Clothes for the Emperor or Can Graduate Schools Learn From Undergraduate Macroeconomics?
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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- Manfred Gärtner & Florian Jung, 2009. "The macroeconomics of financial crises: How risk premiums, liquidity traps and perfect traps affect policy options," University of St. Gallen Department of Economics working paper series 2009 2009-15, Department of Economics, University of St. Gallen.
- Bofinger, Peter & Mayer, Eric & Wollmershäuser, Timo, 2009.
"Teaching New Keynesian Open Economy Macroeconomics at the Intermediate Level,"
Munich Reprints in Economics
20213, University of Munich, Department of Economics.
- Peter Bofinger & Eric Mayer & Timo Wollmershäuser, 2009. "Teaching New Keynesian Open Economy Macroeconomics at the Intermediate Level," The Journal of Economic Education, Taylor & Francis Journals, vol. 40(1), pages 80-102, January.
- Bofinger, Peter & Mayer, Eric & Wollmershäuser, Timo, 2006. "Teaching New Keynesian Open Economy Macroeconomics at the Intermediate Level," W.E.P. - Würzburg Economic Papers 66, University of Würzburg, Chair for Monetary Policy and International Economics.
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Journal of Economic Perspectives,
American Economic Association, vol. 14(2), pages 149-169, Spring.
- Krugman, Paul, 2000. "Thinking About the Liquidity Trap," Journal of the Japanese and International Economies, Elsevier, vol. 14(4), pages 221-237, December.
- Joseph E Stiglitz, 2009. "The Current Economic Crisis and Lessons for Economic Theory," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 35(3), pages 281-296.
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