It's funny that no one mentioned the new book by Akerlof and Schiller during yesterday's debate on macroeconomics. Animal spirits is discussed in this week's economics focus and i really feel like reading it...The Economist write that "Macroeconomists need to apply some new lessons and relearn some old ones!"
Five classes of spririts to take into accout
"Akerlof and Shiller spin five classes of spirit. First and closest to the original is confidence. This goes beyond a rational estimate of next week’s share price, or the price in ten years’ time of what a new factory might produce. And confidence, or the lack of it, builds on itself—in a way similar to Keynes’s multiplier, but defying easy quantification. Second is fairness. Even if economists know that fairness matters, too little of their work reflects it [as I had explained here] . Third is corruption, or bad faith: what explains a Charles Ponzi or an Enron? Fourth is money illusion: economists have come to assume that people see through inflation, but they don’t, especially when it is low. The fifth they call “stories”. Economists are loth to suppose that people are irrational enough to latch onto plausible tales and forecasts—for example, that house prices will never go down. So their models won’t spot the consequences of misplaced belief until it is too late."
Does anybody think this is not gonna be a good book?