Recent Posts
(Note: Page numbers referenced in posts prior to June 1, 2011 refer to 5th edition)
January 21
How to Reform the Tax System
Mankiw suggests four ideas to reform the tax system: 1. Broaden the tax base and lower tax rates. 2. Tax consumption, not income. 3. Tax bads (negative externalities), not goods. 4. Make the system as simple as possible.
Textbook References:
Pages 7-9 “Principle 4: People Respond to Incentives”Chapter 12 “The Design of the Tax System”
December 18
Is Modern Capitalism Sustainable?
Kenneth Rogoff agues that modern capitalism will continue to evolve and there are no viable alternative systems.
Textbook References:
Pages 10-11 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 532-536 “Economic Growth Around the World”
November 28
Richard Epstein on Inequality
Richard Epstein argues that more income redistribution would reduce the incentives to produce and consequently harm everyone.
Textbook References:
Pages 7-9 “Principle 4: People Respond to Incentives”Pages 10-11 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”
November 26
What Milton Friedman might say to the Occupy movement
Two short video clips show Milton Friedman explaining how free markets are the best cure for poverty. At the end of the clips are links to additional clips of Friedman and Hayek.
Textbook References:
Pages 7-9 “Principle 4: People Respond to Incentives”Pages 10-11 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”
Pages 13-14 “Principle 8: A Country's Standard of Living Depends on Its Ability to Produce Goods and Services”
November 23
Thanksgiving Shopping Advice
Steve Sexton argues that buying locally grown food is not better for the environment.
Textbook References:
Pages 10-11 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Chapter 3 “Interdependence and the Gains from Trade”
November 12
The Long, Sad History of Industrial Policy
Government attempts to foster alternative energy technologies have a long history of failure.
Textbook References:
Pages 10-11 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 201-202 “Technology Spillovers, Industrial Policy, and Patent Protection”
October 22
Fates to Avoid
Mankiw warns against the policy blunders made by Zimbabwe, Japan, Greece, and France.
Textbook References:
Pages 7-9 “Principle 4: People Respond to Incentives”Pages 238-240 “The Fiscal Challenge Ahead”
Pages 568-572 “Policy 3: Government Budget Deficits and Surpluses”
Page 654 “Hyperinflation in Zimbabwe”
Page 662 “Inflation Is Bad, But Deflation May Be Worse”
September 30
Principle #4 in Action
Social Security Administration managers told their workers to slow down for a week because of perverse incentives in managers' contracts.
Textbook References:
Pages 7-9 “Principle 4: People Respond to Incentives”September 24
A Conversation with Robert Lucas
Robert Lucas talks about the effects of high marginal tax rates on growth, about the recent financial crisis, and about rational expectations.
Textbook References:
Pages 7-9 “Principle 4: People Respond to Incentives”Page 561 “Financial Crises”
Pages 631-632 “Bank Capital, Leverage, and the Financial Crisis of 2008-2009”
Pages 745-748 “The Recession of 2008-2009”
Pages 789-795 “Shifts in the Phillips Curve: The Role of Expectations”
September 14
Hayek and Keynes
An Excerpt from Silvia Nasar's book The Grand Pursuit: The Story of Economic Genius discusses Keynes and Hayek.
Textbook References:
Pages 10-11 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 11-13 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Page 342 “Galbraith versus Hayek”
Page 751 “The Origin of the Model of Aggregate Demand and Aggregate Supply”
Pages 773-779 “Using Policy To Stabilize The Economy”
September 10
A Plan for Zero Unemployment
Steve Allen suggests a novel plan to eliminate unemployment.
Textbook References:
Pages 7-9 “Principle 4: People Respond to Incentives”Pages 604-605 “How Much Do the Unemployed Respond to Incentives?”
September 10
Fixing Our Sick Economy
Two essays, one by Mankiw and the other by Robert Barro, address the causes of the weak recovery, and suggest possible solutions.
Textbook References:
Pages 7-9 “Principle 4: People Respond to Incentives”Pages 250-251 “Who Pays the Corporate Income Tax?”
Pages 250-251 “The Value-Added Tax”
Page 568 “Policy 2: Investment Incentives”
Pages 745-748 “The Recession of 2008-2009”
Pages 767-773 “How Fiscal Policy Influences Aggregate Demand”
September 4
Something for Nothing
Mankiw recommends a novel about economics
Textbook References:
Inside Back Cover “Suggestions for Summer Reading”August 31
The Economics of Disaster Relief
Paul Krugman and Steve Landsburg disagree about how to pay for Federal disaster aid.
