Greg Mankiw

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Greg Mankiw

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



  • Today, Keynesian theorizing does not inspire whispers and giggles from the audience. There are many economists under the age of forty who do not take offense when their work is called ‘Keynesian’, and I count myself as one of them. If Keynesian economics was dead in 1980, then today it has been reincarnated.
    • N. Gregory Mankiw, "The reincarnation of Keynesian economics", European Economic Review (1992).
  • It is too early to say there is a consensus about how all these topics fit together. Yet one can say that the new classical challenge has been met: Keynesian economics has been reincarnated into a body with firm microeconomic muscle.
    • N. Gregory Mankiw, "The reincarnation of Keynesian economics", European Economic Review (1992).
  • Despite its flaws, Peddling Prosperity has much to recommend it. There is no book written for a lay audience that explains the economics profession with more perception or clarity than this one.
    • N. Gregory Mankiw, Review of Peddling Prosperity: Economic Sense and Nonsense in the Age of Diminished Expectations by Paul Krugman, Journal of Economic Literature (Dec., 1995)

2000s -[edit]

  • Although Keynes’s General Theory provides the foundation for much of our current understanding of economic fluctuations, it is important to remember that classical economics provides the right answers to many fundamental questions.
    • N. Gregory Mankiw]], Macroeconomics, Preview ; Cited in: David Colander (2005). 'The Stories Economists Tell. p. 182
  • 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.
    • N. Gregory Mankiw, "What Would Keynes Have Done?" in New York Times (November 28, 2008).
  • Which brings us to a third group of macroeconomists: those who fall into neither the pro- nor the anti-Keynes camp. I count myself among the ambivalent. We credit both sides with making legitimate points, yet we watch with incredulity as the combatants take their enthusiasm or detestation too far. Keynes was a creative thinker and keen observer of economic events, but he left us with more hard questions than compelling answers.
    • N. Gregory Mankiw, "Back In Demand" Wall Street Journal (September 21, 2009).
  • A few years ago, I had the good fortune of running across a first edition of Paul's textbook (not the recent reprint of the original text, but an actual 1948 edition). It was a real find. I bought the volume in an online auction for, if my recollection is correct, $35. Talk about consumer surplus! I would have gladly paid many times that.
    At the next Boston Fed meeting, I took the book along to get Paul to sign it. Below is the book's title page, along with Paul's gracious inscription.
  • After more than a quarter-century as a professional economist, I have a confession to make: There is a lot I don’t know about the economy. Indeed, the area of economics where I have devoted most of my energy and attention — the ups and downs of the business cycle — is where I find myself most often confronting important questions without obvious answers.
  • The circular-flow diagram offers a simple way of organizing the economic transactions that occur between households and firms in the economy. The two loops of the circular-flow diagram are distinct but related. The inner loop represents the flows of inputs and outputs. The households sell the use of their labor, land, and capital to the firms in the markets for the factors of production. The firms then use these factors to produce goods and services, which in turn are sold to households in the markets for goods...

Principles of Economics (2015)[edit]

N. Gregory Mankiw, Principle of Economics (7th ed., 2015)

Ch. 1. Ten Principles of Economics[edit]

  • The management of society’s resources is important because resources are scarce. Scarcity means that society has limited resources and therefore cannot produce all the goods and services people wish to have.
    • p. 4
  • Economics is the study of how society manages its scarce resources. In most societies, resources are allocated not by an all-powerful dictator but through the combined actions of millions of households and firms. Economists therefore study how people make decisions: how much they work, what they buy, how much they save, and how they invest their savings. Economists also study how people interact with one another. For instance, they examine how the multitude of buyers and sellers of a good together determine the price at which the good is sold and the quantity that is sold. Finally, economists analyze forces and trends that affect the economy as a whole, including the growth in average income, the fraction of the population that cannot find work, and the rate at which prices are rising.
    • p. 4
  • There is no mystery to what an economy is. Whether we are talking about the economy of Los Angeles, the United States, or the whole world, an economy is just a group of people dealing with one another as they go about their lives.
    • p. 4
  • Recognizing that people face trade-offs does not by itself tell us what decisions they will or should make. A student should not abandon the study of psychology just because doing so would increase the time available for the study of economics. Society should not stop protecting the environment just because environmental regulations reduce our material standard of living. The poor should not be ignored just because helping them distorts work incentives. Nonetheless, people are likely to make good decisions only if they understand the options they have available. Our study of economics, therefore, starts by acknowledging life’s trade-offs.
    • p. 5
  • The opportunity cost of an item is what you give up to get that item. When making any decision, decision makers should be aware of the opportunity costs that accompany each possible action. In fact, they usually are. College athletes who can earn millions if they drop out of school and play professional sports are well aware that their opportunity cost of college is very high. It is not surprising that they often decide that the benefit of a college education is not worth the cost.
    • p. 5
  • Countries as well as families benefit from the ability to trade with one another. Trade allows countries to specialize in what they do best and to enjoy a greater variety of goods and services. The Japanese, as well as the French and the Egyptians and the Brazilians, are as much our partners in the world economy as they are our competitors.
    • p. 10

Ch. 2. Thinking Like an Economist[edit]

