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  • No, GP doesn't need Mankiw, just my posts here to run rings around you. /jk

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    • Mankiw is the one to start with?

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      • 1. I thought about it a little during my run. Assuming we have a sudden spurt of new growth opportunities, it is a supply side change (shifting the curve of the supply of projects). Since nothing change with the population, the demand curve is the same. Of course demand shifts to a new point of intersection. This means that interest rates will be lower, more projects will get done and more money will be invested in projects. (I'm using interest rate instead of price here.) So does this have an immediate deflationary aspect? Let's say that it will be two years until the new productive capacity comes on line. (obviously at that point more goods get produced and there is deflationary pressure.)

        2. How exactly does the Federal bank "inject" money supply?

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        • Yes Mankiw is entry level. There are other books that do 1st year micro and macro together, but they are mostly not that good. Mankiw I use for 1st and 2nd years........3rd year courses need other texts to supplement the material in Mankiw.

          As you probably found out when musing over these problems in your run it is hard to analyse.....so many "but move this and I have to move that then he goes there and takes my bishop" moments.......which is why a clear model helps cut through the crap and give you something to work with.

          1. What you are talking about is most accurately modelled as an AS shift within the AS/AD (aggregate supply/aggregate demand) model. IS/LM is a short run model with fixed prices.......AS/AD includes IS/LM but lets the price level vary and also attempts a basic stab at the dynamics of the problem (how do we get from one equilibrium to the other).

          There is an immediate deflationary impact if the fed choose not to increase the money supply, which shifts AD to yield the original price level with higher output than the original equilibrium.

          2. How the CB controls the money supply is indirectly thorugh control of certain key short term interest rates within the financial system. In the 80s we tried to hit money supply targets using interest rates, and hence control inflation.......now we just move the interest rates to hit an inflation target. The money supply stills moves in the right direction (up when rates are cut) but we don't explicitly care by how much, although we keep an eye on it.

          It may not seem a huge distinction about what one should target, but it turns out in practice (in an uncertain world, with uncertain effect of policies and how soon they will have an impact) the inflation target has much better properties than the money supply target.

          Mankiw doesn't really get this far (though he does discuss the banking system), since you need to adapt IS/LM quite a lot to include a central bank in the model.

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          • Which Mankiw book? There are a bunch of them:



            I think I will get it by ILL. I would buy it if you were more effusive. But you weren't. So I borrow.

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            • I have a micro book: MANAGERIAL ECONOMICS by Mansfield. That seemed pretty decent to me. Will Mankiw mess well with that? I also have Brealey and Myers. Ummm and the Valuation book.

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              • The one you want is just called "Macroeconomics". I'd buy it. Or if you borrow it and read it you may feel you want to buy it then, since you will need to review it from time to time. It's not really a case of read once and remember everything and not need to read it again.

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                • Originally posted by DrSpike

                  2. How the CB controls the money supply is indirectly thorugh control of certain key short term interest rates within the financial system.
                  How. What do they do. How does it get money into circulation?

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                  • Originally posted by DrSpike
                    The one you want is just called "Macroeconomics". I'd buy it. Or if you borrow it and read it you may feel you want to buy it then, since you will need to review it from time to time. It's not really a case of read once and remember everything and not need to read it again.
                    You're talking to a man who read Brealey and Myers in the tub. (Actually I thought that book was a stitch. Lots of interesting asides. And lots of cool references to hardcore literature. They even were very upfront about presenting unsolved problems and explaining where others might have a different point of view (while still maintaining the orthodoxy of NPV/CAPM thinking.))

                    Are nested parentheses an abortion in writing?

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                    • Originally posted by DrSpike
                      The one you want is just called "Macroeconomics". I'd buy it. Or if you borrow it and read it you may feel you want to buy it then, since you will need to review it from time to time. It's not really a case of read once and remember everything and not need to read it again.
                      How about the study guide? Any good? And is there a "Teacher's study guide". I like to get that if I am doing something self-study as it has the answers to all the problems, and has more info.

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                      • Anybody remember Andrew Livingstone? He was teaching me this stuff on the boards at one time...

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                        • I don't know the Mansfield book, but most management meets economics texts are for management students. Unfortunately management studies is for students who can't get on the economics course.

                          As I said at this level you can study macro almost completely independently of macro, since basic macro has no microfoundations.

                          A great entry level micro book if you want one is Hal Varian's: Intermediate Micro, a modern approach.

                          This is of interest to anyone that wants to understand policies like pollution control, public good provision, competition policy, financial market regulation, monopoly regulation, and so on.

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                          • Originally posted by DrSpike
                            No, GP doesn't need Mankiw, just my posts here to run rings around you. /jk

                            When he's up to speed you can teach me something.
                            I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
                            - Justice Brett Kavanaugh

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                            • Originally posted by DrSpike
                              I don't know the Mansfield book, but most management meets economics texts are for management students. Unfortunately management studies is for students who can't get on the economics course.

                              As I said at this level you can study macro almost completely independently of macro, since basic macro has no microfoundations.

                              A great entry level micro book if you want one is Hal Varian's: Intermediate Micro, a modern approach.

                              This is of interest to anyone that wants to understand policies like pollution control, public good provision, competition policy, financial market regulation, monopoly regulation, and so on.
                              I thought Mansfield was pretty clear. And yes I learned it under an MBA umbrella (sorta). But I had Ron Bratigan from Northwestern as my teacher. Great prof. Really made things clear. Adam Smith knows him from Northwestern.

                              There is a lot of favorable commentary on the Mankiw PRINCIPLES OF MACROECONOMICS but no reader reviews for MACROECONOMICS.

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                              • Originally posted by GP


                                How. What do they do. How does it get money into circulation?
                                They don't...........they 'encourage' the commercial banking sector to do it for them by manipulating key short term interest rates.......like the rate at which the CB acts as lender of last resort. Ultimately through this control they have some control over all commercial rates.....and hence over the money supply.

                                As to the other post.........I don't have the study guide, though if you are working at it yourself it probably would be useful.

                                Bed now.

                                zzzzzzzzzz

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