Macroeconomics 1979 : readings on comteporary issues / edited by Peter D. Macclelland.

Foreword -- I. Inflation and unemployment -- 1. The Trouble Is Serious. (Time, April 30, 1979) A recent poll indicates a growing national concern with economic problems, particularly inflation, but no clear consensus on how to solve them, 9 2. Runaway Inflation: Can Carter Corral It? (U.S. News & World Report, March 12, 1979) A review of the problem, possible causes, and possible solutions, 12 -- 3. Our Flawed Inflation Indexes. (Fortune, April 24, 1978) How is the rate of inflation measured, and what are the major defects of these measures as indicators of changes in the aggregate price level? Edward Meadows reviews the three main inflation indexes: the Consumer Price Index, the Wholesale Price Index, and the GNP deflator / Edward Meadows, 16 -- 4. An Examination of Employment and Unemployment Rates. (Federal Reserve Bank of New York Quarterly Review, Autumn, 1977) How are employment and unemployment rates calculated, and why is one measure more reliable than the other? An economist with the Federal Reserve Bank of New York examines these two key measures of economic activity and suggests some of the reasons why measured unemployment has been so high in recent years / Sharon P. Smith, 21 -- 5. The U.S. Structures Itself to Live with Inflation. (Business Week, January 29,1979.) The persistence of inflation over the past decade and a half has led to some marked changes in the behavior of businesses, labor unions, financial institutions, and consumers. Business Week outlines the major transformations and suggests how they may undermine the government's ability to fight inflation, 26 -- 6. Indexation of Wages and Retirement Income in the United States. (Federal Reserve Bank of New York Quarterly Review, Autumn, 1978) The previous article raised the possibility of the indexation of the whole U.S. economy. What is indexation, who is now affected by it, and what are the dangers as this process spreads? An economist with the Federal Reserve Bank of New York suggests the answers / Marcelle V. Arak, 33 -- 7. Honest Money. (Federal Reserve Bank of Dallas Voice, August, 1978) The case for fighting inflation is explained by a member of the Board of Governors of the Federal Reserve System / Henry C. Wallich, 41 -- 8. Living with Inflation: Consider the Alternative. (Dollars & Sense, May-June, 1978.) The case against fighting inflation is explained by a leading left-of-center journal concerned with contemporary economic problems, 45 -- 9., I Don't Trust Any Economists Today. (Fortune, September 11, 1978) The persistence of problems such as inflation and a slowdown of productivity growth has been accompanied by a lack of consensus among economists concerning causes and desirable remedies. The unsurprising result is confusion in Washington concerning which economic policies to pursue / Juan Cameron, 48 -- 10. Is Inflation All Due to Money? (Federal Reserve Bank of St. Louis Review, December, 1978)What causes inflation? This article attempts to give an explanation and justification of the monetarist's answer to that question: a too rapid increase in the money supply / Albert E. Burger, 51 -- 11. Is There Really Too Much Money? (Dollars & Sense, February, 1979.)A left-of-center analysis of the causes of the present inflation emphasizes what monetarists emphasize-a rapid growth in the money supply-but draws different conclusions, 56 -- 12. The Realities of Inflation. (Wall Street Journal, January 19, 1979) A former chairman of the Council of Economic Advisors attacks the monetarist's explanation of inflation and emphasizes instead structural and institutional factors. Singled out for special scrutiny are transient factors generating higher prices and "the underlying wage-price spiral that changes only gradually / Walter W. Heller, 59 -- 13. Our Unmysterious Inflation. (Wall Street Journal, April 23, 1979) Another former chairman of the Council of Economic Advisors argues that the present price rise is a classic inflation. Excessive aggregate demand is straining productive capacity, in part because the lag in productivity growth has slowed the expansion of supply in recent years / Paul W. McCracken, 61 -- 14. On Post Keynesian Economics. (Journal of Post Keynesian Economics, Vol. 1, 1978) The previous article