Clothes For the Emperor or Can Graduate Schools Learn From Undergraduate Macroeconomics
Series
Discussion paper (2010-18)
Type
discussion paper
Date Issued
2010-06-29
Author(s)
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.
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Language
English
Keywords
Teaching macroeconomics
lessons
graduate
undergraduate
financial crisis
liquidity trap
risk premium
HSG Classification
contribution to scientific community
Refereed
No
Publisher
Department of Economics, University of St. Gallen (St. Gallen)
Start page
17
Subject(s)
Division(s)
Eprints ID
64719