Book Bits | 27 April 2019

Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly
By John Quiggin
Summary via publisher (Princeton U. Press)
Since 1946, Henry Hazlitt’s bestselling Economics in One Lesson has popularized the belief that economics can be boiled down to one simple lesson: market prices represent the true cost of everything. But one-lesson economics tells only half the story. It can explain why markets often work so well, but it can’t explain why they often fail so badly—or what we should do when they stumble. As Nobel Prize–winning economist Paul Samuelson quipped, “When someone preaches ‘Economics in one lesson,’ I advise: Go back for the second lesson.” In Economics in Two Lessons, John Quiggin teaches both lessons, offering a masterful introduction to the key ideas behind the successes—and failures—of free markets.

People, Power, and Profits: Progressive Capitalism for an Age of Discontent
By Joseph E. Stiglitz
Review via FT
Somewhere America lost its way. Behind the scenes lobby groups control regulation and twist it for their own purposes; trade deals are stacked against workers; the media cannot be trusted; democracy risks becoming nothing more than a sham contest between oligarchs.
This gloomy portrait of the US is painted by the Nobel Prize-winning economist Joseph Stiglitz in his latest book, where he sets out a progressive agenda that he hopes can “save capitalism from itself”. It could even, he suggests, provide a consensus platform for the Democrats in the 2020 effort to unseat Donald Trump.

The Metric Society: On the Quantification of the Social
By Steffen Mau
Review via The Enlightened Economist
I spent the holiday weekend sitting in the sunshine reading digital economy books of varios types (in between cooking for the family and playing with the 10 week-old). First up was Steffen Mau’s The Metric Society, one of the slowly expanding genre of sociology of economic measurement books. The underlying theme is the use of metrics to quantify the qualitative, and the consequences of the appearance of objectivity: “By assigning a number to the thing observed, we take a step toward objectivizing it.” At the same time, measurement ‘disembeds’ phenomena from local context and knowledge. “Numbers not only isolate information from its original context but also place it in extended comparative contexts.” The added spice in this book is the ever-growing scope of the use of data as digitalisation marches on. And, like other similar books, The Metric Society is pretty pessimistic – this implies, it suggests, a panopticon society with entrenched structures of inequality.

Analysing and Interpreting the Yield Curve (2nd ed.)
By Moorad Choudhry
Summary via publisher (Wiley)
Now in a completely updated and expanded edition, this is a technical guide to the yield curve, a key indicator of the global capital markets and the understanding and accurate prediction of which is critical to all market participants. Being able to accurately and timely predict the shape and direction of the curve permits practitioners to consistently outperform the market. Analysing and Interpreting the Yield Curve, 2nd Edition describes what the yield curve is, explains what it tells participants, outlines the significance of certain shapes that the curve assumes and, most importantly, demonstrates what factors drive it and how it is modeled and used.

Financial Econometrics: Models and Methods
By Oliver Linton
Summary via publisher (Cambridge University Press)
This is a thorough exploration of the models and methods of financial econometrics by one of the world’s leading financial econometricians and is for students in economics, finance, statistics, mathematics, and engineering who are interested in financial applications. Based on courses taught around the world, the up-to-date content covers developments in econometrics and finance over the last twenty years while ensuring a solid grounding in the fundamental principles of the field. Care has been taken to link theory and application to provide real-world context for students. Worked exercises and empirical examples have also been included to make sure complicated concepts are solidly explained and understood.