Recent Posts
(Note: Page numbers referenced in posts prior to June 1, 2011 refer to 5th edition)
January 30
How much would a Buffet Tax raise?
At best, a 30 percent minimum tax on incomes above $1 million would raise $700 billion over 10 years. That is far less than what is needed to eliminate the budget deficit.
Textbook References:
Chapter 12 “The Design of the Tax System”January 27
Support from Anonymous
Does Warren Buffet really pay a lower tax rate than his secretary?
Textbook References:
Pages 249-251 “Tax Incidence and Tax Equity”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”
January 19
Five Observations about Progressivity
The U.S. tax system, when viewed properly, is clearly progressive.
Textbook References:
Pages 246-251 “Taxes and Equity”December 30
The Burden of the Debt
Paul Krugman argues that the Federal debt is not much of a problem. Laurence Ball and Greg Mankiw argue that the debt has distributional effects and that too much debt might trigger a collapse in demand for government bonds.
Textbook References:
Pages 238-240 “The Fiscal Challenge Ahead”Pages 568-572 “Policy 3: Government Budget Deficits and Surpluses”
Pages 704-706 “Government Budget Deficits”
Pages 823-827 “Should the Government Balance Its Budget?”
December 5
Eichengreen on U.S. Fiscal Policy
Barry Eichengreen argues that if the U.S. fails to bring its deficits under control, then investors will no longer want to buy or hold U.S. debt. When that happens, the consequences could be severe.
Textbook References:
Pages 238-240 “The Fiscal Challenge Ahead”Pages 704-706 “Government Budget Deficits”
Pages 709-711 “Political Instability and Capital Flight”
November 7
What would John Maynard Keynes have said about Obamacare?
Keynes argued that even necessary reforms might upset business confidence and slow recovery.
Textbook References:
Pages 238-240 “The Fiscal Challenge Ahead”Pages 729-731 “Why the Aggregate-Demand Curve Might Shift”
October 29
My Lecture at Princeton
An hour-long video shows Mankiw's recent lecture at Princeton. In a wide-ranging presentation, he discusses the current state of macroeconomics. In the process he addresses the policy difficulties created by the current slump and the long-term debt crisis.
Textbook References:
Pages 238-240 “The Fiscal Challenge Ahead”Page 561 “Financial Crises”
Pages 568-572 “Policy 3: Government Budget Deficits and Surpluses”
Pages 631-632 “Bank Capital, Leverage, and the Financial Crisis of 2008-2009”
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”
Pages 812-814 “Should Monetary And Fiscal Policymakers Try To Stabilize The Economy?”
October 27
The Budget Deficit
In a 90 minute video, Peter Diamond, Jeff Leibman, Deborah Lucas, Greg Mankiw, and Robert Solow discuss the federal budget deficit. The discussion addresses both short-term and long-term concerns.
Textbook References:
Pages 238-240 “The Fiscal Challenge Ahead”Pages 568-572 “Policy 3: Government Budget Deficits and Surpluses”
Pages 745-748 “The Recession of 2008-2009”
Pages 767-773 “How Fiscal Policy Influences Aggregate Demand”
Pages 773-779 “Using Policy To Stabilize The Economy”
Pages 823-827 “Should the Government Balance Its Budget?”
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”
October 4
Alan Blinder and Glenn Hubbard Agree
Alan Blinder and Glenn Hubbard are from different parts of the political spectrum, but agree on a plan to bring the national debt under control.
Textbook References:
Pages 238-240 “The Fiscal Challenge Ahead”Pages 568-572 “Policy 3: Government Budget Deficits and Surpluses”
September 23
Three from National Affairs.
Andrew Biggs is troubled by suggestions to means-test Social Security and Medicare.
Textbook References:
Pages 238-240 “The Fiscal Challenge Ahead”September 22
Kotlikoff on the Corporate Tax
Laurence Kotlikoff argues that the corporate income tax harms workers more than investors. This is in part because capital can easily move to countries with lower tax rates, but workers can not. Kotlikoff proposes an overhaul of the U.S. tax system.
