%0 Generic %D 2022 %T Government Debt and Capital Accumulation in an Era of Low Interest Rates [NBER Working Paper 30024] %A N.G. Mankiw %G eng %0 Generic %D 2021 %T Market Power in Neoclassical Growth Models [NBER Working Paper 28538] %A N.G. Mankiw %A Ball, LM %G eng %0 Book Section %B Combating Inequality, edited by Olivier Blanchard and Dani Rodrik %D 2021 %T How to Increase Taxes on the Rich (If You Must) %A N.G. Mankiw %B Combating Inequality, edited by Olivier Blanchard and Dani Rodrik %G eng %0 Book Section %B Macroeconomics %D 2020 %T The Covid-19 Recession of 2020 %A N.G. Mankiw %B Macroeconomics %7 11e %G eng %0 Generic %D 2020 %T The Past and Future of Econ 101: The John R. Commons Award Lecture %A N.G. Mankiw %B Prepared for AEA Meeting, January %G eng %0 Generic %D 2020 %T A Skeptic's Guide to Modern Monetary Theory %A N.G. Mankiw %B Prepared for AEA Meeting, January %G eng %0 Journal Article %J Journal of Economic Education %D 2019 %T Six Guidelines for Teaching Intermediate Macroeconomics %A N.G. Mankiw %B Journal of Economic Education %V June %G eng %U https://www.tandfonline.com/doi/full/10.1080/00220485.2019.1618768 %0 Generic %D 2019 %T Reflections of a Textbook Author %A N.G. Mankiw %G eng %0 Journal Article %J Foreign Affairs %D 2019 %T Snake-Oil Economics: The Bad Math Behind Trump's Policies %A N.G. Mankiw %B Foreign Affairs %V 98 %P 176-180 %G eng %N 1 %0 Journal Article %J Journal of Economic Perspectives %D 2018 %T Friedman's Presidential Address in the Evolution of Macroeconomic Thought %A N.G. Mankiw %A Reis, R %B Journal of Economic Perspectives %V 32 %P 81-96 %G eng %N 1 %0 Generic %D 2017 %T The Economics of Healthcare %A Mankiw, Nicholas Gregory %G eng %0 Journal Article %J Journal of Economic Education %D 2017 %T [Comment] On Welfare Economics in the Principles Course %A N.G. Mankiw %B Journal of Economic Education %V 48 %P 27-28 %G eng %N 1 %0 Journal Article %J Eastern Economic Journal %D 2016 %T The Tradeoff between Nuance and Clarity %A N. Gregory Mankiw %B Eastern Economic Journal %V 42 %P 169-170 %G eng %0 Government Document %D 2016 %T CEA Reflection %A N.G. Mankiw %B Box from Economic Report of the President, February 2016, Chapter 7 %G eng %0 Journal Article %J American Economic Review: Papers & Proceedings %D 2015 %T Yes, r > g. So What? %A N.G. Mankiw %B American Economic Review: Papers & Proceedings %V 105 %P 43-47 %G eng %N 5 %0 Journal Article %J Journal of Economic Perspectives %D 2013 %T Defending the One Percent %A N.G. Mankiw %B Journal of Economic Perspectives %V 27 %P 21-34 %G eng %N 3 %0 Journal Article %J Handbook of Monetary Economics %D 2011 %T Imperfect Information and Aggregate Supply %A N.G. Mankiw %A Ricardo Reis %B Handbook of Monetary Economics %G eng %0 Journal Article %J Brookings Papers on Economic Activity %D 2011 %T An Exploration of Optimal Stabilization Policy %A N.G. Mankiw %A Matthew Weinzierl %X

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.

%B Brookings Papers on Economic Activity %V Spring %P 209-272 %G eng %0 Book %D 2011 %T Principles of Economics, 5th edition %A N.G. Mankiw %I South-Western Cengage Learning %G eng %U http://mankiw.swlearning.com/ %0 Journal Article %J Eastern Economic Journal %D 2010 %T Spreading the Wealth Around: Reflections Inspired by Joe the Plumber %A N.G. Mankiw %X

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.

%B Eastern Economic Journal %V 36 %P 285-298 %G eng %0 Journal Article %J American Economic Journal: Economic Policy %D 2010 %T The Optimal Taxation of Height: A Case Study in Utilitarian Income Redistribution %A N.G. Mankiw %A Matthew Weinzierl %X

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.