Textbook References:
Pages 4-5 “Principle 1: People Face Trade-offs”Page 447 “Utility: An Alternative Way to Describe Preferences and Optimization”
August 30
Glaeser on Mortgage Modification
A recent proposal would allow people with government-backed mortgages to refinance them at today's lower interest rates. Proponents claim it is a cost-free way to boost the economy. Edward Glaeser argues that it will not boost the economy and it will cost taxpayers a lot of money.
Textbook References:
Pages 4-5 “Principle 1: People Face Trade-offs”Pages 11-13 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Pages 745-748 “The Recession of 2008-2009”
Pages 767-773 “How Fiscal Policy Influences Aggregate Demand”
August 27
Auctioning Public Parking Spaces
A new iPhone app has created a market linking people looking for a parking space to people leaving a parking space.
Textbook References:
Pages 10-11 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Page 538 “Technological Knowledge”
August 24
Jeff Miron on Capitalism
Jeff Miron discusses three common misconceptions about capitalism.
Textbook References:
Pages 7-9 “Principle 4: People Respond to Incentives”Pages10-11 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”
Pages 13-14 “Principle 8: A Country's Standard of Living Depends on Its Ability to Produce Goods and Services”
Chapter 6 “Supply, Demand, and Government Policies”
July 25
The Light Bulb Ban
Is the ban on incandescent bulbs a good idea?
Textbook References:
Pages10-11 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 11-13 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Page 203 “Command-and-control Policies: Regulation”
July 12
GSE Fact of the Day
By 2008 half of all mortgages were excessively risky, and government sponsored enterprises such as Fannie Mae owned 12 million out of 27 million such loans.
Textbook References:
Pages 11-13 “Principle 7: Governments Can Sometimes Improve Market Outcomes”Page 561 “Financial Crises”
Pages 745-748 “The Recession of 2008-2009”
July 1
Housing Tax Subsidies
The preferential tax treatment of owner-occupied housing distorts capital allocation in the U.S. economy.
Textbook References:
Pages 6-7 “Principle 3: Rational People Think at the Margin”Pages 7-9 “Principle 4: People Respond to Incentives”
Pages 745-748 “The Recession of 2008-2009”
June 26
How To Waste $600 Million
Congress spent $600 million to mint coins that nobody wants.
Textbook References:
Pages 11-13 “Principle 7: Governments Can Sometimes Improve Market Outcomes”Pages 623-625 “Money in the U.S. Economy”
June 9
Rajan on Monetary Policy
Raghuram Rajan discusses why extremely low interest rates have not boosted demand. He also notes that the Fed's policy punishes savers.
Textbook References:
Pages 7-9 “Principle 4: People Respond to Incentives”Pages 644-656 “The Classical Theory of Inflation”
Pages 758-767 “How Monetary Policy Influences Aggregate Demand”
June 2
Lucas on the Great Recession
Robert Lucas discusses the recent recession in an historical context. He worries that the government is now doing too much.
Textbook References:
Pages10-11 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 11-13 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Pages 744-745 “Two Big Shifts in Aggregate Demand: The Great Depression and World War II”
Pages 745-748 “The Recession of 2008-2009”
Pages 758-767 “How Monetary Policy Influences Aggregate Demand”
Pages 767-773 “How Fiscal Policy Influences Aggregate Demand”
Pages 773-779 “Using Policy To Stabilize The Economy”
May 17
Google Plays the Yield Curve
Why is Google borrowing money in the bond market when it has $37 billion in cash?
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 576-577 “The Bond Market”
May 13
Evaluating the ARRA
Tom Conley and Bill Dupor argue that the recent fiscal stimulus (the American Recovery and Reinvestment Act) actually destroyed more jobs than it saved.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 560-572 “Economic Growth and Public Policy”
Page 750 “The 2008 Fiscal Stimulus”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-797 “Using Policy To Stabilize The Economy”
May 10
Libertarian Paradise
A short video satirizes extreme Libertarianism.
Textbook References:
Pages 8-10 “Principle 6: Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Pages 444-445 “Libertarianism”
May 5
If Supermarkets Were Like Public Schools
Donald Boudreaux describes how awful supermarkets would be if they were run the same way as public schools.
Textbook References:
Pages 8-10 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 248-249 “State and Local Government”
April 28
Keynes vs. Hayek Round Two
The views of Keynes and Hayek are dramatized in a music video.
