Pursued Economy: Understanding and Overcoming the Challenging New Realities for Advanced Economies - Hardcover

by Richard C. Koo (Author)

In Pursued Economy: Understanding and Overcoming the Challenging New Realities for Advanced Economies, celebrated economist and thought leader Richard C. Koo dives deep into the failure of traditional economic solutions to address the economic and social problems of post-Great Recession and post-pandemic economies. Starting with the original concepts of balance sheet recessions and global competition for capital, the author explains why the Great Recession lasted for so long and why well-intentioned policies that worked so well in the past are no longer working today.

Readers will discover that advanced economies moved from what the author calls the "golden era" to the "pursued era" of economic development long ago, but the policy debate in these countries continues to be informed by golden era assumptions that are no longer relevant but are still taught in universities. That mismatch has led to an over-reliance on monetary policy and an under-reliance on fiscal policy that are distorting economies and worsening inequality in a profoundly transformed world.

With many real-world examples from the author's extensive involvement in the policy debate on economic, banking and trade issues in several countries, including the U.S., the book describes the correct policy mix in the pursued era as distinct from that in the golden era. It also explains the challenges central banks face in fighting inflation after a decade of over-reliance on monetary policy that flooded the world's economies with unprecedented liquidity.

Instead of simply assuming the existence of "trend growth rates", this book tackles the issue of economic growth head-on so as to elucidate the symmetry between the drivers of growth and the drivers of recession. It also argues that the fundamental disconnect between free trade and free capital movements must be addressed in order to maximize the gains from globalization while minimizing its costs. Written in simple language and with a great sense of urgency, Pursued Economy should be of interest to anyone who is concerned about the global economy, financial stability and geopolitics.

Front Jacket

In Pursued Economy, celebrated economist and thought leader Richard C. Koo starts with his original concepts of balance sheet recession and global competition for capital to explain why the Great Recession lasted for so long and why those policies that worked so well in the past are no longer working today.

Readers will discover that advanced economies moved from what the author calls the "golden era" to the "pursued era" of economic development decades ago, but the policy debate in these countries continues to be based on golden era assumptions that are still taught in universities. That mismatch has led to an over-reliance on monetary policy and an under-reliance on fiscal policy that are distorting economies and worsening inequality in most advanced economies.

With many real-world examples from the author's extensive involvement in the policy debate on economic, banking and trade issues in several countries, including the U.S., the book describes the correct policy mix in the pursued era as distinct from that in the golden era. It also explains the challenges central banks face in fighting inflation after a decade of over-reliance on monetary policy that flooded the world's economies with unprecedented liquidity.

Instead of simply assuming the existence of "trend growth rates", this book tackles the issue of economic growth head-on to elucidate the symmetry between the drivers of growth and the drivers of recession. It also points out that there is a fundamental disconnect between free trade and free capital movements that must be addressed in order to maximize the gains from globalization while minimizing its costs. Written in simple language and with a great sense of urgency, Pursued Economy should be of interest to anyone who is concerned about the global economy, financial stability and geopolitics.

Back Jacket

Praise for the author's previous works

THE OTHER HALF OF MACROECONOMICS AND THE FATE OF GLOBALIZATION (2018)

"Richard Koo has had some of the most important economic ideas of the last two decades. This book extends his important perspective to a wider range of long-run issues. Koo's arguments deserve the attention of everyone who cares about achieving strong, sustained economic growth in the industrial world."
--Lawrence H. Summers, Charles W. Eliot University Professor, Harvard University

"Richard Koo is the most important economist of our time because he alone has devised a revolutionary framework that accurately explains the global economic crisis. His work is revolutionary not because it overthrows all the economic theory that preceded it, but rather because it completes it. Koo's policy prescriptions offer the world the best chance of restoring prosperity before this economic crisis becomes a political crisis and then a geopolitical crisis. The sooner our policymakers understand the implications of this extraordinary book--and act upon them--the safer we all will be."
--Richard Duncan, Author, The Dollar Crisis; Publisher, Macro Watch

THE ESCAPE FROM BALANCE SHEET RECESSION AND THE QE TRAP: A HAZARDOUS ROAD FOR THE WORLD ECONOMY (2014)

"Koo's The Escape from Balance Sheet Recession and the QE Trap provides the most insightful guide to current macroeconomic policy available today. Koo's concept of 'balance sheet recessions' adds depth and detail to observations of the 'liquidity trap' and 'zero lower bound' of interest rates. He explains what needs to be done and how long it could take. Everyone concerned with macroeconomic policy needs to read this analysis to learn how the world economy can be revived."
--Peter Temin, Elisha Gray II Professor Emeritus of Economics, Massachusetts Institute of Technology

THE HOLY GRAIL OF MACROECONOMICS: LESSONS FROM JAPAN'S GREAT RECESSION (2008, REVISED 2009)

"... the Japanese policymakers who (said) the U.S. was in danger of falling into a prolonged period of economic weakness were right. To understand why ... you need to read a brilliant book by Richard Koo..."
--Martin Wolf, Financial Times

"Richard Koo's pioneering work on balance-sheet recession has been invaluable in understanding the difficulty faced by Japan's economy and monetary authorities during the past 15 years. In this book, he has shown that the U.S. Great Depression was also driven by the same balance sheet concerns of the private sector, indicating that this kind of recession can happen to any post-bubble economy. I sincerely hope that the lessons contained in this book are put to good use in fighting similar recessions elsewhere, including the U.S. subprime crisis."
--Yasushi Mieno, Former Governor, Bank of Japan

BALANCE SHEET RECESSION: JAPAN'S STRUGGLE WITH UNCHARTED ECONOMICS AND ITS GLOBAL IMPLICATIONS (2003)

"Richard Koo writes with a strong sense of urgency, bringing a fresh and needed perspective to the long debate about Japan's economic future."
--Paul Volcker, Former Chairman, Federal Reserve

Author Biography

RICHARD C. KOO is Chief Economist of Nomura Research Institute in Tokyo, and former economist with the Federal Reserve Bank of New York. He was also a Doctoral Fellow of the Board of Governors of the Federal Reserve System. Recipient of many awards including the Abramson Award from the National Association for Business Economics, he has advised five Japanese prime ministers and is a Senior Advisor to the Center for Strategic and International Studies in Washington, D. C. A piano manufacturer before becoming an economist, he is also a columnist with the Handelsblatt newspaper in Germany.