Elgar original reference
Edited by Francesco Forte, Ram Mudambi and Pietro Maria Navarra
This book of alternative public economics deals with alternative views of current topics and with new or neglected methodologies as well as with new topics. It is divided into five sections: 'Revisiting the theoretical foundations'; 'Revisiting the values'; 'Beyond "rationalistic" rational choices'; 'Optimal government and government failure'; and 'Public economics of public bads'. The first section on 'Revisiting the theoretical foundations' consists of five chapters on the relevance of the Austrian views, the Marxian view, the supply side economy, the Keynesian orthodoxy and the new school of the budget balance. Pascal Salin in his chapter on 'The neglected importance of Austrian thought in public economics' explains the reasons why, according to the Austrian view, both the Keynesian and the monetary theories of the crisis and related policies are untenable. The crisis is caused by disequilibrating fiscal and monetary policies. Recovering from the crisis implies letting markets make the necessary adjustments and therefore avoiding increased public deficits and introducing more expansionary monetary policies or greater regulation of markets. The Austrian approach differs not only from the Keynesian but also from the monetarist viewpoint because it focuses on a micro rather than on a macroeconomic approach. The pathology of the boom not only consists in an excessive increase of the money supply, it is also due to its wrong directions caused by the abnormal reduction of the interest rate below its natural rate.