The Art of Monetary Policy – Lessons from Sun Tzu for Central Banks
By: Kristin J. Forbes – MIT
When central banks were forced to innovate and develop a multifaceted set of new weapons in response to the 2008 global financial crisis and 2020 COVID-19 pandemic, the result was a substantial expansion in their authority and reach. In The Art of Monetary Policy, Kristin Forbes draws lessons for monetary policy of the last two decades from the principles of Sun Tzu, the author of The Art of War, a Chinese philosopher and military strategist from the fifth century BC.
Tzu proposed several key principles for success—tenets that apply to monetary policy and the battlefield today: (1) plan in advance for the next battle; (2) accept and adapt to the inevitability of powerful, external shocks outside your control; (3) establish a strong tactical position; (4) develop a variety of weapons that can be combined for different maneuvers and situations; (5) maintain flexibility so that you can quickly modify your strategy; and (6) consider the longer-term costs when evaluating the trade-offs of different approaches. These principles provide insights into what central banks did (and did not) do well over the last two decades, as well as how they should deploy interest rates, balance sheets, emergency support programs, forward guidance, and macroprudential tools in the future.
While the optimal strategy in both war and monetary policy is more of an “art” than a science, adopting these principles can improve our ability to battle the next crisis and build more resilient economies during peaceful periods.
Climate Justice – What Rich Nations Owe the World—and the Future
By: Cass R. Sunstein – Harvard University
If you’re injuring someone, you should stop—and pay for the damage you’ve caused. Why does this simple proposition, generally accepted, not apply to climate change? In Climate Justice, a bracing challenge to status quo thinking on the ethics of climate change, renowned author and legal scholar Cass Sunstein clearly frames what’s at stake and lays out the moral imperative: When it comes to climate change, everyone must be counted equally, regardless of when they live or where they live—which means that wealthy nations, which have disproportionately benefited from greenhouse gas emissions, are obliged to help future generations and people in poor nations that are particularly vulnerable.
This book is quintessential Sunstein: engaging prose, wise insights, useful parables, and crucial policy context, all on the important topic of how the world effectively and equitably addresses climate change.
Catherine Wolfram, MIT
Finishing the Inflation Job and New Challenges for Monetary Policy
By: Michael D. Bordo, John H. Cochrane, John B. Taylor – Hoover Institution
How should the Fed finish the inflation-reduction job and prepare for the changing world ahead? And exactly how did one of Hoover’s most influential living economists assist scholars in thinking about where we go from here?
Finishing the Inflation Job and New Challenges for Monetary Policy collects essays and discussions from the annual Hoover Institution Monetary Policy Conference, held on May 9, 2025, exploring these themes and considering other big-picture issues that affect monetary policy in this volatile international environment.
Conventional policymaking confronts new shocks and old challenges, while many economists have diminished confidence in traditional models. Assembling diverse expert viewpoints on the current unprecedented challenges, the Hoover Institution moves ahead of the curve.”
Robert G. King, Boston University
Private Power and Democracy’s Decline – How to Make Capitalism Support Democracy
By: Mordecai Kurz – Stanford University
In Private Power and Democracy’s Decline, Mordecai Kurz explores the relationship between free-market capitalism and democracy. He shows that technology has made capitalism different from what was envisioned in the Age of Enlightenment. Technology creates centers of market power and monopoly concentration that result in a society in which some people are enriched immensely while many workers’ livelihoods are often destroyed. Contrary to conventional thinking, technological competition does not remove market power, which becomes a permanent fixture of free-market capitalism. Such private power creates political inequality and generates forces that cause democracy’s decline and possible destruction.
Applying these ideas to the US, Kurz shows that today’s problems begin in the 1980s with the policy of unregulated free-market capitalism. Coupled with the information technology revolution, this created a techno-winner-takes-all economy—leading to a second Gilded Age of unsustainable inequality and extreme political polarization. In the last 50 years, the economy “boomed” for some while leaving the majority of America’s workers behind.
Kurz concludes that only regulated capitalism can support democracy so that the benefits of technology are more equally shared and no person’s livelihood is destroyed to enable others to be enriched. To save democracy, he proposes a “restoration-of-livelihood” policy, offering firms managerial flexibility to maintain rising productivity while ensuring that technology does not destroy the livelihood of others.
Capitalism is a powerful engine for technological innovation and economic growth. Yet societies everywhere are struggling to reconcile it with democracy. This superb book helps us understand why. It also offers a compelling vision that replaces free-market capitalism with a version that makes markets and democracy both work better.
Dani Rodrik, Harvard University