%B American Economic Journal: Economic Policy %V 2 %P 155-176 %G eng %N 1 %0 Book %D 2010 %T Macroeconomics, 7th Edition %A N.G. Mankiw %I Worth Publishers %G eng %U http://www.worthpublishers.com/mankiw %0 Journal Article %J Journal of Economic Perspectives %D 2009 %T Optimal Taxation in Theory and Practice %A N.G. Mankiw %A Matthew Weinzierl %A Danny Yagan %B Journal of Economic Perspectives %V 23 %P 147-174 %G eng %N 4 %0 Journal Article %J Eastern Economic Journal %D 2009 %T Smart Taxes: An Open Invitation to Join the Pigou Club %A N.G. Mankiw %X

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.

%B Eastern Economic Journal %V 35 %P 12-23 %G eng %0 Journal Article %J Journal of Political Economy %D 2007 %T Intergenerational Risk Sharing in the Spirit of Arrow, Debreu, and Rawls, with Applications to Social Security Design %A N.G. Mankiw %A Laurence Ball %X

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.

%B Journal of Political Economy %V 115 %P 523-547 %G eng %N 4 %0 Journal Article %J Journal of the European Economic Association %D 2007 %T Sticky Information in General Equilibrium %A N.G. Mankiw %A Ricardo Reis %X

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.

%B Journal of the European Economic Association %V 5 %P 603-613 %G eng %N 2-3 %0 Journal Article %J Journal of Economic Perspectives %D 2006 %T The Macroeconomist as Scientist and Engineer %A N.G. Mankiw %B Journal of Economic Perspectives %V 20 %P 29-46 %G eng %N 4 %0 Journal Article %J Journal of Monetary Economics %D 2006 %T The Politics and Economics of Offshore Outsourcing %A N.G. Mankiw %A Phillip L. Swagel %B Journal of Monetary Economics %V 53 %P 1027-1056 %G eng %N 5 %0 Journal Article %J American Economic Review %D 2006 %T Pervasive Stickiness %A N.G. Mankiw %A Ricardo Reis %B American Economic Review %V 96 %P 164-169 %G eng %N 2 %0 Journal Article %J Journal of Public Economics %D 2006 %T Dynamic Scoring: A Back-of-the-Envelope Guide %A N.G. Mankiw %A Matthew Weinzierl %X

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.

%B Journal of Public Economics %V 90 %P 1415-1433 %G eng %N 8-9 %0 Journal Article %J Foreign Affairs %D 2005 %T Antidumping: The Third Rail of Trade Policy %A N.G. Mankiw %A Phillip L. Swagel %B Foreign Affairs %V July/August %G eng %0 Conference Paper %B Alan Greenspan’s Legacy: An Early Look %D 2005 %T A Letter to Ben Bernanke %A N.G. Mankiw %B Alan Greenspan’s Legacy: An Early Look %I American Economic Assocation %G eng %0 Journal Article %J Journal of Monetary Economics %D 2005 %T Monetary Policy for Inattentive Economies %A N.G. Mankiw %A Laurence Ball %A Ricardo Reis %X

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.

%B Journal of Monetary Economics %V 52 %P 703-725 %G eng %N May %0 Journal Article %J NBER Macroeconomics Annual %D 2003 %T Disagreement about Inflation Expectations %A N.G. Mankiw %A Ricardo Reis %A Justin Wolfers %X

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

%B NBER Macroeconomics Annual %P 209-248 %G eng %0 Journal Article %D 2002 %T What Measure of Inflation Should a Central Bank Target? %A N.G. Mankiw %A Ricardo Reis %X

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.

%G eng %0 Journal Article %J Journal of Economic Perspectives %D 2002 %T The NAIRU in Theory and Practice %A N.G. Mankiw %A Laurence Ball %B Journal of Economic Perspectives %V 16 %P 115-136 %G eng %N Fall %0 Journal Article %J Quarterly Journal of Economics %D 2002 %T Sticky Information versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve %A N.G. Mankiw %A Ricardo Reis %X

This paper examines a model of dynamic price adjustment based on the assumption that information disseminates slowly throughout the population. Compared to the commonly used sticky-price model, this 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.

