Greg Mankiw - Mankiw Principles Of Economics

Nicholas Gregory Mankiw (/ˈmæn.kjuː/; born February 3, 1958) is an American macroeconomist and the Robert M. Beren Professor of Economics at Harvard University. Mankiw is best known in academia for his work on New Keynesian economics.

Mankiw has written widely on economics and economic policy. As of April 2016, the RePEc overall ranking based on academic publications, citations, and related metrics put him as the 23rd most influential economist in the world, out of nearly 50,000 registered authors. He was the 11th most cited economist and the 9th most productive research economist as measured by the h-index. In addition, Mankiw is the author of several best-selling textbooks, writes a popular blog, and since 2007 has written a column, approximately monthly, for the Sunday business section of The New York Times A 2011 survey of economics professors named Mankiw their second favorite living economist under the age of 60, just after Paul Krugman and just before Daron Acemoglu.

Mankiw is a conservative and has been an economic adviser to several Republican politicians. From 2003 to 2005, Mankiw was chairman of the Council of Economic Advisers under President George W. Bush. In 2006, he became an economic adviser to Mitt Romney, and he worked with Romney during the presidential campaigns in 2008 and 2012.

Early life and education

Mankiw was born in Trenton, New Jersey. His grandparents were all Ukrainians. In his youth, he attended the Pingry School. In 1975, he studied astronomy at the Summer Science Program. He graduated from Princeton University summa cum laude in 1980 with a Bachelor of Arts in economics. At Princeton, Mankiw was classmates with economist David Romer, who would later become a coauthor of his, and roommates with playwright Richard Greenberg.

After college, Mankiw spent a year working on his Doctor of Philosophy at the Massachusetts Institute of Technology and a subsequent year studying at Harvard Law School. He worked as a staff economist for the Council of Economic Advisers from 1982â€"83, foreshadowing his later position as chairman of that organization. After leaving the Council, he earned his PhD in economics from MIT in 1984 under the supervision of Stanley Fischer. He returned to Harvard Law for a year but, having completed his PhD and realizing he was better at economics, he left to teach at MIT for a year and then became an assistant professor of economics at Harvard University in 1985. He was promoted to full professor in 1987 at the age of 29.

Academic writings

Mankiw is widely considered a New Keynesian economist, although at least one financial journalist says he resists such easy categorisation. Mankiw did important work on menu costs, which are a source of price stickiness. His paper "Small Menu Costs and Large Business Cycles: A Macroeconomic Model of Monopoly," published in the Quarterly Journal of Economics in 1985, compared a firm's private incentive to adjust prices after a shock to nominal aggregate demand with the social welfare implications of that decision. The paper concluded that expansion in aggregate demand may either increase welfare or reduce it, but the welfare reduction is never greater than the menu cost. A contraction in aggregate demand, however, reduces welfare, possibly in an amount much larger than the menu cost. Put another way, from a social planner’s point of view, prices may be stuck too high, but never too low. This paper was a building block for work by Olivier Blanchard and Nobuhiro Kiyotaki on aggregate-demand externalities and for work by Laurence Ball and David Romer on the interaction between real and nominal rigidities.

In 2002, Mankiw and Ricardo Reis proposed an alternative to the widely used New Keynesian Phillips curve, based on the slow diffusion of information among the population of price setters. Their sticky-information model displays three related properties that are more consistent with accepted views about the effects of monetary policy. First, disinflations are always contractionary (although announced disinflations are less contractionary than surprise ones). Second, monetary policy shocks have their maximum impact on inflation with a substantial delay. Third, the change in inflation is positively correlated with the level of economic activity.

Mankiw has written several papers on the empirical analysis of consumer behavior. An article coauthored with John Campbell in 1989 found that the aggregate consumption data are best described by a model in which about half of consumers obey the permanent income hypothesis and half simply consume their current income (sometimes called hand-to-mouth behavior). An article coauthored with Stephen Zeldes in 1991 found that the consumption of stockholders covaried more strongly with the stock market than the consumption of nonstockholders does, providing a possible explanation for the equity premium puzzle.

