Mankiw 6e. Experience it.
Mankiw Blog Map
Chapters
 
Chapter 2: Thinking Like an Economist

Recent Posts
(Note: Page numbers referenced in posts prior to June 1, 2011 refer to 5th edition)

 

September 21

Correlation is not causation

A long list of obviously spurious correlations illustrates the idea that correlation is not causation.

Textbook References:

Pages 46-48 “Cause and Effect”

September 13

The Case for Civility

Debates about economic policy are sometimes heated. Participants may even become uncivil to their opponents. Noah Smith points out that such behavior is evidence of overconfidence; economics is not sufficiently well developed to provide certainty about complex issues.

Textbook References:

Pages 34-35 “Why Economists Disagree”

August 3

Wisdom from Thomas Sowell

In Thomas Sowell's book, "A Conflict of Visions," he discusses a spectrum of political visions. At one end are those who think experts can solve all problems, and who question the motives of all who disagree with them. At the other end are those who recognize the complexity of social processes and are far less likely to accuse opponents of evil intent.

Textbook References:

Pages 34-35 “Why Economists Disagree”

August 2

A Plea for Civility

Laurence Kotlikoff chastises Nobel Laureate Paul Krugman for calling people names and exhibiting other childish behavior.

Textbook References:

Pages 34-35 “Why Economists Disagree”

July 20

What makes a good economist?

A short video (just over 3 minutes long) asks Nobel laureates and young economists about what they think makes a good economist.

Textbook References:

Pages 22-29 “The Economist as Scientist”

May 11

Alan Krueger

What's it like to be the Chairman of the President's Council of Economic Advisors?

Textbook References:

Pages 31-32 “Economists in Washington”

April 16

Sometimes it's better to split the baby

Economists often rely on official statistics for their observations. The Census Bureau is changing how it collects information on healthcare coverage; the change will make it difficult to assess the effects of the Affordable Care Act, better known as Obamacare. It is a reminder that official statistics are far from perfect.

Textbook References:

Pages 22-23 “The Scientific Method: Observation, Theory, and More Observation”

March 10

ERP

Each year the Council of Economic Advisors writes the Economic Report of the President. It discusses the current state of the economy, examines policy issues, and includes a wealth of statistics related to income, employment and production.

Textbook References:

Pages 31-32 “Economists in Washington”

January 29

Does income inequality increase mortality?

Conventional wisdom suggests that mortality rates are lower for rich people than for poor people. Yet a recent study by Angus Deaton suggests that once one controls for race, the relationship between income and mortality disappears. In other words, there is an omitted variable problem if one looks at income inequality and mortality rates without including race.

Textbook References:

Pages 47 “Omitted Variables”
Pages 416-417 “U.S. Income Inequality”

October 21

Yes, Economics is a Science

Raj Chetty argues that even economists with much different perspectives have the same, scientific, approach to the discipline. Economists formulate and test precise hypotheses.

Textbook References:

Pages 22-23 “The Scientific Method: Observation, Theory, and More Observation”

October 12

On DC Discord

Mankiw describes how group identity can promote hostility to others. As a consequence, it can prevent constructive cooperation.

Textbook References:

Pages 32-34 “Why Economists' Advice Is Not Always Followed”

August 20

I Am Ray Fair

Take a quiz to discover which well-known economist has views similar to yours.

Textbook References:

Pages 29-34 “The Economist as Policy Advisor”

August 17

An Economist Gets Pregnant

When she became pregnant, Emily Oster examined the information that lies behind the long list of rules pregnant women are supposed to follow. She discovers that some of the rules do not make much sense.

Textbook References:

Pages 22-23 “The Scientific Method: Observation, Theory, and More Observation”

August 10

Wisdom from Raghu Rajan

Raghuram Rajan bemoans the ad hominem attacks employed by high-profile economists such as Paul Krugman.

Textbook References:

Pages 34-35 “Why Economists Disagree”

June 29

The New CEA Chair

Mankiw suggests that economists may disagree because of different views of: 1. the trade-off between equality and efficiency, 2. the tradeoff between community and liberty, and 3. the extent one trusts governmental power.

Textbook References:

Pages 34-35 “Why Economists Disagree”

June 8

Landsburg versus Krugman

A dispute between prominent economists degenerates into wild accusations and name-calling.

Textbook References:

Pages 34-35 “Why Economists Disagree”

May 25

Dear Paul

Sometimes disputes among economists get personal. Carmen Reinhart and Kenneth Rogoff defend themselves from attacks from Paul Krugman.

