How to evaluate the book Stay Out of it by Lan Xiaohuan, a teacher from Fudan University?

This is a bestseller about China's political economy.

Ordinary readers may underestimate the economic and financial knowledge needed to understand the contents of this book. Because for professional readers, every sentence in the book will correspond to the books and articles read before, while the general readers may be superficial. But this does not mean that this book is not an excellent popular reading. This is a comprehensive and logical book, which reflects the economic problems of China around 1994.

Professional readers associate information economics and game theory knowledge. The information complexity and incentive compatibility in the first chapter are the contents of information economics, also known as incentive theory or contract theory.

Early classical papers can be traced back to the lemon market in akerlof. In order to deal with the market failure caused by all kinds of information asymmetry, the client should negotiate the contract with the agent to increase efficiency, reveal the true type of the agent and supervise it.

This has something to do with game theory. Zhang's Game Theory and Information Economics was very popular in the past, and the book was also very good. After that, various research methods and models took root in domestic sociology and domestic political science after reducing the difficulty. Readers can read Zhao Chen's Economics of Information and Incentive, which is the best introductory book I can find and explains the display principle very well (which is very important for understanding what incentive compatibility is).

Professional readers associate economic geography knowledge with economic growth theory. Words such as "learning effect", "scale economy", "agglomeration effect" and "public service supply" run through the book (including port and transportation costs, etc. ), these are the star words of geo-economics (also known as agglomeration economics, urban economics or new international trade theory).

Non-economics undergraduates don't know much about this direction because the sum of economies of scale combines imperfect competition, and there is no good unified model in economics to show these two aspects at the same time. Other models use too much mathematics and are too complicated (unless they are deliberately simplified). But in recent years, this direction has been a hot topic in academic circles.

If you are interested, you can look at the economic geography of orange peel published by the National People's Congress. If you are not afraid of mathematics, you can read Agglomeration Economics published by a Japanese (I haven't read it, it is said to be good). In addition, the economic growth theory in general textbooks either only involves Solow model or simple two-stage discrete Ramsey model, or uses dynamic optimization and differential equation tools like Barrow's economic growth.

Introduction to Huangpi Economic Growth by Gezhi Publishing House is the only economic growth model in the market that deduces endogenous technological progress by simple microscopic methods. Romer and Schumpeter model.

We should also have a certain understanding of financial debt crisis (banking crisis, liquidity crisis, inherent instability of financial market, formation of asset price bubble and financial contagion caused by cross-deposit, all of which are closely related to debt).

This is very helpful for understanding the sixth chapter of this book. According to the previous statistical description, before 2008, indirect financing still accounted for a large proportion in the financing structure of developed countries, and the types of financial products held were also limited. This shows that the crisis of a single bank or even the banking industry is closely related to the financial crisis.

In order to realize the optimal allocation of resources in Harold's blue economy, banks forced to operate in the form of maturity mismatch will easily become unstable when faced with creditors' withdrawal requirements.

The behavior of banks selling long-term assets to pay off debts (here related to incomplete contract theory) will make banks with greater risks sell more long-term assets, thus causing asset prices to drop rapidly. This is a simple example of bank crisis market transmission.

Friedman's History of American Currency also contains examples of bank runs directly caused by economic recession and falling asset prices. Related books can be read in the back part of Xu Gao's Twenty-five Lectures on Financial Economics, and more professional books can be read Understanding the Financial Crisis written by two professors in binzhou university.

Of course, there must be macro and micro foundations, especially the macro part. Don't look at the is-lm shift curve. Modern macroeconomics needs micro-foundation. Without micro-foundation, macroeconomics can hardly conform to the modern mainstream economic paradigm, nor can it cultivate economic intuition and become a tool for curve shifting. I can't pass Lucas' criticism yet.

For example, if there is no micro-foundation and dichotomy between real economy and monetary economy, some professional readers and most public readers may think, "The book says that China's surplus savings have made China a trade exporter. Although the numerical changes can be understood from the formula of S-I=NX, China's investment is not so much. Why can you leave so much savings for Americans? "

Or "The United States/Japan imports China products, gives us USD/JPY, and then … and so on, why not RMB? ... ok, give it to the dollar, and then ... no, it's contradictory. No, I will understand imported goods ... dollars ... RMB "and successfully bypass myself.

This actually involves the dichotomy between Gao Hong's real economy and monetary economy. "Money is only a veil of the real economy". Macroeconomics does not need to introduce monetary factors at the beginning of its derivation, so the macro real economy assumes that China and the United States exchange homogeneous consumer goods (including homogeneous consumer goods with investment income).

Only after the introduction of currency (macro-monetary economy) and the attachment of US dollar and RMB to homogeneous consumer goods will there be a real price phenomenon (inflation exchange rate or something). Some sentences in the book, the views under entity and currency are mixed, and there is no distinction between contexts. I imagine a homogeneous consumer product and then walk around naturally.

In fact, you have found that one of the characteristics of economic models is that when you make assumptions, you can only see the interpretation of what you assume. This is similar to Kuhn's view that science is like a crossword puzzle.

The real macroeconomic model without introducing money can't see the influence of monetary factors on the economy; A supply curve model that can not see the price right of court meeting, but can see the sticky price brought by long-term contract. When you make economic model assumptions, like other sciences, its innovation is reduced.

Because you have a basic expectation of what kind of views it can deduce. Before cavendish measured G, he knew that G was a very small number through theory and some experiments. Crossword A begins with four known blanks (theories). You may fill in apples, but you will definitely not consider positive economics.

What I said later seems to be beside the point, but it is actually spitting out too many misunderstandings about economic models and assumptions by some people. I read a lot of comments from public readers in Douban. Some people say that the author is a "scholar who misleads the country", that all economic theories are nonsense, and that madness attacks economic assumptions from facts and ethics (for example, if there is no rational person, everything will be black into a rational person and everyone will be finished).

And if you believe in anti-realism, credit economics must need consensus hypothesis for scientific research, and take a fancy to the explanatory power and predictive power of model theory, then you can avoid these invalid arguments from facts and ethics, believe that the basic research paradigm of "Western Economics" is still useful in our country, and believe in the commonness and individuality of our country, then you will respect the explanations and inferences of some model theories in this book.

If a good economist knows the limitations and "necessary tension" of economics best (as Cohen said, there are some small disharmonies in scientific theory), then he can also see what economics can see most and what economics can't see at all; What economics can best be said and what economics cannot be said.