IDEAS home Printed from
   My bibliography  Save this article

A Simulation of Counter-Cyclical Intervention: Some Practical Lessons


  • Nathan D. Grawe


The author introduces a simulation of counter-cyclical interventions that highlights important issues surrounding the practice of government intervention. The simulation provides experiential insight as to why economists have long debated the degree of persistence exhibited by disequilibrating shocks and connects this debate to discussions about policy lags. In addition, the author explores the related issues such as unintended procyclical stimuli created by the political business cycle, the importance of central bank independence, the role of automatic stabilizers, and the value of forecasting. The simulation reminds students of the real-life complexities behind curve-shifting textbook problems and cautions that even optimal strategies may fail over short time horizons.

Suggested Citation

  • Nathan D. Grawe, 2007. "A Simulation of Counter-Cyclical Intervention: Some Practical Lessons," The Journal of Economic Education, Taylor & Francis Journals, vol. 38(4), pages 371-392, September.
  • Handle: RePEc:taf:jeduce:v:38:y:2007:i:4:p:371-392
    DOI: 10.3200/JECE.38.4.371-392

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jeduce:v:38:y:2007:i:4:p:371-392. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.