Mankiw's most widely cited paper is "A Contribution to the Empirics of Economic Growth," coauthored with David Romer and David Weil and published in the Quarterly Journal of Economics in 1992. The paper argues that the Solow growth model, once augmented to include a role for human capital, does a reasonably good job of explaining international differences in standards of living. According to Google Scholar, it has been cited more than 15,000 times, making it one of the most cited articles in the field of economics.

Mankiw has also written several notable papers outside of macroeconomics. In 1989, he coauthored a paper with David Weil examining the demographic determinants of housing demand and predicting that the aging of the baby boomers would undermine the housing market in the 1990s and 2000s. In 1986, he coauthored a paper with Michael Whinston in microeconomic theory showing that, under imperfect competition, entry tends to be excessive in homogeneous goods industries because entrants fail to take into account the business-stealing externality they impose on their rivals; when goods are heterogeneous, it is ambiguous whether free entry produces too many or too few firms because of offsetting business-stealing and product-variety externalities.

Textbooks

Mankiw has written two popular college-level textbooks: the intermediate-level Macroeconomics (now in its 9th edition, published by Worth Publishers) and the more famous introductory text Principles of Economics (now in its 8th edition, published by Cengage Learning). Subsets of chapters from the latter book are sold under the titles Principles of Microeconomics, Principles of Macroeconomics, Brief Principles of Macroeconomics, and Essentials of Economics. This book was signed for a record advance. The New York Times reported in 1995 that Mankiw "was offered a $1.4 million advance by Harcourt Brace in Fort Worth to write a basic economics textbook. That's about three times as big as any other in the college textbook market and rivals those of all but a few celebrity authors."

When the first edition of the Principles book was published in 1997, The Economist magazine wrote,

Mr. Mankiw has produced something long overdue: an accessible introduction to modern economics. By writing more in the style of a magazine than a stodgy textbook and explaining even complex ideas in an intuitive, concise way, he will leave few students bored or bewildered....Most refreshing, though, is the book's even-handedness. Mr Mankiw seems to revel in setting out how different schools of thought have contributed to economists' current state of knowledge.

Since then, more than one million copies have been sold, and Mankiw has received an estimated $42 million in royalties from the book, which is priced at $280 per copy.

Other career activities

In May 2003, President George W. Bush appointed Mankiw as Chairman of the Council of Economic Advisers. Mankiw served in that post from 2003 to 2005, followed by Harvey S. Rosen and then Ben Bernanke. While CEA chair, Mankiw was part of a Bush administration effort seeking greater oversight of the government-sponsored enterprises, Fannie Mae and Freddie Mac. In a November 2003 speech to a conference of bank supervisors, he said:

The enormous size of the mortgage-backed securities market means that any problems at the GSEs matter for the financial system as a whole. This risk is a systemic issue also because the debt obligations of the housing GSEs are widely held by other financial institutions. The importance of GSE debt in the portfolios of other financial entities means that even a small mistake in GSE risk management could have ripple effects throughout the financial system.

The proposed regulatory reforms were not passed into law until years later, when the financial crisis of 2007-08 was well underway.

After leaving the CEA, Mankiw resumed teaching at Harvard, taking over one of the most popular classes at Harvard College, the introductory economics course Ec 10, from Martin Feldstein. He has become an influential figure in the blogosphere and online journalism since launching his eponymous blog. The blog, originally designed to assist his Ec10 students, has gained a readership that extends far beyond students of introductory economics. Subtitled "Random Observations for Students of Economics," it was ranked the number one economics blog by US economics professors in a 2011 survey.

In November 2006, Mankiw became an official economic adviser to then-Massachusetts governor Mitt Romney's political action committee, Commonwealth PAC. In 2007, he signed on as an economic adviser to Romney's presidential campaign. He continued in that role during Romney's 2012 presidential bid.

