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 Macroeconomics
Eighth Edition

Andrew B. Abel
The Wharton School of the
University of Pennsylvania

Ben S. Bernanke

Dean Croushore
Robins School of Business
University of Richmond

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Library of Congress Cataloging-in-Publication Data

Abel, Andrew B.
  Macroeconomics/Andrew B. Abel, Ben S. Bernanke, Dean Croushore.—8th ed.
    p. cm.
  Includes index.
  ISBN 978-0-13-299228-2
  1. Macroeconomics. 2. United States—Economic conditions.  I. Bernanke, Ben.  
  II. Croushore, Dean.  III. Title.
HB172.5.A24  2014
339—dc23
2012042884

10 9 8 7 6 5 4 3 2 1

ISBN 10:     0-13-299228-0

ISBN 13: 978-0-13-299228-2
About the Authors
Andrew B. Abel
The Wharton
School of the
University of
Pennsylvania
Ronald A. Rosen-
feld Professor of
Finance at The
Wharton School
and professor of economics at the
University of Pennsylvania, Andrew
Abel received his A.B. summa cum laude
from Princeton University and his Ph.D.
from the Massachusetts Institute of
Technology.
He began his teaching career
at the University of Chicago and
­Harvard University and has held vis-
iting ­ appointments at both Tel Aviv
­University and The Hebrew University
of Jerusalem.
A prolific researcher, Abel has pub-
lished extensively on fiscal policy, capi-
tal formation, monetary policy, asset
pricing, and Social Security—as well as
serving on the editorial boards of nu-
merous journals. He has been honored
as an Alfred P. Sloan Fellow, a Fellow
of the Econometric Society, and a re-
cipient of the John Kenneth Galbraith
Award for teaching excellence. Abel
has served as a visiting scholar at the
Federal ­Reserve Bank of Philadelphia,
as a member of the Panel of Economic
Advisers at the Congressional Budget
Office, and as a member of the Techni-
cal Advisory Panel on Assumptions and
Methods for the Social Security Advisory
Board. He is also a Research Associate
of the National Bureau of Economic
­Research and a member of the Advisory
Board of the Carnegie-Rochester Confer-
ence Series.
Ben S. Bernanke
Previously the
Howard Harrison
and Gabrielle Sny-
der Beck Professor
of Economics and
Public Affairs at
Princeton Univer-
sity, Ben Bernanke
received his B.A.
in economics from Harvard University
summa cum laude—capturing both the
Allyn Young Prize for best Harvard un-
dergraduate economics thesis and the
John H. Williams prize for outstanding
senior in the Economics Department.
Like coauthor Abel, he holds a Ph.D.
from the Massachusetts Institute of
Technology.
Bernanke began his career at the
Stanford Graduate School of Business
in 1979. In 1985 he moved to Princeton
University, where he served as chair of
the Economics Department from 1995
to 2002. He has twice been visiting pro-
fessor at M.I.T. and once at New York
University, and has taught in under-
graduate, M.B.A., M.P.A., and Ph.D.
programs. He has authored more than
60 publications in macroeconomics,
macroeconomic history, and finance.
Bernanke has served as a visiting
scholar and advisor to the Federal Re-
serve System. He is a Guggenheim
Fellow and a Fellow of the Economet-
ric Society. He has also been variously
honored as an Alfred P. Sloan Research
Fellow, a Hoover Institution National
Fellow, a National Science Foundation
Graduate Fellow, and a Research Asso-
ciate of the National Bureau of Economic
Research. He has served as editor of the
American Economic Review. In 2005
he became Chairman of the President’s
Council of Economic Advisers. He is
currently Chairman and a member of
the Board of Governors of the Federal
Reserve System.
Dean Croushore
Robins School of
Business, Univer-
sity of Richmond
Dean Croushore is
professor of eco-
nomics and Rigsby
Fellow at the Uni-
versity of Rich-
mond. He received his A.B. from Ohio
University and his Ph.D. from Ohio
State University.
Croushore began his career at Penn-
sylvania State University in 1984. After
teaching for five years, he moved to the
Federal Reserve Bank of Philadelphia,
where he was vice president and econo-
mist. His duties during his fourteen
years at the Philadelphia Fed included
heading the macroeconomics section,
briefing the bank’s president and board
of directors on the state of the economy
and advising them about formulating
monetary policy, writing articles about
the economy, administering two nation-
al surveys of forecasters, and research-
ing current issues in monetary policy. In
his role at the Fed, he created the Survey
of Professional Forecasters (taking over
the defunct ASA/NBER survey and
revitalizing it) and developed the Real-
Time Data Set for Macroeconomists.
Croushore returned to academia at
the University of Richmond in 2003.
The focus of his research in recent years
has been on forecasting and how data
revisions affect monetary policy, fore-
casting, and macroeconomic research.
Croushore’s publications include arti-
cles in many leading economics journals
and a textbook on money and banking.
He is associate editor of several journals
and visiting scholar at the Federal Re-
serve Bank of Philadelphia.
v
 Brief Contents

Preface xv

Part 1 Introduction
1 Introduction to Macroeconomics 1
2 The Measurement and Structure of the National Economy 22

Part 2 Long-Run Economic Performance

3 Productivity, Output, and Employment 60
4 Consumption, Saving, and Investment 105
5 Saving and Investment in the Open Economy 168
6 Long-Run Economic Growth 207
7 The Asset Market, Money, and Prices 242

Part 3 Business Cycles and Macroeconomic Policy

8 Business Cycles 280
9 The IS–LM/AD–AS Model: A General Framework for Macroeconomic
Analysis 316
10 Classical Business Cycle Analysis: Market-Clearing
Macroeconomics 367
11 Keynesianism: The Macroeconomics of Wage and Price Rigidity 408

Part 4 Macroeconomic Policy: Its Environment

and Institutions
12 Unemployment and Inflation 449
13 Exchange Rates, Business Cycles, and Macroeconomic Policy in the
Open Economy 481
14 Monetary Policy and the Federal Reserve System 534
15 Government Spending and Its Financing 580

Appendix A Some Useful Analytical Tools 617

Glossary 624
Name Index 635
Subject Index 637
vi
Detailed Contents

Preface xv 2.2 Gross Domestic Product 26

The Product Approach to Measuring GDP 26

1 Introduction
In Touch with Data and Research:
Part Natural Resources, the Environment, and the National
Income Accounts 29
The Expenditure Approach to Measuring GDP 30
Chapter 1 Introduction to Macroeconomics 1
The Income Approach to Measuring GDP 33
1.1 What Macroeconomics Is About 1 2.3 Saving and Wealth 36
Long-Run Economic Growth 2
Measures of Aggregate Saving 36
Business Cycles 4
The Uses of Private Saving 39
Unemployment 5
Relating Saving and Wealth 40
Inflation 6
2.4 Real GDP, Price Indexes, and Inflation 42
The International Economy 7
Real GDP 42
Macroeconomic Policy 8
Price Indexes 44
Aggregation 9
In Touch with Data and Research:
1.2 What Macroeconomists Do 10 The Computer Revolution and Chain-Weighted GDP 45
Macroeconomic Forecasting 10 In Touch with Data and Research:
Macroeconomic Analysis 11 Does CPI Inflation Overstate Increases in the Cost of
Living? 47
Macroeconomic Research 12
In Touch with Data and Research: APPLICATION  The Federal Reserve’s Preferred Inflation

Developing and Testing an Economic Theory 13 Measures 49

Data Development 14 2.5 Interest Rates 51

1.3 Why Macroeconomists Disagree 14

Classicals Versus Keynesians 15 Part 2 Long-Run Economic
A Unified Approach to Macroeconomics 18 Performance

Chapter 2 The Measurement and Structure Chapter 3 Productivity, Output, and

of the National Economy 22
2.1 National Income Accounting:
The Measurement of Production, Income,
and Expenditure 22
In Touch with Data and Research:
The National Income and Product Accounts
Why the Three Approaches Are Equivalent
Employment 60
3.1 How Much Does the Economy Produce?
The Production Function 61
APPLICATION  The Production Function of the U.S.
Economy and U.S. Productivity Growth 62
24 The Shape of the Production Function 64
25 The Marginal Product of Capital 65

vii
viii Detailed Contents

The Marginal Product of Labor 66 APPLICATION Consumer Sentiment and Forecasts of

Supply Shocks 68 Consumer Spending 110

Effect of Changes in Wealth 113
3.2 The Demand for Labor 70
Effect of Changes in the Real Interest Rate 113
The Marginal Product of Labor and Labor Demand:
Fiscal Policy 115
An Example 71
In Touch with Data and Research:
A Change in the Wage 73
Interest Rates 116
The Marginal Product of Labor and the Labor
Demand Curve 73 APPLICATION  How Consumers Respond to Tax
Rebates 120
Factors That Shift the Labor Demand Curve 75
4.2 Investment 122
Aggregate Labor Demand 77
The Desired Capital Stock 123
3.3 The Supply of Labor 77 Changes in the Desired Capital Stock 126
The Income–Leisure Trade-Off 78
APPLICATION Measuring the Effects of Taxes on
Real Wages and Labor Supply 78 Investment 129
The Labor Supply Curve 81 From the Desired Capital Stock to Investment 130
Aggregate Labor Supply 82 Investment in Inventories and Housing 133
In Touch with Data and Research:
3.4 Labor Market Equilibrium 83
Investment and the Stock Market 133
Full-Employment Output 85
4.3 Goods Market Equilibrium 135
APPLICATION Output, Employment, and the Real Wage
During Oil Price Shocks 85 The Saving–Investment Diagram 136
APPLICATION Macroeconomic Consequences of the Boom
3.5 Unemployment 87 and Bust in Stock Prices 140
Measuring Unemployment 87
Appendix 4.A A
 Formal Model of Consumption and
In Touch with Data and Research: Saving 152
Labor Market Data 88
Changes in Employment Status 89
Chapter 5 Saving and Investment in the Open
How Long Are People Unemployed? 90
Economy 168
APPLICATION Unemployment Duration and the 2007–2009
Recession 91 5.1 Balance of Payments Accounting 169
Why There Always Are Unemployed People 92 The Current Account 169
In Touch with Data and Research:
3.6 Relating Output and Unemployment: The Balance of Payments Accounts 171
Okun’s Law 94
The Capital and Financial Account 172
Appendix 3.A The Growth Rate Form of Okun’s Law 104 The Relationship Between the Current Account and
the Capital and Financial Account 174
Net Foreign Assets and the Balance of Payments
Chapter 4 Consumption, Saving, Accounts 176
and Investment 105 APPLICATION  The United States as International

4.1 Consumption and Saving 106 Debtor 177

The Consumption and Saving Decision of an 5.2 Goods Market Equilibrium in an Open
Individual 107 Economy 180
Effect of Changes in Current Income 108 5.3 Saving and Investment in a Small Open
Effect of Changes in Expected Future Income 109 Economy 181
 Detailed Contents ix

The Effects of Economic Shocks in a Small Open In Touch with Data and Research:
Economy 184 The Monetary Aggregates 246
In Touch with Data and Research:
5.4 Saving and Investment in Large Open
Where Have All the Dollars Gone? 247
Economies 186
APPLICATION  The Impact of Globalization on the U.S. 7.2 Portfolio Allocation and the Demand
Economy 189 for Assets 249
APPLICATION  Recent Trends in the U.S. Current Account Expected Return 249
Deficit 191
Risk 250
5.5 Fiscal Policy and the Current Account 194 Liquidity 250
The Critical Factor: The Response of National Time to Maturity 250
Saving 194 Types of Assets and Their Characteristics 251
The Government Budget Deficit and National In Touch with Data and Research:
Saving 195 The Housing Crisis That Began in 2007 254
APPLICATION  The Twin Deficits 196
Asset Demands 256

7.3 The Demand for Money 256

Chapter 6 Long-Run Economic Growth 207
The Price Level 257
6.1 The Sources of Economic Growth 208 Real Income 257
Growth Accounting 210 Interest Rates 258
APPLICATION  The Post–1973 Slowdown in Productivity The Money Demand Function 258
Growth 213
Other Factors Affecting Money Demand 260
Application  The Recent Surge in U.S. Productivity
Velocity and the Quantity Theory of Money 262
Growth 215
7.4 Asset Market Equilibrium 265
6.2 Long-Run Growth: The Solow Model 218
Asset Market Equilibrium: An Aggregation
Setup of the Solow Model 219
Assumption 265
The Fundamental Determinants of Long-Run
The Asset Market Equilibrium Condition 267
Living Standards 226
APPLICATION  The Growth of China 231 7.5 Money Growth and Inflation 268
Application Money Growth and Inflation in European
6.3 Endogenous Growth Theory 233 Countries in Transition 269
6.4 Government Policies to Raise Long-Run The Expected Inflation Rate and the Nominal
Living Standards 235 Interest Rate 270

Policies to Affect the Saving Rate 235 Application Measuring Inflation Expectations 272

