March 08, 2003

Notes: N. Gregory Mankiw

Notes: Greg Mankiw:

MaxSpeak Weblog :

  1. N. GREGORY MANKIW ON ECONOMICS, IV: THE CORPORATE INCOME TAX. "The corporate income tax is popular in part because it appears to be paid by rich corporations. Yet those who bear the ultimate burden of the tax--the customers and workers of corporations--are often not rich. If the true incidence of the corporate tax were more widely known, this tax might be less popular among voters. (p. 255, Principles of Economics, N. Gregory Mankiw, The Dryden Press/Harcourt Brace, 1998) So this tax cannot impede investment and economic growth, insofar as such investment and growth is due to corporations. They should be indifferent to the tax, and they are wasting a lot of lobbying dollars combating it. By the same token, if the true incidence were more widely known in the White House, this tax might be more popular.
  2. . GREGORY MANKIW ON ECONOMICS, III: THE KEY TO ECONOMIC GROWTH. Thus, the most basic lesson about budget deficits follows directly from their effects on the supply and demand for loanable funds: When the government reduces national saving by running a budget deficit, the interest rate rises, and investment falls. Because investment is important for long-run economic growth, government budget deficits reduce the economy's growth rate. (p. 557, Principles of Economics, N. Gregory Mankiw, The Dryden Press/Harcourt Brace, 1998)
  3. N. GREGORY MANKIW ON ECONOMICS, II: WHAT WOULD JESUS TAX. [This is going to be the gift that keeps on giving. Thanx to the Left Business Observer listserv, which I routinely pilfer for content.] THE NEW YORK TIMES Nov. 27, 2001 To The Editor: Robert F. Kennedy Jr. ("Better Gas Mileage, Greater Security," Op-Ed, Nov. 24) may be right that reduced gasoline consumption should be a national goal. But I disagree with his proposal for how to achieve it. Command-and-control solutions like the corporate average fuel economy, or CAFE, standards, are rarely the best approach to correcting decisions made in a free market. Such regulation not only is intrusive but also gives insufficient incentive to car makers once the standard is met and gives no incentive for car owners to drive less. It would be better to use a corrective tax, like the tax on gasoline. A higher gasoline tax could be coupled with lower income taxes. Politically this should be a win-win proposition, for it would appeal to Democratic environmentalists and Republican supply-siders, as well as those who believe that dependence on foreign oil is a threat to national security. N. GREGORY MANKIW Cambridge, Mass., Nov. 24, 2001 The writer is a professor of economics at Harvard University.
  4. N. GREGORY MANKIW ON ECONOMICS: FIRST OF A CONTINUING SERIES. "When the government spends more than it receives in tax revenues, the shortfall is called a budget deficit. The accumulation of past budget deficits is called the government debt. In recent years, the U.S. federal government has run large budget deficits, resulting in a rapidly growing government debt. As a result, much debate has centered on the effects of these deficits both on the allocation of the economy's scarce resources and on long-term economic growth. . . . When the government spends more than it receives in tax revenue, the resulting budget deficit lowers national saving. The supply of loanable funds decreases, and the equilibrium interest rate rises. Thus, when the government borrows to finance its budget deficit, it crowds out households and firms who otherwise would borrow to finance investment." (Page 555, Principles of Economics, N. Gregory Mankiw, The Dryden Press/Harcourt Brace, 1998.)

Posted by DeLong at March 8, 2003 09:52 AM | TrackBack

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