Teaching business cycles with the IS-TR model

Juha Tervala

MPRA Paper from University Library of Munich, Germany

Abstract: Business cycles are an essential part of macroeconomics. However, the study of macroeconomics often ignores the observed business cycles. During and after the global financial crisis, several economists have emphasized that macroeconomics courses will have to be changed. This paper presents a real world application of the IS-TR model, which helps to explain and teach business cycles. The simple Keynesian model clearly explains output fluctuations and the conduct of monetary policy. The main reason for strong business cycles in the euro area has been shocks in the goods market. The European Central Bank has changed its main interest rate mainly as a reaction to changes in the output gap.

Keywords: Business cycles; IS-TR model; macroeconomics; teaching of economics (search for similar items in EconPapers)
JEL-codes: A20 E40 E52 (search for similar items in EconPapers)
Date: 2014-09-30
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/58992/1/MPRA_paper_58992.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:58992

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().