Teaching Undergraduate Macroeconomics with the Taylor-Romer Model

The BMW Model : A New Framework for Teaching Monetary Economics

Although the IS/LM-AS/AD model is still the central tool of macroeconomic teaching in most macroeconomic textbooks, it has been criticized by several economists. Colander (1995) demonstrated that the framework is logically inconsistent, Romer (2000) showed that it is unable to deal with a monetary policy that uses the interest rate as its operating target, and Walsh criticized that it is not we...

Why Does No-one Teach Undergraduate Macroeconomics Using the Dynamic Stochastic General Equilibrium Model?

This paper argues that the reason that the DSGE model, which has proved so successful in convincing academic economists of its value, has made relatively few inroads into the undergraduate teaching sphere is that it fails to allow for the development of higher order educational objectives in students. The qualities which make it attractive to academics, such as the purity of its assumptions and...

Advanced Macroeconomics

Dmitri Kuksov

In many markets, one is likely to have both some correlation across periods of the choices of one consumer and some correlation across consumers of their choices in each period. The former is caused by consumer heterogeneity, while the latter may be the result of demand common shocks across consumers. Furthermore, if these common shocks are partially observed by the firms, then the marketing-mi...

Commentary: Is There a Role for Discretionary Fiscal Policy?

Alan Auerbach has given us a valuable paper loaded with new empirical research on the macroeconomics of fiscal policy. I agree with his basic conclusion that there is “little evidence that (the effects of discretionary fiscal policy) have provided a significant contribution to economic stabilization, if, in fact, they have worked in the right direction at all.” I, therefore, concur with his sup...