Book Review: Beyond Mechanical Markets – Asset Price Swings, Risk and the Role of the State, by Roman Frydman and Michael D. Goldberg, Princeton, NJ, Princeton University Press, 2011.

Frydman and Goldberg’s book lays out important methodological contributions in regard to questioning the hypothesis of rational expectations, constructed on the basis of the writings of Knight, Keynes and Hayek in its opening section. But in the second part, it does not propose a convincing model that would help avoid the formation of new financial bubbles. While accepting to some extent that the government entity has no greater knowledge than economic agents, it ignores the perverse public-sector incentives that James M. Buchanan and the School of Public Choice have explored in recent decades. Furthermore, although repeated reference to Hayek is encouraging, the authors seem to have misunderstood the implications of his most important insight, namely the knowledge problem as it affects public sector decision making. Paradoxically, this oversight leads Frydman and Goldberg themselves to adopt a pretension of knowledge stance despite explicitly criticising traditional models for this very same error.

Leer el trabajo completo en el Journal of New Finance, Vol. 1, No. 1.

Beyond Mechanical Markets: Asset Price Swings, Risk, and the Role of the State (Book Review) [en el Journal of New Finance]

El Finance Research Center de la UFM acaba de publicar el primer ejemplar del Journal of New Finance. Este número incluye los siguientes trabajos:

  • Letter from the Editors: Is Modern Finance Geared Up to Support Financial Regulation? – The Editors
  • A Call for Model Modesty – Mark Calabria
  • Assessing the Systemic Importance of Asset Managers – Gustave Laurent, Massimiliano Neri
  • Hyman Minsky: An Advocate of Big Government – Juan Ramón Rallo
  • Macroeconomics and the Financial Cycle: Hamlet Without the Prince? – Claudio Borio
  • Beyond Mechanical Markets: Asset Price Swings, Risk, and the Role of the State (Book Review) – Adrián Ravier

Acceda aquí a todo el material.