Policies to Raise the Rate of Productivity

Growth 235
Part 3 Business Cycles and
Macroeconomic Policy
Chapter 7 The Asset Market, Money, and
Prices 242
Chapter 8 Business Cycles 280
7.1 What Is Money? 242
In Touch with Data and Research:
8.1 What Is a Business Cycle? 281
Money in a Prisoner-of-War Camp 243
8.2 The American Business Cycle:
The Functions of Money 244 The Historical Record 283
x Detailed Contents
The Pre–World War I Period 283
The Great Depression and World War II
Post–World War II U.S. Business Cycles
The “Long Boom” 286
The Great Recession 286
Have American Business Cycles Become
Less Severe? 287
8.3 Business Cycle Facts 290
The Cyclical Behavior of Economic Variables:
Direction and Timing 290
Production 291
Expenditure 293
Employment and Unemployment 294
APPLICATION  The Job Finding Rate and the Job
Loss Rate 295
Average Labor Productivity and the
Real Wage 298
Money Growth and Inflation 299
Financial Variables 300
International Aspects of the Business Cycle 301
In Touch with Data and Research:
Coincident and Leading Indexes 302
8.4 Business Cycle Analysis: A Preview 306
In Touch with Data and Research:
The Seasonal Cycle and the Business Cycle
Aggregate Demand and Aggregate Supply:
A Brief Introduction 308
Chapter 9 The IS–LM/AD–AS Model: A General
Framework for Macroeconomic
Analysis 316
9.1 The FE Line: Equilibrium in the Labor
Market 317
Factors That Shift the FE Line 317
9.2 The IS Curve: Equilibrium in the Goods
Market 319
Factors That Shift the IS Curve 321
9.3 The LM Curve: Asset Market
Equilibrium 323
The Interest Rate and the Price of a Nonmonetary
Asset 324
The Equality of Money Demanded and Money
283 Supplied 324
285 Factors That Shift the LM Curve 327
9.4 General Equilibrium in the Complete IS–LM
Model 330
Applying the IS–LM Framework: A Temporary
Adverse Supply Shock 332
APPLICATION Oil Price Shocks Revisited 334
In Touch with Data and Research:
Econometric Models and Macroeconomic Forecasts for
Monetary Policy Analysis 335
9.5 Price Adjustment and the Attainment of
General Equilibrium 336
The Effects of a Monetary Expansion 336
Classical Versus Keynesian Versions of the IS–LM
Model 340
9.6 Aggregate Demand and Aggregate
Supply 342
The Aggregate Demand Curve 342
The Aggregate Supply Curve 344
Equilibrium in the AD–AS Model 347
Monetary Neutrality in the AD–AS Model 348
Appendix 9.A Worked-Out Numerical Exercise for
­Solving the IS–LM/AD–AS Model 357
307
Appendix 9.B AlgebraicVersions of the IS–LM
and AD–AS Models 360
Chapter 10 Classical Business Cycle
Analysis: Market-Clearing
Macroeconomics 367
10.1 Business Cycles in the Classical Model 368
The Real Business Cycle Theory 368
APPLICATION Calibrating the Business Cycle 371
10.2 Fiscal Policy Shocks in the Classical
Model 378
10.3 Unemployment in the Classical Model 382
Jobless Recoveries 384
10.4 Money in the Classical Model 386
Monetary Policy and the Economy 386
 Detailed Contents xi

Monetary Nonneutrality and Reverse Macroeconomic Stabilization 431

Causation 387
The Nonneutrality of Money: Additional
Evidence 388
10.5 The Misperceptions Theory and the
Nonneutrality of Money 389
Monetary Policy and the Misperceptions
Theory 392
Rational Expectations and the Role of Monetary
Policy 394
In Touch with Data and Research:
Are Price Forecasts Rational? 396
Supply Shocks in the Keynesian Model 433
In Touch with Data and Research:
DSGE Models and the Classical–Keynesian Debate 435
Appendix 11.A Labor Contracts and Nominal-Wage
Rigidity 442
Appendix 11.B Worked-Out Numerical Exercise for
Calculating the Multiplier in a Keynesian
Model 445
Appendix 11.C The Multiplier in the Keynesian Model 447

Appendix 10.A  orked-Out Numerical Exercise for

W
Solving the Classical AD–AS Model Part 4  acroeconomic Policy:
M
with Misperceptions 405 Its Environment and Institutions
Appendix 10.B  n Algebraic Version of the Classical
A
AD–AS Model with Misperceptions 406
Chapter 12 Unemployment and Inflation 449

Chapter 11 Keynesianism: The Macroeconomics 12.1 Unemployment and Inflation: Is There

of Wage and Price Rigidity 408 a Trade-Off? 449
The Expectations-Augmented Phillips Curve 452
11.1 Real-Wage Rigidity 409
The Shifting Phillips Curve 455
Some Reasons for Real-Wage Rigidity 409
The Efficiency Wage Model 410 12.2 Macroeconomic Policy and the Phillips
Curve 460
Wage Determination in the Efficiency Wage
Model 411 In Touch with Data and Research:
The Lucas Critique 461
Employment and Unemployment in the Efficiency
Wage Model 412 The Long-Run Phillips Curve 462
Efficiency Wages and the FE Line 414 12.3 The Problem of Unemployment 462
In Touch with Data and Research:
The Costs of Unemployment 463
Henry Ford’s Efficiency Wage 415
The Long-Term Behavior of the Unemployment
11.2 Price Stickiness 416 Rate 463
Sources of Price Stickiness: Monopolistic 12.4 The Problem of Inflation 467
Competition and Menu Costs 416
The Costs of Inflation 467
11.3 Monetary and Fiscal Policy in the Keynesian In Touch with Data and Research:
Model 422 Indexed Contracts 469
Monetary Policy 422
12.5 Fighting Inflation: The Role of Inflationary
Fiscal Policy 425 Expectations 471
11.4 The Keynesian Theory of Business Cycles In Touch with Data and Research:
and Macroeconomic Stabilization 428 The Sacrifice Ratio 473
Keynesian Business Cycle Theory 428 The U.S. Disinflation of the 1980s and 1990s 474
xii Detailed Contents

Chapter 13 Exchange Rates, Business Cycles, Chapter 14 Monetary Policy and the Federal
and Macroeconomic Policy in the Reserve System 534
Open Economy 481 14.1 Principles of Money Supply
13.1 Exchange Rates 482 Determination 535
Nominal Exchange Rates 482 Open-Market Operations 537
In Touch with Data and Research: The Money Multiplier 538
Exchange Rates 483 Bank Runs 541
Real Exchange Rates 484 APPLICATION  The Money Multiplier During Severe

Appreciation and Depreciation 485 Financial Crises 542

Purchasing Power Parity 486 14.2 Monetary Control in the United States 547
In Touch with Data and Research: The Federal Reserve System 547
McParity 487
The Federal Reserve’s Balance Sheet and
The Real Exchange Rate and Net Exports 489 Open-Market Operations 548
APPLICATION  The Value of the Dollar and U.S. Net Reserve Requirements 550
Exports 491 Discount Window Lending 551
13.2 How Exchange Rates Are Determined: Interest Rate on Reserves 553
A Supply-and-Demand Analysis 493
14.3 Setting Monetary Policy Targets 553
Macroeconomic Determinants of the Exchange Rate
Targeting the Federal Funds Rate 553
and Net Export Demand 495
14.4 Making Monetary Policy in Practice 557
13.3 The IS–LM Model for an Open
Economy 497 Lags in the Effect of Monetary Policy 557
The Open-Economy IS Curve 498 Conducting Monetary Policy Under
Uncertainty 559
Factors That Shift the Open-Economy IS Curve 501
Monetary Policy in the Great Recession 560
The International Transmission of Business
Cycles 503 APPLICATION  The Financial Crisis of 2008 564

13.4 Macroeconomic Policy in an Open Economy 14.5 The Conduct of Monetary Policy:
with Flexible Exchange Rates 504 Rules Versus Discretion 565
A Fiscal Expansion 504 The Monetarist Case for Rules 566
A Monetary Contraction 507 Rules and Central Bank Credibility 568
The Taylor Rule 570
13.5 Fixed Exchange Rates 509
Other Ways to Achieve Central Bank
Fixing the Exchange Rate 510 Credibility 572
Monetary Policy and the Fixed Exchange Rate 512 APPLICATION Inflation Targeting 574
Fixed Versus Flexible Exchange Rates 515
Currency Unions 516
Chapter 15 Government Spending and Its
APPLICATION European Monetary Unification 517 Financing 580
APPLICATION Crisis in Argentina 519
15.1 The Government Budget: Some Facts and
Appendix 13.A  orked-Out Numerical Exercise for the
W Figures 580
Open-Economy IS–LM Model 528 Government Outlays 580
Taxes 583
Appendix 13.B  n Algebraic Version of the Open-
A
Economy IS–LM Model 531 Deficits and Surpluses 586
 Detailed Contents xiii

15.2 Government Spending, Taxes, Appendix A Some Useful Analytical

and the Macroeconomy 588 Tools 617
Fiscal Policy and Aggregate Demand 588
A.1 Functions and Graphs 617
Government Capital Formation 590
A.2 Slopes of Functions 618
Incentive Effects of Fiscal Policy 591 A.3 Elasticities 619
APPLICATION Labor Supply and Tax Reform in the A.4 Functions of Several Variables 620
1980s 593 A.5 Shifts of a Curve 620
A.6 Exponents 621
15.3 Government Deficits and Debt 595 A.7 Growth Rate Formulas 621
Problems 622
The Growth of the Government Debt 595
APPLICATION Social Security: How Can It Be Fixed? 597 Glossary 624
The Burden of the Government Debt on Future
Generations 599 Name Index 635
Budget Deficits and National Saving: Ricardian
Equivalence Revisited 600 Subject Index 637
Departures from Ricardian Equivalence 603
In Touch with Data and Research:
Measuring the Impact of Government Purchases
on the Economy 604

15.4 Deficits and Inflation 605

The Deficit and the Money Supply 606
Real Seignorage Collection and Inflation 607

Appendix 15.A The Debt–GDP Ratio 616

xiv Detailed Contents

Summary Tables Key Diagrams

1 Measures of Aggregate Saving 37 1 The production function 97
2 Comparing the Benefits and Costs of Changing the 2 The labor market 98
Amount of Labor 73
3 The saving–investment diagram 145
3 Factors That Shift the Aggregate Labor Demand
4 National saving and investment in a small open
Curve 77
economy 200
4 Factors That Shift the Aggregate Labor Supply
5 National saving and investment in large open
Curve 83
economies 201
5 Determinants of Desired National Saving 120
6 The IS–LM model 351
6 Determinants of Desired Investment 132
7 The aggregate demand–aggregate supply
7 Equivalent Measures of a Country’s International model 352
Trade and Lending 177
8 The misperceptions version of the AD–AS
8 The Fundamental Determinants of Long-Run Living model 399
Standards 226
9 Macroeconomic Determinants of the Demand for
Money 260
10 The Cyclical Behavior of Key Macroeconomic
Variables (The Business Cycle Facts) 292
11 Factors That Shift the Full-Employment (FE)
Line 318
12 Factors That Shift the IS Curve 321
13 Factors That Shift the LM Curve 327
14 Factors That Shift the AD Curve 346
15 Terminology for Changes in Exchange Rates 486
16 Determinants of the Exchange Rate
(Real or Nominal) 497
17 Determinants of Net Exports 497
18 International Factors That Shift the IS Curve 503
19 Factors Affecting the Monetary Base, the Money
Multiplier, and the Money Supply 550
Preface
Since February 2006, Ben Bernanke has been chairman of the Board of Governors
of the Federal Reserve System. Federal ethics rules prohibited him from making
substantive contributions to the sixth, seventh, and eighth editions.
In preparing the eighth edition, we viewed our main objective to be keeping
the book fresh and up-to-date, especially in light of the recent crises in the United
States and Europe and many new tools used by the Federal Reserve in response to
the crisis. We have also added new applications, boxes, and problems throughout
and made many revisions of the text to reflect recent events and developments in
the field. In addition, the empirical problems at the end of most chapters direct
students to appropriate data in the FRED database on the Web site of the Fed-
eral Reserve Bank of St. Louis. Because this database is frequently updated and is
available free of charge, students will develop familiarity and facility with a cur-
rent data source that they can continue to use after completing the course.
A summary of our revisions follows.

What’s New in This Edition

The severe recession that occurred from 2007 to 2009 and the slow recovery that
followed have motivated many changes in this edition of Macroeconomics. The
main changes in this textbook are geared toward explaining those economic
events and related issues, including the large increase in the duration of unem-
ployment, the slow recovery of the labor market, the Fed’s new tools for conduct-
ing monetary policy and how they have been used, and the impact of fiscal policy
on the economy in a severe recession.
This is a summary of the changes made in the textbook for the eighth edition.
See the following section for further details on these changes.
■■ We add a new application on the large increase in unemployment duration in
the 2007–2009 recession and evaluate four potential explanations for it.
■■ We discuss the severity of the 2007–2009 recession and show how it compares
historically to other recessions, leading many economists to label it the Great
Recession.
■■ We analyze the slow recovery in employment that followed the three most
recent recessions and review potential explanations.
■■ We look at the various crises facing European countries since 2008 and con-
sider the major changes that may be required if the euro is to survive.
■■ We examine monetary policy in greater detail, discussing both the theory of
the conduct of monetary policy under uncertainty and what the Fed did in
response to the Great Recession.
■■ We add detail on the new tools the Fed has used in recent years, including
quantitative easing, credit easing, forward guidance, and modifying the ma-
turity structure of its assets.

xv
xvi Preface

■■ We describe new research evaluating the impact of government purchases on

the economy, motivated by the fiscal stimulus put in place in the United States
in response to the Great Recession.
■■ We update our extensive series of graphs illustrating the historical movements
of key economic variables.

