New and noteworthy books (January)

In When Things Don’t Fall Apart, Ilene Grabel challenges the dominant view that the global financial crisis had little effect on global financial governance and developmental finance. Most observers discount all but grand, systemic ruptures in institutions and policy. Grabel argues instead that the global crisis induced inconsistent and ad hoc discontinuities in global financial governance and developmental finance that are now having profound effects on emerging market and developing economies. Grabel’s chief normative claim is that the resulting incoherence in global financial governance is productive rather than debilitating. In the age of productive incoherence, a more complex, dense, fragmented, and pluripolar form of global financial governance is expanding possibilities for policy and institutional experimentation, policy space for economic and human development, financial stability and resilience, and financial inclusion.

Professor Grabel builds a case for a gradual, evolutionary change in the global financial system and argues that there is at least as much evidence for this alternative thesis as there is for the regime-continuity thesis.
Dani Rodrik, Harvard University

This book argues that diversity of membership is not an economic obstacle to the success of the euro, as diversity increases the potential gains from risk sharing. But political cooperation is needed to realize this potential, and such cooperation is up against collective action problems which become more intractable as the parties become more diverse. Hence, risk-sharing usually comes about as a collective by-product of national incentives. This political-economic tension can explain why the gains from risk-sharing are not more fully exploited, both in the euro area and in the US dollar area.This approach to monetary integration is based on the theory of collective action when hierarchy is not available as a solution to inter-state cooperation. The theory originates with Keohane and Ostrom (1995) and it is applied in this book, taking into account the latest research on the inherent instability of financial market integration.

The term “degrowth” has emerged within ecological and other heterodox schools of economics as a critique of the idea (and ideology) of economic growth. Instead, degrowth advocates a contraction of economies by reducing production and consumption, arguing that it is possible to do so without reducing prosperity or wellbeing. One might see in the degrowth community a resurgence of a radical theoretical and political variant of environmentalism, or “ecologism,” based on the key premise that there are, and that there must be, “limits to growth.” While this is an old idea, the recent degrowth literature has given it new shape by bringing different disciplines and schools of thought together in formulating its core critiques and propositions. Degrowth is the interdisciplinary theory, or science, of ecologism and the aim of this book is to summarize its core elements in a brief, succinct, and simple form. It grounds degrowth squarely within the field of ecological economics and, in addition to outlining its key ideas, explores what it would take for an economy to transition to a position that enabled it to prosper without growth.

In contrast to mainstream economics, complexity theory conceives the economy as a complex system of heterogeneous interacting agents characterised by limited information and bounded rationality. Agent Based Models (ABMs) are the analytical and computational tools developed by the proponents of this emerging methodology. Aimed at students and scholars of contemporary economics, this book includes a comprehensive toolkit for agent-based computational economics, now quickly becoming the new way to study evolving economic systems. Leading scholars in the field explain how ABMs can be applied fruitfully to many real-world economic examples and represent a great advancement over mainstream approaches. The essays discuss the methodological bases of agent-based approaches and demonstrate step-by-step how to build, simulate and analyse ABMs and how to validate their outputs empirically using the data. They also present a wide set of applications of these models to key economic topics, including the business cycle, labour markets, and economic growth.