In this book Edmond Malinvaud focuses on the theory of economic policy. Drawing on his experience as a macroeconomic theorist, policy adviser, and government statistician, he considers the problems associated with diagnosing unemployment, paying particular attention to the role of forecasting. The analytical framework and the policy environment in which forecasting occurs are also highlighted. The book begins by examining the role of economists as theorists and expert advisers. The methodological choices that expert advisers confront, and the political context in which they operate, are carefully set out, as is the case for the implementation of active macroeconomic policies in modern market economies. In this context the importance of feedback effects and the effect of public policies on individual behaviour are both considered. Professor Malinvaud has devoted a great deal of his professional career to diagnosing the macroeconomic causes of unemployment. In the final chapters of the book he outlines the difficulties forecasters face in distinguishing between frictional and disequilibrium unemployment. The impact of changes in the demand for labour on medium-term unemployment trends are assessed by focusing in particular on the effect of real wages on investment and employment.