Textbook References:

Pages 34-35 “Why Economists Disagree”

March 22

Swagel on Scheiber

Phillip Swagel reviews Noam Scheiber's book, Escape Artists, which is about economic policymaking during President Obama's first term. Scheiber's account makes it clear that real-world policymaking can be messy and subject to infighting.

Textbook References:

Pages 29-34 “The Economist as Policy Advisor”

March 19

The Economist as Advice Columnist

The economic way of thinking can be useful in making everyday decisions. That is why economist Emily Oster has started writing an advice column.

Textbook References:

Chapter 2: “Thinking Like an Economist”

March 16

The Economist as Civil Libertarian

Tyler Cowen argues that most economists have an "egalitarian and civil libertarian core."

Textbook References:

Pages 23-24 “The Role of Assumptions”

March 15

ERP

The 2013 Economic Report of the President was just released. The Council of Economic Advisors issues the Economic Report of the President every year. It contains an overview of the economy and a wealth of data.

Textbook References:

Pages 29-34 “The Economist as Policy Adviser”

February 17

A Profile of Stanley Fischer

The Washington Post profiles Stanley Fischer. Fischer is arguably one of the most influential economists alive.

Textbook References:

Pages 29-34 “The Economist as Policy Adviser”

October 16

Optimal Tax Policy

About three-fourths of economists polled agree that, all else equal, lighter taxes on capital compared to labor would result in greater long-term prosperity.

Textbook References:

Pages 34-35 “Why Economists Disagree”

October 1

Swagel on Bair

Personal animosity can sometimes warp professional judgment.

Textbook References:

Pages 34-35 “Why Economists Disagree”

September 30

Actual Economists, Virtual Realities

Economists advise real-world policy makers. They are also beginning to shape economic policies in online games.

Textbook References:

Pages 29-34 “The Economist as Policy Adviser”

September 28

The Price of Fiscal Uncertainty

Political failures can have bad effects on the economy.

Textbook References:

Pages 32-34 “Why Economists' Advice Is Not Always Followed”

June 14

Data > Ideology

Politicians want to eliminate important sources of economic statistics in the U.S. and Canada. The cost saving would be trivial and the damage could be great.

Textbook References:

Pages 22-23 “The Scientific Method: Observation, Theory, and More Observation”

March 20

Free Bikes and Girls' Education

India's poorest state gives bicycles to girls who stay in school. Two economists discuss how to measure its effectiveness.

Textbook References:

Pages 7-9 “Principle 4: People Respond to Incentives”
Pages 22-29 “The Economist as Scientist”
Pages 543-544 “Education”

February 18

ERP Released

Mankiw provides a link to the 2012 Economic Report of the President.

Textbook References:

Pages 29-34 “The Economist as Policy Adviser”

December 17

Are Economists Selfish?

Are people who take economics classes less generous than others?

Textbook References:

Page 30 “Who Studies Economics?”
Page 220 “The Free Rider Problem”

December 12

This Year's Nobel Lectures

Thomas Sargent draws parallels between the birth of the United States and the current situation in the European Union. Chris Sims gives a history of macroeconomic modeling.

Textbook References:

Pages 22-29 “The Economist as Scientist”
Page 683 “The Euro”

December 10

Steve Marglin on Heterodox Economics

Steve Marglin argues that critiques of orthodox economics should be taught much more widely.

Textbook References:

Pages 34-35 “Why Economists Disagree”

December 8

Taylor versus Krugman

Paul Krugman accuses John Taylor of misrepresenting research presented at a conference on growth.

Textbook References:

Pages 34-35 “Why Economists Disagree”

November 22

Polling Economic Experts

IGM Forum regularly polls economists on important policy issues. It allows us to see if a consensus exists on these issues.

Textbook References:

Pages 34-35 “Why Economists Disagree”
Page 36 “Table 1: Propositions about Which Most Economists Agree”

September 12

Krugman on Barro

Paul Krugman argues that the business cycle drives investment, and not the other way around. Mankiw points out that Krugman may have made a fundamental error in logic.

Textbook References:

Pages 46-48 “Cause and Effect”

September 7

Austin Goolsbee Plays...

The former chair of the President's Council of Economic Advisors participates in a very funny interview and game.

Textbook References:

Pages 31-32 “Economists in Washington”

September 1

Theory versus Practice

A cartoon makes fun of economic science.