From 2012 to 2015, Mankiw served as chairman of the Harvard economics department.

In February 2013, Mankiw publicly supported legal recognition for same-sex marriage in an amicus brief submitted to the U.S. Supreme Court.

In 2016 Mankiw became a member of the US Partnership on Mobility from Poverty, an effort funded by the Bill & Melinda Gates Foundation and run by the Urban Institute. The group of 24 scholars and activists is "a new collaborative aimed at discovering permanent ladders of mobility for the poor. The partnership will identify breakthrough solutions that can be put into action by philanthropy, practitioners, and the public and private sectors."

2004 Economic Report of the President

Several controversies arose from CEA's February 2004 Economic Report of the President. In a press conference, Mankiw spoke of the gains from free trade, noting that outsourcing of jobs by U.S. companies is "probably a plus for the economy in the long run." While this reflected mainstream economic analysis, it was criticized by many politicians who drew a link between outsourcing and the still-slow recovery of the U.S. labor market in early 2004.

Controversy also arose from a rhetorical question posed by the report (and repeated by Mankiw in a speech about the report): "when a fast-food restaurant sells a hamburger, is it providing a service or combining inputs to manufacture a product?" The intended point was that the distinction between manufacturing jobs and service industry jobs is somewhat arbitrary and therefore a poor basis for policy. Even though the issue was not raised in the report, a news account led to criticism that the Administration was seeking to cover up job losses in manufacturing by redefining jobs such as cooking hamburgers as manufacturing.

2008â€"2009 Keynesian resurgence

In November 2008, Mankiw wrote in The New York Times:

If you were going to turn to only one economist to understand the problems facing the economy, there is little doubt that the economist would be John Maynard Keynes. Although Keynes died more than a half-century ago, his diagnosis of recessions and depressions remains the foundation of modern macroeconomics. His insights go a long way toward explaining the challenges we now confront.

Nonetheless, Mankiw expressed skepticism about a $1 trillion spending package in the face of the global financial and economic crisis. He criticized Vice President Joseph Biden for suggesting there was unanimity of support among economists for a stimulus package.

2011 student walkout

On November 2, 2011, a number of students in Mankiw's Economics 10 class walked out of his lecture. Several dozen of the 750 students participated. Before leaving, they handed Mankiw an open letter critical of his course, saying in part:

we found a course that espouses a specificâ€"and limitedâ€"view of economics that we believe perpetuates problematic and inefficient systems of economic inequality in our society today ... Economics 10 makes it difficult for subsequent economics courses to teach effectively as it offers only one heavily skewed perspective rather than a solid grounding on which other courses can expand. ... Harvard graduates play major roles in the financial institutions and in shaping public policy around the world. If Harvard fails to equip its students with a broad and critical understanding of economics, their actions are likely to harm the global financial system. The last five years of economic turmoil have been proof enough of this.

The students concluded their letter by stating they would instead be attending the Occupy Boston demonstration then under way. Counter protesters showed up in that class and Mankiw replied to his students in an article in The New York Times. An editorial in the student-run Harvard Crimson condemned the protest. Harvard Crimson in its editorial stated that:

While it is true that Professor N. Gregory Mankiw, who was lecturing during the walkout, has conservative views and held a position in the Bush Administration, we take issue with the claim that his class is inherently biased because he is the professor and author of its textbook. The truth is that Ec 10, a requirement for economics concentrators, provides a necessary academic grounding for the study of economics as a social science. Professor Mankiw’s curriculum sticks to the basics of economic theory without straying into partisan debate. We struggle to believe that we must defend his textbook, much maligned by the protesters, which is both peer reviewed and widely used.

Furthermore, the students protesting the class who desire that he give more time to other, less accepted schools of economic thoughtâ€"like Marxismâ€"would do well to remember that such interrogation is the domain of social theory, not economic theory. Supply-and-demand economics is a popular idea of how society is organized, and Mankiw’s Ec 10 never presents itself as more than that. As such, including other theories would simply muddy the waters of what is intended; Ec 10 is an introductory class that lays the foundation for future, more nuanced, study.

