How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism By George A. Akerlof and Robert J. Shiller | 230 pages |
| Princeton University Press | Rs. 948 | ISBN 9780691150901 | Turnitin – 4% | Post the great depression of 1930’s, and its impact on all the nations worldwide, the economists with their models and studies had assured us that such a situation would never arise in the United States. They knew that if the economic activity drops, they Federal Reserve or the central bank would lower down the interest rates, which would stimulate the consumers to increase the borrowings and in turn their spending would increase which would fuel the production and thus revive the economic activity of the country. However, when recession started showing its ugly face in September 2008, economists from the academic and government areas were taken by surprise and were not clearly prepared to take it under control. Even by mid 2009, they were confused and could not agree upon a plan of action to recover from it. The recession of 2007-09 posed multiple questions in front of the government and the economists of the world: What went wrong? What needs to be done? Are we on the right tract of progress and development? Can we expect something similar in near future? What will be the repercussions of the current actions? In the book ‘Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism’, the authors George Akerlof and Robert Shiller, put forth the point that ‘animal spirits’ – the human emotions that drive consumer confidence could be the key to the issue. John Maynard Keynes coined the term ‘animal spirits’ to describe a range of emotions, human impulses, enthusiasms and misperceptions that drive economies. In this book, the authors reflect that the economists who ignored the animal spirits part of the Keynesian theory are at the centre of the cause of the great depression. They emphasize the fact...
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