%B Quarterly Journal of Economics %V 117 %P 1295-1328 %G eng %N Nov %0 Conference Paper %B Conference in Honor of Ned Phelps %D 2001 %T Sticky Information: A Model of Monetary Nonneutrality and Structural Slumps %A N.G. Mankiw %A Ricardo Reis %X

This paper explores a model of wage adjustment based on the assumption that information disseminates slowly throughout the population of wage setters. This informational frictional yields interesting and plausible dynamics for employment and inflation in response to exogenous movements in monetary policy and productivity. In this model, disinflations and productivity slowdowns have a parallel effect: They both cause the path of employment to fall below the level that would prevail under full information. The model implies that, in the face of productivity change, a policy of targeting either nominal income or the nominal wage leads to more stable employment than does a policy of targeting the price of goods and services. Finally, we examine U.S. time series and find that, as the model predicts, unemployment fluctuations are associated with both inflation and productivity surprises.

%B Conference in Honor of Ned Phelps %8 October %G eng %0 Journal Article %J Economic Journal %D 2001 %T The Inexorable and Mysterious Tradeoff between Inflation and Unemployment %A N.G. Mankiw %X

This paper discusses the short-run tradeoff between inflation and unemployment. Although this tradeoff remains a necessary building block of business cycle theory, economists have yet to provide a completely satisfactory explanation for it. According to the consensus view among central bankers and monetary economists, a contractionary monetary shock raises unemployment, at least temporarily, and leads to a delayed and gradual fall in inflation. Standard dynamic models of price adjustment, however, cannot explain this pattern of responses. Reconciling the consensus view about the effects of monetary policy with models of price adjustment remains an outstanding puzzle for business cycle theorists.

%B Economic Journal %V 111 %P C45-C61 %G eng %N May %0 Conference Paper %B Conference on "Economic Policy During the 1990s" %D 2001 %T U.S. Monetary Policy During the 1990s %A N.G. Mankiw %X

This paper discusses the conduct and performance of U.S. monetary policy during the 1990s, comparing it to policy during the previous several decades. It reaches four broad conclusions. First, the macroeconomic performance of the 1990s was exceptional, especially if judged by the volatility of growth, unemployment, and inflation. Second, much of the good performance was due to good luck arising from the supply-side of the economy: Food and energy prices were well behaved, and productivity growth experienced an unexpected acceleration. Third, monetary policymakers deserve some of the credit by making interest rates more responsive to inflation than was the case in previous periods. Fourth, although the 1990s can be viewed as an example of successful discretionary policy, Fed policymakers may have been engaged in "covert inflation targeting" at a rate of about 3 percent. The avoidance of an explicit policy rule, however, means that future policymakers inherit only a limited legacy.

%B Conference on "Economic Policy During the 1990s" %I Kennedy School of Government %8 June %G eng %0 Journal Article %J American Economic Review %D 2000 %T The Savers-Spenders Theory of Fiscal Policy %A N.G. Mankiw %X

The macroeconomic analysis of fiscal policy is usually based on one of two canonical models--the Barro-Ramsey model of infinitely-lived families or the Diamond-Samuelson model of overlapping generations. This paper argues that neither model is satisfactory and suggests an alternative. In the proposed model, some consumers plan ahead for themselves and their descendants, while others live paycheck to paycheck. This model is easier to reconcile with the essential facts about consumer behavior and wealth accumulation, and it yields some new and surprising conclusions about fiscal policy.

%B American Economic Review %V 90 %P 120-125 %G eng %N May %0 Book Section %B Handbook of Macroeconomics %D 1999 %T Government Debt %A N.G. Mankiw %A Douglas Elmendorf %X

This paper surveys the literature on the macroeconomic effects of government debt. It begins by discussing the data on debt and deficits, including the historical time series, measurement issues, and projections of future fiscal policy. The paper then presents the conventional theory of government debt, which emphasizes aggregate demand in the short run and crowding out in the long run. It next examines the theoretical and empirical debate over the theory of debt neutrality called Ricardian equivalence. Finally, the paper considers the various normative perspectives about how the government should use its ability to borrow.

