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Teaching Real Business Cycles to Undergraduates

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  • Frode Brevik
  • Manfred Gärtner

Abstract

The authors review the graphical approach to teaching the real business cycle model introduced in Barro. They then look at where this approach cuts corners and suggest refinements. Finally, they compare graphical and exact models by means of impulse-response functions. The graphical models yield reliable qualitative results. Sizable quantitative differences exist, but these can partly be remedied by adding appropriate refinements when taught by experienced instructors. The graphical analysis of the real business cycle equips students with a first understanding of the economy's supply side and generates dynamics that will survive closer scrutiny later in the curriculum.

Suggested Citation

  • Frode Brevik & Manfred Gärtner, 2007. "Teaching Real Business Cycles to Undergraduates," The Journal of Economic Education, Taylor & Francis Journals, vol. 38(2), pages 229-247, April.
    • Handle: RePEc:taf:jeduce:v:38:y:2007:i:2:p:229-247
    DOI: 10.3200/JECE.38.2.229-247
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    References listed on IDEAS

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    1. Fischer Black, 1982. "General Equilibrium and Business Cycles," NBER Working Papers 0950, National Bureau of Economic Research, Inc.
    2. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    3. Long, John B, Jr & Plosser, Charles I, 1983. "Real Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 39-69, February.
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    Cited by:

    1. Borner, Silvio, 2010. "Die Finanzkrise von 2008/09 im Lichte der Konjunkturschwankungen von Walter Adolf Jöhr von 1952," Walter Adolf Jöhr Lecture 2010, University of St. Gallen, School of Economics and Political Science, Institute of Economics (FGN-HSG).
    2. Wyplosz, Charles, 2009. "Macroeconomics After the Crisis," Walter Adolf Jöhr Lecture 2009, University of St. Gallen, School of Economics and Political Science, Institute of Economics (FGN-HSG).
    3. von Weizsäcker, Carl Christian, 2011. "Staatliches Gewaltmonopol, Staatsverschuldung und individuelle Vorsorge," Walter Adolf Jöhr Lecture 2011, University of St. Gallen, School of Economics and Political Science, Institute of Economics (FGN-HSG).

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    More about this item

    JEL classification:

    • A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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