Monday, March 31, 2008

Teaching Economics -'Aim high in steering'

The latest EconTalk with McCloskey is highly recommended- the last part of the discussion talks about the art of teaching economics.

Discipline of economics, McCloskey was Russ's teacher of micro, style of economic teaching that is puzzle-solving, intuition based. Profession has become more Samuelsonian, more mathematical. Where would you like economics to go if you had your druthers? Teaching 18-year olds. Adam Smith, more Smithian economics, economics where maximizing is in a context of ethics where the economic actor is thought of as being a human instead of a maximizing machine. The Economic Conversation, elementary book, students and faculty are urged to talk about economics. It's not the math itself that's the problem; it's the thinking that mathematical thought is the same thing as economic thought. Math is a tool. If all we do is run models over and over again, what is point of scholarships? Chess problems, econometrics. Hayekian direction as Russ's personal revolt against Max U. Either the use of emergent market based thinking or the conversational exploration of concepts are hard to write exams for. Compulsion to grade. Time-consuming to give a grade. When we have to give a grade we fall back on the Max U kind of problem. Language is how an economy operates and it's how a science operates. An emergent market is a talk shop. Austrian approach: These conversations are creative and that's why they can't be formulated as exam problems. Information. Talk about the role of language in the economy. Best economic education tragically takes place outside the classroom. "Aim high in steering.

Though teaching style have not made much progress, textbooks are improving for the better.

Intermediate Macroeconomics- from draft of textbook by Kevin Hoover
Current intermediate macroeconomics texts suffer from three common problems:

Theory is detached from the facts of the U.S. economy. Textbooks often include boxed case studies to illustrate theoretical principles and illustrative graphs and tables of current data. The numbers in the chapters on national income accounting are updated with each edition. Yet, the facts of the economy are usually peripheral – not woven tightly into the main exposition. And it is common for students to emerge nearly as ignorant at the end of the course of the basic features of the U.S. economy as at the beginning.

Exposition of theory is not well adapted to the real world. Macroeconomic news generally reports rates of change (e.g., growth rates, inflation rates), while typical textbooks focus on levels (e.g., the aggregate supply and demand curves determine the level of prices and GDP). The teacher knows how to translate from one context to the other, but the average student finds it difficult. Much of real world macroeconomics is closely tied to the complexities of financial markets. Textbooks typically focus on “the” rate of interest as determined by the supply of and demand for money, leaving a richer analysis of financial markets to later money and banking courses.

Too much stress on theoretical closure and advanced topics at the expense of first principles. Many intermediate macroeconomics textbooks read like graduate textbooks without the mathematics.

From another forthcoming Intermediate Macroeconomics book by Chad Jones;
Economic growth is the first major topic explored in the book. After an overview chapter describes the facts and some tools, Chapter 4 presents a (static) model based on a Cobb-Douglas production function. Students learn what a model is with this simple structure, and they see it applied to understanding the 50-fold differences in per capita GDP that we see across countries. Chapter 5 presents the Solow model—but with no technological change or population growth, which simplifies the presentation. Instead, students learn Robert Solow’s insight that capital accumulation cannot serve as the engine for long-run economic growth. Chapter 6 then offers something absent in most (all?) other intermediate macro books: a thorough exposition of the economics of ideas and of Paul Romer’s insight that the discovery of new ideas can drive long-run growth.

Chapter 12 is where the payoff occurs, and we see the simple, familiar AS/AD framework. The innovation is that the graph is drawn with inflation on the vertical axis rather than the price level—perfect for teaching students about the
Volcker disinflation, the Great Inflation of the 1970s, and modern monetary policy. All of the short-run analysis—including explicit dynamics— can be performed in this single graph. Another innovation in getting to the AS/AD framework is a focus on interest rates and the absence of an LM curve. The central bank sets the interest rate directly in Chapter 11; Chapter 12 introduces a simple version of John Taylor’s monetary policy rule to get the AD curve. A final innovation in the short-run model is that it features an open economy from the start. Business cycles in the rest of the world are one source of shocks to the home economy. To keep things simple, however, the initial short-run model does not include exchange rates...

Relative to many intermediate macro books, this text features more emphasis on the world economy. This occurs in three ways. First, the longrun growth chapters are a main emphasis in the book, and these inherently involve international comparisons. Second, the short-run model features an open economy (albeit without exchange rates) from the very beginning. Finally, the book includes two international chapters in Part 4: in addition to the standard international finance chapter that appears as Chapter 15, Chapter 14 is entirely devoted to international trade.

Brad DeLong
can improve;

I wrote this book out of a sense that undergrad macro needed to have the barnacles scraped off of its hull. It is more than three-quarters of a century since Keynes wrote his Tract on Monetary Reform; it is two-thirds of a century since Hicks and Hansen drew their IS and LM curves; it is more than one-third of a century since Friedman and Phelps demolished the static Phillips curve, and since Lucas, Sargent, and Barro taught us what rational expectations could mean. All this time undergrad macro has been becoming more complicated, as new material is added while old material remains. It seemed to me that if I could successfully streamline the presentation of material, both traditional and more modern, the result would be a more understandable and comprehensible book. I hope that I have succeeded—that this book does move more smoothly through the water than its competitors, and will prove to be a better textbook for third-millennium macroeconomics courses.

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