The Search for Stability (2006) by Ian Macfarlane is a book based on the 2006 Boyer lecture given by Macfarlane. Macfarlane was governor of the Reserve Bank of Australia (RBA) and is very well placed to provide an overview of macroeconomics and in particular the macroeconomics of Australia.
The book looks at the Golden Age of economic growth in the West from the end of WWII to the early 1970s. Macfarlane then looks at the failure of Keynsianism in the 1970s as Keynsian stimulus and the Bretton Woods system failed. The Phillips curve then broke. Macfarlane then looks at the changes of the 1970s and beyond in response to this failure. Reform and deregulation in Australia and the recession of 1990 are discussed in detail. The long expansion, which we are still in at the time of this review is then looked at. Unfortunately the failure of Monetarism in the US of the late 2000s is not in the scope of the book.
Macfarlane does mention the difficulty in dealing with asset price bubbles that reserve banks have to confront. He makes the point that a bubble is only clearly revealed to be a bubble when it bursts. It’s well worth reading the book to get a view of what a top practical economist thinks of the way the Australian economy works.
Macfarlane is a very smart guy and was also involved in the decisions that led to the independence of the RBA. His views on Australia’s economic changes are well worth reading for any Australian. The book is also pleasantly short.