Textbook References:

Pages 22-29 “The Economist as Scientist”

August 29

Alan Krueger to chair CEA

Alan Krueger has been named the new chair of the President's Council of Economic Advisors.

Textbook References:

Pages 31-32 “Economists in Washington”

July 30

In Defense of Ben

Mankiw argues that Fed Chair Ben Bernanke does not deserve all the criticism he has been getting.

Textbook References:

Pages 31-32 “Economists in Washington”
Pages 638-639 “Bernanke on the Fed's Toolbox”
Pages 664-665 “Inflationary Threats”

July 28

Mark Thoma vs Larry Summers

Should academic economists pay more attention to economic practitioners?

Textbook References:

Chapter 2 “Thinking Like an Economist”

June 25

Crazy Public Policy: A Case Study

Ethanol subsidies drive up the cost of food and do not benefit the environment.

Textbook References:

Pages 32-34 “Why Economists' Advice Is Not Always Followed”
Pages 202-209 “Public Policies toward Externalities”

June 22

Preaching to the Choir

Mankiw agrees with Paul Krugman that across-the-board cuts in tax rates will not typically increase tax revenue. But Mankiw takes issue with Krugman's evidence.

Textbook References:

Pages 34-35 “Why Economists Disagree”
Pages 163-166 “Deadweight Loss and Tax Revenue as Taxes Vary”

June 18

A Few, Unwitting Agreements about Healthcare

Mankiw points out that Democrats and Republicans agree on more healthcare policies than the partisan politicians' rhetoric suggests.

Textbook References:

Pages 31-32 “Economists in Washington”

June 7

Austan Goolsbee Steps Down

Austan Goolsbee will resign as the top White House economist.

Textbook References:

Pages 31-32 “Economists in Washington”

May 25

A regression I would like to see

Holding SAT score constant, what effect does family income have on a student's performance in college?

Textbook References:

Pages 22-30 “The Economist as Scientist”
Chapter 20 “Income Inequality and Poverty”

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”

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 12

The Half-Full Glass of Economic Mobility

How much economic mobility is there in the U.S.? There are different interpretations of the data.

Textbook References:

Pages 34-36 “Why Economists Disagree”
Pages 440-441 “Economic Mobility”

January 5

What does a trillion dollars look like?

There is a clever representation of one trillion dollars.

Textbook References:

Pages 40-41 “Graphs of a Single Variable”

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

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”


November 1

From Saturday's DC Rally

A protester holds up a sign asking for policy to be based on science.

Textbook References:

Pages 22-30 “The Economist As Scientist”


October 23

Goolsbee, Deconstructed

Keith Hennessey comments on Austin's Goolsbee's assertions about recent economic policy and performance.

Textbook References:

Pages 34-36 “Why Economists Disagree”

Pages 654-655 “The Financial Crisis of 2008”

Page 750 “The 2008 Fiscal Stimulus”


October 17

Why do economists disagree?

David Segal offers some insight as to why economists sometimes disagree.

Textbook References:

Pages 34-36 “Why Economists Disagree”


September 28

Bill Clinton Channels Friedrich Hayek

Bill Clinton suggests that policy is often made by people who don't know what they are doing.

Textbook References:

Pages 32-33 “Why Economists' Advice Is Not Always Followed”

Page 358 “Galbraith versus Hayek”


September 22

Me on All Things Considered

National Public Radio interviews Greg Mankiw about life as an advisor to the President.

Textbook References:

Pages 30-33 “The Economist As Policy Adviser”


September 17

Glaeser on Goolsbee

Edward Glaeser discusses the new chair of the Council of Economic Advisers.

Textbook References:

Pages 30-33 “The Economist As Policy Adviser”
Pages 160-164 “The Deadweight Loss of Taxation”
Pages 164-167 “The Determinants Of The Deadweight Loss”
Pages 369-370 “How the Size of an Oligopoly Affects the Market Outcome”


September 10

Goolsbee to Chair CEA

The Wall Street Journal discusses the new chair of the Council of Economic Advisors.

Textbook References:

Pages 30-33 “The Economist As Policy Adviser”


September 3

Counting Small Business

Kevin Hassett and Alan Viard point out how easy it is to use statistics to mislead people.

Textbook References:

Pages 30-33 “The Economist As Policy Advisor”


August 10

The White House Policy Process

Keith Hennessey provides a detailed description of the formal groups that make up the president's economics team.

