Sunday, May 24, 2009

Will The Economic Crisis Change What Material Is Covered in a Freshman Economics Course?

Not really, Greg Mankiw explains.

4 Comments:

At 5/24/2009 12:24 PM, Blogger Robert Miller said...

This comment has been removed by the author.

 
At 5/24/2009 1:23 PM, Anonymous Anonymous said...

If I understand what Robert is saying then he wants the government to prop up house prices to prevent foreclosures and banks from failing. That is what Obama is doing and he constantly criticizes him. Mark wants prices to fall so markets will clear. So who is the real free market economist here?

 
At 5/24/2009 2:00 PM, Blogger Robert Miller said...

This comment has been removed by the author.

 
At 5/29/2009 12:13 PM, Blogger Ed said...

Mankiw is right--what is taught will change, even if underlying economic principles do not. Here is my variant on his list of four major new macro topics:

1. Financial institutions, liquidity, etc. (these are really one topic). These used to be reserved for the finance department--now they need to go right into the first macro course

2. Forecasting. Yes, but not just forecasting. It is the fatal triad of forecasting+lags+politically-driven time-inconsistency that needs new emphasis in the macro principles course

3. Zero interest rates, liquidity trap, deflation, etc. This used to be left to the intermediate and advanced courses--now it has to move into principles.

4. I would add fiscal policy. Sure, fiscal policy has always been in the macro principles course, but it needs to be presented in a completely new way, not just the multiplier (what multiplier? Recent estimates put it at less-than-two to less-than-one), but also the long-run issue of sustainability of the debt and deficit.

There is lots of new material on all of these topics in the new 4th edition of my econ text (Introduction to Macroeconomics from BVT Publishers). Would anyone like to preview/review draft material before the book comes out later this year? I'd be happy to share selected chapters. Contact me via dolanecon-at-gmail-dot-com.

Ed Dolan

 

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