Publications

Submitted
Mankiw NG, Weinzierl M. An Exploration of Optimal Stabilization Policy. Submitted.Abstract
This paper examines the optimal response of monetary and fi…scal policy to a decline in aggregate demand. The theoretical framework is a two-period general equilibrium model in which prices are sticky in the short run and flexible in the long run. Policy is evaluated by how well it raises the welfare of the representative household. While the model has Keynesian features, its policy prescriptions di¤er signi…cantly from textbook Keynesian analysis. Moreover, the model suggests that the commonly used "bang for the buck" calculations are potentially misleading guides for the welfare e¤ects of alternative …fiscal policies.
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2013
Mankiw NG. Defending the One Percent. Journal of Economic Perspectives. 2013;27(3):21-34. defending_the_one_percent.pdf
2011
Mankiw NG, Reis R. Imperfect Information and Aggregate Supply. Handbook of Monetary Economics. 2011. PDF
Principles of Economics, 5th edition
Mankiw NG. Principles of Economics, 5th edition. South-western Cengage Learning; 2011. Website 4th Edition 2nd Edition 3rd Edition
2010
Mankiw NG. Spreading the Wealth Around: Reflections Inspired by Joe the Plumber. Eastern Economic Journal. 2010;36:285-298.Abstract
This essay discusses the policy debate concerning optimal taxation and the distribution of income. It begins with a brief overview of trends in income inequality, the leading hypothesis to explain these trends, and the distribution of the tax burden. It then considers the normative question of how the tax system should be designed. The conventional utilitarian framework is found to be wanting, as it leads to prescriptions that conflict with many individuals’ moral intuitions. The essay then explores an alternative normative framework, dubbed the Just Deserts Theory, according to which an individual’s compensation should reflect his or her social contribution.
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Mankiw NG, Weinzierl M. The Optimal Taxation of Height: A Case Study in Utilitarian Income Redistribution. American Economic Journal: Economic Policy. 2010;2(1):155-176.Abstract
Should the income tax system include a tax credit for short taxpayers and a tax surcharge for tall ones? This paper shows that the standard Utilitarian framework for tax policy analysis answers this question in the a¢ rmative. Moreover, based on the empirical distribution of height and wages, the optimal height tax is substantial: a tall person earning $50,000 should pay about $4,500 more in taxes than a short person earning the same income. This result has two possible interpretations. One interpretation is that individual attributes correlated with wages, such as height, should be considered more widely for determining tax liabilities. Alternatively, if policies such as a tax on height are rejected, then the standard Utilitarian framework must in some way fail to capture our intuitive notions of distributive justice.
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Macroeconomics, 7th Edition
Mankiw NG. Macroeconomics, 7th Edition. Worth Publishers; 2010. Website 4th Edition 5th Edition 6th Edition
2009
Mankiw NG, Weinzierl M, Yagan D. Optimal Taxation in Theory and Practice. Journal of Economic Perspectives. 2009;23(4):147-174. PDF
Mankiw NG. Smart Taxes: An Open Invitation to Join the Pigou Club. Eastern Economic Journal. 2009;35:12-23.Abstract
Many economists favor higher taxes on energy-related products such as gasoline, while the general public is more skeptical. This essay discusses various aspects of this policy debate. It focuses, in particular, on the use of these taxes to correct for various externalities—an idea advocated long ago by British economist Arthur Pigou.
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2007
Mankiw NG, Ball L. Intergenerational Risk Sharing in the Spirit of Arrow, Debreu, and Rawls, with Applications to Social Security Design. Journal of Political Economy. 2007;115(4):523-547.Abstract
This paper examines the optimal allocation of risk in an overlapping-generations economy. It compares the allocation of risk the economy reaches naturally to the allocation that would be reached if generations behind a Rawlsian "veil of ignorance" could share risk with one another through complete Arrow-Debreu contingent-claims markets. The paper then examines how the government might implement optimal intergenerational risk sharing with a social security system. One conclusion is that the system must either hold equity claims to capital or negatively index benefits to equity returns.