New and Updated Coverage

What is taught in intermediate macroeconomics courses—and how it is taught—
has changed substantially in recent years. Previous editions of Macroeconomics
played a major role in these developments. The eighth edition provides lively
coverage of a broad spectrum of macroeconomic issues and ideas, including a
variety of new and updated topics:
■■ Monetary policy. In response to the slow economic recovery following the
2007–2009 recession, the Federal Reserve introduced new tools to influence
economic activity, so we have added a substantial amount of material to dis-
cuss many different aspects of these policy changes. Thus, we have rewritten
Chapter 14 on monetary policy substantially. New or substantially revised cov-
erage: In Chapter 14 we describe all the new tools the Fed has used for mon-
etary policy, including quantitative easing, credit easing, forward guidance,
and twisting the yield curve. In Chapter 14, we also increase our discussion
of policymaking under uncertainty and discuss how policymakers can deal
optimally with uncertainty. Finally, we also show how the Fed’s balance sheet
has changed since the financial crisis, with the Fed’s assets more than tripling
in size.
■■ Long-term economic growth. Because the rate of economic growth plays a cen-
tral role in determining living standards, we devote much of Part 2 to growth
and related issues. We first discuss factors contributing to growth, such as
productivity (Chapter 3) and rates of saving and investment (Chapter 4);
then in Chapter 6 we turn to a full-fledged analysis of the growth process,
using tools such as growth accounting and the Solow model. Growth-related
topics covered include the post-1973 productivity slowdown, the factors that
determine long-run living standards, and the productivity “miracle” of the
1990s. Revised coverage: Updated data and a discussion of China’s growth
prospects plus a discussion of how governments can encourage research and
development is included.
■■ International macroeconomic issues. We address the increasing integration of the
world economy in two ways. First, we frequently use cross-country compari-
sons and applications that draw on the experiences of nations other than the
United States. For example, in Chapter 6 we compare the long-term economic
growth rates of several countries; in Chapter 7 we compare inflation experi-
ences among European countries in transition; in Chapter 8 we compare the
growth in industrial production in several countries; in Chapter 12 we com-
pare sacrifice ratios among various countries; and in Chapter 14 we discuss
strategies used for making monetary policy around the world. Second, we
devote two chapters, 5 and 13, specifically to international issues. In Chapter 5
we show how the trade balance is related to a nation’s rates of saving and
investment, and then apply this framework to discuss issues such as the U.S.
 Preface xvii

trade deficit and the relationship between government budget deficits and
trade deficits. In Chapter 13 we use a simple supply–demand framework to
examine the determination of exchange rates. The chapter features innovative
material on fixed exchange rates and currency unions, including an explana-
tion of why a currency may face a speculative run. Revised coverage: The text
includes a discussion of the series of financial crises in Europe that began in
2008 (Chapter 13).
■■ Business cycles. Our analysis of business cycles begins with facts rather than
theories. In Chapter 8 we give a history of U.S. business cycles and then de-
scribe the observed cyclical behavior of a variety of important economic vari-
ables (the “business cycle facts”). In Chapters 9–11 we evaluate alternative
classical and Keynesian theories of the cycle by how well they explain the
facts. New to this edition: The text now includes an analysis of the Great Reces-
sion (Chapter 8), and a description of the jobless recoveries that have occurred
following the three most recent recessions (Chapter 10).
■■ Fiscal policy. The effects of macroeconomic policies are considered in nearly
every chapter, in both theory and applications. We present classical (Chapter 10),
Keynesian (Chapter 11), and monetarist (Chapter 14) views on the appropriate
use of policy. New or substantially revised coverage: The text now discusses new
research measuring the impact of government purchases on the economy.
■■ Labor market issues. We pay close attention to issues relating to employment,
unemployment, and real wages. We introduce the basic supply–demand
model of the labor market, as well as unemployment, early, in Chapter 3. We
discuss unemployment more extensively in Chapter 12, which covers the
­inflation– unemployment trade-off, the costs of unemployment, and govern-
ment ­policies for reducing unemployment. Other labor market topics ­include
­efficiency wages (Chapter 11) and the effects of marginal and average tax rate
changes on labor supply (Chapter 15). New or substantially revised coverage: The
text now discusses the large rise in unemployment duration that occurred
during the 2007–2009 recession (Chapter 3).

A Solid Foundation
The eighth edition builds on the strengths that underlie the book’s lasting appeal
to instructors and students, including:
■■ Real-world applications. A perennial challenge for instructors is to help students
make active use of the economic ideas developed in the text. The rich variety of
applications in this book shows by example how economic concepts can be put
to work in explaining real-world issues such as the housing crisis that began in
2007 and the financial crisis of 2008, the slowdown and revival in productivity
growth, the challenges facing the Social Security system and the Federal budget,
the impact of globalization on the U.S. economy, and new approaches to making
monetary policy that were used in response to the financial crisis in 2008 and the
slow recovery since 2009. The eighth edition offers new applications as well as
updates of the best applications and analyses of previous editions.
■■ Broad modern coverage. From its conception, Macroeconomics has responded
to students’ desires to investigate and understand a wider range of macro-
economic issues than is permitted by the course’s traditional emphasis on
xviii Preface

short-run fluctuations and stabilization policy. This book provides a modern

treatment of these traditional topics but also gives in-depth coverage of other
important macroeconomic issues such as the determinants of long-run eco-
nomic growth, the trade balance and financial flows, labor markets, and the
institutional framework of policymaking. This comprehensive coverage also
makes the book a useful tool for instructors with differing views about course
coverage and topic sequence.
■■ Reliance on a set of core economic ideas. Although we cover a wide range of top-
ics, we avoid developing a new model or theory for each issue. Instead we
emphasize the broad applicability of a set of core economic ideas (such as the
production function, the trade-off between consuming today and saving for
tomorrow, and supply–demand analysis). Using these core ideas, we build
a theoretical framework that encompasses all the macroeconomic analyses
­presented in the book: long-run and short-run, open-economy and closed-
economy, and classical and Keynesian.
■■ A balanced presentation. Macroeconomics is full of controversies, many of which
arise from the split between classicals and Keynesians (of the old, new, and
neo-varieties). Sometimes the controversies overshadow the broad common
ground shared by the two schools. We emphasize that common ground. First,
we pay greater attention to long-run issues (on which classicals and Keynes-
ians have less disagreement). Second, we develop the classical and Keynesian
analyses of short-run fluctuations within a single overall framework, in which
we show that the two approaches differ principally in their assumptions
about how quickly wages and prices adjust. Where differences in viewpoint
remain—for example, in the search versus efficiency-wage interpretations of
unemployment—we present and critique both perspectives. This balanced ap-
proach exposes students to all the best ideas in modern macroeconomics. At
the same time, an instructor of either classical or Keynesian inclination can
easily base a course on this book.
■■ Innovative pedagogy. The eighth edition, like its predecessors, provides a va-
riety of useful tools to help students study, understand, and retain the mate-
rial. Described in more detail later in the preface, these tools include summary
tables, key diagrams, key terms, and key equations to aid students in organ-
izing their study, and four types of questions and problems for practice and
developing understanding, including problems that encourage students to do
their own empirical work, using data readily available on the Internet. Several
appendices illustrate how to solve numerical exercises that are based on the
algebraic descriptions of the IS–LM/AS–AD model.

A Flexible Organization
The eighth edition maintains the flexible structure of earlier editions. In Part 1
(Chapters 1–2), we introduce the field of macroeconomics and discuss issues of
economic measurement. In Part 2 (Chapters 3–7), we focus on long-run issues, in-
cluding productivity, saving, investment, the trade balance, growth, and inflation.
We devote Part 3 (Chapters 8–11) to the study of short-run economic fluctuations
and stabilization policy. Finally, in Part 4 (Chapters 12–15), we take a closer look
at issues and institutions of policymaking. Appendix A at the end of the book re-
views useful algebraic and graphical tools.
 Preface xix

Instructors of intermediate macroeconomics have different preferences as to

course content, and their choices are often constrained by their students’ back-
grounds and the length of the term. The structure of Macroeconomics accommo-
dates various needs. In planning how to use the book, instructors might find it
useful to consider the following points:

■■ Core chapters. We recommend that every course include these six chapters:

Chapter 1 Introduction to Macroeconomics

Chapter 2 The Measurement and Structure of the National Economy
Chapter 3 Productivity, Output, and Employment
Chapter 4 Consumption, Saving, and Investment
Chapter 7 The Asset Market, Money, and Prices
Chapter 9  The IS–LM/AD–AS Model: A General Framework for Macroeco-
nomic Analysis

Chapters 1 and 2 provide an introduction to macroeconomics, including na-

tional income accounting. The next four chapters in the list make up the ana-
lytical core of the book: Chapter 3 examines the labor market, Chapters 3 and 4
together develop the goods market, Chapter 7 discusses the asset market, and
Chapter 9 combines the three markets into a general equilibrium model usable
for short-run analysis (in either a classical or Keynesian mode).
■■ Suggested additions. To a syllabus containing these six chapters, instructors can
add various combinations of the other chapters, depending on the course fo-
cus. The following are some possible choices:

Short-run focus. Instructors who prefer to emphasize short-run issues (busi-

ness cycle fluctuations and stabilization policy) may omit Chapters 5 and 6
without loss of continuity. They could also go directly from Chapters 1 and 2
to Chapters 8 and 9, which introduce business cycles and the IS–LM/AD–AS
framework. Although the presentation in Chapters 8 and 9 is self-contained,
it will be helpful for instructors who skip Chapters 3–7 to provide some back-
ground and motivation for the various behavioral relationships and equilib-
rium conditions.
Classical emphasis. For instructors who want to teach the course with a modern
classical emphasis, we recommend assigning all the chapters in Part 2. In Part
3, Chapters 8–10 provide a self-contained presentation of classical business
cycle theory. Other material of interest includes the Friedman–Phelps inter-
pretation of the Phillips curve (Chapter 12), the role of credibility in monetary
policy (Chapter 14), and Ricardian equivalence with multiple generations
(Chapter 15).
Keynesian emphasis. Instructors who prefer a Keynesian emphasis may choose
to omit Chapter 10 (classical business cycle analysis). As noted, if a short-run
focus is preferred, Chapter 5 (full-employment analysis of the open economy)
and Chapter 6 (long-run economic growth) may also be omitted without loss
of continuity.
International focus. Chapter 5 discusses saving, investment, and the trade bal-
ance in an open economy with full employment. Chapter 13 considers ex-
change rate determination and macroeconomic policy in an open-economy
xx Preface

model in which short-run deviations from full employment are possible.

(Chapter 5 is a useful but not essential prerequisite for Chapter 13.) Both chap-
ters may be omitted for a course focusing on the domestic economy.

Applying Macroeconomics to the Real World

Economists sometimes get caught up in the elegance of formal models and forget
that the ultimate test of a model or theory is its practical relevance. In the previ-
ous editions of Macroeconomics, we dedicated a significant portion of each chapter
to showing how the theory could be applied to real events and issues. Our efforts
were well received by instructors and students. The eighth edition continues to help
students learn how to “think like an economist” by including the following features:
■■ Applications. Applications in each chapter show students how they can use the-
ory to understand an important episode or issue. Examples of topics covered
in Applications include the increase in the duration of unemployment in the
Great Recession (Chapter 3), the macroeconomic consequences of the boom and
bust in stock prices (Chapter 4), how people respond to tax rebates (Chapter 4),
the United States as international debtor (Chapter 5), the recent surge in U.S.
­productivity growth (Chapter 6), calibrating the business cycle (Chapter 10),
inflation targeting (Chapter 14), and labor supply and tax reform (Chapter 15).
■■ In Touch with Data and Research. These boxes give the reader further insight
into new developments in economic research as well as a guide to keeping
abreast of new developments in the economy. Research topics in these boxes
include discussions of biases in inflation measurement (Chapter 2), the link
between capital investment and the stock market (Chapter 4), flows of U.S.
dollars abroad (Chapter 7), DSGE models and the classical–Keynesian debate
(Chapter 10), the Lucas critique (Chapter 12), and the impact on the economy
of fiscal stimulus packages (Chapter 15). Keeping abreast of the economy re-
quires an understanding of what data are available, as well as their strengths
and shortcomings. We provide a series of boxes to show where to find key
macroeconomic data—such as labor market data (Chapter 3), balance of pay-
ments data (Chapter 5), and exchange rates (Chapter 13)—and how to inter-
pret them. Online data sources are featured along with more traditional media.

Learning Features
The following features of this book aim to help students understand, apply, and
retain important concepts:
■■ Detailed, full-color graphs. The book is liberally illustrated with data graphs,
which emphasize the empirical relevance of the theory, and analytical graphs,
which guide students through the development of model and theory in a step-
by-step manner. For both types of graphs, descriptive captions summarize the
details of the events shown.
■■ The use of color in an analytical graph is demonstrated by the figure on
the next page, which shows the effects of a shifting curve on a set of endo­
genous variables. Note that the original curve is in black, whereas its new
position is marked in red, with the direction of the shift indicated by ­arrows.
 Preface xxi

Figure 9.14

Price level, P
Monetary neutrality in the
AD–AS framework LRAS
If we start from general
equilibrium at point E,
a 10% increase in the
nominal money supply
shifts the AD curve up
H
and to the right from P2 SRAS 2
AD1 to AD2. The points 1. Money supply
on the new AD curve are increases by 10%
those for which the price E F
P1 SRAS 1
level is 10% higher at
each level of output de-
manded, because a 10% 2. Price level
increase in the price level increases by 10%
AD 2
is needed to keep the real AD 1
money supply, and thus
the aggregate quantity
of output demanded,
unchanged. In the new Y Y2
Output, Y
short-run equilibrium at
point F, the price level is
unchanged, and output
is higher than its full- A peach-colored “shock box” points out the reason for the shift, and a blue
employment level. In the “result box” lists the main effects of the shock on endogenous variables.
new long-run equilib- These and similar conventions make it easy for students to gain a clear
rium at point H, output ­understanding of the analysis.
is unchanged at Y,
■■ Key diagrams. Key diagrams, a unique study feature at the end of selected
and the price level P2 is
chapters, are self-contained descriptions of the most important analytical
10% higher than the ini-
tial price level P1. Thus
graphs in the book (see the end of the Detailed Contents for a list). For each
money is neutral in the key diagram, we present the graph (for example, the production function,
long run. p. 97, or the AD–AS diagram, p. 352) and define and describe its elements in
words and, where appropriate, equations. We then analyze what the graph
reveals and discuss the factors that shift the curves in the graph.
■■ Summary tables. Throughout the book, summary tables bring together the main
results of an analysis and reduce the time that students must spend writing and
memorizing results, allowing a greater concentration on understanding and
applying these results.
■■ End-of-chapter review materials. To facilitate review, at the end of each chapter
students will find a chapter summary, covering the chapter’s main points; a
list of key terms with page references; and an annotated list of key equations.
■■ End-of-chapter questions and problems. An extensive set of questions and prob-
lems includes review questions, for student self-testing and study; numeri-
cal problems, which have numerical solutions and are especially useful for
checking students’ understanding of basic relationships and concepts; analytical
problems, which ask students to use or extend a theory qualitatively; and
empirical problems that direct students to use data from the FRED database
of the Federal Reserve Bank of St. Louis and allow them to see for them-
selves how well theory explains real-world data. Answers to these problems
(except the empirical problems, the answers to which change over time) a­ ppear
xxii Preface

in the Instructor’s Manual. All end-of-chapter Review Questions, Numerical

Problems, and most Analytical Problems can be assigned in and automatically
graded by MyEconLab.
■■ Worked numerical problems at the end of selected chapters. The IS-LM/AD-AS mod-
el is the analytic centerpiece of Parts 3 and 4 of the book. In addition to provid-
ing algebraic descriptions of this model in appendixes at the end of selected
chapters in Parts 3 and 4, separate appendixes illustrate worked-out numeri-
cal problems using this model.
■■ Review of useful analytical tools. Although we use no mathematics beyond
high school algebra, some students will find it handy to have a review of
the book’s main analytical tools. Appendix A (at the end of the text) suc-
cinctly discusses functions of one variable and multiple variables, graphs,
slopes, exponents, and formulas for finding the growth rates of products
and ratios.
■■ Glossary. The glossary at the end of the book defines all key terms (boldface
within the chapter and also listed at the end of each chapter) and refers stu-
dents to the page on which the term is fully defined and discussed.

