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Clothes for the Emperor or Can Graduate Schools Learn From Undergraduate Macroeconomics?

Author

Listed:
  • Manfred Gärtner
  • Florian Jung

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.

Suggested Citation

  • Manfred Gärtner & Florian Jung, 2010. "Clothes for the Emperor or Can Graduate Schools Learn From Undergraduate Macroeconomics?," University of St. Gallen Department of Economics working paper series 2010 2010-19, Department of Economics, University of St. Gallen.
  • Handle: RePEc:usg:dp2010:2010-19
    as

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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/dp2010/DP-1019-Ga.pdf
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    References listed on IDEAS

    as
    1. 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.
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    4. 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.
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    More about this item

    Keywords

    Teaching macroeconomics; lessons; graduate; undergraduate; financial crisis; liquidity trap; risk premium;
    All these keywords.

    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F01 - International Economics - - General - - - Global Outlook

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