Sunday, March 13, 2011

Mankiw Ditches Tiger Woods

The world's greatest economic textbook salesman, Harvard Professor Greg Mankiw, has ditched Tiger Woods in the sixth edition of his principles text.

On his blog, Mankiw lists a number of changes made for the sixth edition.  For Chapter 3, Mankiw lists as a change:
Tiger Woods changed to Tom Brady in in-text example.
In other notes, Mankiw writes of changes in Chapter 12:
New In the News box: The Temporarily Disappearing Estate Tax

New In the News box: The Value Added Tax
There is no indication as to whether Mankiw explains in the chapter the destructiveness of such taxes.

Mankiw writes that in Chapter 20, he includes:

New In the News box: The Root Cause of a Financial Crisis
Somehow, I doubt he includes Austrian Business Cycle Theory.

In Chapter 24, Mankiw hints at an intriguing topic:
New In the News box: Shopping for the CPI
Am I hoping, beyond hope, that in this chapter Mankiw blows the cover on the bogus "core" CPI the index designed by Tricky Dick Nixon

Mankiw clearly knows he has to do a better job on down turns and why they occur. He returns to the subject again in Chapter 26:
New FYI box: Financial Crises
Again, I doubt he gets the analysis fully correct. But, lets hope he at least mentions moral hazard.

In Chapter 29, he returns to the financial crisis, again!
New Section on Bank Capital, Leverage, and the Financial Crisis of 2008-2009
My guess is that this chapter is way off, blaming leverage rather than fractional reserve banking and the time mismatch between bank assets and liabilities.

Also, in Chapter 29, Mankiw delves into Bernanke's new tools. At his blog, Mankiw has clearly demonstrated that he is aware of some of the problems with Bernanke's new tools. Let's see if he has the balls to cover the problems in his textbook, since it appears he is devoting considerable new space to the topic in Chapter 29:

Much revised section on the tools of monetary policy. It now includes a discussion of the Term Auction Facility and the Fed’s payment of interest on reserves.

New In the News box: Bernanke on the Fed’s Toolbox
It looks like Mankiw has a split personality on inflation. In Chapter 30, he seems to warn about hyper-inflation but appears to discuss a non-existent deflation problem:

New FYI box: Hyperinflation in Zimbabwe

New section: Inflation is Bad, But Deflation May Be Worse

New In the News box: Inflationary Threats
In Chapter 32, it appears he is subtly introducing the likelihood of the end of the dollar as the reserve currency:
New In the News box: Alternative Exchange-Rate Regimes
I may have to check this edition out in more detail, to find out exactly what college students are being told about the economy these days. In past editions Mankiw has generally not been as bad as Paul Samuelson economic texts, but then again Mankiw is probably not writing under the manic influence of a Charlie Sheen type coke withdrawal, so you would expect him to get things a little better than Samuelson.


  1. Does he leave this intact?

    "It concluded that the optimal corrective tax on gasoline was $2.10 per gallon, compared to the actual tax in the United States of 40 cents."

  2. My guess is that "Shopping for the CPI" refers to the "Google Price Index"