Corporate Finance

Economists on Parade

A new book ''for people who want to link the day-to-day battles of running businesses with a greater picture.''
Kate O'SullivanJanuary 1, 2006

As the 18-year reign of Federal Reserve chairman Alan Greenspan comes to an end this month, new chairman Ben Bernanke will inherit a daunting job. Fluctuating oil prices, inflation concerns, and a sagging housing market will surely test the new Fed chairman as he assumes the mantle.

For advice on how to handle the turbulence, Bernanke may want to turn to Flying on One Engine (Bloomberg Press, 2005). The book, a compilation of essays by 16 top market economists, is a comprehensive view of how global economics can roil markets.

Thomas Keene, who edited the book, says he conceived the compilation in part “for people who want to link the day-to-day battles of running businesses with a greater picture.” And certainly the book addresses a number of pressing issues for finance chiefs, such as competition from developing markets in Asia.

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While the essays in Flying on One Engine are insightful, the authors offer up no easy answers. Indeed, the views provide a glimpse of the contradictory opinions Bernanke will have to wade through. Case in point: the deficit. Bear Stearns’s David Malpass doesn’t seem overly concerned by the shortfall, writing of a “durable U.S. expansion.” William Dudley and Edward McKelvey of The Goldman Sachs Group Inc. sound a slightly different note: “The United States has embarked on a set of policies that will make the deficit chronic and damage U.S. economic performance if left unchanged.”