The Magic Money Tree and Other Economic Tales - by Lorenzo Forni (Hardcover)

About the Book

A lively analysis of how mistakes in economic policy-making are increasingly made for political reasons and typically in the run up to a crisis when the constraints on the economy are ignored.

Book Synopsis

A lively analysis of how mistakes in economic policy-making are increasingly made for political reasons and typically in the run up to a crisis when the constraints on the economy are ignored.

Review Quotes

A most enjoyable and instructive read with many fascinating country examples. As fiscal deficits explode and central banks remain big buyers of government bonds, Forni's lucid warnings about unsustainable macroeconomic policies could not be better timed.

An insightful journey through politics and economics, addressing why the former might mismanage the latter. Lorenzo Forni describes in depth the causes and consequences of many policy 'mistakes', all characterized by a common error: forgetting the economic constraints.

Forni's main target is the politicians who, in targeting their short-term advantage, undermine the medium and long-term prospects for their countries ... SPE members who need to find support for economic rationality in dealing with their clients, masters, or even the friends in the pub will find useful material in here.

Live by the printing press, die by the printing press. This is the no-free-fiscal-lunch message of Lorenzo Forni, a premier economic advisor to countries across the globe. The Money Magic Tree is a sobering wake-up call for the United States and other advanced economies who think they can live well beyond their means.

This book aptly distills lessons about sound macroeconomic policies from theory and international experiences in a non-technical and user-friendly way. It will be especially useful to non-economists who want to form well-informed opinions about important current debates on the appropriate stance of fiscal and monetary policies. I especially like its key message that prolonged expansionary policies cannot raise potential GDP growth rates. Doing so requires structural fiscal, financial, and regulatory reforms. The book highlights the political economy challenges that such reforms face.

This book is about magic. Yet, the magic tricks work and are exciting only when the audience does not know what to expect. With magical economic policy-making, the audience have been conned before. This book shows that harsh economic truths are much less exciting than magic but are inescapable.

About the Author

Lorenzo Forni is Professor of Economic Policy at the University of Padua. He has worked at the International Monetary Fund in Washington, DC and at the Central Bank of Italy in Rome.