%B Handbook of Macroeconomics %I North Holland %G eng %0 Journal Article %J Eastern Economic Journal %D 1998 %T Teaching the Principles of Economics %A N.G. Mankiw %B Eastern Economic Journal %V 24 %P 519-524 %G eng %N 4 %0 Journal Article %J American Economic Review %D 1997 %T An Asset Allocation Puzzle %A N.G. Mankiw %A Niko Canner %A David Weil %B American Economic Review %V 87 %P 181-191 %G eng %N Mar %0 Generic %D 1995 %T What Do Budget Deficits Do? %A N.G. Mankiw %A Laurence Ball %G eng %0 Journal Article %J Brookings Papers on Economic Activity %D 1995 %T The Growth of Nations %A N.G. Mankiw %X

Average incomes in the world's richest countries are more than ten times as high as in the world's poorest countries. It is apparent to anyone who travels the world that these large differences in income lead to large differences in the quality of life. Less apparent are the reasons for these differences. What is it about the United States, Japan, and Germany that makes these countries so much richer than India, Indonesia, and Nigeria? How can the rich countries be sure to maintain their high standard of living? What can the poor countries do to join the club?
After many years of neglect, these questions are again at the center of macroeconomic research and teaching. Long-run growth is now widely viewed to be at least as important as short-run fluctuations. Moreover, growth is not just important. It is also a topic about which macroeconomists, with their crude aggregate models, have something useful to say.
My goal here is to assess what we now know about economic growth. The scope of this paper is selective and, to some extent, idiosyncratic. The study of growth has itself grown so rapidly in recent years that it would take an entire book to discuss the field thoroughly.' In this paper, I do not try to lay out the many different views in the large literature on economic growth. Instead, I try to present my own views, as cogently as I can, on what we know about the growth of nations.

%B Brookings Papers on Economic Activity %V 1 %P 275-326 %G eng %0 Journal Article %J American Economic Review %D 1995 %T Capital Mobility in Neoclassical Models of Growth %A N.G. Mankiw %A Robert Barro %A Xavier Sala-i-Martin %B American Economic Review %V 85 %P 103-115 %G eng %N Mar %0 Journal Article %J Quarterly Journal of Economics %D 1995 %T Relative-Price Changes as Aggregate Supply Shocks %A N.G. Mankiw %A Laurence Ball %X

This paper proposes a theory of supply shocks, or shifts in the short-run Phillips curve, based on relative-price changes and frictions in nominal price adjustment. When price adjustment is costly, firms adjust to large shocks but not to small shocks, and so large shocks have disproportionate effects on the price level. Therefore, aggregate inflation depends on the distribution of relative-price changes: inflation rises when the distribution is skewed to the right, and falls when the distribution is skewed to the left. We show that this theoretical result explains a large fraction of movements in postwar U. S. inflation. Moreover, our model suggests measures of supply shocks that perform better than traditional measures, such as the relative prices of food and energy.

%B Quarterly Journal of Economics %V Feb %P 161-193 %G eng %0 Journal Article %J The American Economist %D 1994 %T My Rules of Thumb %A N.G. Mankiw %B The American Economist %G eng %0 Journal Article %J Economic Journal %D 1994 %T Asymmetric Price Adjustment and Economic Fluctuations %A N.G. Mankiw %A Laurence Ball %X

This paper considers a possible explanation for asymmetric adjustment of nominal prices. We present a menu-cost model in which positive trend inflation causes firms' relative prices to decline automatically between price adjustments. In this environment, shocks that raise firms' desired prices trigger larger price responses than shocks that lower desired prices. We use this model of asymmetric adjustment to address three issues in macroeconomics: the effects of aggregate demand, the effects of sectoral shocks, and the optimal rate of inflation.

%B Economic Journal %V 104 %P 247-261 %G eng %N Mar %0 Journal Article %J Quarterly Journal of Economics %D 1992 %T A Contribution to the Empirics of Economic Growth %A N.G. Mankiw %A David Romer %A David Weil %X

This paper examines whether the Solow growth model is consistent with the international variation in the standard of living. It shows that an augmented Solow model that includes accumulation of human as well as physical capital provides an excellent description of the cross-country data. The paper also examines the implications of the Solow model for convergence in standards of living, that is, for whether poor countries tend to grow faster than rich countries. The evidence indicates that, holding population growth and capital accumulation constant, countries converge at about the rate the augmented Solow model predicts.