0\(FRQ/DE
MyEconLab is a powerful assessment and tutorial system that works hand-in-hand
with Macroeconomics. MyEconLab includes comprehesive homework, quiz, test,
and tutorial options, allowing instructors to manage all assessment needs in one
program. Key innovations in the MyEconLab course for Macroeconomics, eighth edi-
tion, include the following:

■■ Real-time Data Analysis Exercises, marked with , allow students and instruc-
tors to use the absolute latest data from FRED, the online macroeconomic data
bank from the Federal Reserve Bank of St. Louis. By completing the exercises,
students become familiar with a key data source, learn how to locate data, and
develop skills to interpret data.
■■ In the eText available in MyEconLab, select figures labeled MyEconLab Real-time data
allow students to display a popup graph updated with real-time data from
FRED.
■■ Current News Exercises, new to this edition of the MyEconLab course, pro-
vide a turn-key way to assign gradable news-based exercises in MyEconLab.
Every week, Pearson scours the news, finds a current article appropriate for
the macroeconomics course, creates an exercise around this news article, and
then automatically adds it to MyEconLab. Assigning and grading current
news-based exercises that deal with the latest macro events and policy issues
has never been more convenient.

Students and MyEconLab. This online homework and tutorial system puts
students in control of their own learning through a suite of study and practice
tools correlated with the online, interactive version of the textbook and other
media tools. Within MyEconLab’s structured environment, students practice
what they learn, test their understanding, and then pursue a study plan that
MyEconLab generates for them based on their performance on practice tests.
 Preface xxiii

Instructors and MyEconLab. MyEconLab provides flexible tools that allow

instructors to easily and effectively customize online course materials to suit their
needs. Instructors can create and assign tests, quizzes, or homework assignments.
MyEconLab saves time by automatically grading all questions and tracking results
in an online gradebook. MyEconLab can even grade assignments that require stu-
dents to draw a graph.
After registering for MyEconLab instructors have access to downloadable
supplements such as an instructor’s manual, PowerPoint lecture notes, and a test
bank. The test bank can also be used within MyEconLab, giving instructors ample
material from which they can create assignments.
For advanced communication and customization, MyEconLab is deliv-
ered in CourseCompass. Instructors can upload course documents and as-
signments, and use advanced course management features. For more infor-
mation about MyEconLab or to request an instructor access code, visit www.
myeconlab.com.
Additional MyEconLab resources include:

■■ Animated figures. Key figures from the textbook are presented in step-by-step
animations with audio explanations of the action.
■■ MySearchLab. This site includes research tools, steps for researching and w
­ riting
a paper, and avoiding plagiarism tutorials.

Additional Supplementary Resources

A full range of additional supplementary materials to support teaching and
learning accompanies this book. All of these items are available to qualified
domestic adopters but in some cases may not be available to international
adopters.

■■ The Instructor’s Manual offers guidance for instructors on using the text, solu-
tions to all end-of-chapter problems in the book (except the empirical ques-
tions), and suggested topics for class discussion.
■■ The Test Item File contains a generous selection of multiple-choice questions
and problems, all with answers. All questions and problems are also available
in TestGen.
■■ PowerPoint Lectures provide slides for all the basic text material, including all
tables and figures from the textbook.

Acknowledgments
A textbook isn’t the lonely venture of its author or coauthors but rather is the joint
project of dozens of skilled and dedicated people. We extend special thanks to
­Denise Clinton, digital publisher; David Alexander, executive editor; and p ­ roject
manager ­Lindsey Sloan, for their superb work on the eighth edition. For their
­efforts, care, and craft, we also thank Kathryn Dinovo, senior production ­project
manager; Debbie Meyer, managing editor from Integra; Melissa Honig, ­executive
media producer; Noel Lotz, MyEconLab content lead; and Lori DeShazo, ­executive
marketing manager.
xxiv Preface
We also appreciate the contributions of the reviewers and colleagues who have
offered valuable comments on succeeding drafts of the book in all eight ­editions
thus far:
Ugur Aker, Hiram College
Krishna Akkina, Kansas State University
Terence J. Alexander, Iowa State University
Edward Allen, University of Houston
Richard G. Anderson, Federal Reserve
Bank of
St. Louis
David Aschauer, Bates College
Martin A. Asher, The Wharton School,
University
of Pennsylvania
David Backus, New York University
Daniel Barbezat, Amherst College
Parantap Basu, Fordham University
Valerie R. Bencivenga, University of Texas
Haskel Benishag, Kellogg Graduate School
of Management, Northwestern University
Charles A. Bennett, Gannon University
Joydeep Bhattacharya, Iowa State
­University
Robert A. Blewett, Saint Lawrence
­University
Scott Bloom, North Dakota State University
Bruce R. Bolnick, Northeastern University
David Brasfield, Murray State University
Viacheslav Breusov, University of
­Pennsylvania
Audie Brewton, Northeastern Illinois
University
Stacey Brook, University of Sioux Falls
Nancy Burnett, University of Wisconsin,
Oshkosh
Maureen Burton, California Polytechnic
University, Pomona
John Campbell, Harvard University
Kevin Carey, American University
J. Lon Carlson, Illinois State University
Wayne Carroll, University of Wisconsin,
Eau Claire
Arthur Schiller Casimir, Western New
England College
Stephen Cecchetti, Brandeis University
Anthony Chan, Woodbury University
Leo Chan, University of Kansas
S. Chandrasekhar, Pennsylvania State
University
Henry Chappell, University of South
Carolina
Jen–Chi Cheng, Wichita State University
Menzie Chinn, University of California,
Santa Cruz
K. A. Chopra, State University of New
York, Oneonta
Nan-Ting Chou, University of Louisville
Jens Christiansen, Mount Holyoke College
Reid W. Click, George Washington
­University
John P. Cochran, Metropolitan State College
of Denver
Juan Carlos Cordoba, Rice University
Steven R. Cunningham, University of
Connecticut
Bruce R. Dalgaard, St. Olaf College
Betty C. Daniel, University at
Albany—SUNY
Joe Daniels, Marquette University
Edward Day, University of Central Florida
Robert Dekle, University of Southern
California
Greg Delemeester, Marietta College
Wouter J. Den Haan, University of
­Amsterdam
Johan Deprez, Texas Tech University
James Devine, Loyola Marymount
­University
Wael William Diab, Cisco Systems
Aimee Dimmerman, George Washington
University
Peter Dohlman, International Monetary
Fund
Patrick Dolenc, Keene State College
Allan Drazen, University of Maryland
Robert Driskill, Vanderbilt University
Bill Dupor, Ohio State University
Donald H. Dutkowsky, Syracuse
­University
James E. Eaton, Bridgewater College
Janice C. Eberly, Northwestern University
Andrew Economopoulos, Ursinus College
Alejandra Cox Edwards, California State
University, Long Beach
Martin Eichenbaum, Northwestern
­University
Carlos G. Elias, Manhattan College
Kirk Elwood, James Madison University
Sharon J. Erenburg, Eastern Michigan
University
Christopher Erickson, New Mexico State
University
James Fackler, University of Kentucky
Steven Fazzari, Washington University
J. Peter Ferderer, Clark University
Abdollah Ferdowsi, Ferris State University
David W. Findlay, Colby College
Thomas J. Finn, Wayne State University
Charles C. Fischer, Pittsburg
State University
John A. Flanders, Central Methodist College
Juergen Fleck, Hollins College
Adrian Fleissig, California State University,
Fullerton
R. N. Folsom, San Jose State University
Kevin Foster, City University of New York
J. E. Fredland, U.S. Naval Academy
James R. Gale, Michigan Technological
University
Edward N. Gamber, Lafayette College
William T. Ganley, Buffalo State College
Charles B. Garrison, University of
Tennessee, Knoxville
Kathie Gilbert, Mississippi State University
Carlos G. Glias, Manhattan College
Roger Goldberg, Ohio Northern
University
Joao Gomes, The Wharton School,
University of Pennsylvania
Fred C. Graham, American University
John W. Graham, Rutgers University

Stephen A. Greenlaw, Mary Washington
College
Alan F. Gummerson, Florida International
University
A. R. Gutowsky, California State
University, Sacramento
David R. Hakes, University of
Northern Iowa
Michael Haliassos, University of Maryland
George J. Hall, Brandeis University
John C. Haltiwanger, University
of Maryland
James Hamilton, University of California,
San Diego
David Hammes, University of Hawaii
Reza Hamzaee, Missouri Western
State College
Robert Stanley Herren, North Dakota
University
Charles Himmelberg, Federal Reserve Bank
of New York
Barney F. Hope, California State
University, Chico
Fenn Horton, Naval Postgraduate School
Christopher House, University of Michigan
E. Philip Howrey, University of Michigan
John Huizinga, University of Chicago
Nayyer Hussain, Tougaloo College
Steven Husted, University of Pittsburgh
Matthew Hyle, Winona State University
Matteo Iacoviello, Boston College
Selo Imrohoroglu, University of Southern
California
Kenneth Inman, Claremont McKenna
College
Liana Jacobi, Washington University
Philip N. Jefferson, Swarthmore College
Urban Jermann, The Wharton School,
University of Pennsylvania
Charles W. Johnston, University of
Michigan, Flint
Barry E. Jones, Binghamton University
Paul Junk, University of Minnesota
James Kahn, Yeshiva University
George Karras, University of Illinois,
Chicago
Roger Kaufman, Smith College
Adrienne Kearney, University of Maine
James Keeler, Kenyon College
Patrick R. Kelso, West Texas State
University
Kusum Ketkar, Seton Hall University
F. Khan, University of Wisconsin, Parkside
Jinill Kim, Korea University
Robert King, Boston University
Milka S. Kirova, Saint Louis University
Nobuhiro Kiyotaki, Princeton University
Michael Klein, Tufts University
Peter Klenow, Stanford University
Kenneth Koelln, University of
North Texas
Douglas Koritz, Buffalo State College
Eugene Kroch, Villanova University
Corinne Krupp, University of North
­Carolina, Chapel Hill
Kishore Kulkarni, Metropolitan State
­College of Denver
Krishna B. Kumar, University of Southern
California
Andre Kurmann, Federal Reserve Board
Maureen Lage, Miami University
John S. Lapp, North Carolina State
­University
G. Paul Larson, University of North Dakota
Sven R. Larson, Skidmore College
James Lee, Fort Hays State University
Junsoo Lee, University of Alabama
Keith J. Leggett, Davis and Elkins College
Carol Scotese Lehr, Virginia
­Commonwealth University
John Leyes, Florida International University
Xuan Liu, East Carolina University
Ming Chien Lo, University of Virginia
Mary Lorely, Syracuse University
Cara Lown, Federal Reserve Bank
of New York
Richard MacDonald, St. Cloud State
University
Thampy Mammen, St. Norbert College
Linda M. Manning, University of
Missouri
Michael Marlow, California Polytechnic
State University
Preface xxv
Kathryn G. Marshall, Ohio State
­University
Patrick Mason, University of California,
Riverside
Ben Matta, New Mexico State University
Stephen McCafferty, Ohio State University
J. Harold McClure, Jr., Villanova
­University
Ken McCormick, University of Northern
Iowa
John McDermott, University of South
Carolina
Michael B. McElroy, North Carolina State
University
Randolph McGee, University of Kentucky
Michael McPherson, University of
North Texas
Tim Miller, Denison University
Bruce Mizrach, Rutgers University
Tommaso Monacelli, Boston College
B. Moore, Wesleyan University
W. Douglas Morgan, University of
­California, Santa Barbara
Jon Nadenichek, California State
­University, Northridge
K. R. Nair, West Virginia Wesleyan College
Emi Nakamura, Columbia University
John Neri, University of Maryland
Jeffrey Nugent, University of Southern
California
Maurice Obstfeld, University of California,
Berkeley
Stephen A. O’Connell, Swarthmore College
William P. O’Dea, State University of New
York, Oneonta
Heather O’Neill, Ursinus College
Athanasios Orphanides, Federal Reserve
Board
Spencer Pack, Connecticut College
Walter Park, American University
Randall Parker, East Carolina University
Allen Parkman, University of New Mexico
David Parsley, Vanderbilt University
James E. Payne, Eastern Kentucky
­University
Rowena Pecchenino, Michigan State
University
xxvi Preface

