Shocks, Crises, and False Alarms

CHAPTER 21 Good Macro in an Era of Tightness

Our last chapter is not a traditional synthesis of what was said in prior ones. The book’s first objective—how to analyze true macroeconomic risk—was already summarized within the preceding 18 chapters. Readers should look there for conclusions on the eclectic mix of frameworks and methods we used to analyze real, financial, and global risk, and they can refer to chapter 2 for a summary of our approach to macroeconomics.

Here we look forward. This chapter strings together and concludes our second objective: determining what the future of the macroeconomic system could look like. We stated in the introduction that good macro, the economy’s mostly benign operating system of the past 40 years or ...