%B Quarterly Journal of Economics %V 107 %P 407-437 %G eng %N May %0 Journal Article %J European Economic Review %D 1991 %T The Response of Consumption to Income: A Cross-Country Investigation %A N.G. Mankiw %A John Campbell %X

In previous work we have argued that aggregate, post-war, United States data on consumption and income are well described by a model in which a fraction of income accrues to individuals who consume their current income rather than their permanent income. This fraction is estimated to be about 50”/., indicating a substantial departure from the permanent income hypothesis. In this paper we ask whether the same model fits quarterly data from the United Kingdom over the period 1957-1988 and from Canada, France, Japan, and Sweden over the period 1972-1988. We also explore several generalizations of the basic model.

%B European Economic Review %V 35 %P 723-767 %G eng %0 Journal Article %J Journal of Financial Economics %D 1991 %T The Consumption of Stockholders and Non-Stockholders %A N.G. Mankiw %A Stephen Zeldes %X

Only one-fourth of U.S. families own stock. This paper examines whether the consumption of stockholders differs from the consumption of nonstockholders and. if so. whether these differences help explain the empirical failures of the consumption-based CAPM. Household panel data are used to construct time series on the consumption of each group. The results indicate that the consumption of stockholders is more volatile and more highly correlated with the excess return on the stock market. These differences help explain the size of the equity premium, although they do not fully resolve the equity premium puzzle.

%B Journal of Financial Economics %V 29 %P 97-112 %G eng %N Mar %0 Journal Article %J Journal of Economic Literature %D 1990 %T A Quick Refresher Course in Macroeconomics %A N.G. Mankiw %X

This paper, though new, draws heavily on my previous paper, "Recent Developments in Macroeconomics: A Very Quick Refresher Course," Journal of Money, Credit, and Banking, August 1988, Part 2. I am grateful to Moses Abramovitz, David Laidler, and Thomas Mayer for comments, and to the National Science Foundation for financial support.

%B Journal of Economic Literature %V 28 %P 1645-1660 %G eng %N Dec %0 Journal Article %J Journal of Business and Economic Statistics %D 1990 %T Permanent Income, Current Income, and Consumption %A N.G. Mankiw %A John Campbell %X

This article reexamines the consistency of the permanent-income hypothesis with aggregate postwar U.S. data. The permanent-income hypothesis is nested within a more general model in which a fraction of income accrues to individuals who consume their current income rather than their permanent income. This fraction is estimated to be about 50%, indicating a substantial departure from the permanent-income hypothesis. Our results cannot be easily explained by time aggregation or small-sample bias, by changes in the real interest rate, or by nonseparabilities in the utility function of consumers.

%B Journal of Business and Economic Statistics %V 8 %P 265-280 %G eng %N July %0 Journal Article %J NBER Macroeconomics Annual 4 %D 1989 %T Consumption, Income, and Interest Rates: Reinterpreting the Time Series Evidence %A N.G. Mankiw %A John Campbell %B NBER Macroeconomics Annual 4 %P 185-216 %G eng %0 Journal Article %J Journal of Political Economy %D 1989 %T Precautionary Saving and the Timing of Taxes %A N.G. Mankiw %A Miles Kimball %X

This paper analyzes the effects of government debt and income taxes on consumption and saving in a world of infinitely lived households having uncertain and heterogeneous incomes. The special structure of the model allows exact aggregation across households despite incomplete markets. The effects of government debt are shown to be substantial, roughly comparable to those resulting from finite horizons, and crucially dependent on the length of time until the debt is repaid. Also, anticipated changes in taxes are shown to cause anticipated changes in consumption. Finally, an index of fiscal stance is derived.

%B Journal of Political Economy %V 97 %P 863-879 %G eng %N Aug %0 Journal Article %J Regional Science and Urban Economics %D 1989 %T The Baby Boom, the Baby Bust, and the Housing Market %A N.G. Mankiw %A David Weil %X

This paper examines the impact of major demographic changes on the housing market in the United States. The entry of the Baby Boom generation into its house-buying years is found to be the major cause of the increase in real housing prices in the 1970s. Since the Baby Bust generation is now entering its house-buying years, housing demand will grow more slowly in the 1990s than in any time in the past forty years. If the historical relation between housing demand and housing prices continues into the future, real housing prices will fall substantially over the next two decades.