Peter Pedroni, Williams College
Mark Pernecky, St. Olaf College
Christopher Phelan, University
of Minnesota
Kerk Phillips, Brigham Young University
Paul Pieper, University of Illinois, Chicago
Andrew J. Policano, State University of
New York, Stony Brook
Richard Pollock, University of Hawaii,
Manoa
Jay B. Prag, Claremont McKenna College
Kojo Quartey, Talladega College
Vaman Rao, Western Illinois University
Neil Raymon, University of Missouri,
Columbia
Colin Read, University of Alaska, Fairbanks
Michael Redfearn, University of North
Texas
Robert R. Reed, University of Alabama
Charles Revier, Colorado State University
Patricia Reynolds, International Monetary
Fund
Jack Rezelman, State University of New
York, Potsdam
Robert Rich, Federal Reserve Bank
of New York
Libby Rittenberg, Colorado College
Helen Roberts, University of Illinois, Chicago
Kenneth Rogoff, Harvard University
Rosemary Rossiter, Ohio University
Benjamin Russo, University of North
Carolina
Heajin Heidi Ryoo, La Trobe University
Plutarchos Sakellaris, University of
Maryland
Christine Sauer, University of New Mexico
Edward Schmidt, Randolph–Macon College
Stacey Schreft, Federal Reserve Bank of
Kansas City
William Seyfried, Rose-Hulman Institute of
Technology
Tayyeb Shabbir, California State University,
Dominguez Hills
Andrei Shevchenko, Michigan State
University
Virginia Shingleton, Valparaiso University
Dorothy Siden, Salem State College
Scott Simkins, University of North Carolina,
Greensboro
Tara Sinclair, George Washington
University
Abdol Soofi, University of Wisconsin
Nicholas Souleles, The Wharton School,
University of Pennsylvania
David E. Spencer, Brigham Young
University
Don Stabile, St. Mary’s College
Richard Startz, University of California,
Santa Barbara
Gabriel Talmain, State University of New
York, Albany
Bryan Taylor, California State University,
Los Angeles
Susan Washburn Taylor, Millsaps College
M. Dekalb Terrell, Kansas State University
Henry S. Terrell, University of Maryland
Willem Thorbecke, George Mason
University
Stephen J. Turnovsky, University of
­Washington
Michael Twomey, University of Michigan,
Dearborn
Michael Ulan, U.S. Department of State
Victor Valcarcel, Texas Tech University
Dietrich Vollrath, University of Houston
Ronald Warren, University of Georgia
Chong K. Yip, Chinese University of
Hong Kong

We thank John Haltiwanger of the University of Maryland for supplying data on

job creation and destruction used in Chapter 10 and Shigeru Fujita of the Federal
Reserve Bank of Philadelphia for data on the rates of job loss and job finding used
in Chapter 8. We would also like to thank Robert H. Rasche, research director at
the Federal Reserve Bank of St. Louis, for assisting us in our use of the FRED data-
base cited at the end of each chapter in the “Working with Macroeconomic Data”
exercises.
Finally, we thank Mark Gertler, Rick Mishkin, and Steve Zeldes for valuable
assistance with the first edition. Also, we are grateful to several cohorts of students
at the University of Pennsylvania, Princeton University, and the U ­ niversity of Rich-
mond who—not entirely of their own free will but nonetheless very ­graciously—
assisted us in the development of this textbook. Last and most ­important, we
thank our families for their patience and support. We dedicate this book to them.

A. B. A.
Wynnewood, PA
B. S. B.
Washington, DC
D. C.
Richmond, VA
 Chapter 1 Introduction to
Macroeconomics
1.1 What Macroeconomics Is About
Summarize the Macroeconomics is the study of the structure and performance of national
primary issues economies and of the policies that governments use to try to affect economic
addressed in performance. The issues that macroeconomists address include the following:
macroeconomics. ■■ What determines a nation’s long-run economic growth? In 1890, income per capita
was smaller in Norway than in Argentina. But today, income per capita is
almost three times as high in Norway as in Argentina. Why do some nations’
economies grow quickly, providing their citizens with rapidly improving
­living standards, while other nations’ economies are relatively stagnant?
■■ What causes a nation’s economic activity to fluctuate? The 1990s exhibited the
longest period of uninterrupted economic growth in U.S. economic history,
but economic performance in the 2000s was much weaker. A mild recession
in 2001 was followed by a weak recovery that lasted only until December
2007. The recession that began at the end of 2007 was worsened by the finan-
cial crisis in 2008, which contributed to a sharp decline in output at the end
Learning Objectives of 2008 and in early 2009. Why do economies sometimes experience sharp
1.1 Summarize short-run fluctuations, lurching between periods of prosperity and periods
of hard times?
the primary issues
■■ What causes unemployment? During the 1930s, one-quarter of the work force in
addressed in
the United States was unemployed. A decade later, during World War II, less
macroeconomics. than 2% of the work force was unemployed. Why does unemployment some-
1.2 Describe the times reach very high levels? Why, even during times of relative prosperity, is
a significant fraction of the work force unemployed?
activities and
■■ What causes prices to rise? The rate of inflation in the United States crept
objectives of
steadily upward during the 1970s, and exceeded 10% per year in the early
macroeconomists. 1980s, before dropping to less than 4% per year in the mid 1980s and drop-
1.3 Differentiate ping even further to less than 2% per year in the late 1990s. Germany’s infla-
tion experience has been much more extreme: Although Germany has earned
between the classical
a reputation for low inflation in recent decades, following its defeat in World
and Keynesian War I Germany experienced an eighteen-month period (July 1922–December
approaches to 1923) during which prices rose by a factor of several billion! What causes
macroeconomics. ­inflation, and what can be done about it?

1
2 Part 1 | Introduction

■■ How does being part of a global economic system affect nations’ economies? In the
late 1990s, the U.S. economy was the engine of worldwide economic growth.
The wealth gained by Americans in the stock market led them to increase
their spending on consumer goods, including products made abroad, spur-
ring greater economic activity in many countries. How do economic links
among nations, such as international trade and borrowing, affect the perfor-
mance of individual economies and the world economy as a whole?
■■ Can government policies be used to improve a nation’s economic performance? In
the 1980s and 1990s, the U.S. economy’s output, unemployment rate, and
inflation rate fluctuated much less than in the 1960s and 1970s. Some econo-
mists credit good government policy for the improvement in economic per-
formance. In the financial crisis of 2008, the Federal Reserve and the federal
government used extraordinary measures to keep banks and other financial
institutions from failing. But some economists criticized these measures for
going too far in trying to stabilize the economy, at the expense of creating
incentives for increased risk taking by financial firms. Other economists criti-
cize the Federal Reserve for not going far enough because the unemployment
rate remained persistently high for years after the end of the recession in 2009.
How should economic policy be conducted to keep the economy as prosper-
ous and stable as possible?
Macroeconomics seeks to offer answers to such questions, which are of great
practical importance and are constantly debated by politicians, the press, and the
public. In the rest of this section, we consider these key macroeconomic issues in
more detail.

Long-Run Economic Growth

If you have ever traveled in a developing country, you could not help but observe
the difference in living standards relative to those of countries such as the United
States. The problems of inadequate food, shelter, and health care experienced by the
poorest citizens of rich nations often represent the average situation for the people
of a developing country. From a macroeconomic perspective, the difference between
rich nations and developing nations may be summarized by saying that rich nations
have at some point in their history experienced extended periods of rapid economic
growth but that the poorer nations either have never experienced sustained growth
or have had periods of growth offset by periods of economic decline.
Figure 1.1 summarizes the growth in output of the U.S. economy since 1869.1
The record is an impressive one: Over the past 142 years, the annual output of U.S.
goods and services has increased by more than 125 times. The performance of the
U.S. economy is not unique, however; other industrial nations have had similar,
and in some cases higher, rates of growth over the same period of time. This mas-
sive increase in the output of industrial economies is one of the central facts of
modern history and has had enormous political, military, social, and even cultural
implications.
In part, the long-term growth of the U.S. economy is the result of a rising pop-
ulation, which has meant a steady increase in the number of available workers.

1
Output is measured in Fig. 1.1 by two very similar concepts, real gross national product (real GNP)
until 1929 and real gross domestic product (real GDP) since 1929, both of which measure the physical
volume of production in each year. We discuss the measurement of output in detail in Chapter 2.

Figure 1.1
Output of the U.S.
economy, 1869–2011
In this graph the output
of the U.S. economy is
measured by real gross
domestic product (real
GDP) for the period
1929–2011 and by real
gross national product
(real GNP) for the period
prior to 1929, with goods
and services valued at
their 2005 prices in both
cases (see Chapter 2).
Note the strong upward
trend in output over
time, as well as sharp
fluctuations during
the Great Depression
(1929–1940), World
War II (1941–1945),
and the recessions of
1973–1975, 1981–1982,
1990–1991, 2001, and
2007–2009.
Sources: Real GNP 1869–1928
from Christina D. Romer,
“The Prewar Business Cycle
Reconsidered: New Estimates
of Gross National Product,
1869–1908,” Journal of Political
Economy, 97, 1 (February 1989),
pp. 22–23; real GDP 1929
onward from FRED database,
Federal Reserve Bank of
St. Louis, research.stlouisfed.org/
fred2/series/GDPCA. Data from
Romer were rescaled to 2005
prices.
Chapter 1 | Introduction to Macroeconomics 3
MyEconLab Real-time data
14 2007–2009
(trillions of (chained) 2005 dollars)
Real output
recession
2001
12
recession
1990–1991
10 recession
1981–1982
8 recession
1973–1975
recession
6
World War II
4 Great Depression (1941–1945)
REAL
(1929–1940)
OUTPUT
World War I
2 (1917–1918)
0
1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Year
But another significant factor is the increase in the amount of output that can be
produced with a given amount of labor. The amount of output produced per unit
of labor input—for example, per worker or per hour of work—is called average
labor productivity. Figure 1.2 shows how average labor productivity, defined in
this case as output per employed worker, has changed since 1900. In 2011, the
average U.S. worker produced more than seven times as much output as the
­average worker at the beginning of the twentieth century, despite working fewer
hours over the course of the year. Because today’s typical worker is so much more
productive, Americans enjoy a significantly higher standard of living than would
have been possible a century ago.
Although the long-term record of productivity growth in the U.S. economy is
excellent, productivity growth slowed from the early 1970s to the mid-1990s and
only recently has picked up. Output per worker grew about 2.5% per year from
1949 to 1973, but only 1.1% per year from 1973 to 1995. More recently, from 1995 to
2011, output per worker has increased 1.7% per year, a pace that has improved the
health of the U.S. economy significantly.
Because the rates of growth of output and, particularly, of output per worker
ultimately determine whether a nation will be rich or poor, understanding
what determines growth is one of the most important goals of macroeconomics.
Unfortunately, explaining why economies grow is not easy. Why, for example, did
resource-poor Japan and Korea experience growth rates that transformed them in
a generation or two from war-torn nations into industrial powers, whereas several
resource-rich nations of Latin America have had erratic or even negative growth in
recent years? Although macroeconomists have nothing close to a complete answer
to the question of what determines rates of economic growth, they do have some
ideas to offer. For example, as we discuss in some detail in this book, most macro-
economists believe that rates of saving and investment are important for growth.
Another key determinant of growth we discuss is the rate at which technological
change and other factors help increase the productivity of machines and workers.
4 Part 1 | Introduction

MyEconLab Real-time data

Figure 1.2
Average labor 100

Real output per employed worker

(thousands of (chained) 2005 dollars)
productivity in the United
States, 1900–2011 90
Average labor productiv-
ity (output per employed 80
worker) has risen over
70
time, with a peak during
World War II reflect- 60
ing increased wartime
production. Productivity 50 World War II
growth was particularly
1970s
strong in the 1950s and 40 Great
productivity
1960s, slowed in the Depression
slowdown
1970s, and picked up 30
again in the mid 1990s. 1950s–1960s
20 productivity
For the calculation of
speedup
productivity, output is 10 AVERAGE LABOR
measured as in Fig. 1.1. PRODUCTIVITY
Sources: Employment in thou- 0
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
sands of workers 14 and older
for 1900–1947 from Historical Year
Statistics of the United States,
Colonial Times to 1970,
pp. 126–127; workers 16 and
older for 1948 onward from Business Cycles
FRED database, Federal
Reserve Bank of St. Louis, If you look at the history of U.S. output in Fig. 1.1, you will notice that the growth
research.stlouisfed.org/fred2/ of output isn’t always smooth but has hills and valleys. Most striking is the period
series/ CE16OV. Average labor between 1929 and 1945, which spans the Great Depression and World War II.
productivity is output divided
by employment, where output During the 1929–1933 economic collapse that marked the first major phase of the
is from Fig. 1.1. Great Depression, the output of the U.S. economy fell by nearly 30%. Over the pe-
riod 1939–1944, as the United States entered World War II and expanded produc-
tion of armaments, output nearly doubled. No fluctuations in U.S. output since
1945 have been as severe as those of the 1929–1945 period. However, during the
postwar era there have been periods of unusually rapid economic growth, such
as during the 1960s and 1990s, and times during which output actually declined
from one year to the next, as in 1973–1975, 1981–1982, 1990–1991, and 2007–2009.
Macroeconomists use the term business cycle to describe short-run, but some-
times sharp, contractions and expansions in economic activity.2 The downward
phase of a business cycle, during which national output may be falling or perhaps
growing only very slowly, is called a recession. Even when they are relatively
mild, recessions mean hard economic times for many people. Recessions are also
a major political concern because almost every politician wants to be reelected
and the chances of reelection are better if the nation’s economy is expanding
rather than declining. Macroeconomists put a lot of effort into trying to figure
out what causes business cycles and deciding what can or should be done about
them. In this book we describe a variety of features of business cycles, compare
alternative explanations for cyclical fluctuations, and evaluate the policy options
that are available for affecting the course of the cycle.

