Western Economics

Author: Gao Hongye, Chief Editor
Publisher:
Publishing Date: 2005-03-01
Features: This book is a college-level textbook on "Western Economics" organized and compiled by the Ministry of Education of China. It was written by a team of five teaching staff: Professor Gao Hongye and Professor Wu Hanhong from Renmin University of China, Professor Liu Wenxin from Peking University, Professor Feng Jinhua (former) from Wuhan University, and Professor Yin Bocheng from Fudan University, with Professor Gao Hongye as the chief editor. The first and second editions were published successively in 1996 and 2001. The preface to the second edition states: "As recognized by Western scholars, Western economics is a discipline with evolving content. Over time, Western economics will introduce new material and different emphases, and textbooks reflecting these changes must do the same. Therefore, this book will inevitably require revisions and additions in the future." For example, the second edition has been in circulation for four years. In light of this, the compilation of the third edition has become necessary. Additionally, experience gained from using the book and improvements to its chapter arrangement have made the compilation of the new edition essential. Of course, the main purpose of the third edition remains unchanged: to introduce the theoretical framework of mainstream Western economics with brief commentary, aiming to achieve the goal of "applying foreign theories to China" while avoiding potential adverse effects. The main revisions and additions in the third edition can be categorized into three parts: microeconomics, macroeconomics, and general topics.
Regarding the microeconomic changes, the following four points can be listed:
(1) The original chapters on "General Equilibrium" and "Welfare Economics" were merged into one chapter. The primary reason for this merger was the removal of the lengthy section on "The Development and Current Status of General Equilibrium Theory," as feedback from teaching staff indicated that this section was not essential for beginners and was difficult to explain clearly, often being omitted in lectures.
(2) The section on "The Theoretical Foundations of Market Socialism," which currently has limited theoretical significance in the West, was removed.
(3) Complex and minor issues were deleted, including the original book's sections on "Case Study: Risk Aversion and Insurance," "The Comprehensive Relationship Between Short-Run and Long-Run Cost Curves," and "Expansion Paths and Long-Run Cost Curves."
(4) The content related to information economics and public goods was expanded, and a new section on "Efficiency and Equity," currently a focus of welfare economics, was added to better reflect the more recent developments in microeconomics.
Regarding the macroeconomic changes, the following six points can be listed:
(1) The original section on dynamic aggregate demand and supply curves was removed, as the discussion on these curves has far exceeded the scope of introductory materials. Moreover, even without them, we can use existing static aggregate demand and supply models to provide a rough explanation of inflation or deflation.
(2) In the third edition, unemployment was incorporated into the existing chapter on "Inflation," as they are two short-term issues that the entire macroeconomics framework attempts to address. At the end of this chapter, we combine the two issues by introducing the Phillips curve, making the chapter arrangement more logical.
(3) The section on taxes levied according to tax rates and their multipliers was removed, as this topic is difficult to explain concisely and is often omitted in Western introductory textbooks.
(4) The sections on dynamic aggregate demand and supply models and the "Optimal Growth Path" were removed, as they exceed the scope of introductory materials and are typically covered in intermediate-level textbooks in the West.
(5) At the beginning of the macroeconomic section, in the new edition's Chapter 12, we added a section titled "A Brief Overview of Macroeconomics and the Chapter Arrangement of This Book" to provide a clear outline for the entire macroeconomic section. Based on this outline, we completely revised Chapters 18 to 23 of the second edition (equivalent to Chapters 17 to 22 of the third edition). The reason for this revision stems from the development and evolution of Western macroeconomic theory. In the past, macroeconomic theory primarily focused on aggregate demand; however, with changing times, research on aggregate supply has also gained importance. As a result, many of the earlier disagreements regarding aggregate supply curves still exist, but some of the past ambiguities have been clarified, making the theoretical framework of aggregate supply curves clearer than before. Most Western macroeconomic textbooks now adopt this clearer framework. As a textbook introducing Western theories, this book naturally should reflect this new development. For this reason, the new edition's macroeconomic section has a more organized and rational chapter arrangement.
(6) The third edition expands the introduction to financial instruments. With the development of China's financial market, financial instruments have become more diverse. In addition to the original stocks and bonds, derivative financial instruments have been gradually introduced. To provide readers with more knowledge in this area, the third edition appropriately increases the coverage of financial instruments.
Regarding the general changes, the following four points can be listed:
(1) To save space, the "References for This Chapter" at the end of each chapter and the appendix "Main References" at the end of the book were removed, replaced by a more practical "Bilingual Reference List."
(2) The concluding section of each chapter was divided into two parts. The first part summarizes the key points of the chapter, while the second part provides commentary on the chapter's content. This approach should benefit readers' learning.
(3) Western scholars' latest research findings were added to the commentary section of the concluding remarks for each chapter.