%B Regional Science and Urban Economics %V 19 %P 235-258 %G eng %0 Journal Article %J Journal of Economic Perspectives %D 1989 %T Real Business Cycles: A New Keynesian Perspective %A N.G. Mankiw %B Journal of Economic Perspectives %V 3 %P 79-90 %G eng %N Summer %0 Journal Article %J Review of Economic Studies %D 1989 %T Assessing Dynamic Efficiency: Theory and Evidence %A N.G. Mankiw %A Andrew Abel %A Lawrence Summers %A Richard Zeckhauser %X

The issue of dynamic efficiency is central to analyses of capital accumulation and economic growth. Yet the question of what characteristics should be examined to determine whether actual economies are dynamically efficient is unresolved. This paper develops a criterion for determining whether an economy is dynamically efficient. The criterion, which holds for economies in which technological progress and population growth are stochastic, involves a comparison of the cash flows generated by capital with the level of investment. Its application to the United States economy and the economies of other major OECD nations suggests that they are dynamically efficient.

%B Review of Economic Studies %V 56 %P 1-20 %G eng %N Jan %0 Journal Article %J Brookings Papers on Economic Activity %D 1988 %T The New Keynesian Economics and the Output-Inflation Trade-off %A N.G. Mankiw %A Laurence Ball %A David Romer %B Brookings Papers on Economic Activity %V 1 %P 1-65 %G eng %0 Journal Article %J Journal of Monetary Economicss %D 1987 %T The Optimal Collection of Seigniorage: Theory and Evidence %A N.G. Mankiw %X

This paper presents and tests a positive theory of monetary and fiscal policy. The government chooses the rates of taxation and inflation to minimize the present value of the social cost of raising revenue given exogenous expenditure and an intertemporal budget constraint. The theory implies that nominal interest rates and inflation are random walks. It also implies that nominal interest rates and inflation move together with tax rates. United States data from 1952 to 1985 provide some support for the theory.

%B Journal of Monetary Economicss %V 20 %G eng %N 327-341 %0 Journal Article %J Quarterly Journal of Economics %D 1987 %T Are Output Fluctuations Transitory? %A N.G. Mankiw %A John Campbell %X

According to the conventional view of the business cycle, fluctuations in output represent temporary deviations from trend. The purpose of this paper is to question this conventional view. If fluctuations in output are dominated by temporary deviations from the natural rate of output, then an unexpected change in output today should not substantially change one's forecast of output in, say, five or ten years. Our examination of quarterly postwar United States data leads us to be skeptical about this implication. The data suggest that an unexpected change in real GNP of 1 percent should change one's forecast by over 1 percent over a long horizon.

%B Quarterly Journal of Economics %V Nov %P 857-880 %G eng %0 Journal Article %J American Economic Review %D 1987 %T The Adjustment of Expectations to a Change in Regime: A Study of the Founding of the Federal Reserve %A N.G. Mankiw %A Jeffrey Miron %A David Weil %B American Economic Review %V 77 %P 358-374 %G eng %N June %0 Journal Article %J Journal of Political Economy %D 1987 %T Government Purchases and Real Interest Rates %A N.G. Mankiw %X

This paper examines the dynamic impact of government purchases in a simple general equilibrium model with both durable and non-durable consumer goods as well as productive capital. The model generates perhaps surprising results. In particular, increases in government purchases are shown to cause reductions in real interest rates. The model thus provides a possible explanation for the observed behavior of real interest rates around wars.

%B Journal of Political Economy %V 95 %P 407-419 %G eng %N Apr %0 Journal Article %J Quarterly Journal of Economics %D 1986 %T The Allocation of Credit and Financial Collapse %A N.G. Mankiw %X

This paper examines the allocation of credit in a market in which borrowers have greater information concerning their own riskiness than do lenders. It illustrates that (1)the allocation of credit is inefficient and at times can be improved by government intervention, and (2) small changes in the exogenous risk-free interest rate can cause large (discontinuous) changes in the allocation of credit and the efficiency of the market equilibrium. These conclusions suggests a role for government as the lender of last resort.

