A Concise Guide to Macroeconomics: What Managers, Executives, And Students Need To Know [Hardcover]

It is rare to find a book so aptly described by its title as "A Concise Guide to Macroeconomics." The book really is concise; the text is only 141 pages long, and even that number might give an exaggerated impression because there are fairly wide margins and two blank pages between each chapter, as well as numerous graphs and tables. Yet in those 141 pages, this guidebook covers the essentials of output and GDP accounting, the role of money, interest and expectations in monetary policy and business cycles, a brief monetary history of the United States, as well as the basics of international economics: why countries trade, how to read a balance of payments statement, and what sorts of forces move exchange rates.

The tables and charts scattered throughout the book provide excellent intuition for understanding international comparisons of GDP, the history of business cycles, or whatever topic is presently at hand. All of these media are well referenced in the text, clearly explained, and contain up-to-date information. Moss also illustrates some concepts, such as the Ricardian theory of comparative advantage, with examples of his own; these too are excellent.

What impresses me most about the book is that Moss seems to have gotten the technical level just right: this book has none of the anecdote-ridden flakiness so common to journalistic writing about economics, nor is it ponderous or over-burdened with theory. This guide will aptly explain the essentials of the field to those who are curious; I know of no other book like it, and I cannot recommend it highly enough. If you have any lingering doubts (you shouldn't) just click on the "Search Inside" icon at the top of the page, and click "Surprise Me" to get a random sample of Moss's writing.

Professor Moss' Concise Guide to Macroeconomics is titled aptly. It is very concise; fluidly written and easily read in a couple of sittings. It is also very fundamental. The author focuses in one the three core pillars of macro-economics, output, money and expectations, and takes the reader through them in a tried and trued presentation format: tell the reader what you're going to tell them, tell them, then tell them what you just told them.

As such the first part has a chapter dedicated to introducing each of these three core concepts. The second part has a chapter for each of these three concepts again, but with slightly more sophistication afforded from the reader now having seen all three concepts in isolation, and the conclusion quickly ties everything together holistically. I found this format very effective for the content it was meant to convey.

To be clear though concise is the key word to describe this book. It covers first things first and only first things. As such many concepts, such as foreign reserves, aren't even mentioned. This book is very much a starting point, and it is written for the lay reader with only a simple or passing knowledge of economics concepts in general. It certainly won't make you a genius who can understand the world. It could likely help students understand concepts qualitatively but has no real math or graphical analysis and probably wouldn't help students with their homework or tests.

Despite its brevity and the fact it skips some topics many would like to see in a macroeconomics book I feel five stars is richly deserved on account of an admirable and rare honesty on behalf of the author. Although a Harvard Business School professor (and thus, if reputation is to be believed, about as educated as one can come) Mr. Moss is extremely clear that macroeconomics is not a precise science, most macroeconomic theories do not slide seamlessly into successful practice in real life, the reasons behind macroeconomic situations (i.e. currency collapses, recessions, sharp inflation, etc.) can be ambiguous and arguable, and macroeconomic monetary and fiscal policies (such as interest rate cuts or deficit spending) can have contradictory and unpredictable impacts in the real world. His explanation of macroeconomics can show how we can ask smarter questions to increase our chances of being successful when it comes to private enterprise and government venture, but also shows why there is such disagreement and room for argument on both sides of any macroeconomic issue.

A great starting place and, rare for an academic book, armed with a highly appropriate warning on the limits of a imprecisely understood albeit very important topic.

This book does introduce some basic macro concepts concisely, and in clear prose. Most of the main points are nicely summarized in simple graphics showing you how one thing (GDP, inflation, whatever) goes up as something else goes down, etc. And the author (DM) does remind you several times, in a general way, that the real world often behaves differently from macroeconomic theory.

That said, it's often hard to distinguish whether DM is talking about real effects or hypothetical ones. For example, DM mentions a couple of arguments aginst the Keynesian idea of stimulating the economy by means of deficit spending (an idea that was big in the 1930s-1970s, and that might make a comeback under the Obama Administration). The "rational expectations" argument says that consumers might rationally expect taxes to be higher in the future, to pay back for the deficit spending; and therefore they might increase their savings (in preparation for paying those taxes) instead of spending on goods or services. To the extent they save, that would neutralize the intended stimulus effect. The "crowding out" argument says that if the government tries to raise money by selling bonds, it will be competing with private borrowers for funds; the resulting increased demand for money could raise interest rates; and the higher rates, in turn, could discourage entrepreneurs and other private borrowers from borrowing; with the result that potentially useful projects would go unfunded and be scuttled. Has either of these effects ever been observed, and if so, to what extent? Or are they just arguments by supply-side economists, Reagan Republicans and other anti-Keynesian partisans? We are never told.

The book may also disappoint you if you're looking for insights into the current world situation. For example, in the chapter describing economic output (i.e., goods and services, usually measured by GDP), DM notes "At root, most financial assets represent claims on real productive assets (such as plants and equipment), which in turn are expected to generate output in the future. But of course, all of these productive assets were once output themselves" (@27; emphasis in the original). Maybe this statement is true, in a textbook theoretical way, about shares of stock in corporations: profs teach that a share of stock represents a claim to a piece of the company's assets. But this statement doesn't help you understand how the value of outstanding credit default swaps and other financial derivatives based on US home mortgages can be $33-$47 trillion, while the value of the mortgages themselves is only $10-$11 trillion, and the value of the homes (real assets, and BTW not "productive" ones) subject to the mortgages is in many cases less than the mortgages themselves. How do those financial assets in excess of 1x the mortgage values represent claims on real anything? DM's book doesn't clarify the mystery of derivatives -- or even mention it. Unfortunate, since the estimated value of all outstanding financial derivatives of all types is around $60T.

Another striking comment comes from a discussion of monetary policy: "A lower rate of interest may encourage consumption by making saving appear less attractive (since it now pays less) and -- what is essentially the same thing -- by reducing the cost of consumer borrowing" (@73). Sure, a lower interest rate could reduce the cost of consumer borrowing; the problem with DM's remark is between the dashes. If you don't save, couldn't that simply mean you're spending the money you earn, rather than borrowing? To call borrowing "essentially the same thing" as not saving seems an illustration of the messed-up thinking that got us into the current crisis, rather than something that will help you think your way out of that crisis.

If DM had allowed himself even 10 additional pages or so for thoughtful analysis and more specific examples of how well the theory relates to the real world, the book might have been more balanced. Instead, while its generally clear writing style is admirable, the book is a bit too short on substance.