Textbook References:
Pages 8-10 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-797 “Using Policy To Stabilize The Economy”
Pages 830-832 “Should Monetary and Fiscal Policymakers Try To Stabilize The Economy?”
April 21
Price Controls for Limo Rides
A short video demonstrates the harm caused by a price floor.
Textbook References:
Pages 8-10 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 118-121 “How Price Floors Affect Market Outcomes”
April 13
Two Visions for Medicare
Mankiw is pleased that the long-run fiscal health of the nation is now taken seriously by both parties. Yet there are fundamental philosophical differences between the two sides.
Textbook References:
Pages 8-10 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Pages 246-248 “The Fiscal Challenge Ahead”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
March 19
Some Commentary
Scott Summers, Paul Krugman, and Greg Ip comment on the paper Mankiw posted on March 17.
Textbook References:
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”Pages 778-787 “How Monetary Policy Influences Aggregate Demand”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-797 “Using Policy To Stabilize The Economy”
March 17
Optimal Stabilization Policy
A research paper by Mankiw and Matthew Weinzierl look at optimal monetary and fiscal policy.
Textbook References:
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”Pages 778-787 “How Monetary Policy Influences Aggregate Demand”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-797 “Using Policy To Stabilize The Economy”
February 27
Empiricists versus Theorists
Christina Romer argues that when inflation is low and the unemployment rate is high, there is little danger of inflation. She says that the Fed could engage in more aggressive quantitative easing, but seems to be overly worried about inflation expectations.
Textbook References:
Pages 14-15 “Principle 10: Society Faces a Short-Run Trade-off between Inflation and Unemployment”Pages 664-676 “The Classical Theory of Inflation”
Pages 809-810 “The Short-Run Phillips Curve”
February 23
Tax Fact of the Day
The corporate tax rate on new investment in the U.S. is the highest in the OECD.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Page 257 “Who Pays the Corporate Income Tax?”
February 22
Tax Fact of the Day
From an estate tax perspective, New Jersey is the worst place to die in the U.S.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 248-249 “State and Local Government”
February 12
Jobs, Jobs, Jobs
Should the government embrace anything that creates jobs, or should it consider the long-run value of its projects?
Textbook References:
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”Pages 25-28 “Our Second Model: The Production Possibilities Frontier”
Page 742 “Fact 3: As Output Falls, Unemployment Rises”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
February 9
Incentivizing Customers to Monitor Workers
A sign in South Africa offers customers a reward if an employee fails to provide a correct receipt.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 484-485 “Hidden Actions: Principals, Agents, and Moral Hazard”
January 31
Would you call Gary Becker for marital advice?
Paula Szuchman argues that economics offers insights into successful marriages.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 52-53 “Specialization and Trade”
Pages 54-57 “Comparative Advantage: The Driving Force of Specialization”
January 2
Natural Resources and the Limits to Growth
John Tierny explains how high oil prices encourage more exploration, which in turn reduce energy prices.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 300-306 “The Supply Curve in Competitive Markets”
January 1
Letter to the President
Mankiw offers advice to President Obama on how to work with Republicans.
Textbook References:
Page 6 “Principle 3: Rational People Think at the Margin”Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 246-248 “The Fiscal Challenge Ahead”
Pages 442-445 “The Political Economy of Income Redistribution”
Pages 563-565 “Education”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
December 29
Voting with Your Feet II
Edward Glaeser argues that states with fewer restrictions on building grow faster.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”December 24
Voting with Your Feet
Michael Barone reports that the states that do not have income taxes grew faster than other states.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”December 24
Economists on Ebenezer Scrooge
Three economists discuss the virtues of Scrooge, and a fourth claims there is a humbug industry.
Textbook References:
Pages 4-5 “Principle 1: People Face Trade-offs”Pages 8-10 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Page 560 “Saving and Investment”
Pages 584-585 “Supply and Demand for Loanable Funds”
December 19
The Charitable Deduction
Richard Thaler argues that there is little reason to allow a tax deduction for charitable giving. Mankiw disagrees.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 34-36 “Why Economists Disagree”
Pages 246-248 “The Fiscal Challenge Ahead”
December 16
The Economics of Seinfeld
Clips from the TV show "Seinfeld" are used to illustrate a variety of economic concepts.
