Introducing....

my new co-blogger, Dr. Mark Witte.

Long-time reader may suspect that past references to Dr. Mark are about him and those suspicions would be correct. Mark Witte is the Director of Undergraduate Studies for economics at Northwestern University, and he teaches Macroeconomics, Public Finance, and Environmental Economics. I've known him for a number of years because of common connections to the Fed and the College Fed Challenge (Oh, that Northwestern.) He's been a good friend and a good source of ideas. I'm glad he's agreed to join me.

You should see his first post shortly.

Just So We Don't Forget...MR>MC

(You can't just “make it up on volume.”)

If you're looking for something to help your students remember that firms have to be profitable to survive in the long-run, try this. (Big HT to EconomistsDoItWithModels. And you will want to read her accompanying post.)

Inflation

For those of you dealing with inflation and the Consumer Price Index (CPI) in your classes, there are two great interactive graphics (HT to Chartporn) that you can use.

This one is from The Wall Street Journal and lets you compare the price behavior of any of the CPI components to the overall CPI and the core CPI.

Another excellent graphic is this one from The New York Times in 2008. It shows how all of the components are weighted within the various categories.

If for some reason you have trouble getting to either of these, go to the Chartporn post andclick directly on either the second or third chart. (You may have difficulty getting through toChartporn because of the school filters.)

 Let me know what you think.

The Krugman

Here's something for those of you seeking a link between Keynesian macroeconomics and a classic piece of American literature.

And for those of you who don't fit into the category, you might want to look at anyway. It’s fun and imaginative and might offer a springboard to introduce fiscal policy. (HT to Economics & Ethics.)

For the Economics Teacher

Here are three good links that come to us courtesy of Marginal Revolution.  You may have already seen one or more, but if you haven’t you should give all of them a look.

First, if you’re teaching AP Economics, you will want to look at “How to Improve AP Economics” from the most recent Econ Journal Watch. It was written by three people I know and respect greatly. I had meant to post about this earlier, but....

Second is a list of Best Podcasts recommended by Tim Harford, The Undercover Economist.  I will disagree only with the ranking but not the substance of the list. I prefer longer podcasts such as EconTalk because I usually listen while driving. The LSE Lectures are also longer.

Finally, for those of us who are real econ geeks, the American Economic Review has come up with its 20 Best Articles from the AER. The article contains summaries and links to important articles such as the 1928 article by Cobb and Douglas on the production function, Friedman’s 1968 article on monetary policy, and Hayek’s 1945 article on knowledge in society. The most recent was written in 1981, in case you’re interested.

Beef...It's What's for Dinner...and So Much More

Some of you may remember the tag-line spoken by Robert Mitchum in a long series of commercials. But look at this article in today's edition of The Wall Street Journal (subscriber content at this writing - but put the article title in your browser and you may find an ungated version). The slideshow alone is very helpful and that is open access.

According to the article, beef is a normal good; an indicator of rising prosperity and economic growth; and a subject of globalization.

I think you'll find it interesting and I hope you find it useful.

Economic Systems - Remember the Bad Old Days?

Here is an interesting item from the BBC (HT to Carpe Diem).

It seems that the hot game in Poland is about shopping in the old days - when Poland was a communist country. It's based on the queues that people had to wait in to purchase just about anything.

If you want to show students a similar situation, I recommend the first few minutes of the movie Moscow on the Hudson. Although the relevant cut takes place in the old Soviet Union, the story is essentially the same. See a queue? Stand in it and buy whatever is being sold.

When we talk about economic systems, we sometimes to remind students that price is a rationing mechanism that distributes goods according to willingness to pay. (Students should be able to connect to that if they read anything about ticket prices, parking prices, airline, and hotel prices in Dallas last week.)

Gains from Trade

For those of you looking for an interesting article to use when teaching gains from trade in your macro courses, look no further. Today’s edition of The Wall Street Journal has a very good piece titled “Chinese Demand Lifts U.S. Wood Sales.” The article itself is subscriber content at this writing, but you might find an ungated version if you put the title in your browser.

 But even if you can’t access the article, there is value here. The video and the slideshow are open and both provide enough information to use with your classes. The video focuses on Canadian lumber and the slideshow on U.S. lumber, but the story is the same.  And the reference to a export duty on Russian lumber adds even more depth to the discussion.

Take a look and share your thoughts.

Comparatively Rich?

This past weekend, The New York Times reviewed a book titled The Haves and the Have Nots: A Brief and Idiosyncratic History of Global Inequality.The book is about income distribution and while it may sound like the same old argument about the inequality of it all, it is more. The book is built around three academic essays; but each is followed by a number of short pieces to add flavor and color to the discussion.  

What is particularly interesting to me is the information that seems to be in the second and third essays - those that focus on global inequality. There are bits of information in there that can be used with students when discussion income inequality and economic development that might bring clarity to their thought.  Specifically, it will help them understand that the idea of wealth can be somewhat subjective.

This blog post from The New York Times (HT to Marginal Revolution) was a follow-up to the review. The author points out an interesting chart that shows that the average real income of the bottom five percent in the U.S. is higher than the average real income of the top five percent in India.

Having said that, I suspect the spread in India's top five is significantly larger than the spread in the bottom five in the U.S. That alone should help students become more skeptical about how "averages" are used. But the relative wealth of the "poor" in the U.S. is something that we often forget. That does not excuse the gap, but it does put it into a different perspective. I hope to read this book soon, and I'm placing it on my carousel at left. I hope some of you are also moved to read it, and come back and comment.

The Great Stagnation - A Review

Tyler Cowen of George Mason University has a new book out titled The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better.

As this review in The Wall Street Journal explains, this is not likely to be the definitive explanation of the current economic downturn, but it could be among the most significant.

Cowen points out that the amazing success of the United States over the past 300 years (that includes a considerable period before we were the United States - I know) has been due to a unique mix of circumstances that he calls "low-hanging fruit". These were aspects that provided easy and quick return for the most part. They were easy to "pluck" and benefit from.  But Cowen points out that the easy stuff may be gone, and the sooner we realize that the sooner we can begin to benefit from the harder stuff by finding ways to get at it. That is what will bring renewed economic growth.

There are numerous reviews of this book elsewhere. Many of them echo the evaluation of the

Journal, this can be an important and a good read.  I'm adding it to my reading list and my carousel at left. I hope you'll be moved to purchase it. From what I can tell, it is currently only available in a Kindle edition.

Consumer Surplus

For those of you teaching micro, there are a couple of good posts by David Henderson at Econlog that explain the concept of consumer surplus.

In his first post, he provides what I consider to be a good explanation of consumer surplus. In the second post, he addresses some comments from the first post - making certain aspects clearer. I hope you can use them. I intend to.