VICTORA. CANTO AND ARTHUR B. LAFFER
Most economics books that focus on the policy implications of government actions analyze those implications in the context of whether they offer the appropriate solution to the problem in question. Seldom does the analysis consider the practical implications and strategies that are vital to business managers, financial analysts, and investors in general.
In this book we attempt to take that extra step. We try to illustrate how incentives and disincentives affect economic behavior and the performance of the economy. In addition, we present a top-down approach that shows the reader how to trace the impact of government policies through the economy and thereby discover investment implications that will be helpful to investors and policymakers alike, from portfolio managers and financial analysts to corporate strategists and government officials.
The first section of the book focuses on monetary issues. Since the inflation potential of the economy depends, in large part, on the organization of the monetary market, particular attention must be paid to the likely intervention mechanisms, as well as to discussing the relevant monetary aggregate.
The first chapter discusses a common macroeconomic view that the press has attributed to some members of the Fed. The view postulates that sustained increases in overall economic activity eventually strain capacity and lead to