Big Ideas in Macroeconomics
During the summer, I came across a book that described macroeconomic foundations, models, and frameworks in a simple way. I was so intrigued by the clarity of the explanations that I wrote a book review, which just got published in The American Economist. The book by Kartik Athreya is called “Big Ideas in Macroeconomics: A Nontechnical View”, published by the MIT Press in 2013.
In a nontechnical manner, with great attention to the details of the big picture, the author showcases major macroeconomic models, describes the logic of them, and talks to the reader about their successes and failures in explaining real world problems. The book will be valuable to those with a casual interest in economics, undergraduate and graduate students, and seasoned academics and practitioners alike.
The author shows the irony of the criticism that macroeconomic models cannot accommodate real world concerns. For example, in the last chapter he addresses the causes of the recent financial crisis and the limitations of macroeconomic theory in predicting it. Athreya analyzes the components of the 2007-2008 crisis, and highlights several problems facing policymakers before, during, and after any crisis. Most importantly, the author addresses criticisms of the profession for its inability to foresee the Great Recession and hasten the slow recovery. He assures the reader that “a sensible shift of priorities toward understanding the role of household finance (e.g., mortgage and student loans) and financial contracting between firms (e.g., repos) as sources of macroeconomic fluctuations” is already underway.
It struck me that AIER could have been listed here as a source of reliable information on personal finance, retirement, and general economic literacy. While academia is slowly catching up with the informational demands of the Main Street, the Institute produces objective insights and useful information that has helped people successfully pursue their economic and financial goals for more than eighty years.
When finished reading, I could not stop thinking that there are synergies between the style of this book and the style of AIER’s publications. AIER strives to produce research that is easy to understand and use in daily life. As we continue on this path, our readers will be well equipped with actionable approaches to financial and economic issues that they face every day.
I am happy that my book review got published so more people will know about this interesting book.
Photo: Natalia Smirnova with the issue of The American Economist in her AIER office.