What's happening in monetary policy and macroeconomics.
Thursday, October 21, 2010
Solow Book Review
Someone drew my attention to this book review by Robert Solow. It's a very thoughtful piece on economics, efficiency, and market failures. I like the bottom line, which is that there are no easy answers.
Yes. It's a very good review. One picky critique of it though, is when he says that buyer and seller need to have the same information in order for markets to work.ReplyDelete
True, asymmetric information about the properties of the good being exchanged can be a problem (though whether and how it can be fixed is another question). But sellers don't need to know a buyer's preferences and budget constraints, and buyers don't need to know a seller's technology and costs. It misses the whole Hayekian point about decentralised information as the underlying rationale for a market economy.