Andrew Winning / Courtesy Reuters The things they carried: leaving Lehman Brothers, London, September 2008

Can Economists Learn?

The Right Lessons From the Financial Crisis

In This Review

What Have We Learned? Macroeconomic Policy after the Crisis
by Edited by George A. Akerlof, Olivier J. Blanchard, David Rom
The MIT Press, 2014
368 pp. $27.95

Is it acceptable for a reviewer to complain about a book’s title? I hope so, because this one is pretty misleading. A number of valuable lessons can indeed be gleaned from the two and a half dozen essays that compose this quite interesting volume, but the book’s subject is described far more accurately by the title of the April 2013 International Monetary Fund conference that spawned it: “Rethinking Macro Policy II: First Steps and Early Lessons.” (Yes, there was a “Rethinking Macro Policy I,” which resulted in an earlier MIT Press volume.)

The two subjects are related, of course. But readers expecting the insights of 31 prominent authors on what economists should have learned from the crisis may come away disappointed. For example, the book’s index does not even contain the words “bubble,” “subprime,” “Lehman,” or “AIG,” and there is only one reference to derivatives. Still, readers looking for wisdom on how to rethink monetary, fiscal, macroprudential, and other policies will be richly rewarded, for this fine volume is bristling with it.

The five essays written by the editors are alone worth the price of admission, and the other 25 include the often provocative thoughts of such luminaries as Sheila Bair, former chair of the Federal Deposit Insurance Corporation; Stanley Fischer, former governor of Israel’s central bank and current vice chair of the U.S. Federal Reserve; Mervyn King, former head of the United Kingdom’s central bank; Jean Tirole, the French expert on markets and regulation who won the 2014 Nobel Prize in Economics; Janet Yellen, the current Fed chair; and many more.

Not every essay in this volume is a gem. But some of them are. I particularly liked the Berkeley economist David Romer’s ruminations on what he calls “deeper solutions,” such as imposing much higher capital requirements on banks, creating a simpler financial sector, legislating stronger automatic stabilizers, and replacing inflation targeting with a new monetary policy framework. Unfortunately, such large topics are barely touched on elsewhere