Textbook References:
Pages 4-5 “Principle 1: People Face Trade-offs”Pages 5-6 “Principle 2: The Cost of Something is What You Give Up to Get It”
Page 6 “Principle 3: Rational People Think at the Margin”
Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Chapter 3 “Interdependence and the Gains from Trade”
Pages 67-72 “Demand”
Pages 73-76 “Supply”
Pages 144-153 “Controls on Prices”
Chapter 10 “Externalities”
Pages 226-227 “The Different Kinds of Goods”
Pages 227-232 “Public Goods”
Pages 230-232 “The Difficult Job of Cost-Benefit Analysis”
Pages 232-237 “Common Resources”
Pages 274-275 “Fixed and Variable Costs”
Page 281 “Economies and Diseconomies of Scale”
Pages 312-315 “Why Monopolies Arise”
Chapter 16 “Monopolistic Competition”
Pages 370-378 “The Economics of Cooperation”
Pages 399-400 “The Supply of Labor”
Page 414 “Compensating Differentials”
Page 442 “Utility”
Page 465 “Utility: An Alternative Way to Describe Preferences and Optimization”
Pages 484-489 “Asymmetric Information”
Pages 556-558 “Technological Knowledge”
Pages 578-580 “Financial Intermediaries”
Pages 598-600 “Present Value: Measuring the Time Value of Money”
Pages 603-604 “Diversification of Firm-Specific Risk”
Pages 606-609 “The Efficient Market Hypothesis”
Pages 630-631 “The Economics of Unions”
Pages 703-705 “The Prices for International Transactions: Real and Nominal Exchange Rates”
Pages 707-708 “The Basic Logic of Purchasing Power Parity”
Page 833 “Time Inconsistency”
November 16
Hubbard on the Bowles-Simpson Tax Plan
Glenn Hubbard likes the idea of broadening the tax base so as to reduce tax rates.
Textbook References:
Page 6 “Principle 3: Rational People Think at the Margin”Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 160-164 “The Deadweight Loss of Taxation”
Pages 246-248 “The Fiscal Challenge Ahead”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
November 11
The Simpson-Bowles Social Security Plan
Charles Blahous examines the Simpson-Bowles plan for making Social Security financially sound.
Textbook References:
Pages 4-5 “Principle 1: People Face Trade-offs”Pages 246-248 “The Fiscal Challenge Ahead”
Pages 842-843 “Dealing with Deficits”
November 7
Thaler on the Estate Tax
Richard Thaler argues in favor of retaining the estate tax. Greg Mankiw makes the opposite case.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 160-164 “The Deadweight Loss of Taxation”
Pages 256-257 “Tax Incidence and Tax Equity”
October 29
A Rolling Stone gathers no taxes
The Rolling Stones make decisions on where to work and live based on the tax laws.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 167-171 “Deadweight Loss And Tax Revenue As Taxes Vary”
October 26
John Cochrane on Tim Geithner
John Cochrane discusses Tim Geithner's plan to reduce "external imbalances." Cochrane suggests that Geithner and the IMF intend to engage in a type of global central planning that is bound to fail.
Textbook References:
Page 8 “Principle 5: Trade Can Make Everyone Better Off”Pages 8-10 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Pages 692-702 “The International Flows of Goods and Capital”
Pages 707-711 “A First Theory of Exchange-Rate Determination: Purchasing Power Parity”
Chapter 32 “A Macroeconomic Theory of the Open Economy”
October 18
Hear Me Squawk
Mankiw discusses a variety of issues including marginal tax rates, long-term deficits, and ways to stimulate the economy.
Textbook References:
Page 6 “Principle 3: Rational People Think at the Margin”Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 160-164 “The Deadweight Loss of Taxation”
Pages 246-248 “The Fiscal Challenge Ahead”
Page 399 “The Trade-off Between Work and Leisure”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 749-751 “Why the Aggregate-Demand Curve Might Shift”
Page 750 “The 2008 Fiscal Stimulus”
Pages 778-787 “How Monetary Policy Influences Aggregate Demand”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-797 “Using Policy To Stabilize The Economy”
Pages 842-843 “Dealing with Deficits”
October 12
Response to Queries
Mankiw responds to questions about his New York Times article that was posted on his blog on October 10.
Textbook References:
Page 6 “Principle 3: Rational People Think at the Margin”Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 160-164 “The Deadweight Loss of Taxation”
Page 399 “The Trade-off Between Work and Leisure”
October 10
My Marginal Tax Rate
Mankiw explains how the marginal tax rate affects his decisions about how much to work.
Textbook References:
Page 6 “Principle 3: Rational People Think at the Margin”Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 160-164 “The Deadweight Loss of Taxation”
Page 399 “The Trade-off Between Work and Leisure”
September 16
The Tourist Platter of Economics
Nick Rowe explains why Mankiw's Ten Principles is akin to the Tourist Platter in a Jamaican Restaurant.