Textbook References:
Pages 250-251 “Pays the Corporate Income Tax?”Page 568 “Policy 2: Investment Incentives”
September 20
The Progressivity of the Tax System
Contrary to what politicians have been saying, the U.S. income tax is in practice progressive.
Textbook References:
Pages 246-252 “Taxes and Equity”September 10
Paul Samuelson on Social Security
In 1967 Paul Samuelson described the Social Security system as a Ponzi scheme, but in a good way.
Textbook References:
Pages 238-240 “Fiscal Challenge Ahead”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”
August 8
I Talk to Reuters
Mankiw discusses the current U.S. debt crisis and what the Fed can do to boost the weak recovery.
Textbook References:
Pages 238-240 “The Fiscal Challenge Ahead”Page 561 “Financial Crises”
Pages 568-572 “Policy 3: Government Budget Deficits and Surpluses”
Pages 745-748 “The Recession of 2008-2009”
Pages 758-767 “How Monetary Policy Influences Aggregate Demand”
August 6
Federal Nondefense Spending (as a % of GDP)
A chart from the Bureau of Economic Analysis shows how Federal nondefense spending as a share of GDP has risen sharply in the past few years.
Textbook References:
Pages 234-241 “A Financial Overview of the U.S. Government”Pages 745-748 “The Recession of 2008-2009”
Pages 767-773 “How Fiscal Policy Influences Aggregate Demand”
Pages 773-779 “Using Policy To Stabilize The Economy”
July 13
Spending Hidden in the Tax Code
Federal tax expenditures are almost as large as federal discretionary spending.
Textbook References:
Chapter 12 “The Design of the Tax System”June 11
How to Grow the Economy
Bruce Bartlett reminds us that saving and investment, education, infrastructure, and technological advancement ultimately drive growth.
Textbook References:
Pages 238-240 “The Fiscal Challenge Ahead”Pages 540-552 “Economic Growth and Public Policy”
Pages 568-572 “Policy 3: Government Budget Deficits and Surpluses”
June 4
The Demagoguing of Medicare reform
Mankiw wonders why politicians on both the left and the right seem more interested in scoring political points than solving a serious problem.
Textbook References:
Pages 238-240 “The Fiscal Challenge Ahead”Pages 568-572 “Policy 3: Government Budget Deficits and Surpluses”
May 31
How to Fix the Long-Term Fiscal Problem
Six think tanks offer their solutions to the long-term fiscal crisis faced by the U.S.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 560-572 “Economic Growth and Public Policy”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
May 12
Our Negative Bequest to Our Children
John Cogan reports that the typical 66 year old couple will get $1 million in Social Security and Medicare benefits. That is double what they paid in taxes.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 842-843 “Dealing with Deficits”
May 12
Fun Fact of the Day: California Edition
Lifeguard salaries help explain California's fiscal crisis.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 248-249 “State and Local Government”
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 30
The Purple Tax Plan
Laurence Kotlikoff and Andrew Weiss propose a tax reform that both the left and the right might embrace.
Textbook References:
Chapter 12 “The Design of the Tax System”April 19
A Free Book Well Worth Your Time
Mankiw recommends Policy and Choice: Public Finance through the Lens of Behavioral Economics by William J. Congdon, Jeffrey R. Kling, and Sendhil Mullainathan. A link allows you to download the book for free.
Textbook References:
Chapter 10 “Externalities”Chapter 11 “Public Goods and Common Resources”
Chapter 12 “The Design of the Tax System”
Pages 484-489 “Asymmetric Information”
April 16
My Talk From Yesterday
A video shows Mankiw's talk at the University of Cincinnati. He provides a brief history of macroeconomics, discusses current monetary and fiscal policy, and discusses the long-run fiscal situation.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 539-541 “Real and Nominal Interest Rates”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 654-655 “The Financial Crisis of 2008”
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”
April 14
Capping Tax Expenditures
Martin Feldstein, Daniel Feenberg, and Maya MacGuineas argue that we should cap individual tax expenditures at 2 per cent of adjusted gross income.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 249-253 “Taxes and Efficiency”
Pages 253-257 “Taxes and Equity”
April 13
The Ryan Plan
Paul Ryan offers his plan to reduce the federal debt, and he contrasts it to the Bowles-Simpson plan.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
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 28
Stiglitz on the Deficit
Joseph Stiglitz explains why he does not endorse the report produced by the bipartisan National Commission on Fiscal Responsibility and Reform.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 253-257 “Taxes and Equity”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
March 26
Our Children's Financial Crisis
Mankiw writes a speech for a future president that discusses the cost of not acting sooner to reduce the Federal debt.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
March 24
CEA Chairs on the Budget Deficit
Ten former chairs of the Council of Economic Advisers urge Congress to consider seriously the report produced by the bipartisan National Commission on Fiscal Responsibility and Reform.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
March 21
What nation has the most progressive income tax system?
