Praise for William A. Barnett’s Book, Getting It Wrong
“Leading up to the financial
crisis, investors displayed an incorrect assessment of systemic risk
and significantly increased their leverage and risk-taking activities.
Barnett documents that better Federal Reserve data could have signaled
the error in that view. This error led to the credit-driven, asset-price
bubble in the U.S. housing market. He also has shown that as a result
of measurement errors, monetary policy was damaged, with tragic consequences.
He is the world’s foremost authority in the study of monetary and
financial aggregation using index number and aggregation theory.”
James J. Heckman, University of
Chicago and University College Dublin, Nobel Laureate in Economics
“Getting It Wrong
is a gripping combination of colorful mini-biographies, memoir from
a close witness to our financial troubles, and well-argued case for
better monetary statistics. This book first makes you care about
monetary aggregation and then masterfully shows you how it should be
done.”
Julio J. Rotemberg, William Ziegler Professor of Business Administration,
Harvard Business School
“I would never fly in
an airplane designed by an economist. Unfortunately, I have to live
in an economy where policymakers listen to economists. Professor Barnett,
a former rocket scientist, shows clearly how important it is that economists
pay attention to details and teaches economists how to do far better.
Until economists absorb these lessons, the policymakers they advise
will be flying blind. ”
Kenneth L. Judd, Hoover Institution, Stanford University
“Getting It Wrong
is a magisterial treatment on the measurement of monetary aggregates
by the world’s foremost authority. Barnett informs us about
how to get the measurements right. He also shows us how the Federal
Reserve gets them wrong. Indeed, if Paul Volcker’s dashboard
would have displayed Barnett’s monetary metrics, the severe 1981-82
recession might never have occurred. Alas, the Fed’s money supply
gauges remain in need of an overhaul by Barnett, a monetary master craftsman.”
Steve H. Hanke, Professor of Applied Economics, Johns Hopkins University,
and Forbes Magazine Columnist
“You would think that
by now so much has been written about the causes of the 2007-08 financial
crisis that nothing else needs to be said. This book persuasively explains
why any such assumption would be wrong. It turns out that mis-measured
money is another culprit that has not been given its due. Professor
Barnett, in this remarkable book, corrects this oversight. Economists,
public policy makers, and informed students of monetary policy will
never think about the subject the same way after reading this path-breaking
book. ”
Robert E. Litan, Kauffman Foundation
Vice President for Research and Policy and Brookings Institution Senior
Fellow
“Getting It Wrong
gives masterful insights into causes of the financial crisis beyond
simplistic notions of "greed" or "failure of theory."
This book shows how faulty measures led to incorrect risk assessments
and failure of policymakers, including the Fed. Using flawed gauges,
policymakers promoted notions of a "Great Moderation" with
reduced systemic risks and thereby ended up steering markets to crisis.
William Barnett, a pioneer in economic measurement theory and practice,
shows us how to do it right.”
Jeffrey M. Wrase,
Professional Congressional Staff Member
“This book is a tour
de force. Barnett argues that theoreticians have provided the tools
for practitioners to deliver sound macroeconomic policies. The problem
is that the Fed is not producing data based on best-practice principles,
thereby distorting the information set available to practitioners and
leading to misguided policies, misperceptions about systemic risk, and
the crisis that erupted in 2008. Barnett navigates effortlessly through
the interconnections between theory and policy. The result is a compelling
and fascinating study of “what went wrong,” and the making of a
modern classic in economics.”
George S. Tavlas, Director General, Bank of Greece; Alternate Member,
ECB Governing Council; and Editor, Open Economies Review
“Whether you are
a Wall Street professional, an academic economist, or simply interested
in the Fed, Getting It Wrong is essential. Professor Barnett
weaves personal vignettes into seminal monetary events, creating a riveting
read. For the quant, Professor Barnett – an eminent economic scientist
– details his path-breaking advances in monetary and financial measurement.
With interest rates near record lows, Barnett's monetary theory and
tools are needed more than ever for officials, investors, and the public.”
Lawrence Goodman, President,
Center for Financial Stability, Inc.
“This riveting read
from William Barnett combines detailed and very deep knowledge of monetary
history and precise economic theory, to provide a compelling personal
view of the crisis in both the financial markets and in macroeconomic/monetary
policy. Barnett is the leader in devising monetary aggregates, and he
makes a strong case against alternative ‘simple-sum’ aggregators
that the Fed and others employ. His attribution of partial blame to
bad data and bad aggregates for the ‘Great Recession’ is novel,
has merit, and is strongly argued. Some may argue that this too is a
‘symptom’ rather than a cause, of recurring ‘cycles’
in our type of economy, but Barnett is able to masterfully draw on his
vast knowledge of many fields and his unusual command of current cultural
and media influences to infuse his discussion of very deep theoretical
and policy debates, making the book very readable and useful to non-economists.”
Esfandiar Maasoumi, Arts & Sciences Distinguished Professor,
Emory University, and Editor of Econometric Reviews
“In this masterful book,
William Barnett provides a compelling explanation of what went wrong
in the years leading up to the worst financial crisis since the Great
Depression, as well as a broader history of the last half-century of
Federal Reserve policymaking. He presents clear and intuitive arguments
to support the message that runs through his most important scholarly
work—that measures of the money supply, when properly constructed,
accurately and reliably describe what monetary policy is actually doing—using
a separate section to fill in the details for more technically-inclined
readers.”
Peter Ireland, Murray and Monti
Professor of Economics, Boston College
More about Getting It Wrong.