That being said, even if Ec 10 were as biased as the protesters claim it is, students walking out to protest its ideology set a dangerous precedent in an academic institution that prides itself on open discourse. This type of protest ignores opposition rather than engages with it. Instead of challenging a professor to back up his claims, it tries to remove him from the dialogue.

Advocacy of Pigovian taxation

Throughout his career, Mankiw has advocated the implementation of pigovian taxes, such as a revenue-neutral carbon tax, to correct for externalities. Toward that end, on his blog he founded the informal Pigou Club. In 2016, he had a part in the Leonardo DiCaprio film Before the Flood, a documentary about global climate change, where he was interviewed about carbon taxation. In 2017, Mankiw was one of eight "Republican elder statesmen" proposing that conservatives embrace of a policy of carbon taxes, with all revenue rebated as lump-sum dividends; the group also included James A. Baker III, Martin S. Feldstein, Henry M. Paulson Jr., and George P. Shultz.

Honors

In 2007, Mankiw was elected a member of the American Academy of Arts and Sciences. In 2012, the Princeton Review named him one of the 300 best professors in the nation. Along with David Card, he was elected vice president of the American Economic Association for 2014.

In popular culture

Mankiw is referenced in the 2011 film Elles, which shows an episode in the life of Anne (Juliette Binoche), a journalist writing an article about female student prostitution. When asked about her classes, one of the students, Polish immigrant Alicja (Joanna Kulig), replies that she has been studying neoliberal economist Greg Mankiw.

Personal life

Mankiw lives in Massachusetts with his wife Deborah, to whom he has been married since 1984. They have three children, Catherine, Nicholas and Peter.

Selected bibliography

• N. Gregory Mankiw (1985). "Small Menu Costs and Large Business Cycles: A Macroeconomic Model of Monopoly". Quarterly Journal of Economics. The MIT Press. 100 (2): 529â€"537. doi:10.2307/1885395. JSTOR 1885395. 
• N. Gregory Mankiw; David Romer; David Weil (1992). "A Contribution to the Empirics of Economic Growth". Quarterly Journal of Economics. The MIT Press. 107 (2): 407â€"437. doi:10.2307/2118477. JSTOR 2118477. 
• N. Gregory Mankiw (1998). Principles of Economics (1st ed.). Fort Worth, Texas: Dryden Press. ISBN 0-03098238-3. 
  • N. Gregory Mankiw (2006). Principles of Economics (4th ed.). South-Western College Pub. ISBN 0-324-22472-9. 
  • N. Gregory Mankiw (2011). Principles of Economics (6th ed.). Cengage Learning. ISBN 978-0-538-45305-9. 
• Mankiw, N. Gregory (2008). "New Keynesian Economics". In David R. Henderson (ed.). Concise Encyclopedia of Economics (2nd ed.). Indianapolis: Library of Economics and Liberty. ISBN 978-0865976658. OCLC 237794267. 
• N. Gregory Mankiw (2010). Macroeconomics (7th Edition). Worth Publishers. ISBN 978-1-4292-1887-0. 

References

External links

• Greg Mankiw's blog
• Mankiw's page at Harvard University
• "Into the Politics of Economics" New York Times article
• "Repeat After Me" Wall Street Journal Op-Ed with Mankiw's wishlist of economic proposals
• Mankiw's ten Principles of Economics, translated on YouTube
• Appearances on C-SPAN
• I Can Afford Higher Taxes. But They’ll Make Me Work Less. by N. Gregory Mankiw, New York Times, 9 October 2010
• "Mankiw Interview with Russell Roberts"
• Roberts, Russ (January 22, 2007). "Greg Mankiw on Gasoline Taxes, Keynes and Macroeconomics". EconTalk. Library of Economics and Liberty.