argued that inflation would not be brought to heel until markets impose strong disciplines on wage and price increases. The present article emphasizes the limited ability of the market to provide that disciplining force / John Kenneth Galbraith, 62 -- II. Monetary and fiscal policy -- 15. A Layman s Guide to the Keynesian Monetarist Dispute. Articles in the first section illustrate one of the dilemmas of current macroeconomics. Economists have widely different views on how inflation and unemployment should be attacked, and those differences show no signs of being resolved. There are two main reasons for this disagreement. One stems from a difference in values. Some economists emphasize equity considerations; others, the preservation of certain freedoms. The second major reason for disagreement is differing views on how the economy works. This article attempts to summarize the main arguments in the theoretical dispute between the two dominant schools of thought in contemporary macroeconomics / Peter D. McClelland, 65 -- 16. Introduction and Summary. (Excerpted from Chapter 1 of the Brookings Institution, Setting National Priorities: The 1980 Budget) A detailed review of monetary and fiscal policy in general and President Carter's 1980budget in particular is presented from a Keynesian perspective / Joseph A. Pechman, 68 -- 17. Playing to the Haves: Carter's Dangerous Budget Act. (The New Leader, February 12, 1979) The President s economic policies are analyzed from a left-of-center perspective. 80 18. Irving Kristol, Can Carter Reap a Windfall? (Wall Street Journal, April 13, 1979) The President's economic policies are analyzed from a right-of-center perspective / Robert Lekachman, 83 -- 19. Fed Plan to Slow Money Growth Further Is Signaled in Policy Report to Congress. (Wall Street Journal, February 21,1979) The central bank spells out its priorities and policies for 1979 and beyond / Richard J. Levine, 84 -- 20. Can the Fed Stem the Tide? (New York Times, November 12, 1978)Recent changes in the practices of financial institutions may pose a threat to the effectiveness of monetary policy. Arenson outlines why / Karen W. Arenson, 85 -- 21. Interest Rates: A Bargain at 10%? (Dollars & Sense, January, 1979) Are the present high interest rates indicative of a restrictive monetary policy or of adjustments in financial markets to a rapid rate of inflation? Dollars & Sense discounts the first and emphasizes the second, 87 -- 22. The Last Days of the Boom. (Newsweek, April 30, 1979) Economic prospects and appropriate government policies are assessed from a Keynesian perspective, 90 -- 23. The Fed: At It Again. (Newsweek, February 19, 1979) Economic prospects and appropriate government policies are assessed from a monetarist perspective / Milton Friedman, 91 -- 24. Proposal for An Anti-Inflation Package. (Challenge, September-October, 1978)One of the authors of a tax based incomes policy (TIP) presents an updated version of his plan / Sidney Weintraub, 92 -- 25. Can Tax-Based Incomes Policies Work? (Challenge, November-December, 1978) One major objection to TIP proposals is that they would be extremely difficult to administer. A leading expert on taxation explains why / Joseph A. Pechman, 94 -- 26. A Tax-Based Incomes Policy (TIP): What's It All About? (Federal Reserve Bank of St. Louis Review, February, 1978.) Another objection to TIP proposals is that they are predicated on the wrong view concerning the causes of inflation. An economist with the Federal Bank of St. Louis presents the monetarist's critique / Nancy Ammon Jianakoplos, 96 --

-- 27. Disintermediation: An Old Disorder with a New Remedy. (Federal Reserve Bank of St. Louis Review, January, 1979.)What is disintermediation, how has it changed in recent years, and how have those Changes affected the housing market? Two economists with the Federal Reserve Bank of St. Louis review the recent history and document some of the effects / R. Alton Gilbert and Jean M. Lovati, 101 -- 28. Automatic Transfers: Evolution of the Service and Impact on Money. (Federal Reserve Bank of Chicago Economic Perspectives, November-December, 1978) A new development in banking practices has implications for monetary policy. An economist with the Federal Reserve Bank of Chicago suggests why / Randall C. Merris, 107 -- 29. Automatic Transfer and NOW Accounts