Mankiw presents a table from the OECD showing an alternative measure of progressivity. The alternative measure shows that the United States has the most progressive income tax among the countries listed.
Textbook References:
Pages 253-257 “Taxes and Equity”February 25
MIT Symposium
A 2-hour video presents a wide-ranging discussion of macroeconomic issues. Participants are Olivier Blanchard, Pedro Aspe, Robert Gordon, Paul Krugman, Greg Mankiw, and Christina Romer.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 654-655 “The Financial Crisis of 2008”
Chapter 32 “A Macroeconomic Theory of the Open Economy”
Page 750 “The 2008 Fiscal Stimulus”
Pages 778-787 “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”
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 2
Donald Marron on Tax Reform
Donald Marron testifies before Congress about the tax code. He argues that reducing tax preferences ("credits, deductions, deferrals, exclusions, exemptions, and preferential rates") could reduce tax rates and improve fairness.
Textbook References:
Pages 167-171 “Deadweight Loss and Tax Revenue as Taxes Vary”Chapter 12 “The Design of the Tax System”
January 29
Tax Justice
A PBS video discusses the difficulties of establishing a fair tax code.
Textbook References:
Pages 249-253 “Taxes and Efficiency”Pages 253-257 “Taxes and Equity”
Pages 258-260 “Conclusion: The Trade-Off Between Equity and Efficiency”
Pages 442-445 “The Political Philosophy of Redistributing Income”
January 19
What would repeal of Obamacare do to the budget deficit?
Defenders of the Affordable Care Act point to a CBO study that says its repeal would add to the Federal deficit. But Holtz-Eakin, Antos, and Capretta claim that the CBO study is based on wrong assumptions.
Textbook References:
Page 23 “The Role of Assumptions”Pages 246-248 “The Fiscal Challenge Ahead”
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 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 10
Fairness and Tax Policy
Jonathan Weinstein responds to a paper by Greg Mankiw and challenges some of its assumptions. The discussion centers on competing views of fair taxation.
Textbook References:
Pages 34-36 “Why Economists Disagree”
Pages 253-257 “Taxes and Equity”
Pages 419-421 “The Superstar Phenomen”
Pages 442-445 “The Political Philosophy of Redistributing Income”
December 9
Hear me Squawk
Mankiw discusses the tax deal reached between President Obama and Congressional Republicans. He argues that it is a good deal that will help stimulate the economy. Mankiw also endorses the Simpson-Bowles plan to reduce the long-run deficit.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”
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”
December 9
Simon Johnson and Me on NPR
Simon Johnson and Greg Mankiw discuss the tax deal reached between President Obama and Congressional Republicans. Johnson fears that the deal adds too much to the tax deal. Mankiw argues that it is positive for the short run, but that the administration needs to get serious about reducing the deficit in the long run.
Textbook References:
Pages 34-36 “Why Economists Disagree”
Pages 246-248 “The Fiscal Challenge Ahead”
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 842-843 “Dealing with Deficits”
December 7
The Distribution of the Tax Deal
The Tax Policy Center looks at the numbers behind the tax deal between President Obama and Congressional Republicans. The numbers show that the deal is progressive when compared to current policy, but regressive when compared to what would happen if the Bush-era tax cuts were allowed to expire.
Textbook References:
Pages 254-255 “The Ability-to-Pay Principle”Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
November 29
The Simpson-Bowles Social Security Plan
Charles Blahous explains who will gain and who will lose under the Simpson-Bowles proposal for Social Security.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”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 14
You Fix the Federal Budget
How would you reduce the federal deficit?
