Zombie Economics

Preface vii Introduction 1 Chapter 1: The Great Moderation 5 Birth: Calm after the Storms 8 Life: The Great Risk Shift 13 Death: The Dissenters and Their Vindication 19 Reanimation: A Global Crisis or a Transitory Blip? 30 After the Zombies: Rethinking the Experience of the Twentieth Century 31 Further Reading 34 Chapter 2: The Efficient Markets Hypothesis 35 Birth: From Casino to Calculating Machine 36 Life: Black-Scholes, Bankers, and Bubbles 39 Death: The Crisis of 2008 50 Reanimation: Chicago Revives the Dead 64 After the Zombies: The State and the Market 66 Further Reading 77 Chapter 3: Dynamic Stochastic General Equili brium 79 Birth: From the Phillips Curve to the NAIRU, and Beyond 83 Life: Rationality and the Representative Agent 106 Death: How Did Economists Get It So Wrong? 110 Reanimation: How Obama Caused the Global Financial Crisis 121 After the Zombies: Toward a Realistic Macroeconomics 123 Further Reading 133 Chapter 4: Trickle -down Economics 136 Birth: From Supply-side Economics to Dynamic Scoring 138 Life: Excuses for Inequality 146 Death: The Rich Get Richer and the Poor Go Nowhere 152 Reanimation: Mobility without Movement 167 After the Zombies: Economics, Inequality, and Equity 168 Further Reading 172 Chapter 5: Privati zation 174 Birth: We Are All Market Liberals Now 178 Life: A Policy in Search of a Rationale 182 Death: Puzzles and Failures 187 Reanimation: Dead for Good? 199 After the Zombies: The Mixed Economy 200 Further Reading 204 Conclusion: Economics for the Twenty -first Century 206 Rethinking the Experience of the Twentieth Century 206 A New Approach to Risk and Uncertainty 207 What Is Needed in Economics 210 References 213 Index 229

John Quiggin is professor of economics at the University of Queensland in Australia.

Killing vampires and werewolves is easy enough. But how does one slay economic zombies--ideas that should have died long ago but still shamble forward? Armed with nothing but the truth, John Quiggin sets about dispatching these dead ideas once and for all in this engaging book. Zombie Economics should be required reading for those who would dare reanimate the economic theories that brought us to the edge of ruin.--Brad DeLong, University of California, Berkeley