Compared. (From Randall C. Merris, Automatic Transfers, Federal Reserve Bank of Chicago Economic Perspectives, November-December, 1978)Two recent changes in banking practices are compared, 110 -- 30. Recent Developments Enabling Depositors to Use interest-Earning Balances for Purposes Previously Requiring Non-Interest Earning Demand Balances. (From Alfred Broaddus, Automatic Transfers from Savings to Checking, Federal Reserve Bank of Richmond Economic Review, November-December, 1978.)The Review lists the major revisions since September, 1970, 110 -- 31., Behavior of the Income Velocity of Money. (Federal Reserve Bank of Chicago Economic Perspectives, September/October, 1977) Laporte charts the recent upward trend in velocity and explains how this movement is caused by changes in the practices of financial institutions / Anne Marie Laporte, 111 -- III. Wage and price regulation -- 32. Anti-inflation Program. (Vital Speeches of the Day, November 15, 1978)The President explains why inflation is a threat, how he plans to attack it, and the role to be played by voluntary wage and price standards and a real wage insurance policy / Jimmy Carter, 114 -- 33. Those Mystifying Guidelines. (Time, March 5, 1979) The President's wage and price guidelines have raised complex problems for business and labor leaders who would understand them and for bureaucrats who would enforce them. Time outlines some of the difficulties, 118 -- 34. Braking the Spiral? Wage-Price Guidelines Just May Help a Bit, Many Executives Say. (Wall Street Journal, February 15, 1979) Businessmen note some of the positive results, and some of the unsolved problems, in the early stages of the President’s efforts to enforce wage-price guidelines / Ralph E. Winter, 120 -- 35. The Case for Controls. (The New Republic, October 14,1978) Lekachman outlines the case against controls, and then indicates why he still favors them. Much of his argument rests upon perceived defects in the market system / Robert Lekachman, 122 -- 36. The Economic Consequences of Wage-Price Guidelines. (Federal Reserve Bank of St. Louis Review, December, 1978) Trebing explains the monetarist argument against any form of controls, including the President's wage price guidelines. Much of his argument rests upon a belief in the effectiveness of the market system / Michael E. Trebing, 126 -- 37. Wage Insurance Embarrassment. (Wall Street Journal, January 16,1979) Jimmy Carter's proposal for a real wage insurance policy seemed to be doomed from the start. A Wall Street Journal editorial suggests why / Michael E. Trebing, 132 -- 38. The Minimum Wage: A Perspective. (Federal Reserve Bank of New York Quarterly Review, Autumn, 1978) Another form of wage regulation is the minimum wage. This article outlines the history of the policy and the arguments for and against its continuation / Robert T. Falconer, 133 -- IV. Tax revolts and constitutional amendments 39. Proposition 13 and Its Aftermath. (Federal Reserve Bank of Philadelphia Business Review, March/April, 1979) What has sparked the recent tax revolts, and will they culminate in a state-initiated constitutional amendment to limit the federal budget? An economist with the Federal Reserve Bank of Philadelphia attempts to assess some of the causes of discontent and some of the options for fiscal reform / Anita A. Summers, 137 -- 40. Shades of the Founding Fathers. (Time, February 19, 1979) A large number of states have voted to call a Constitutional Convention to approve an amendment requiring a balanced federal budget. This article examines how that prospect is viewed by various constitutional lawyers, politicians, and economists, 144 -- 41. Pro and Con: A Constitutional Ban on Red Ink? Interviews with Edmund G. Brown, Jr., and Gardner Ackley (U.S. News & World Report, January 29, 1979) A leading advocate of a balanced budget amendment explains why he favors it, and a leading economist explains why he views the balanced budget amendment as a disastrous and irresponsible proposal, 146 -- 42. The Balanced Budget Mania. (Dollars & Sense, April, 1979) The Time article outlined the objections of monetarists to a balanced budget amendment. The Ackley article presented a Keynesian perspective. The present article assesses the same proposal from a more radical perspective, 148 -- V. Energy, growth, and productivity -- 