Operating Manual for Economists

AuthorPeter Heller
PositionVisiting professor of economics at Williams College in Williamstown, Massachusetts, and former deputy director, IMF Fiscal Affairs Department
Pages59-59
June 2019 | FINANCE & DEVELOPMENT 59
BOOK REVIEWS
Operating Manual
for Economists
JUST AS MEDICAL students must be seasoned as
interns, the IMF teaches its new economists how
to transition from a theoretica l, model-driven
view of an economy to an understanding of how
a real country’s economy actua lly behaves. Like
the human body, a country’s economy reflects the
composite operation of many specialized “macro”
organs—the real economy, the fiscal sector, and
the monetary and fina ncial sectors—that interact
with one another and with the rest of the world.
Understanding the nitty-gritty of how these dif-
ferent organs function, and whether t hey are per-
forming well, is as much art as science.
e IMF’s approach to such an education
relies in part on an apprenticesh ip model and in
part on short bursts of tra ining from its teaching
and capacity development unit. is wis e book,
Macroeconomics for Professionals —the collab oration
of two former senior IMF staffer s—dist ills the
essence of the basic ana lytical framework the I MF
uses to understand a countr y’s economic reality.
Leslie Lipschitz and Susan Schadler provide a
superb road map for assessing a countr y’s policies.
It is relevant not only for new IMF economists
but also for analyst s in investment banks, rating
agencies, finance mi nistries, and central bank s, as
well as for economic journalist s seeking to bridge
the gap between theor y and real-world practice.
Indeed, this book would enha nce economics
training in graduate schools of public policy.
Separate chapters elucidate the ana lytical and
statistical f rameworks that underlie the macroeco-
nomic sectors, the data measure s that explain their
operation, and the role of normative diagnostic
indicators pertinent to sectoral a ssessments. e
authors highlight the challenges of determining
the direction of causa lity in the movement of key
economic variables. Historical case studies a nd
exercises in both the book and t he online work-
book highlight the li mitations of policy guidance,
gleaned from the frameworks. Effectively, the
book allows the reader to consider the cha llenges
policymakers f ace when making critical deci sions,
using all avai lable tools and data to help narrow
the scope of i nevitable u ncerta inties.
Finally, the book implicitly provides the neces-
sary cautionar y perspective that high-level official s
and policy analy sts in government are too often
“fighting the last war.” We are now in a century
where the combination of rapid technological
change and (still not fu lly understood) environ-
mental forces may soon give rise to unexpected
and substantial s ystemic or country-specific
shocks. e economic verities of 2050, let alone
those of 2100, threaten to be very different from
those of today. Policymakers will be cha llenged
to innovate responses—most likely untested—
quickly to limit economic and socia l damage.
e framework of global ec onomic policy coordi-
nation cannot be so easily a nalyzed in a book of
this kind. Yet the need for effective coordinated
policy responses is both impor tant and urgent.
PETER HELLER, visiting professor of economics at Williams
College in Williamstown, Massachusetts, and former deputy
director, IMF Fiscal Affairs Department
Leslie Lipschitz and Susan Schadler
Macroeconomics for
Professionals: A Guide for
Analysts and Those Who
Need to Understand Them
Cambridge University Press,
Cambridge, UK, 2019, 308 pp., $39.99
978110844983
0>
ISBN 978-1-108-44983-0
9781108449830: Lipschitz and Schadler: CVR: CMY K
L L
 S  S
Macroeconomics
for Professionals
A Guide for Analysts and Those
Who Need to Understand Them
“Decades of IMF work in the trenches have been brilliantly distilled here
into key insights about policy making in the real world. Recognizing
explicitly the challenges posed by inadequate understanding, tough
trade-offs, constant evolution and non-linear processes, the book
nevertheless provides a convincing framework for making policy decisions.
Every macroeconomist who pretends to be professional should read it.”
- William R. White, Chairman, Economic a nd Development Review
Committee, the Organisation for Economic Co- operation and
Development (OECD)
“Macroeconomics for Professionals provides a valuable introduction
to the practical use of macroeconomic analysis in policy-making.
It illustrates the judgments involved in applying these analytical tools to
real-world situations, drawing on the authors’ wealth of international
policy experience and their  nely-honed critical faculties.”
- Tim Lane, Deputy Governor, Bank of Canada
“Economic commentary is everywhere but it is rare to  nd a source for
the practitioner that brings it all together in a coherent, real-world guide.
The authors’ command of the practical nature of macroeconomics and
their extensive experience at the forefront of policy-making is on good
display. Students, practitioners and seasoned economists would all bene t
from this refresher on how economics work in the real world.”
- Agustin Carstens, General Manager, Bank of Internation al Settlements
Cover image: Utamaru Kido\Gett y Images
Cover design: Andrew Ward
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 S Macroeconomics for Professionals
 S
Macroeconomics for Professionals

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