Clothes for the Emperor or Can Graduate Schools Learn From Undergraduate Macroeconomics?

Manfred Gärtner () and Florian Jung

University of St. Gallen Department of Economics working paper series 2010 from Department of Economics, University of St. Gallen

Abstract: The current crisis is not only one of financial markets, but also of macroeconomics. Leading scholars call for a paradigm shift away from dynamic general equilibrium models, though some argue that the profession's arsenal already contains the tools and historical lessons needed to deal with such crises. Taking this view to the limit, this note demonstrates that the workhorse models of undergraduate macroeconomics not only permit a refined view and classification of financial crises. These models also identify scenarios under which either policymakers would be ill advised to follow conventional prescriptions, or full-scale depressions loom that cannot be fought by means of fiscal or monetary policy alone.

Keywords: Teaching macroeconomics; lessons; graduate; undergraduate; financial crisis; liquidity trap; risk premium (search for similar items in EconPapers)
JEL-codes: A20 E63 F01 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2010-06
New Economics Papers: this item is included in nep-cba and nep-hpe
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