The Making of Economic Policy

This classic work of political economy—one of the first books I read on the subject—begins with the striking observation that few countries follow the advice of economists in setting trade policy. Rather, this choice must be recognized as fundamentally political.

The author sets out an innovative formal framework that explains policy outcomes in terms of the transaction costs that arise in economic interactions (such as trade). This parsimonious yet powerful approach has significantly shaped my understanding of how economic policymaking works in practice.