Economic Policy: Theory and Practice

Economic Policy provides a unique combination of facts-based analysis, state-of-the art economic theory, and insights from first-hand policy experience at the national and international levels to shed light on current domestic and international policy challenges. It is ideally suited for students, practitioners, and scholars seeking understanding both of the pragmatic constraints of real-world policy making and the analytical tools that enhance inquiry and inform debates.

The authors draw on their experiences as academics and as policy makers in European and international institutions to offer a deep dive into the rationale, design, and implementation of economic policy across a range of policy domains: fiscal policy, monetary policy, international finance, financial stability, taxes, long-term growth and inequality. Highlighting the ways experience, theories, and institutions interact, each chapter starts with historical examples of dilemmas and shows how theoretical approaches can help policy makers understand what is at stake and identify solutions. The authors highlight the differences between the positive approach to economic policy (how do policies impact the economy), the normative approach (what should be policymakers' objectives and against which criteria should their action be judged), and the political-economy constraints (what are the limits and obstacles to public intervention). They rely on the most recent academic research, providing technical boxes while explaining the mechanisms in plain English in the text, with appropriate illustrations.

This new edition is informed by such important recent developments as the Great Recession, the strains on the European Union and the Euro, the challenges of public and private debt, the successes and setbacks to emerging markets, changes to labor markets along with the increased attention to inequality, the debates on secular stagnation and its implications for conventional and unconventional monetary policy, the re-regulation of the financial sector, the debt overhang in both the public and the private sector.

Agnès Bénassy-Quéré is a professor at the Paris School of Economics - University of Paris 1 Panthéon-Sorbonne and a member of the French macro-prudential authority. She previously chaired the French Council of Economic Advisors.

Benoît Coeuré is a member of the Executive Board of the European Central Bank and an affiliate professor at Sciences Po (Paris). He has served in various international and domestic positions at the French Treasury and is a former co-Chair of the Paris Club.

Pierre Jacquet is President of the Global Development Network (GDN) in New Delhi (India) and professor at the Ecole Nationale des Ponts et Chausées (ENPC). He is the former Chief Economist and Executive Director of Strategy of the French Development Agency.

Jean Pisani-Ferry is a professor at Sciences Po (Paris) and at the Hertie School of Governance (Berlin). He holds the Tommaso Padoa-Schioppa chair at the European University Institute in Florence. From 2005 to 2013 he was the founding director of Bruegel, the European think tank and served from 2013 to 2017 as Commissioner-General of France Stratégie, the ideas lab of the French government.