Economics

971 Pages·2006·12.75 MB·English

by  Joseph E. Stiglitz

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ECONOMICS
FOURTH EDITION
Joseph E. Stiglitz
COLUMBIA UNIVERSITY
Carl E.Walsh
UNIVERSITY OF CALIFORNIA, SANTA CRUZ
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ECONOMICS
FOU RT H E D I T ION
B
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employees. Economics / Joseph E. Stiglitz, Carl E. Walsh.—4th ed.
p. cm.
Includes index.
ISBN 0-393-92622-2
1. Economics. I. Walsh, Carl E. II. Title
HB171.5.S884 2005
330—dc22
2005055518
ISBN 0-393-11644-1 (ebook)
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ABOUT THE AUTHORS
Joseph E.Stiglitz is professor of economics, business, and international and
public affairs at Columbia University. Before joining the Columbia faculty, he held
appointments at Yale, Oxford, Princeton, and Stanford. Internationally recognized
as one of the leading economists of his generation, Professor Stiglitz has made impor-
tant contributions to virtually all of the major subfields of economics, in particular
the economics of information, one of the key topics highlighted in this text. He was
a co-recipient of the Nobel Prize in Economic Science in 2001, and earlier in his
career received the American Economic Association’s John Bates Clark Medal,
which is given every two years to the most outstanding economist under the age of
forty. Professor Stiglitz is the author and editor of hundreds of scholarly articles
and books, including the best-selling undergraduate textbook Economics of the Public
Sector(Norton) and, with Anthony Atkinson, the classic graduate textbook Lectures
in Public Economics.He is the author of two influential popular books as well:
Globalization and Its Discontentsand The Roaring Nineties.In addition, he was the
founding editor of the Journal of Economic Perspectives.Professor Stiglitz has also
played a prominent role at the highest levels of economic policy making. He was a
member and chairman of President Clinton’s Council of Economic Advisers and
later served as Senior Vice President and Chief Economist of the World Bank.
Carl E.Walshis professor of economics at the University of California, Santa
Cruz, where he teaches principles of economics. He previously held faculty appoint-
ments at Princeton and the University of Auckland, New Zealand, and has been a vis-
iting professor at Stanford. He is widely known for his research in monetary economics
and is the author of a leading graduate text, Monetary Theory and Policy(MIT Press).
Before joining the Santa Cruz faculty, Professor Walsh was senior economist at the
Federal Reserve Bank of San Francisco, where he continues to serve as a visiting
scholar. He has also been a visiting scholar at the Federal Reserve Banks of Kansas
City, Philadelphia, and at the Board of Governors. He has taught courses in mone-
tary economics to the research department and staff economists at the central banks
of Hong Kong, Norway, Portugal, Spain, and the United Kingdom, and at the
International Monetary Fund. He is a past member of the board of editors of the
American Economic Reviewand is currently an associate editor of the Journal of
Money, Credit, and Bankingand the Journal of Economics and Business.He is also on
the editorial board of the Journal of Macroeconomics.
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CONTENTS IN BRIEF
PART 1 INTRODUCTION 1
Chapter 1 Modern Economics • 3
Chapter 2 Thinking Like an Economist • 25
PART 2 PERFECT MARKETS 51
Chapter 3 Demand,Supply,and Price • 53
Chapter 4 Using Demand and Supply • 77
Chapter 5 The Consumption Decision • 101
Chapter 6 The Firm’s Costs • 131
Chapter 7 The Competitive Firm • 155
Chapter 8 Labor Markets • 175
Chapter 9 Capital Markets • 191
Chapter 10 The Efficiency of Competitive Markets • 215
PART 3 IMPERFECT MARKETS 237
Chapter 11 Introduction to Imperfect Markets • 239
Chapter 12 Monopoly,Monopolistic Competition,and Oligopoly • 261
Chapter 13 Government Policies Toward Competition • 289
Chapter 14 Strategic Behavior • 311
Chapter 15 Imperfect Information in the Product Market • 333
Chapter 16 Imperfections in the Labor Market • 355
PART 4 ISSUES IN PUBLIC POLICY 373
Chapter 17 The Public Sector • 375
Chapter 18 Environmental Economics • 405
Chapter 19 International Trade and Trade Policy • 423
Chapter 20 Technological Change • 453
PART 5 INTRODUCTION TO MACROECONOMICS 471
Chapter 21 Macroeconomics and the Economic Perspective • 473
Chapter 22 Measuring Output and Unemployment • 485
Chapter 23 The Cost of Living and Inflation • 509
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PART 6 FULL-EMPLOYMENT MACROECONOMICS 523
Chapter 24 The Full-Employment Model • 525
Chapter 25 Government Finance at Full Employment • 547
Chapter 26 The Open Economy at Full Employment • 567
Chapter 27 Growth and Productivity • 585
Chapter 28 Money,the Price Level,and the Federal Reserve • 605
PART 7 MACROECONOMIC FLUCTUATIONS 635
Chapter 29 Introduction to Macroeconomic Fluctuations • 637
Chapter 30 Aggregate Expenditures and Income • 661
Chapter 31 Aggregate Demand and Inflation • 689
Chapter 32 The Federal Reserve and Interest Rates • 715
Chapter 33 The Role of Macroeconomic Policy • 727
PART 8 THE GLOBAL ECONOMY 755
Chapter 34 The International Financial System • 757
Chapter 35 Policy in the Open Economy • 779
Chapter 36 Development and Transition • 793
PART 9 FURTHER TOPICS IN MACROECONOMICS 817
Chapter 37 Inflation and Unemployment • 819
Chapter 38 Controversies in Macroeconomic Policy • 837
Chapter 39 A Student’s Guide to Investing • 865
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