Aligning basic to intermediate macroeconomics to current central bank practice - new suggestions and some unfinished business

Joerg Baumberger

University of St. Gallen Department of Economics working paper series 2003 from Department of Economics, University of St. Gallen

Abstract: The present paper aims at providing a framework for teaching macroeconomics at the introductory to intermediate level. In doing this, my principal concern is to align current teaching models with the modern practice of central banking. In the spirit of Romer (1999), I introduce a simple monetary policy rule, which is shown to make the LM curve redundant. This approach is consistent with the more traditional ISLM, but provides a basis for addressing some important stylized facts very early in the course in a straightforward and much more natural way. Particular attention is devoted to issues such as liquidity traps and monetary policy in an open economy. Finally, directions for further improvements are pointed out. I think that the new family of teaching models I present should not crowd out ISLM but rather complement it.

Keywords: Teaching of macroeconomics; General aggregate macro models; Monetary policy rules; Monetary policy in an open economy (search for similar items in EconPapers)
JEL-codes: A22 E00 E52 E58 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2003-04
New Economics Papers: this item is included in nep-mac
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