(4) The book's figures were enhanced with red and blue colors to improve clarity.
In addition to the points listed above, revisions were made to the text, symbols, and printing errors throughout the book. Additionally, we will soon publish a companion "Study and Teaching Manual" to accompany this book. This manual will include the more challenging parts of the previous edition and a wealth of supplementary materials, making the third edition more flexible. Overall, we strive to make the third edition more accurately reflect the nature of mainstream Western economics and more conducive to teaching and learning. The consultants for this book are Professors Hu Daiguang and Wu Yifeng. For the compilation of the first, second, and third editions, we held small seminars to gather feedback from peers.
Participants in the first edition seminar: (listed in order of signature)
Yang Zhijian (Ministry of Education), Shu Yuan (Sun Yat-sen University), Li Xinzhong (Social Science Center of the Ministry of Education), Shi Jinchuan (Hangzhou University), Liu Zhanchang (Ministry of Propaganda), Shi Shijun (Ningbo University), Peng Diyun (Nanchang University), Xu Guangyuan (Yunnan University), Luo Jielei (Sichuan University), Xing Yaxia (Heilongjiang University), Wan Shichun (Qinghai University), Han Xuyu (Xinjiang University), Liu Changgeng (Xiangtan University), Lin Yuanhui (Guangxi University), Yang Yusheng (Liaoning University), Liu Junmin (Nankai University), Zhang Donghui (Shandong University), He Zhang (Beijing Normal University), Jiang Changliu (Anhui University), Hu Xining (Central Party School of the Communist Party of China), Sun Xinlei (Zhengzhou University), Li Yiyuan (Tsinghua University), Wu Yuhui (Jilin University), Ding Bing (Capital University of Economics and Business), Li Jingxia (Shanxi University of Finance and Economics), Liu Fengliang (Renmin University of China), Liu Dong (Nanjing University), Tian Qiusheng (Lanzhou University), Guo Qiyou (Xiamen University), Du Yuesheng (Shenzhen University).
Participants in the second edition seminar: (listed in order of signature)
Qin Ling (Liaoning University), Wang Hongtao (Tongji University), Zhang Donghui (Shandong University), Shao Danying (Zhejiang Provincial Party School), Yang Yusheng (Liaoning University), Fang Shengchun (Shanghai Normal University), Liu Jichuan (Jiangxi Agricultural University), Chen Laokun (Shanghai Textile University), Long Zhihe (Southwest Jiaotong University), Zhang Ruohua (Yunnan University), Zhang Xukun (Hangzhou University), Zhang Jianhua (Huazhong University of Science and Technology), Xu Changsheng (Huazhong University of Science and Technology), Chen Xin (Zhengzhou University), Lin Yong (South China Normal University), Guo Qiyou (Xiamen University), Liu Fengliang (Renmin University of China).
Participants in the third edition seminar: (listed in order of signature)
Xu Guangyuan (Yunnan University), Shi Qi (Nanjing University of Finance and Economics), Dong Changrui (Shandong University of Economics), Liu Wen (Shandong University of Finance and Economics), Zuo Feng (Weihai Branch of Shandong University), Xu Zerong (Capital University of Economics and Business), Niu Yongping (China Coal Economics University), Liu Guoliang (Shandong University), Zhao Hongmei (Shanxi University of Finance and Economics).
All the listed colleagues provided valuable feedback on the book's compilation through spoken remarks or correspondence, and a significant portion of their suggestions has been adopted. In this regard, the book can be considered a collaborative effort of numerous higher education institutions across the country. The book's editorial team would like to express its gratitude to all of them.
Additionally, many teaching staff and readers have offered feedback on the book's writing. Yu Ze and Li Bin, doctoral students in Western Economics at Renmin University of China, revised the three appendices at the back of the book. We are also grateful for their contributions.
The division of labor in the book's compilation remains largely the same as in previous editions: Gao Hongye wrote the first, seventeenth, and twenty-third chapters, as well as the critical commentary section of each chapter's conclusion, and oversaw the final editing of the entire book. Liu Wenxin wrote Chapters 2 to 7. Feng Jinhua wrote Chapters 8 to 11. Yin Bocheng wrote Chapters 12 to 16. Wu Hanhong wrote Chapters 18 to 22 and conducted extensive correspondence and proofreading work.
This book was recognized as a national-level textbook and won the First Prize of the Seventh Beijing Philosophy and Social Sciences Outstanding Achievement Award in 2002 and the First Prize of the National Outstanding College Textbook Award from the Ministry of Education. The authors are deeply honored by these achievements.
Given the knowledge level and teaching experience of the authors, it is inevitable that the book contains shortcomings and omissions. Therefore, we hope that those using the book will continue to provide feedback to the authors.