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Reforming the undergraduate macroeconomics curriculum: the case for a thorough treatment of accounting relationships

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  • Johannes Schmidt

Abstract

The paper gives an overview of the important macroeconomic accounting relationships and the so-called 'balance mechanics' that should be systematically treated in an undergraduate macroeconomics course. It is argued that a mastery of these relationships is in itself a good basis for understanding economic events and debates. Furthermore, these relationships give a solid foundation for a pluralistic teaching approach, a comparison of different models, and a critical evaluation of economic policy proposals. This is shown by looking closer at three examples: first, the problem of coordination between saving and investment can be made much clearer when balance mechanics and accounting relationships are taken into account; second, a related problem of economic policy - the case for (or against) a funded pension system - is evaluated; and third, it is shown how balance mechanics can be used as a consistency check for economic models.

Suggested Citation

  • Johannes Schmidt, 2017. "Reforming the undergraduate macroeconomics curriculum: the case for a thorough treatment of accounting relationships," International Journal of Pluralism and Economics Education, Inderscience Enterprises Ltd, vol. 8(1), pages 42-67.
    • Handle: RePEc:ids:ijplur:v:8:y:2017:i:1:p:42-67
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    Cited by:

    1. Decker, Frank & Goodhart, Charles A. E., 2022. "Wilhelm Lautenbach’s credit mechanics – a precursor to the current money supply debate," LSE Research Online Documents on Economics 111819, London School of Economics and Political Science, LSE Library.
    2. Alan Karaev K. & Vadim Ponkratov V. & А. Караев К. & В. Понкратов В., 2018. "Основы балансовой механики Вольфганга Штютцела // Basics of the Wolfgang Stützel’s Balance Mechanics," Мир новой экономики // The world of new economy, Финансовый университет при Правительстве Российской Федерации // Financial University under The Governtment оf The Russian Federation, vol. 12(1), pages 104-113.

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