2
A more exact definition is given in Chapter 8. Business cycles do not include fluctuations lasting only
a few months, such as the increase in activity that occurs around Christmas.
Another random document with
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 DANCE ON STILTS AT THE GIRLS’ UNYAGO, NIUCHI

Newala, too, suffers from the distance of its water-supply—at least

the Newala of to-day does; there was once another Newala in a lovely
valley at the foot of the plateau. I visited it and found scarcely a trace
of houses, only a Christian cemetery, with the graves of several
missionaries and their converts, remaining as a monument of its
former glories. But the surroundings are wonderfully beautiful. A
thick grove of splendid mango-trees closes in the weather-worn
crosses and headstones; behind them, combining the useful and the
agreeable, is a whole plantation of lemon-trees covered with ripe
fruit; not the small African kind, but a much larger and also juicier
imported variety, which drops into the hands of the passing traveller,
without calling for any exertion on his part. Old Newala is now under
the jurisdiction of the native pastor, Daudi, at Chingulungulu, who,
as I am on very friendly terms with him, allows me, as a matter of
course, the use of this lemon-grove during my stay at Newala.
 FEET MUTILATED BY THE RAVAGES OF THE “JIGGER”
(Sarcopsylla penetrans)

The water-supply of New Newala is in the bottom of the valley,

some 1,600 feet lower down. The way is not only long and fatiguing,
but the water, when we get it, is thoroughly bad. We are suffering not
only from this, but from the fact that the arrangements at Newala are
nothing short of luxurious. We have a separate kitchen—a hut built
against the boma palisade on the right of the baraza, the interior of
which is not visible from our usual position. Our two cooks were not
long in finding this out, and they consequently do—or rather neglect
to do—what they please. In any case they do not seem to be very
particular about the boiling of our drinking-water—at least I can
attribute to no other cause certain attacks of a dysenteric nature,
from which both Knudsen and I have suffered for some time. If a
man like Omari has to be left unwatched for a moment, he is capable
of anything. Besides this complaint, we are inconvenienced by the
state of our nails, which have become as hard as glass, and crack on
the slightest provocation, and I have the additional infliction of
pimples all over me. As if all this were not enough, we have also, for
the last week been waging war against the jigger, who has found his
Eldorado in the hot sand of the Makonde plateau. Our men are seen
all day long—whenever their chronic colds and the dysentery likewise
raging among them permit—occupied in removing this scourge of
Africa from their feet and trying to prevent the disastrous
consequences of its presence. It is quite common to see natives of
this place with one or two toes missing; many have lost all their toes,
or even the whole front part of the foot, so that a well-formed leg
ends in a shapeless stump. These ravages are caused by the female of
Sarcopsylla penetrans, which bores its way under the skin and there
develops an egg-sac the size of a pea. In all books on the subject, it is
stated that one’s attention is called to the presence of this parasite by
an intolerable itching. This agrees very well with my experience, so
far as the softer parts of the sole, the spaces between and under the
toes, and the side of the foot are concerned, but if the creature
penetrates through the harder parts of the heel or ball of the foot, it
may escape even the most careful search till it has reached maturity.
Then there is no time to be lost, if the horrible ulceration, of which
we see cases by the dozen every day, is to be prevented. It is much
easier, by the way, to discover the insect on the white skin of a
European than on that of a native, on which the dark speck scarcely
shows. The four or five jiggers which, in spite of the fact that I
constantly wore high laced boots, chose my feet to settle in, were
taken out for me by the all-accomplished Knudsen, after which I
thought it advisable to wash out the cavities with corrosive
sublimate. The natives have a different sort of disinfectant—they fill
the hole with scraped roots. In a tiny Makua village on the slope of
the plateau south of Newala, we saw an old woman who had filled all
the spaces under her toe-nails with powdered roots by way of
prophylactic treatment. What will be the result, if any, who can say?
The rest of the many trifling ills which trouble our existence are
really more comic than serious. In the absence of anything else to
smoke, Knudsen and I at last opened a box of cigars procured from
the Indian store-keeper at Lindi, and tried them, with the most
distressing results. Whether they contain opium or some other
narcotic, neither of us can say, but after the tenth puff we were both
“off,” three-quarters stupefied and unspeakably wretched. Slowly we
recovered—and what happened next? Half-an-hour later we were
once more smoking these poisonous concoctions—so insatiable is the
craving for tobacco in the tropics.
Even my present attacks of fever scarcely deserve to be taken
seriously. I have had no less than three here at Newala, all of which
have run their course in an incredibly short time. In the early
afternoon, I am busy with my old natives, asking questions and
making notes. The strong midday coffee has stimulated my spirits to
an extraordinary degree, the brain is active and vigorous, and work
progresses rapidly, while a pleasant warmth pervades the whole
body. Suddenly this gives place to a violent chill, forcing me to put on
my overcoat, though it is only half-past three and the afternoon sun
is at its hottest. Now the brain no longer works with such acuteness
and logical precision; more especially does it fail me in trying to
establish the syntax of the difficult Makua language on which I have
ventured, as if I had not enough to do without it. Under the
circumstances it seems advisable to take my temperature, and I do
so, to save trouble, without leaving my seat, and while going on with
my work. On examination, I find it to be 101·48°. My tutors are
abruptly dismissed and my bed set up in the baraza; a few minutes
later I am in it and treating myself internally with hot water and
lemon-juice.
Three hours later, the thermometer marks nearly 104°, and I make
them carry me back into the tent, bed and all, as I am now perspiring
heavily, and exposure to the cold wind just beginning to blow might
mean a fatal chill. I lie still for a little while, and then find, to my
great relief, that the temperature is not rising, but rather falling. This
is about 7.30 p.m. At 8 p.m. I find, to my unbounded astonishment,
that it has fallen below 98·6°, and I feel perfectly well. I read for an
hour or two, and could very well enjoy a smoke, if I had the
wherewithal—Indian cigars being out of the question.
Having no medical training, I am at a loss to account for this state
of things. It is impossible that these transitory attacks of high fever
should be malarial; it seems more probable that they are due to a
kind of sunstroke. On consulting my note-book, I become more and
more inclined to think this is the case, for these attacks regularly
follow extreme fatigue and long exposure to strong sunshine. They at
least have the advantage of being only short interruptions to my
work, as on the following morning I am always quite fresh and fit.
My treasure of a cook is suffering from an enormous hydrocele which
makes it difficult for him to get up, and Moritz is obliged to keep in
the dark on account of his inflamed eyes. Knudsen’s cook, a raw boy
from somewhere in the bush, knows still less of cooking than Omari;
consequently Nils Knudsen himself has been promoted to the vacant
post. Finding that we had come to the end of our supplies, he began
by sending to Chingulungulu for the four sucking-pigs which we had
bought from Matola and temporarily left in his charge; and when
they came up, neatly packed in a large crate, he callously slaughtered
the biggest of them. The first joint we were thoughtless enough to
entrust for roasting to Knudsen’s mshenzi cook, and it was
consequently uneatable; but we made the rest of the animal into a
jelly which we ate with great relish after weeks of underfeeding,
consuming incredible helpings of it at both midday and evening
meals. The only drawback is a certain want of variety in the tinned
vegetables. Dr. Jäger, to whom the Geographical Commission
entrusted the provisioning of the expeditions—mine as well as his
own—because he had more time on his hands than the rest of us,
seems to have laid in a huge stock of Teltow turnips,[46] an article of
food which is all very well for occasional use, but which quickly palls
when set before one every day; and we seem to have no other tins
left. There is no help for it—we must put up with the turnips; but I
am certain that, once I am home again, I shall not touch them for ten
years to come.
Amid all these minor evils, which, after all, go to make up the
genuine flavour of Africa, there is at least one cheering touch:
Knudsen has, with the dexterity of a skilled mechanic, repaired my 9
× 12 cm. camera, at least so far that I can use it with a little care.
How, in the absence of finger-nails, he was able to accomplish such a
ticklish piece of work, having no tool but a clumsy screw-driver for
taking to pieces and putting together again the complicated
mechanism of the instantaneous shutter, is still a mystery to me; but
he did it successfully. The loss of his finger-nails shows him in a light
contrasting curiously enough with the intelligence evinced by the
above operation; though, after all, it is scarcely surprising after his
ten years’ residence in the bush. One day, at Lindi, he had occasion
to wash a dog, which must have been in need of very thorough
cleansing, for the bottle handed to our friend for the purpose had an
extremely strong smell. Having performed his task in the most
conscientious manner, he perceived with some surprise that the dog
did not appear much the better for it, and was further surprised by
finding his own nails ulcerating away in the course of the next few
days. “How was I to know that carbolic acid has to be diluted?” he
mutters indignantly, from time to time, with a troubled gaze at his
mutilated finger-tips.
 Since we came to Newala we have been making excursions in all
directions through the surrounding country, in accordance with old
habit, and also because the akida Sefu did not get together the tribal
elders from whom I wanted information so speedily as he had
promised. There is, however, no harm done, as, even if seen only
from the outside, the country and people are interesting enough.
The Makonde plateau is like a large rectangular table rounded off
at the corners. Measured from the Indian Ocean to Newala, it is
about seventy-five miles long, and between the Rovuma and the
Lukuledi it averages fifty miles in breadth, so that its superficial area
is about two-thirds of that of the kingdom of Saxony. The surface,
however, is not level, but uniformly inclined from its south-western
edge to the ocean. From the upper edge, on which Newala lies, the
eye ranges for many miles east and north-east, without encountering
any obstacle, over the Makonde bush. It is a green sea, from which
here and there thick clouds of smoke rise, to show that it, too, is
inhabited by men who carry on their tillage like so many other
primitive peoples, by cutting down and burning the bush, and
manuring with the ashes. Even in the radiant light of a tropical day
such a fire is a grand sight.
Much less effective is the impression produced just now by the
great western plain as seen from the edge of the plateau. As often as
time permits, I stroll along this edge, sometimes in one direction,
sometimes in another, in the hope of finding the air clear enough to
let me enjoy the view; but I have always been disappointed.
Wherever one looks, clouds of smoke rise from the burning bush,
and the air is full of smoke and vapour. It is a pity, for under more
favourable circumstances the panorama of the whole country up to
the distant Majeje hills must be truly magnificent. It is of little use
taking photographs now, and an outline sketch gives a very poor idea
of the scenery. In one of these excursions I went out of my way to
make a personal attempt on the Makonde bush. The present edge of
the plateau is the result of a far-reaching process of destruction
through erosion and denudation. The Makonde strata are
everywhere cut into by ravines, which, though short, are hundreds of
yards in depth. In consequence of the loose stratification of these
beds, not only are the walls of these ravines nearly vertical, but their
upper end is closed by an equally steep escarpment, so that the
western edge of the Makonde plateau is hemmed in by a series of
deep, basin-like valleys. In order to get from one side of such a ravine
to the other, I cut my way through the bush with a dozen of my men.
It was a very open part, with more grass than scrub, but even so the
short stretch of less than two hundred yards was very hard work; at
the end of it the men’s calicoes were in rags and they themselves
bleeding from hundreds of scratches, while even our strong khaki
suits had not escaped scatheless.

