How the Economy Works translates the scientific arguments of Expectations, Employment and Prices into English, and although the book was written for the general reader, there will also be much to interest those with a specialist knowledge of economics. It is more important than ever that the public understands the dominant schools of economic thought, how they developed in response to previous crises, and how economists’ beliefs influence the policies that are now having such a huge impact on peoples’ everyday lives. Many economists recognize that it is time for economics to change.  The public is hungry to understand why recessions can be declared over and yet very high unemployment persists. Is inflation around the corner? Must we live with a jobless recovery? Is the fiscal stimulus plan working? What is the role of central banks in the 21^st century?  This book answers these questions from the perspective of a  new theory that combines the best ideas from Keynesian and classical economics.

Expectations Employment and Prices is a monograph aimed at an academic audience. It brings Keynesian economics into the 21st century by providing a new paradigm which explains how high unemployment could potentially persist forever without a little help from the government. The book fills in logical gaps that were missing from the General Theory by reconciling some of its key ideas with modern economic theory. Central bankers throughout the world are talking now about developing a second instrument of monetary policy in addition to controlling the interest rate. This book directly addresses this issue and offers new creative monetary policy proposals and suggestions for the design of new financial institutions for  the 21st century.

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