%B Quarterly Journal of Economics %V 101 %P 455-470 %G eng %N Aug %0 Journal Article %J Journal of Financial Economics %D 1986 %T The Equity Premium and the Concentration of Aggregate Shocks %A N.G. Mankiw %X

This paper examines an economy in which aggregate shocks are not dispersed equally throughout the population. Instead, while these shocks affect all individuals ex ante, they are concentrated among a few ex post. The equity premium in genera) depends on the concentration of these aggregate shocks; it follows that one cannot estimate the degree of risk aversion from aggregate data alone. These findings suggest that the empirical usefulness of aggregation theorems for capital asset pricing models is limited.

%B Journal of Financial Economics %V 17 %P 211-219 %G eng %0 Journal Article %J American Economic Review %D 1986 %T Ricardian Consumers with Keynesian Propensities %A N.G. Mankiw %A Robert Barsky %A Stephen Zeldes %X

This paper examines Ricardian equivalence in a world in which taxes are not lump sum, but are levied on risky labor income. It shows that the marginal propensity to consume out of a tax cut, coupled with a future income tax increase, can be substantial under plausible assumptions. Indeed, the MPC out of a tax cut can be closer to the Keynesian value that ignores the future tax liabilities than to the Ricardian value that treats future taxes as if they were lump sum.

%B American Economic Review %V 76 %P 676-691 %G eng %N Sept %0 Journal Article %J Rand Journal of Economics %D 1986 %T Free Entry and Social Inefficiency %A N.G. Mankiw %A Michael Whinston %X

Previous articles have noted the possibility of socially inefficient levels of entry in markets in whichJirms must incurjixed set-up costs upon entry. This article identifies the fundamental and intuitive forces that lie behind these entry biases. Ifan entrant causes incumbent firms to reduce output, entry is more desirable to the entrant than it is to society. There is therefore a tendency toward excessive entry in homogeneous product markets. The roles of product diversity and the integer constraint on the number ofJirms are also examined.

%B Rand Journal of Economics %V 17 %P 48-58 %G eng %N Spring %0 Journal Article %J Quarterly Journal of Economics %D 1986 %T The Changing Behavior of the Term Structure of Interest Rates %A N.G. Mankiw %A Jeffrey Miron %X

We reexamine the expectations theory of the term structure using data at the short end of the maturity spectrum. We find that prior to the founding of the Federal Reserve System in 1915, the spread between long rates and short rates has substantial predictive power for the path of interest rates; after 1915, however, the spread contains much less predictive power. We then show that the short rate is approximately a random walk after the founding of the Fed but not before. This latter fact, coupled with even slight variation in the term premium, can explain the observed change in 1915 in the performance of the expectations theory. We suggest that the random walk character of the short rate may be attributable to the Federal Reserve's commitment to stabilizing interest rates.

%B Quarterly Journal of Economics %V 101 %P 211--228 %G eng %N 2 %0 Journal Article %J Quarterly Journal of Economics %D 1985 %T Small Menu Costs and Large Business Cycles: A Macroeconomic Model of Monopoly %A N.G. Mankiw %B Quarterly Journal of Economics %V 100 %P 529-537 %G eng %N May %0 Journal Article %J Quarterly Journal of Economics %D 1985 %T Intertemporal Substitution in Macroeconomics %A N.G. Mankiw %A Julio Rotemberg %A Lawrence Summers %X

Modern neoclassical business cycle theories posit that the observed fluctuations in consumption and employment correspond to decisions of an optimizing representative individual. We estimate three first-order conditions that represent three tradeoffs faced by such an optimizing individual. He can trade off present for future consumption, present for future leisure, and present consumption for present leisure. The aggregate U. S. data lend no support to this model. The overidentifying restrictions are rejected, and the estimated utility function is often convex. Even when it is concave, the estimates imply that either consumption or leisure is an inferior good.

%B Quarterly Journal of Economics %V 100 %P 225-251 %G eng %N Feb %0 Journal Article %J Journal of Monetary Economics %D 1982 %T Hall's Consumption Hypothesis and Durable Goods %A N.G. Mankiw %B Journal of Monetary Economics %V 10 %P 417-426 %G eng %N Nov