NATIVE PATH THROUGH THE MAKONDE BUSH, NEAR

MAHUTA

I see increasing reason to believe that the view formed some time
back as to the origin of the Makonde bush is the correct one. I have
no doubt that it is not a natural product, but the result of human
occupation. Those parts of the high country where man—as a very
slight amount of practice enables the eye to perceive at once—has not
yet penetrated with axe and hoe, are still occupied by a splendid
timber forest quite able to sustain a comparison with our mixed
forests in Germany. But wherever man has once built his hut or tilled
his field, this horrible bush springs up. Every phase of this process
may be seen in the course of a couple of hours’ walk along the main
road. From the bush to right or left, one hears the sound of the axe—
not from one spot only, but from several directions at once. A few
steps further on, we can see what is taking place. The brush has been
cut down and piled up in heaps to the height of a yard or more,
between which the trunks of the large trees stand up like the last
pillars of a magnificent ruined building. These, too, present a
melancholy spectacle: the destructive Makonde have ringed them—
cut a broad strip of bark all round to ensure their dying off—and also
piled up pyramids of brush round them. Father and son, mother and
son-in-law, are chopping away perseveringly in the background—too
busy, almost, to look round at the white stranger, who usually excites
so much interest. If you pass by the same place a week later, the piles
of brushwood have disappeared and a thick layer of ashes has taken
the place of the green forest. The large trees stretch their
smouldering trunks and branches in dumb accusation to heaven—if
they have not already fallen and been more or less reduced to ashes,
perhaps only showing as a white stripe on the dark ground.
This work of destruction is carried out by the Makonde alike on the
virgin forest and on the bush which has sprung up on sites already
cultivated and deserted. In the second case they are saved the trouble
of burning the large trees, these being entirely absent in the
secondary bush.
After burning this piece of forest ground and loosening it with the
hoe, the native sows his corn and plants his vegetables. All over the
country, he goes in for bed-culture, which requires, and, in fact,
receives, the most careful attention. Weeds are nowhere tolerated in
the south of German East Africa. The crops may fail on the plains,
where droughts are frequent, but never on the plateau with its
abundant rains and heavy dews. Its fortunate inhabitants even have
the satisfaction of seeing the proud Wayao and Wamakua working
for them as labourers, driven by hunger to serve where they were
accustomed to rule.
But the light, sandy soil is soon exhausted, and would yield no
harvest the second year if cultivated twice running. This fact has
been familiar to the native for ages; consequently he provides in
time, and, while his crop is growing, prepares the next plot with axe
and firebrand. Next year he plants this with his various crops and
lets the first piece lie fallow. For a short time it remains waste and
desolate; then nature steps in to repair the destruction wrought by
man; a thousand new growths spring out of the exhausted soil, and
even the old stumps put forth fresh shoots. Next year the new growth
is up to one’s knees, and in a few years more it is that terrible,
impenetrable bush, which maintains its position till the black
occupier of the land has made the round of all the available sites and
come back to his starting point.
The Makonde are, body and soul, so to speak, one with this bush.
According to my Yao informants, indeed, their name means nothing
else but “bush people.” Their own tradition says that they have been
settled up here for a very long time, but to my surprise they laid great
stress on an original immigration. Their old homes were in the
south-east, near Mikindani and the mouth of the Rovuma, whence
their peaceful forefathers were driven by the continual raids of the
Sakalavas from Madagascar and the warlike Shirazis[47] of the coast,
to take refuge on the almost inaccessible plateau. I have studied
African ethnology for twenty years, but the fact that changes of
population in this apparently quiet and peaceable corner of the earth
could have been occasioned by outside enterprises taking place on
the high seas, was completely new to me. It is, no doubt, however,
correct.
The charming tribal legend of the Makonde—besides informing us
of other interesting matters—explains why they have to live in the
thickest of the bush and a long way from the edge of the plateau,
instead of making their permanent homes beside the purling brooks
and springs of the low country.
“The place where the tribe originated is Mahuta, on the southern
side of the plateau towards the Rovuma, where of old time there was
nothing but thick bush. Out of this bush came a man who never
washed himself or shaved his head, and who ate and drank but little.
He went out and made a human figure from the wood of a tree
growing in the open country, which he took home to his abode in the
bush and there set it upright. In the night this image came to life and
was a woman. The man and woman went down together to the
Rovuma to wash themselves. Here the woman gave birth to a still-
born child. They left that place and passed over the high land into the
valley of the Mbemkuru, where the woman had another child, which
was also born dead. Then they returned to the high bush country of
Mahuta, where the third child was born, which lived and grew up. In
course of time, the couple had many more children, and called
themselves Wamatanda. These were the ancestral stock of the
Makonde, also called Wamakonde,[48] i.e., aborigines. Their
forefather, the man from the bush, gave his children the command to
bury their dead upright, in memory of the mother of their race who
was cut out of wood and awoke to life when standing upright. He also
warned them against settling in the valleys and near large streams,
for sickness and death dwelt there. They were to make it a rule to
have their huts at least an hour’s walk from the nearest watering-
place; then their children would thrive and escape illness.”
The explanation of the name Makonde given by my informants is
somewhat different from that contained in the above legend, which I
extract from a little book (small, but packed with information), by
Pater Adams, entitled Lindi und sein Hinterland. Otherwise, my
results agree exactly with the statements of the legend. Washing?
Hapana—there is no such thing. Why should they do so? As it is, the
supply of water scarcely suffices for cooking and drinking; other
people do not wash, so why should the Makonde distinguish himself
by such needless eccentricity? As for shaving the head, the short,
woolly crop scarcely needs it,[49] so the second ancestral precept is
likewise easy enough to follow. Beyond this, however, there is
nothing ridiculous in the ancestor’s advice. I have obtained from
various local artists a fairly large number of figures carved in wood,
ranging from fifteen to twenty-three inches in height, and
representing women belonging to the great group of the Mavia,
Makonde, and Matambwe tribes. The carving is remarkably well
done and renders the female type with great accuracy, especially the
keloid ornamentation, to be described later on. As to the object and
meaning of their works the sculptors either could or (more probably)
would tell me nothing, and I was forced to content myself with the
scanty information vouchsafed by one man, who said that the figures
were merely intended to represent the nembo—the artificial
deformations of pelele, ear-discs, and keloids. The legend recorded
by Pater Adams places these figures in a new light. They must surely
be more than mere dolls; and we may even venture to assume that
they are—though the majority of present-day Makonde are probably
unaware of the fact—representations of the tribal ancestress.
 The references in the legend to the descent from Mahuta to the
Rovuma, and to a journey across the highlands into the Mbekuru
valley, undoubtedly indicate the previous history of the tribe, the
travels of the ancestral pair typifying the migrations of their
descendants. The descent to the neighbouring Rovuma valley, with
its extraordinary fertility and great abundance of game, is intelligible
at a glance—but the crossing of the Lukuledi depression, the ascent
to the Rondo Plateau and the descent to the Mbemkuru, also lie
within the bounds of probability, for all these districts have exactly
the same character as the extreme south. Now, however, comes a
point of especial interest for our bacteriological age. The primitive
Makonde did not enjoy their lives in the marshy river-valleys.
Disease raged among them, and many died. It was only after they
had returned to their original home near Mahuta, that the health
conditions of these people improved. We are very apt to think of the
African as a stupid person whose ignorance of nature is only equalled
by his fear of it, and who looks on all mishaps as caused by evil
spirits and malignant natural powers. It is much more correct to
assume in this case that the people very early learnt to distinguish
districts infested with malaria from those where it is absent.
This knowledge is crystallized in the
ancestral warning against settling in the
valleys and near the great waters, the
dwelling-places of disease and death. At the
same time, for security against the hostile
Mavia south of the Rovuma, it was enacted
that every settlement must be not less than a
certain distance from the southern edge of the
plateau. Such in fact is their mode of life at the
present day. It is not such a bad one, and
certainly they are both safer and more
comfortable than the Makua, the recent
intruders from the south, who have made USUAL METHOD OF
good their footing on the western edge of the CLOSING HUT-DOOR
plateau, extending over a fairly wide belt of
country. Neither Makua nor Makonde show in their dwellings
anything of the size and comeliness of the Yao houses in the plain,
especially at Masasi, Chingulungulu and Zuza’s. Jumbe Chauro, a
Makonde hamlet not far from Newala, on the road to Mahuta, is the
most important settlement of the tribe I have yet seen, and has fairly
spacious huts. But how slovenly is their construction compared with
the palatial residences of the elephant-hunters living in the plain.
The roofs are still more untidy than in the general run of huts during
the dry season, the walls show here and there the scanty beginnings
or the lamentable remains of the mud plastering, and the interior is a
veritable dog-kennel; dirt, dust and disorder everywhere. A few huts
only show any attempt at division into rooms, and this consists
merely of very roughly-made bamboo partitions. In one point alone
have I noticed any indication of progress—in the method of fastening
the door. Houses all over the south are secured in a simple but
ingenious manner. The door consists of a set of stout pieces of wood
or bamboo, tied with bark-string to two cross-pieces, and moving in
two grooves round one of the door-posts, so as to open inwards. If
the owner wishes to leave home, he takes two logs as thick as a man’s
upper arm and about a yard long. One of these is placed obliquely
against the middle of the door from the inside, so as to form an angle
of from 60° to 75° with the ground. He then places the second piece
horizontally across the first, pressing it downward with all his might.
It is kept in place by two strong posts planted in the ground a few
inches inside the door. This fastening is absolutely safe, but of course
cannot be applied to both doors at once, otherwise how could the
owner leave or enter his house? I have not yet succeeded in finding
out how the back door is fastened.

MAKONDE LOCK AND KEY AT JUMBE CHAURO

 This is the general way of closing a house. The Makonde at Jumbe
Chauro, however, have a much more complicated, solid and original
one. Here, too, the door is as already described, except that there is
only one post on the inside, standing by itself about six inches from
one side of the doorway. Opposite this post is a hole in the wall just
large enough to admit a man’s arm. The door is closed inside by a
large wooden bolt passing through a hole in this post and pressing
with its free end against the door. The other end has three holes into
which fit three pegs running in vertical grooves inside the post. The
door is opened with a wooden key about a foot long, somewhat
curved and sloped off at the butt; the other end has three pegs
corresponding to the holes, in the bolt, so that, when it is thrust
through the hole in the wall and inserted into the rectangular
opening in the post, the pegs can be lifted and the bolt drawn out.[50]

MODE OF INSERTING THE KEY

With no small pride first one householder and then a second

showed me on the spot the action of this greatest invention of the
Makonde Highlands. To both with an admiring exclamation of
“Vizuri sana!” (“Very fine!”). I expressed the wish to take back these
marvels with me to Ulaya, to show the Wazungu what clever fellows
the Makonde are. Scarcely five minutes after my return to camp at
Newala, the two men came up sweating under the weight of two
heavy logs which they laid down at my feet, handing over at the same
time the keys of the fallen fortress. Arguing, logically enough, that if
the key was wanted, the lock would be wanted with it, they had taken
their axes and chopped down the posts—as it never occurred to them
to dig them out of the ground and so bring them intact. Thus I have
two badly damaged specimens, and the owners, instead of praise,
come in for a blowing-up.
The Makua huts in the environs of Newala are especially
miserable; their more than slovenly construction reminds one of the
temporary erections of the Makua at Hatia’s, though the people here
have not been concerned in a war. It must therefore be due to
congenital idleness, or else to the absence of a powerful chief. Even
the baraza at Mlipa’s, a short hour’s walk south-east of Newala,
shares in this general neglect. While public buildings in this country
are usually looked after more or less carefully, this is in evident
danger of being blown over by the first strong easterly gale. The only
attractive object in this whole district is the grave of the late chief
Mlipa. I visited it in the morning, while the sun was still trying with
partial success to break through the rolling mists, and the circular
grove of tall euphorbias, which, with a broken pot, is all that marks
the old king’s resting-place, impressed one with a touch of pathos.
Even my very materially-minded carriers seemed to feel something
of the sort, for instead of their usual ribald songs, they chanted
solemnly, as we marched on through the dense green of the Makonde
bush:—
 “We shall arrive with the great master; we stand in a row and have
no fear about getting our food and our money from the Serkali (the
Government). We are not afraid; we are going along with the great
master, the lion; we are going down to the coast and back.”
With regard to the characteristic features of the various tribes here
on the western edge of the plateau, I can arrive at no other
conclusion than the one already come to in the plain, viz., that it is
impossible for anyone but a trained anthropologist to assign any
given individual at once to his proper tribe. In fact, I think that even
an anthropological specialist, after the most careful examination,
might find it a difficult task to decide. The whole congeries of peoples
collected in the region bounded on the west by the great Central
African rift, Tanganyika and Nyasa, and on the east by the Indian
Ocean, are closely related to each other—some of their languages are
only distinguished from one another as dialects of the same speech,
and no doubt all the tribes present the same shape of skull and
structure of skeleton. Thus, surely, there can be no very striking
differences in outward appearance.
 Even did such exist, I should have no time
to concern myself with them, for day after day,
I have to see or hear, as the case may be—in
any case to grasp and record—an
extraordinary number of ethnographic
phenomena. I am almost disposed to think it
fortunate that some departments of inquiry, at
least, are barred by external circumstances.
Chief among these is the subject of iron-
working. We are apt to think of Africa as a
country where iron ore is everywhere, so to
speak, to be picked up by the roadside, and
where it would be quite surprising if the
inhabitants had not learnt to smelt the
material ready to their hand. In fact, the
knowledge of this art ranges all over the
continent, from the Kabyles in the north to the
Kafirs in the south. Here between the Rovuma
and the Lukuledi the conditions are not so
favourable. According to the statements of the
Makonde, neither ironstone nor any other
form of iron ore is known to them. They have
not therefore advanced to the art of smelting
the metal, but have hitherto bought all their
THE ANCESTRESS OF
THE MAKONDE
iron implements from neighbouring tribes.
Even in the plain the inhabitants are not much
better off. Only one man now living is said to
understand the art of smelting iron. This old fundi lives close to
Huwe, that isolated, steep-sided block of granite which rises out of
the green solitude between Masasi and Chingulungulu, and whose
jagged and splintered top meets the traveller’s eye everywhere. While
still at Masasi I wished to see this man at work, but was told that,
frightened by the rising, he had retired across the Rovuma, though
he would soon return. All subsequent inquiries as to whether the
fundi had come back met with the genuine African answer, “Bado”
(“Not yet”).
 BRAZIER

Some consolation was afforded me by a brassfounder, whom I

came across in the bush near Akundonde’s. This man is the favourite
of women, and therefore no doubt of the gods; he welds the glittering
brass rods purchased at the coast into those massive, heavy rings
which, on the wrists and ankles of the local fair ones, continually give
me fresh food for admiration. Like every decent master-craftsman he
had all his tools with him, consisting of a pair of bellows, three
crucibles and a hammer—nothing more, apparently. He was quite
willing to show his skill, and in a twinkling had fixed his bellows on
the ground. They are simply two goat-skins, taken off whole, the four
legs being closed by knots, while the upper opening, intended to
admit the air, is kept stretched by two pieces of wood. At the lower
end of the skin a smaller opening is left into which a wooden tube is
stuck. The fundi has quickly borrowed a heap of wood-embers from
the nearest hut; he then fixes the free ends of the two tubes into an
earthen pipe, and clamps them to the ground by means of a bent
piece of wood. Now he fills one of his small clay crucibles, the dross
on which shows that they have been long in use, with the yellow
material, places it in the midst of the embers, which, at present are
only faintly glimmering, and begins his work. In quick alternation
the smith’s two hands move up and down with the open ends of the
bellows; as he raises his hand he holds the slit wide open, so as to let
the air enter the skin bag unhindered. In pressing it down he closes
the bag, and the air puffs through the bamboo tube and clay pipe into
the fire, which quickly burns up. The smith, however, does not keep
on with this work, but beckons to another man, who relieves him at
the bellows, while he takes some more tools out of a large skin pouch
carried on his back. I look on in wonder as, with a smooth round
stick about the thickness of a finger, he bores a few vertical holes into
the clean sand of the soil. This should not be difficult, yet the man
seems to be taking great pains over it. Then he fastens down to the
ground, with a couple of wooden clamps, a neat little trough made by
splitting a joint of bamboo in half, so that the ends are closed by the
two knots. At last the yellow metal has attained the right consistency,
and the fundi lifts the crucible from the fire by means of two sticks
split at the end to serve as tongs. A short swift turn to the left—a
tilting of the crucible—and the molten brass, hissing and giving forth
clouds of smoke, flows first into the bamboo mould and then into the
holes in the ground.
The technique of this backwoods craftsman may not be very far
advanced, but it cannot be denied that he knows how to obtain an
adequate result by the simplest means. The ladies of highest rank in
this country—that is to say, those who can afford it, wear two kinds
of these massive brass rings, one cylindrical, the other semicircular
in section. The latter are cast in the most ingenious way in the
bamboo mould, the former in the circular hole in the sand. It is quite
a simple matter for the fundi to fit these bars to the limbs of his fair
customers; with a few light strokes of his hammer he bends the
pliable brass round arm or ankle without further inconvenience to
the wearer.
SHAPING THE POT