Textbook References:

Pages 30-33 “The Economist As Policy Advisor”


August 6

Christy Romer Steps Down

Christina Romer is stepping down as chair of the Council of Economic Advisors to the president.

Textbook References:

Pages 30-33 “The Economist As Policy Advisor”


July 22

Solow on DSGE Models

Robert Solow suggests that the Dynamic Stochastic General Equilibrium models that dominate modern macroeconomics do not pass the smell test.

Textbook References:

Page 23 “The Role of Assumptions”

Pages 23-24 “Economic Models”

Pages 560-572 “Economic Growth and Public Policy”


July 14

The CEA's Impossible Job

The Council of Economic Advisors to the President is charged with counting the number of jobs created by the fiscal stimulus. It's an impossible task.

Textbook References:

Pages 30-33 “The Economist as Policy Advisor”

Page 750 “The 2008 Fiscal Stimulus”

Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”

Pages 793-797 “Using Policy To Stabilize The Economy”


June 26

My Latest

Mankiw discusses the difficulties faced by the President's economic team in diagnosing and treating the economic crisis. He suggests that macroeconomists need to be humble.

Textbook References:

Pages 30-33 “The Economist as Policy Advisor”

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 830-832 “Should Monetary And Fiscal Policymakers Try To Stabilize The Economy?”


May 13

Who Gets the Goodies?

Ted Gayer points out that the Senate will auction off less than 25 percent of pollution permits in its cap-and-trade bill. As he puts it, "the Senate bill sacrifices economic gain for political support from interest groups."

Textbook References:

Pages 32-33 “Why Economists' Advice Is Not Always Followed”

Pages 212 to 214 “Market-Based Policy 2: Tradable Pollution Permits”


May 4

A Talk from Esther Duflo

A 16 minute video shows John Bates Clark Medalist Esther Duflo discussing how the scientific method can improve the lot of the world's poorest.

Textbook References:

Pages 22-29 “The Economist as Scientist”

Pages 550-554 “Economic Growth Around the World”


April 17

The Latest from the CEA Chair

CEA Chair Christina Romer reports on what has been done to fight the current recession and discusses what else can be done.

Textbook References:

Pages 30-33 “The Economist as Policy Advisor”

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”

Page 750 “The 2008 Fiscal Stimulus”

Chapter 34 “The Influence of Monetary and Fiscal Policy on Aggregate Demand”

Pages 830-832 “Monetary And Fiscal Policymakers Try To Stabilize The Economy”

Pages 842-843 “Dealing with Deficits”


March 21

Caveats from CBO

In a letter to Nancy Pelosi, the CBO warns that its estimate of the effect of the healthcare bill on the federal budget depends on assumptions that might not be realistic.

Textbook References:

Page 23 “The Role of Assumptions”

Pages 23-24 “Economic Models”


February 25

More on Ranking CEAs

The Economist magazine weighs in on Christina Romer's claim that her staff at the Council of Economic Advisors is the best since the 1960's.

Textbook References:

Pages 30-33 “The Economist as Policy Advisor”

Chapter 2: Thinking Like an Economist
Archived Posts

 

February 23

An Interview

The Wellesley Weston interviews Mankiw.

Textbook References:

Pages 30-33 “The Economist as Policy Advisor”


February 12

Ranking CEAs

Tino Sanandaji ranks the Council of Economic Advisors since 1980 on the basis of citations by its members. It contradicts Christina Romer's claim that the current CEA is the best since the 1960's.

Textbook References:

Pages 30-33 “The Economist as Policy Advisor”


February 11

The ERP

Christina Romer writes in the Economic Report of the President that her staff at the Council of Economic Advisors is the best since the 1960's.

Textbook References:

Pages 30-33 “The Economist as Policy Advisor”


February 6

Austan Goolsbee on the Daily Show

Austan Goolsbee, a member of the President's Council of Economic Advisors, appears on the Daily Show.

Textbook References:

Pages 30-33 “The Economist as Policy Advisor”

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”


January 23

A Note From Inside

An (anonymous) friend of Mankiw working in the Obama administration claims that the idea of separating investment from commercial banking is not a populist response to recent events. It has been discussed for some time.

Textbook References:

Pages 30-34 “The Economist as Policy Advisor”


November 26

How Little We Know

Russell Roberts explains that the extreme complexity of the financial system means that we do not understand it very well. We should therefore be careful when we try to "fix" it.