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
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 10
Good Signs from the Deficit Commission
The Bipartisan Deficit Commission was appointed to find ways to reduce the federal deficit. Mankiw approves of some of the options the Commission is considering.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
November 9
Raise the Early Retirement Age
Andrew Biggs argues that the early retirement age for Social Security should be raised from 62 to 65. Having workers in the labor force longer will increase GDP and tax revenue. Biggs also says that average retirement income would be higher.
Textbook References:
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”
November 6
Laura Tyson and Me on NPR
Laura Tyson and Greg Mankiw discuss current fiscal policy on National Public Radio.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Page 560 “Saving and Investment”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 654-655 “The Financial Crisis of 2008”
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?”
Pages 842-843 “Dealing with Deficits”
October 24
Christy's First Column
Christina Romer argues against calls to cut the federal deficit now. She says that while the deficit must eventually be reduced, the economy is too weak to do so now.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”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 842-843 “Dealing with Deficits”
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”
August 7
How Is Medicare Doing?
Rick Foster, the chief actuary for Medicare, says that planned Medicare cost reductions are not likely to happen.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 838-841 “Should the Government Balance Its Budget?”
August 6
On Congressman Paul Ryan
Paul Krugman argues that Paul Ryan's plan to cut federal spending and taxes actually raises the deficit. This is contrary to Ryan's claim. Ted Gayer suggests that Krugman's reading of the evidence is flawed.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 838-841 “Should the Government Balance Its Budget?”
July 23
The Mid-Session Review
The administration's mid-session budget review assumes rapid growth and hopes the fiscal commission will fix the deficit problems.
Textbook References:
Pages 242-249 “A Financial Overview of The U.S. Government”Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
July 21
Harvardians in the FT
Kenneth Rogoff argues against more fiscal stimulus. Lawrence Summers supports short-term stimulus combined with medium and long-term deficit reduction. Niall Ferguson argues that Keynesian policies are misguided.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Page 750 “The 2008 Fiscal Stimulus”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 842-843 “Dealing with Deficits”
July 20
Government Spending By Another Name
Martin Feldstein points out that a significant portion of government spending is in the form of special tax rules called tax expenditures. Deficit reduction should include reducing such expenditures.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
July 7
Are Stimulus Skeptics Logically Incoherent?
Paul Krugman wonders why private spending would create jobs but public spending won't. Mankiw replies.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”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 842-843 “Dealing with Deficits”
July 1
The Influence of Alberto Alesina
Alberto Alesina argues that governments should take large, credible steps to reduce their deficits. That would calm bond markets and increase confidence for investors and consumers.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 560-572 “Economic Growth and Public Policy”
Pages 576-577 “The Bond Market”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
June 28
Federal Tax Rates by Income Quintile
A graph illustrates how federal tax rates have changed over time.
Textbook References:
Pages 243-248 “The Federal Government”Pages 254-255 “Vertical Equity”
June 27
Links
There are five links sent in by readers. Four of them are humorous, but one, "Ten Commandments for Fiscal Adjustment," is serious.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 560-572 “Economic Growth and Public Policy”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Page 750 “The 2008 Fiscal Stimulus”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-797 “Using Policy To Stabilize The Economy”
Pages 842-843 “Dealing with Deficits”
June 7
CBO on Health Spending
The CBO argues that health-care spending "will put tremendous pressure on the federal budget during the next few decades and beyond."
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
June 7
A Bit More on the Soda Tax
Mankiw argues that savings from lower health-care costs associated with reductions in obesity are offset by additional health-care and pension costs due to longer life spans.
Textbook References:
Pages 246-248 “The Fiscal Challenge Ahead”Pages 842-843 “Dealing with Deficits”
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?”
May 28
Income and Federal Tax Shares
A chart from the Tax Policy Center shows that U.S. federal taxes are progressive.
Textbook References:
Pages 254-256 “The Ability-to-Pay Principle”May 18
Is A VAT Good for Exports?
Alan Viard explains the fallacy in former President Clinton's assertion that a VAT would be good for exports.
Textbook References:
Page 251 “Income or Consumption Be Taxed? ”Pages 728-730 “Trade Policy”