A leading expert on economic policy makes the convincing case for the foundation, coordination and reach of government action through economic policy.

Government interventions in market failures can encounter objections from those who doubt their efficacy. Acocella, a leading expert on economic policy, counters these unfounded criticisms, making the convincing case for the foundation, coordination and reach of government action through economic policy. Arguing for the governmental potential to devise democratic, fair and effective institutions and policies, this book also demonstrates the validity of the principles outlined by Frisch and Tinbergen, amongst others, for controlling the economy, in a strategic context, equivalent to the rational expectations assumption. Demonstrating how unconventional monetary policies (such as macro-prudential regulation, new fiscal rules, and new forms of international policy coordination) can offer an effective response to the multiplicity of current economic issues, the recent financial crisis arguably indicates that economic policy must once again take centre stage as the applied complement to mainstream economic theory.