Textbook References:

Pages 30-34 “The Economist as Policy Advisor”

Pages 34-36 “Why Economists Disagree”


November 17

A Rational Loss for Bill Belichick

The New England Patriots went for it on fourth down and failed. But that doesn't mean that the strategy was flawed.

Textbook References:

Pages 32-33 “Football Economics”


October 20

More on Superfreakonomics

Yoram Bauman suggests that the chapter on climate change in Steven Levitt's forthcoming book is misleading.

Textbook References:

Pages 34-36 “Why Economists Disagree”
Page 37 “Environmental Economics”


October 17

Battle of the Clark Medalists

Paul Krugman and Steven Levitt accuse each other of misrepresenting the truth.

Textbook References:

Pages 34-36 “Why Economists Disagree”
Page 37 “Environmental Economics”


May 13

Paul Krugman concedes

In a previous blog, Mankiw doubted that the economy would grow as fast as the administration predicted. Krugman agreed with the administration and called Mankiw evil. Mankiw asked Krugman if he would like to bet some of his Nobel Prize money on it. Krugman hasn’t responded. But Krugman has recently written that we cannot expect the economy to grow very fast at all. Pride goeth before the fall.

Textbook References:

Pages 32-33 “Why Economists’ Advice Is Not Always Followed”
Pages 246-247 “The Fiscal Challenge Ahead”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”


Mar. 31

The Mess that is GM

David Brooks argues that GM has been “restructuring” for decades. It will take enormous political will to make it actually restructure.

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 30-34 “The Economist As Policy Advisor”


Mar. 22

Heckuva Job, Larry

Frank Rich criticizes the Obama administration’s response to the crisis, with special attention given to Laurence Summers.

Textbook Reference:

Pages 30-34 “The Economist as Policy Adviser”


Mar. 3

The CEA on its Forecast

The Council of Economic Advisors defends its forecasts from common criticisms.

Textbook References:

Pages 30-33 “The Economist as Policy Advisor”
Pages 34-36 “Why Economists Disagree”


Feb. 27

Rosy Scenario or Audacity of Hope?

Obama’s budget forecast depends on some extremely optimistic assumptions.

Textbook References:

Pages 32-33 “Why Economists’ Advice Is Not Always Followed”
Pages 246-247 “The Fiscal Challenge Ahead”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”

Moving the Goal Posts

The Committee for a Responsible Budget believes that Obama’s budget contains absurd assumptions.

Textbook References:

Pages 32-33 “Why Economists’ Advice Is Not Always Followed”
Pages 246-247 “The Fiscal Challenge Ahead”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”


Feb. 22

The Stimulus versus the Pigou Club

Politicians prefer stimulus money to raising the gasoline tax.

Textbook References:

Pages 32-33 “Why Economists’ Advice Is Not Always Followed”
Chapter 10 “Externalities”
Chapter 12 “The Design of the Tax System”


Feb. 4

Feldstein on Fiscal Stimulus

There are links to two newspaper articles by Martin Feldstein. In the first he makes a case for a fiscal stimulus. In the second he argues that the current fiscal stimulus proposal is poorly put together and will not have the intended effect.

Textbook References:

Pages 32-33 “Why Economists’ Advice is not Always Followed”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-796 “Using Policy to Stabilize the Economy”
Pages 830-832 “Should Monetary and Fiscal Policymakers Try To Stabilize the Economy?


Feb. 3

Lessons from Past Crises

There is a link to an Op-ed for the Wall Street Journal written by Carmen Reinhart and Kenneth Rogoff. They compare the current crisis to previous ones around the world.

Textbook References:

Pages 654-655 “The Financial Crisis of 2008”
Page 657 “Bank Runs and the Money Supply”
Pages 740-742 “Three Key Facts About Economic Fluctuations”


Jan. 31

Summers vs Obama

Before becoming economic advisor to Obama, Larry Summers wrote that unions are a cause of long-term unemployment. Obama claims that unions are part of the solution.

Textbook References:

Pages 32-33 “Why Economists’ Advice is not Always Followed”
Pages 421-422 “Above-Equilibrium Wages: Minimum-Wage Laws, Unions, and Efficiency Wages”
Pages 629-631 “Unions and Collective Bargaining”


Jan. 12

There is a link to an interview with Christina Romer. She discusses the objectives of Obama’s stimulus plan.

Textbook References:

Pages 30-34 “The Economist as Policy Adviser”
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-796 “Using Policy to Stabilize the Economy”