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Mankiw NG, Reis R. Sticky Information in General Equilibrium. Journal of the European Economic Association. 2007;5(2-3):603-613.Abstract
This paper develops and analyzes a general-equilibrium model with sticky information. The only rigidity in goods, labor, and financial markets is that agents are inattentive, sporadically updating their information sets, when setting prices, wages, and consumption. After presenting the ingredients of such a model, the paper develops an algorithm to solve this class of models and uses it to study the model’s dynamic properties. It then estimates the parameters of the model using U.S. data on five key macroeconomic time series. It finds that information stickiness is present in all markets, and is especially pronounced for consumers and workers. Variance decompositions show that monetary policy and aggregate demand shocks account for most of the variance of inflation, output, and hours.
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2006
Mankiw NG. The Macroeconomist as Scientist and Engineer. Journal of Economic Perspectives. 2006;20(4):29-46. PDF
Mankiw NG, Swagel PL. The Politics and Economics of Offshore Outsourcing. Journal of Monetary Economics. 2006;53(5):1027-1056. PDF
Mankiw NG, Reis R. Pervasive Stickiness. American Economic Review. 2006;96(2):164-169. PDF Appendix
Mankiw NG, Weinzierl M. Dynamic Scoring: A Back-of-the-Envelope Guide. Journal of Public Economics. 2006;90(8-9):1415-1433.Abstract
This paper uses the neoclassical growth model to examine the extent to which a tax cut pays for itself through higher economic growth. The model yields simple expressions for the steady-state feedback effect of a tax cut. The feedback is surprisingly large: for standard parameter values, half of a capital tax cut is self-…nancing. The paper considers various generalizations of the basic model, including elastic labor supply, general production technologies, departures from in…nite horizons, and non-neoclassical production settings. It also examines how the steady-state results are modi…ed when one considers the transition path to the steady state.
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2005
Mankiw NG, Swagel PL. Antidumping: The Third Rail of Trade Policy. Foreign Affairs. 2005;July/August. PDF
Mankiw NG. A Letter to Ben Bernanke, in Alan Greenspan’s Legacy: An Early Look. American Economic Assocation; 2005. PDF
Mankiw NG, Ball L, Reis R. Monetary Policy for Inattentive Economies. Journal of Monetary Economics. 2005;52(May):703-725.Abstract
This paper is a contribution to the analysis of optimal monetary policy. It begins with a critical assessment of the existing literature, arguing that most work is based on implausible models of inflation-output dynamics. It then suggests that this problem may be solved with some recent behavioral models, which assume that price setters are slow to incorporate macroeconomic information into the prices they set. A specific such model is developed and used to derive optimal policy. In response to shocks to productivity and aggregate demand, optimal policy is price level targeting. Base drift in the price level, which is implicit in the inflation targeting regimes currently used in many central banks, is not desirable in this model. When shocks to desired markups are added, optimal policy is flexible targeting of the price level. That is, the central bank should allow the price level to deviate from its target for a while in response to these supply shocks, but it should eventually return the price level to its target path. Optimal policy can also be described as an elastic price standard: the central bank allows the price level to deviate from its target when output is expected to deviate from its natural rate.
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2003
Mankiw NG, Reis R, Wolfers J. Disagreement about Inflation Expectations. NBER Macroeconomics Annual. 2003:209-248.Abstract
Analyzing 50 years of inflation expectations data from several sources, we document substantial disagreement among both consumers and professional economists about expected future inflation. Moreover, this disagreement shows substantial variation through time, moving with inflation, the absolute value of the change in inflation, and relative price variability. We argue that a satisfactory model of economic dynamics must speak to these important business cycle moments. Noting that most macroeconomic models do not endogenously generate disagreement, we show that a simple “sticky-information” model broadly matches many of these facts. Moreover, the sticky-information model is consistent with other observed departures of inflation expectations from full rationality, including autocorrelated forecast errors and insufficient sensitivity to recent macroeconomic news
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2002
Mankiw NG, Reis R. What Measure of Inflation Should a Central Bank Target?. 2002.Abstract
This paper assumes that a central bank commits itself to maintaining an inflation target and then asks what measure of the inflation rate the central bank should use if it wants to maximize economic stability. The paper first formalizes this problem and examines its microeconomic foundations. It then shows how the weight of a sector in the stability price index depends on the sector’s characteristics, including size, cyclical sensitivity, sluggishness of price adjustment, and magnitude of sectoral shocks. When a numerical illustration of the problem is calibrated to U.S. data, one tentative conclusion is that a central bank that wants to achieve maximum stability of economic activity should use a price index that gives substantial weight to the level of nominal wages.
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