Three from the JEL
By Arnold Kling
I rarely find the book reviews in the Journal of Economic Literature worthy of comment, but the December 2010 issue has three.
1. Tim Conley has a review of Leamer’s Macroeconomic Patterns and Stories. Like me, he thinks that the book is miscast as an MBA textbook. Conley writes, “every graduate student in economics should read this book.”
2. Tyler Cowen reviews Allan Meltzer’s volume two of his history of the Fed. Tyler writes,
I no longer believe that money supply regulation, even if combined with price inflation targeting, is “enough.” It seems that, slowly but surely, financial systems build up pressures for extreme and unwarranted risk-taking and that the previous period’s successes make this subsequent risk-taking even worse…It’s an open question whether the financial system has long-run balance and perhaps that should induce a deeper revaluation of which Fed policies were successes and which were not. Meltzer’s history instead reflects the point of view that an ongoing even keel is more or less feasible.
Tyler seems to be taking Minsky over Sumner.
3. Jeremy Stein reviews a conference volume on Ending Government Bailouts as We Know Them. He, too, seems to fear a natural risk-taking propensity in financial markets, which he believes involves more than just the moral hazard of too-big-to-fail. He points out, as have many commenters on my posts, that correlated failures among small institutions can have the same effect as the single failure of a large institution.
I believe that all of these reviews are gated. If anyone finds ungated online copies, please leave a pointer in the comments.