Herman E. Daly and Joshua Farley
Can monetary policy help in distribution and macro-allocation? No, it is a blunt instrument directed only towards the production and consumption of market goods, say Herman E. Daly and Joshua Farley in Ecological Economics, from Pearson (www.pearsoned.co.in). "Economists typically have a poor understanding of what is happening in the economy at any given moment," chide the authors. Don't expect the economists, therefore, to give quick answers to questions like: `Is unemployment too high? Is the economy growing too fast, threatening inflation? Are we headed for recession?' Weathermen, perhaps, fare better; they can `look outside right now and tell you what the weather is,' even if they were wrong in their forecasts!
Elsewhere in the engagingly written book, the authors wonder why the IMF bets billions of other people's dollars, to stubbornly pursue policies that have been proved to be wrong. "IMF economists are almost all trained in neoclassical economics. They believe well-informed people make rational choices based on rational expectations... "