Plain Sense Economics

Was it Popeye’s friend, Wimpy, who kept asking for a hamburger on credit? Today’s credit markets are anything but robust, with reduced demand and supply for borrowed funds. Always eager to find obscure terms for modern dilemmas, economists refer to this condition as a liquidity trap. With a little prodding from Facebook friend and neighbor, [...]

My first childhood visit to Washington, DC included a visit to the Bureau of Printing and Engraving. There you can watch paper currency running off the printing presses, being inspected, sliced, and bundled. In the gift shop you can buy bags of shredded, rejected currency, or a sign that says, “The Buck Starts Here.”
Well, in [...]

In Macro class today we talked about what is really a dual decision. First, should our national policy encourage spending or saving? Second, should government actions favor consumption or investment?
First, some definitions and a smidgen of theory. There is a simple dichotomy over  how a family or a nation uses their income. They can spend [...]

Our Principles of Macroeconomic classes have been learning more about GDP – how it is measured, and what levels of GDP growth are sustainable. The New York Times reported significant growth in GDP for China for the 4th quarter and all of 2010…
China’s economy grew at a higher-than-expected rate of 9.8 percent in the [...]

Prof. Mankiw gave us a nice reminder of structural unemployment on Monday. From his post…
As my colleague Erik Hurst and his co-authors have shown, states that had the largest rise in construction as a share of GDP in 2000-2006 tended to have had the greatest contraction in that industry in 2006-2009. These [...]

Each year The Economist magazine publishes one of my favorite economic indicators – the Big Mac Index. This year The Economist said,
Our Big Mac index, based on the theory of purchasing-power parity, in which exchange rates should equalise the price of a basket of goods across countries, suggests that the yuan is 49% [...]

A recent news article announced the discovery of significant mineral deposits in Afghanistan.
The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government [...]

This is a supplement to our discussion, in Principles of Macroeconomics, about unemployment.
In this piece, by Univ. of Oregon professor Mark Thoma, you will find a review of the three kinds of unemployment and a discussion of what “normal” or “natural” employment is.
Will There be a “New Normal” for Unemployment?
Thoma also writes in his very [...]

In his best selling principles textbook, Prof. Mankiw outlines 10 fundamental principles of economics.
Here is the rap version, for your entertainment. The player below gives a teaser, with a link to the full version, which is free to listen to.

Demand, Supply – Rhythm, Rhyme, Results

In Principles of Microeconomics this week we talked about labor markets and how wages should rise as worker productivity rises. In Principles of Macroeconomics this week we talked about the concept of “sticky wages” – where, in the short run employers adjust their production/output when demand falls, but don’t immediately adjust wages downward.
This article in [...]