The economics of regulation: Principles and institutions Alfred E. Kahn Cambridge,MA: MIT Press, 1988, Vol. I, 199 pp., Vol. II, 360 pp.

Conclusion Although Kahn's theorizing may be criticized in various ways, there is no doubt that he succeeds in arriving at the correct conclusion. Significant social benefits were to be attained through increasing competition, i.e., through deregulation, in all of the industries that are considered in his analysis. As chairman of the Civil Aeronautics Board, Kahn courageously and effectively acted to bring about the benefits from deregulation that he predicted would be forthcoming, for which this nation, if not the world, should be grateful.In this book, Kahn argues persuasively for increasing thecompetitive component in regulated industries in order to achieve greater economic efficiency. The message of the book endures, as is befitting the book's stature as a classic.The author expresses his appreciation to the Book Review Editor of this journal, the two anonymous referees, Janice A. Sears, Khy and Anne Alexis Daniel, and Tonya Katsoulis for their tolerance, encouragement, and suggestions. The author alone is responsible for any errors.     

The macroeconomics of self-fulfilling prophecies Roger E. A. Farmer MIT Press, 1993, 259 pp.

In The Macroeconomics of Self-Fulfilling Prophecies, Roger Farmer argues that dynamic general equilibrium models represent a useful means for organizing and representing one's understanding of macroeconomic behavior. Reasonably small departures from the standard assumptions of Arrow-Debreu economies can lead to equilibria with non-trivial roles for macroeconomic policy. Farmer demonstrates through theory and example the potential for multiple equilibria, which he suggests can be treated by better specification of agents' beliefs. The existence of multiple equilibria creates the possibility of bounded fluctuations due to animal spirits or "self-fulfilling prophecies." The author is indebted to Robert Holland and Chris Waller for comments on a previous draft.