SMOOTHING WITH MAIZE-COB

CUTTING THE EDGE

 FINISHING THE BOTTOM

LAST SMOOTHING BEFORE

BURNING

FIRING THE BRUSH-PILE

 LIGHTING THE FARTHER SIDE OF
THE PILE

TURNING THE RED-HOT VESSEL

NYASA WOMAN MAKING POTS AT MASASI

Pottery is an art which must always and everywhere excite the
interest of the student, just because it is so intimately connected with
the development of human culture, and because its relics are one of
the principal factors in the reconstruction of our own condition in
prehistoric times. I shall always remember with pleasure the two or
three afternoons at Masasi when Salim Matola’s mother, a slightly-
built, graceful, pleasant-looking woman, explained to me with
touching patience, by means of concrete illustrations, the ceramic art
of her people. The only implements for this primitive process were a
lump of clay in her left hand, and in the right a calabash containing
the following valuables: the fragment of a maize-cob stripped of all
its grains, a smooth, oval pebble, about the size of a pigeon’s egg, a
few chips of gourd-shell, a bamboo splinter about the length of one’s
hand, a small shell, and a bunch of some herb resembling spinach.
 Nothing more. The woman scraped with the
shell a round, shallow hole in the soft, fine
sand of the soil, and, when an active young
girl had filled the calabash with water for her,
she began to knead the clay. As if by magic it
gradually assumed the shape of a rough but
already well-shaped vessel, which only wanted
a little touching up with the instruments
before mentioned. I looked out with the
MAKUA WOMAN closest attention for any indication of the use
MAKING A POT. of the potter’s wheel, in however rudimentary
SHOWS THE a form, but no—hapana (there is none). The
BEGINNINGS OF THE embryo pot stood firmly in its little
POTTER’S WHEEL
depression, and the woman walked round it in
a stooping posture, whether she was removing
small stones or similar foreign bodies with the maize-cob, smoothing
the inner or outer surface with the splinter of bamboo, or later, after
letting it dry for a day, pricking in the ornamentation with a pointed
bit of gourd-shell, or working out the bottom, or cutting the edge
with a sharp bamboo knife, or giving the last touches to the finished
vessel. This occupation of the women is infinitely toilsome, but it is
without doubt an accurate reproduction of the process in use among
our ancestors of the Neolithic and Bronze ages.
There is no doubt that the invention of pottery, an item in human
progress whose importance cannot be over-estimated, is due to
women. Rough, coarse and unfeeling, the men of the horde range
over the countryside. When the united cunning of the hunters has
succeeded in killing the game; not one of them thinks of carrying
home the spoil. A bright fire, kindled by a vigorous wielding of the
drill, is crackling beside them; the animal has been cleaned and cut
up secundum artem, and, after a slight singeing, will soon disappear
under their sharp teeth; no one all this time giving a single thought
to wife or child.
To what shifts, on the other hand, the primitive wife, and still more
the primitive mother, was put! Not even prehistoric stomachs could
endure an unvarying diet of raw food. Something or other suggested
the beneficial effect of hot water on the majority of approved but
indigestible dishes. Perhaps a neighbour had tried holding the hard
roots or tubers over the fire in a calabash filled with water—or maybe
an ostrich-egg-shell, or a hastily improvised vessel of bark. They
became much softer and more palatable than they had previously
been; but, unfortunately, the vessel could not stand the fire and got
charred on the outside. That can be remedied, thought our
ancestress, and plastered a layer of wet clay round a similar vessel.
This is an improvement; the cooking utensil remains uninjured, but
the heat of the fire has shrunk it, so that it is loose in its shell. The
next step is to detach it, so, with a firm grip and a jerk, shell and
kernel are separated, and pottery is invented. Perhaps, however, the
discovery which led to an intelligent use of the burnt-clay shell, was
made in a slightly different way. Ostrich-eggs and calabashes are not
to be found in every part of the world, but everywhere mankind has
arrived at the art of making baskets out of pliant materials, such as
bark, bast, strips of palm-leaf, supple twigs, etc. Our inventor has no
water-tight vessel provided by nature. “Never mind, let us line the
basket with clay.” This answers the purpose, but alas! the basket gets
burnt over the blazing fire, the woman watches the process of
cooking with increasing uneasiness, fearing a leak, but no leak
appears. The food, done to a turn, is eaten with peculiar relish; and
the cooking-vessel is examined, half in curiosity, half in satisfaction
at the result. The plastic clay is now hard as stone, and at the same
time looks exceedingly well, for the neat plaiting of the burnt basket
is traced all over it in a pretty pattern. Thus, simultaneously with
pottery, its ornamentation was invented.
Primitive woman has another claim to respect. It was the man,
roving abroad, who invented the art of producing fire at will, but the
woman, unable to imitate him in this, has been a Vestal from the
earliest times. Nothing gives so much trouble as the keeping alight of
the smouldering brand, and, above all, when all the men are absent
from the camp. Heavy rain-clouds gather, already the first large
drops are falling, the first gusts of the storm rage over the plain. The
little flame, a greater anxiety to the woman than her own children,
flickers unsteadily in the blast. What is to be done? A sudden thought
occurs to her, and in an instant she has constructed a primitive hut
out of strips of bark, to protect the flame against rain and wind.
This, or something very like it, was the way in which the principle
of the house was discovered; and even the most hardened misogynist
cannot fairly refuse a woman the credit of it. The protection of the
hearth-fire from the weather is the germ from which the human
dwelling was evolved. Men had little, if any share, in this forward
step, and that only at a late stage. Even at the present day, the
plastering of the housewall with clay and the manufacture of pottery
are exclusively the women’s business. These are two very significant
survivals. Our European kitchen-garden, too, is originally a woman’s
invention, and the hoe, the primitive instrument of agriculture, is,
characteristically enough, still used in this department. But the
noblest achievement which we owe to the other sex is unquestionably
the art of cookery. Roasting alone—the oldest process—is one for
which men took the hint (a very obvious one) from nature. It must
have been suggested by the scorched carcase of some animal
overtaken by the destructive forest-fires. But boiling—the process of
improving organic substances by the help of water heated to boiling-
point—is a much later discovery. It is so recent that it has not even
yet penetrated to all parts of the world. The Polynesians understand
how to steam food, that is, to cook it, neatly wrapped in leaves, in a
hole in the earth between hot stones, the air being excluded, and
(sometimes) a few drops of water sprinkled on the stones; but they
do not understand boiling.
To come back from this digression, we find that the slender Nyasa
woman has, after once more carefully examining the finished pot,
put it aside in the shade to dry. On the following day she sends me
word by her son, Salim Matola, who is always on hand, that she is
going to do the burning, and, on coming out of my house, I find her
already hard at work. She has spread on the ground a layer of very
dry sticks, about as thick as one’s thumb, has laid the pot (now of a
yellowish-grey colour) on them, and is piling brushwood round it.
My faithful Pesa mbili, the mnyampara, who has been standing by,
most obligingly, with a lighted stick, now hands it to her. Both of
them, blowing steadily, light the pile on the lee side, and, when the
flame begins to catch, on the weather side also. Soon the whole is in a
blaze, but the dry fuel is quickly consumed and the fire dies down, so
that we see the red-hot vessel rising from the ashes. The woman
turns it continually with a long stick, sometimes one way and
sometimes another, so that it may be evenly heated all over. In
twenty minutes she rolls it out of the ash-heap, takes up the bundle
of spinach, which has been lying for two days in a jar of water, and
sprinkles the red-hot clay with it. The places where the drops fall are
marked by black spots on the uniform reddish-brown surface. With a
sigh of relief, and with visible satisfaction, the woman rises to an
erect position; she is standing just in a line between me and the fire,
from which a cloud of smoke is just rising: I press the ball of my
camera, the shutter clicks—the apotheosis is achieved! Like a
priestess, representative of her inventive sex, the graceful woman
stands: at her feet the hearth-fire she has given us beside her the
invention she has devised for us, in the background the home she has
built for us.
At Newala, also, I have had the manufacture of pottery carried on
in my presence. Technically the process is better than that already
described, for here we find the beginnings of the potter’s wheel,
which does not seem to exist in the plains; at least I have seen
nothing of the sort. The artist, a frightfully stupid Makua woman, did
not make a depression in the ground to receive the pot she was about
to shape, but used instead a large potsherd. Otherwise, she went to
work in much the same way as Salim’s mother, except that she saved
herself the trouble of walking round and round her work by squatting
at her ease and letting the pot and potsherd rotate round her; this is
surely the first step towards a machine. But it does not follow that
the pot was improved by the process. It is true that it was beautifully
rounded and presented a very creditable appearance when finished,
but the numerous large and small vessels which I have seen, and, in
part, collected, in the “less advanced” districts, are no less so. We
moderns imagine that instruments of precision are necessary to
produce excellent results. Go to the prehistoric collections of our
museums and look at the pots, urns and bowls of our ancestors in the
dim ages of the past, and you will at once perceive your error.
MAKING LONGITUDINAL CUT IN
BARK

DRAWING THE BARK OFF THE LOG

REMOVING THE OUTER BARK

 BEATING THE BARK

WORKING THE BARK-CLOTH AFTER BEATING, TO MAKE IT

SOFT

MANUFACTURE OF BARK-CLOTH AT NEWALA

To-day, nearly the whole population of German East Africa is
clothed in imported calico. This was not always the case; even now in
some parts of the north dressed skins are still the prevailing wear,
and in the north-western districts—east and north of Lake
Tanganyika—lies a zone where bark-cloth has not yet been
superseded. Probably not many generations have passed since such
bark fabrics and kilts of skins were the only clothing even in the
south. Even to-day, large quantities of this bright-red or drab
material are still to be found; but if we wish to see it, we must look in
the granaries and on the drying stages inside the native huts, where
it serves less ambitious uses as wrappings for those seeds and fruits
which require to be packed with special care. The salt produced at
Masasi, too, is packed for transport to a distance in large sheets of
bark-cloth. Wherever I found it in any degree possible, I studied the
process of making this cloth. The native requisitioned for the
purpose arrived, carrying a log between two and three yards long and
as thick as his thigh, and nothing else except a curiously-shaped
mallet and the usual long, sharp and pointed knife which all men and
boys wear in a belt at their backs without a sheath—horribile dictu!
[51]
Silently he squats down before me, and with two rapid cuts has
drawn a couple of circles round the log some two yards apart, and
slits the bark lengthwise between them with the point of his knife.
With evident care, he then scrapes off the outer rind all round the
log, so that in a quarter of an hour the inner red layer of the bark
shows up brightly-coloured between the two untouched ends. With
some trouble and much caution, he now loosens the bark at one end,
and opens the cylinder. He then stands up, takes hold of the free
edge with both hands, and turning it inside out, slowly but steadily
pulls it off in one piece. Now comes the troublesome work of
scraping all superfluous particles of outer bark from the outside of
the long, narrow piece of material, while the inner side is carefully
scrutinised for defective spots. At last it is ready for beating. Having
signalled to a friend, who immediately places a bowl of water beside
him, the artificer damps his sheet of bark all over, seizes his mallet,
lays one end of the stuff on the smoothest spot of the log, and
hammers away slowly but continuously. “Very simple!” I think to
myself. “Why, I could do that, too!”—but I am forced to change my
opinions a little later on; for the beating is quite an art, if the fabric is
not to be beaten to pieces. To prevent the breaking of the fibres, the
stuff is several times folded across, so as to interpose several
thicknesses between the mallet and the block. At last the required
state is reached, and the fundi seizes the sheet, still folded, by both
ends, and wrings it out, or calls an assistant to take one end while he
holds the other. The cloth produced in this way is not nearly so fine
and uniform in texture as the famous Uganda bark-cloth, but it is
quite soft, and, above all, cheap.
Now, too, I examine the mallet. My craftsman has been using the
simpler but better form of this implement, a conical block of some
hard wood, its base—the striking surface—being scored across and
across with more or less deeply-cut grooves, and the handle stuck
into a hole in the middle. The other and earlier form of mallet is
shaped in the same way, but the head is fastened by an ingenious
network of bark strips into the split bamboo serving as a handle. The
observation so often made, that ancient customs persist longest in
connection with religious ceremonies and in the life of children, here
finds confirmation. As we shall soon see, bark-cloth is still worn
during the unyago,[52] having been prepared with special solemn
ceremonies; and many a mother, if she has no other garment handy,
will still put her little one into a kilt of bark-cloth, which, after all,
looks better, besides being more in keeping with its African
surroundings, than the ridiculous bit of print from Ulaya.
MAKUA WOMEN