  • Economists try to address their subject with a scientist’s objectivity. They approach the study of the economy in much the same way a physicist approaches the study of matter and a biologist approaches the study of life: They devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.
    • p. 20
  • To find a substitute for laboratory experiments, economists pay close attention to the natural experiments offered by history.
    • p. 21
  • Assumptions can simplify the complex world and make it easier to understand. To study the effects of international trade, for example, we might assume that the world consists of only two countries and that each country produces only two goods. In reality, there are numerous countries, each of which produces thousands of different types of goods. But by assuming two countries and two goods, we can focus our thinking on the essence of the problem. Once we understand international trade in this simplified imaginary world, we are in a better position to understand international trade in the more complex world in which we live. The art in scientific thinking—whether in physics, biology, or economics—is deciding which assumptions to make.
    • p. 21
  • The economy consists of millions of people engaged in many activities—buying, selling, working, hiring, manufacturing, and so on. To understand how the economy works, we must find some way to simplify our thinking about all these activities. In other words, we need a model that explains, in general terms, how the economy is organized and how participants in the economy interact with one another.
    • p. 22
  • In this model [circular-flow diagram], the economy is simplified to include only two types of decision makers—firms and households. Firms produce goods and services using inputs, such as labor, land, and capital (buildings and machines). These inputs are called the factors of production. Households own the factors of production and consume all the goods and services that the firms produce.
    • p. 22
  • Microeconomics and macroeconomics are closely intertwined. Because changes in the overall economy arise from the decisions of millions of individuals, it is impossible to understand macroeconomic developments without considering the associated microeconomic decisions.
    • p. 27
  • Positive and normative statements are fundamentally different, but they are often intertwined in a person’s set of beliefs. In particular, positive views about how the world works affect normative views about what policies are desirable.
    • p. 28
  • Making economic policy in a representative democracy is a messy affair—and there are often good reasons presidents (and other politicians) do not advance the policies that economists advocate. Economists offer crucial input into the policy process, but their advice is only one ingredient of a complex recipe.
    • p. 30
  • Economics is a young science, and there is still much to be learned. Economists sometimes disagree because they have different hunches about the validity of alternative theories or about the size of important parameters that measure how economic variables are related.
    • p. 30

Ch. 4. The Market Forces of Supply and Demand[edit]

  • A market is a group of buyers and sellers of a particular good or service. The buyers as a group determine the demand for the product, and the sellers as a group determine the supply of the product. Markets take many forms. Some markets are highly organized, such as the markets for many agricultural commodities. In these markets, buyers and sellers meet at a specific time and place, where an auctioneer helps set prices and arrange sales. More often, markets are less organized. For example, consider the market for ice cream in a particular town. […] Nonetheless, these consumers and producers of ice cream are closely connected.
    • p. 66
  • Economies are enormous groups of people engaged in a multitude of interdependent activities. What prevents decentralized decision making from degenerating into chaos? What coordinates the actions of the millions of people with their varying abilities and desires? What ensures that what needs to be done is in fact done? The answer, in a word, is prices. If an invisible hand guides market economies, as Adam Smith famously suggested, then the price system is the baton that the invisible hand uses to conduct the economic orchestra.
    • p. 83

Ch. 7. Consumers, Producers, and the Efficiency of Markets[edit]

  • Suppose our social planner tried to choose an efficient allocation of resources on his own, instead of relying on market forces. To do so, he would need to know the value of a particular good to every potential consumer in the market and the cost of every potential producer. And he would need this information not only for this market but for every one of the many thousands of markets in the economy. The task is practically impossible, which explains why centrally planned economies never work very well.
    The planner’s job becomes easy, however, once he takes on a partner: Adam Smith’s invisible hand of the marketplace. The invisible hand takes all the information about buyers and sellers into account and guides everyone in the market to the best outcome as judged by the standard of economic efficiency. It is, truly, a remarkable feat. That is why economists so often advocate free markets as the best way to organize economic activity.
    • p. 147
  • Market power and externalities are examples of a general phenomenon called market failure—the inability of some unregulated markets to allocate resources efficiently. When markets fail, public policy can potentially remedy the problem and increase economic efficiency. Microeconomists devote much effort to studying when market failure is likely and what sorts of policies are best at correcting market failures. As you continue your study of economics, you will see that the tools of welfare economics developed here are readily adapted to that endeavor. Despite the possibility of market failure, the invisible hand of the marketplace is extraordinarily important.
    • p. 150

Quotes about Greg Mankiw[edit]

  • Colander: What’s your view of the New Keynesian approach?
    Tobin: I’m not sure what that means. If it means people like Greg Mankiw, I don’t regard them as Keynesians. I don’t think they have involuntary unemployment or absence of market clearing. It is a misnomer to call Mankiw any form of Keynesian.
    Colander: How about real-business-cycle theorists?
    Tobin: Well, that’s just the enemy.
    • David Colander, "Conversations with James Tobin and Robert J. Shiller on the “Yale Tradition” in Macroeconomics", Macroeconomic Dynamics (1999), later published in Inside the economist’s mind: conversations with eminent economists (2007) edited by Paul A. Samuelson and William A. Barnett.

External links[edit]

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