Beyond Mechanical Markets
Asset Price Swings, Risk, and the Role of the State
Автор(и) : Roman Frydman
Издател : Princeton University Press
Място на издаване : New Jersey, USA
Година на издаване : 2011
ISBN : 978-0-691-14577-8
Брой страници : 285
Език : английски
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In the wake of the global financial crisis that began in 2007, faith in the rationality of markets has lost ground to a new faith in their irrationality. The problem, Roman Frydman and Michael Goldberg argue, is that both the rational and behavioral theories of the market rest on the same fatal assumption--that markets act mechanically and economic change is fully predictable. In "Beyond Mechanical Markets," Frydman and Goldberg show how the failure to abandon this assumption hinders our understanding of how markets work, why price swings help allocate capital to worthy companies, and what role government can and can't play. The financial crisis, Frydman and Goldberg argue, was made more likely, if not inevitable, by contemporary economic theory, yet its core tenets remain unchanged today. In response, the authors show how imperfect knowledge economics, an approach they pioneered, provides a better understanding of markets and the financial crisis. Frydman and Goldberg deliver a withering critique of the widely accepted view that the boom in equity prices that ended in 2007 was a bubble fueled by herd psychology. They argue, instead, that price swings are driven by individuals' ever-imperfect interpretations of the significance of economic fundamentals for future prices and risk. Because swings are at the heart of a dynamic economy, reforms should aim only to curb their excesses. Showing why we are being dangerously led astray by thinking of markets as predictably rational or irrational, "Beyond Mechanical Markets" presents a powerful challenge to conventional economic wisdom that we can't afford to ignore.
"""The debate over how to re-regulate [markets and banks] to avoid another financial crisis is urgent and it cannot conclude without resolving the problem that economics' most basic assumption is flawed. [Beyond Mechanical Markets is one] of the most interesting contributions [to] find a new way to model markets.""--John Authers,Financial Times
""[Beyond Mechanical Markets] marshals a powerful argument that's bolstered by empirical reality: the eternal failures of mechanical forecasting; the sheer difficulty of beating the market with consistency; the unforeseeable ways that history unfolds. . . . [It's approach] seeks to reach beneficial outcomes through flexible, empirical response to [changing] conditions.""--Robert Teitelman, Huffington Post
Roman Frydman (born February 29, 1948) is an American economist at New York University and the author of more than ten books treating macroeconomic theory and privatization.
Frydman's research, exemplified by his two recent books with Michael D. Goldberg, Imperfect Knowledge Economics: Exchange Rates and Risk (Princeton University Press, 2007) and Beyond Mechanical Markets: Asset Price, Swings, Risk, and the Role of the State (Princeton University Press, 2011), argues that markets cannot be predicted accurately by deterministic optimization models, particularly models promoted by adherents of the rational expectations hypothesis. Rather, Frydman argues that predictive models must take into account the role of contingent events, irrationality, imperfect knowledge and communication among the market participants. "Imperfect Knowledge Economics" presents a model that many critics have described as not only more flexible, but also more predictive of empirical events.
Frydman did his undergraduate studies in physics and mathematics at Cooper Union, graduating in 1971. After earning a master's degree in mathematics and computer science from New York University in 1973, he began studying economics at Columbia University, receiving a second master's degree in 1976 and a Ph.D. in 1978. After working in central Europe for many years, he returned to NYU as a faculty member in 1995. In 2001 he founded the Center on Capitalism & Society at Columbia with his frequent collaborator, Nobel Memorial Prize winner Edmund Phelps.
Личен сайт: http://www.econ.nyu.edu/user/frydmanr/