Recent Posts
(Note: Page numbers referenced in posts prior to June 1, 2011 refer to 5th edition)
June 3
The Mistake of 1937
Gauti Eggertsson notes that policymakers in 1937 confused a rise in the relative prices of commodities for fundamental inflation. The result was bad policy decisions. He wonders if modern policymakers will make the same mistake.
Textbook References:
Pages 514-520 “The Consumer Price Index”Pages 664-665 “Inflationary Threats”
Pages 758-767 “How Monetary Policy Influences Aggregate Demand”
Pages 773-779 “Using Policy To Stabilize The Economy”
May 7
I Agree with Paul Krugman
To maximize economic stability, central banks should use a price index that gives substantial weight to the level of nominal wages.
Textbook References:
Chapter 24 “Measuring the Cost of Living”Pages 778-787 “How Monetary Policy Influences Aggregate Demand”
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”
December 21
Advances in Inflation Measurement
The Billion Prices Project offers an alternative to the Consumer Price Index.
Textbook References:
Pages 530-537 “The Consumer Price Index”December 22
The Price of Christmas
The price index for the gifts in "The Twelve Days of Christmas" rose 1.8 percent this year.
Textbook References:
Pages 530-537 “The Consumer Price Index”June 18
Deflation?
A graph shows that there has been deflation over the past year, as measured by the CPI. Yet when measured by the median CPI, there has been low inflation.
Textbook References:
Chapter 24 “Measuring the Cost of Living”
Chapter 30 “Money Growth and Inflation”
Pages 746-9 “Why the Aggregate-Demand Curve Slopes Downward”
May 26
More on Negative Interest Rates
Glen Rudebusch of the San Francisco Fed says that to be consistent with the Fed’s past policy, the interest rate would have to be negative five percent by the end of this year.
Textbook References:
Pages 539-541 “Real and Nominal Interest Rates”
Chapter 30 “Money Growth and Inflation”
Pages 778-787 “How Monetary Policy Influences Aggregate Demand”
Pages 793-796 “Using Policy to Stabilize the Economy”
Page 821 “Bernanke’s Challenges”
Pages 830-832 “Should Monetary and Fiscal Policymakers Try To Stabilize the Economy?
May 11
Negative Interest Rates
The city of Prien am Chiemsee in Bavaria, Germany, employs a local currency that implements one of Mankiw’s suggestions for creating negative interest rates.
Textbook References:
Pages 539-541 “Real and Nominal Interest Rates”
Chapter 30 “Money Growth and Inflation”
Pages 778-787 “How Monetary Policy Influences Aggregate Demand”
Pages 793-796 “Using Policy to Stabilize the Economy”
Page 821 “Bernanke’s Challenges”
Pages 830-832 “Should Monetary and Fiscal Policymakers Try To Stabilize the Economy?
May 7
More on Negative Interest Rates
Former central banker Willem Buiter endorses the idea of negative interest rates.
Textbook References:
Pages 539-541 “Real and Nominal Interest Rates”
Chapter 30 “Money Growth and Inflation”
Pages 778-787 “How Monetary Policy Influences Aggregate Demand”
Pages 793-796 “Using Policy to Stabilize the Economy”
Page 821 “Bernanke’s Challenges”
Pages 830-832 “Should Monetary and Fiscal Policymakers Try To Stabilize the Economy?