43. What Decontrol of Oil Will Mean. (Newsweek, April 16, 1979) Newsweek outlines what the present control system is, how the President proposes to modify it, and what the likely effects will be from those modifications, 151 -- 44. The Nature and Origins of the U.S. Energy Crisis. (Federal Reserve Bank of St. Louis Review, July, 1977) As a complement to the previous article, Yang gives a detailed history of U.S. energy policy and offers an explanation of present difficulties which emphasizes how previous government intervention has distorted the forces of supply and demand / Jai-Hoon Yang, 154 -- 45. Looking Anew at the Nuclear Future. (Time, April 16, 1979) What role-should nuclear power play in meeting U.S. energy needs of the future? Time outlines some of the relevant questions and some of the possible answers / George J. Church, 165 -- 46. The Role Of Productivity Gains in Solving National Economic Problems. (Federal Reserve Bank of Dallas Voice, December, 1978) The chairman of the Federal Reserve outlines the history of the slowdown in productivity growth, suggests the major causes, and offers possible solutions / G. William Miller, 167 -- VI. Poverty, welfare, and income distribution -- 47. Black Economic Progress since 1964. (The Public Interest, Summer, 1978) What have been the major changes, why have they occurred, and what are the implications for present policy? In a carefully documented study, Freeman explores these and other issues, and suggests some of the answers / Richard Freeman, 174 -- 48. The New Face of Poverty. (The Progressive, January, 1979.)The focus of the previous article Waslargely upon advances made. The focus of the present one is upon advances not made, combined with some bleak speculation about the probable trend in government policies designed to alleviate poverty / Elliott Currie, 188 -- 49. America's War on Poverty-Is It a No-Win Struggle? (U.S. News & World Report, January 22,1979.) Have the antipoverty programs of the past decade succeeded, and if not, why not? U.S. News & World Report explores the conflicting evidence and ongoing disagreement among the experts concerning the answers, 191 -- 50. Feeding the Hungry. (The New Republic, November 25, 1978) Kotz argues that federal programs aimed at alleviating hunger among the poor, while far from perfect, have achieved a definite success / Nick Kotz, 195 -- 51. Young Blacks Out of Work: Time Bomb for U.S. (U.S. News & World Report, December 5, 1977.) One of the most pressing social problems of the nation has, to date, been little affected by government policies. This article outlines the major policies and indicates why they have had so little success, 198 -- 52. Short and Long Run Unemployment Burdens. (Economic Outlook U.S.A. Autumn, 1978) A special study attempts to identify the pattern of long-term unemployment, who is persistently unemployed, and why / Martha S. Hill and Mary Corcoran, 202 -- VII. International -- 53. Federal Reserve and Treasury Support the Dollar. (Federal Reserve Bank of Dallas Voice, November, 1978) A summary of why the dollar declined in recent years, and how the Treasury and the central bank intervened in November, 1978, in an effort to strengthen the dollar, 205 -- 54.

Our Sick Dollar Starts to Regain Its Health. (U.S. News & World Report, April 30, 1979)After a prolonged slide, the value of the American dollar has been rising. U.S. News & World Report summarizes some of the explanations for this reversal, 210 -- 55. OPEC's Billions. (The Brookings Bulletin, Fall, 1978)The article reviews the international adjustments required by OPEC surpluses of the past, and forecasts adjustment problems of the immediate future / Bruce K. MacLaury, 212 -- 56. Trade Wars 3: The Politics of Oil. (Excerpted from Dollars & Sense, February, 1979) From a perspective left of center, Dollars & Sense assesses the impact of OPEC actions upon the price of oil, its supply, and the value of the U.S. dollar, 217 -- 57. Evolution of the International Monetary System. (Challenge, January-February, 1979) A member of the Board of Governors of the Federal Reserve reviews how recent dissynchronized business cycles among the world's major countries have contributed to international monetary instability and why current American government policy should make for greater stability / Henry C. Wallich, 220.