Textbook References:
Chapter 1 “Ten Principles Of Economics”September 15
How much would the President raise the top rate?
Alan Viard argues that while the marginal tax rate on top earners will rise to 39.6 percent, the elimination of itemized deductions and increases in the Medicare tax will make the effective rate 44.6 percent by 2013.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 164-167 “The Determinants Of The Deadweight Loss”
September 13
Viard on Marginal Tax Rates
Alan Viard argues in favor of keeping the Bush tax cuts because they will promote growth.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Page 560 “Saving and Investment”
Page 586 “Policy 1: Saving Incentives”
Pages 587-589 “Policy 2: Investment Incentives”
September 11
Miron on the Bush Tax Cuts
Jeffrey Miron argues in favor of making the Bush tax cuts permanent.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Page 560 “Saving and Investment”
Page 586 “Policy 1: Saving Incentives”
Pages 587-589 “Policy 2: Investment Incentives”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
September 10
A Dastardly Clever Scheme
Some universities in New York City are buying rent-controlled apartment buildings. They then rent to faculty at the rent-controlled price, which allows them to reduce faculty wages.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 117-118 “Rent Control In The Short Run And The Long Run”
September 7
A Small Step in the Right Direction
The Obama administration is proposing that, for tax purposes, investment expenditures be expensed as they occur as opposed to depreciated over time. That should have a small but positive impact on investment.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-797 “Using Policy To Stabilize The Economy”
September 4
Should the Bush Tax Cuts be Extended?
Most economists recommend that the Bush tax cuts be extended.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-797 “Using Policy To Stabilize The Economy”
September 2
Cash for Clunkers
Jeff Jacoby argues that the Car Allowance Rebate System (Cash for Clunkers) drove up the price of used cars by over ten percent. That's because it required the destruction of cars that were traded. It also did not have an appreciable effect on carbon emissions.
Textbook References:
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”Pages 80-81 “Example: A Change in Market Equilibrium Due to a Shift in Supply”
August 7
A Wise Passage
Paul Seabright suggests that politicians have less influence over the economy than commonly believed.
Textbook References:
Pages 8-10 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
July 6
An Interview with Bob Hall
A wide-ranging interview with Robert Hall touches on a variety of topics.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 566-567 “Property Rights and Political Stability”
Pages 604-605 “The Trade-Off Between Risk and Return”
Pages 654-655 “The Financial Crisis of 2008”
Pages 740-742 “Three Key Facts About Economic Fluctuations”
Pages 778-787 “How Monetary Policy Influences Aggregate Demand”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-797 “Using Policy To Stabilize The Economy”
June 5
Soda and Other Sins
Mankiw considers the question of whether decisions that do not impose external costs on others may impose external costs on future versions of ourselves. He also asks us if we "trust the government enough to appoint it your guardian?"
Textbook References:
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”Pages 204-209 “Externalities and Market Inefficiency”
Pages 210-212 “Market-Based Policy 1: Corrective Taxes and Subsidies”
Page 251 “Should Income or Consumption Be Taxed?”
June 1
Lessons from the BP Spill
Kenneth Rogoff argues that "when there is huge uncertainty about catastrophic risks, it is dangerous to rely too much on the price mechanism to get incentives right." But he also warns that we do not know "how to adapt regulation over time to complex systems with constantly evolving risks."
Textbook References:
Pages 8-10 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Chapter 10 “Externalities”
May 28
Fama on Financial Reform
There is a video of an interview with Eugene Fama. He discusses the recent financial crisis and suggested reforms.
Textbook References:
Pages 8-10 “Principle 6: Markets Are Usually A Good Way To Organize Economic Activity”Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Pages 606-610 “Asset Valuation”
Pages 654-655 “The Financial Crisis of 2008”
Pages 821-822 “Bernanke's Challenges”
May 11
Opportunity Cost
Writer Neil Gaiman charges very large speaking fees. He does so because the opportunity cost of his time is so high.
Textbook References:
Pages 5-6 “Principle 2: The Cost of Something is What You Give Up to Get It”Page 6 “Principle 3: Rational People Think at the Margin”
May 5
In Defense of Price Gouging
Should vendors of bottled water raise their prices when tap water is no longer clean enough to drink?
Textbook References:
Pages 4-5 “Principle 1: People Face Trade-offs”Pages 114-118 “How Price Ceilings Affect Market Outcomes”