Law and Macroeconomics: Legal Remedies to Recessions
Yair Listokin, the Shibley Family Professor of Law
(Harvard University Press)
After the economic crisis of 2008, private-sector spending took nearly a decade to recover. Yair Listokin believes we can respond more quickly to the next meltdown by reviving and refashioning a policy approach whose proven success is too rarely acknowledged. Harking back to New Deal regulatory agencies, Listokin proposes that we take seriously law’s ability to function as a macroeconomic tool, capable of stimulating demand when needed and relieving demand when it threatens to overheat economies.
Listokin looks at both positive and cautionary examples, going back to the New Deal and including the Keystone Pipeline, the bond-buying program unveiled by the European Central Bank at the nadir of the Eurozone crisis, the ongoing Greek crisis, and the experience of U.S. price controls in the 1970s. Listokin argues that under certain conditions the law offers a vital alternative to the monetary and fiscal policy tools that stretch the legitimacy of technocratic central banks near their breaking point.