Download - article 1 - group 4
-
8/7/2019 article 1 - group 4
1/13
GROUP 4
P V Bhanu Prakash ReddyRachana Vatsyayan
Ramesh Nair
Sadique Reza
Saurabh Pugalia
Sneha Nagar
MACROECONOMICS
How Economic Crisis has affected Teaching?
Recession and Depression
-
8/7/2019 article 1 - group 4
2/13
How has the
?Economic Crisisaffected themethods of teaching
-
8/7/2019 article 1 - group 4
3/13
The onset recent global financial crisis, that
marred economic growth worldwide, begets a
relook into the way economics is taught in
educational institutions the world over.
This is so that in the future we learn from our
mistakes and dont tread the same path of
financial turmoil.
Introduction
A number of economists have
commented about what they feel
must change in the teaching of
economics
-
8/7/2019 article 1 - group 4
4/13
Learn from the Great depression.
experts in finance are talking more about issues of financial regulation.
Discussion of pros and cons of activism in fiscal policy, and the
institutional role of central banks. The recession has changed what is being taught but not how things are
being taught.
Alberto Alesina
-
8/7/2019 article 1 - group 4
5/13
Knowledge of history, enabled
economists to predict the impending
dangers in the economy.
The current cycle elements were
similar to those in the depression. While mathematical fluency is
useful, the heart of economic
instruction needs to be reserved for
economic history.
Michael Pettis
-
8/7/2019 article 1 - group 4
6/13
The economic fear to fear is fear itself.
Watching one financial megalith after another bite the dust and one
politician after another scream, The depression is coming terrified the
private sector.
Laurence Kotlikoff
Such coordination failures
should be obvious to all
economists, but they arent.
The solution is taking fearout of the economic equation.
-
8/7/2019 article 1 - group 4
7/13
Some people believe that economics is an exact science.
In fact, economics is inevitably inexact. And, some economic variables are inherently unpredictable.
While the ultimate cause of the crisis is not entirely understood, many of its
mechanisms are familiar to economists.
Gilles Saint-Paul
Crisis is not a major challenge for
economics research.
Thus, the crisis will affect the
research agenda of the discipline but in
a way that can hardly be called aparadigm shift.
-
8/7/2019 article 1 - group 4
8/13
The crisis should have changed the way economics is taught, but little has
changed because it takes a long time to develop a new sequence of lectures and
very little time to give last years lectures.
Improving models dont really exist or are just emerging and are too fresh
to teach in most classes.
Richard Baldwin Three types of knowledgeare required so as to see the crisiscoming:
- Understand the recent
developments in the financial
system- New developments in
banking
- Macroeconomics
-
8/7/2019 article 1 - group 4
9/13
Some knew all about the fragilities of the banking sector, financial
markets and some about the complex interactions between the banking and
capital market
They did not understand how problems in overnight lending could induce
a recession that could make banks balance sheets look worse which would
worsen the credit crunch.
The macroeconomists were organizing their thinking using models in
which there were no banks and the financial market consisted of a single,
riskless asset.
-
8/7/2019 article 1 - group 4
10/13
Michael Bordo
Economics courses should discuss the financial crisis and financial stability
issues.
Introductory level: Need to discuss the long history of financial crisis androle of central banks in crisis management.
- Carmen Reinhart and Kenneth Rogoffs - This Time is Different
Graduate Level: Need to integrate the
latest researches into the area ofmacroeconomics and exposed to some
economic history in non-technical works
like:
- Franklin Allen, Douglas Gale, and
Jean-Charles Rochet
- Milton Friedman and Anna
Schwartzs The Great Contraction
-
8/7/2019 article 1 - group 4
11/13
Two different ways to handle a crisis: First: Stick to the Keynesians theories and principles.
Second: Abandon the conventional theories of macroeconomics and act
according to the situation.
Guillermo Calvo
Challenges in implementation:
Poor coverage of financial sector
issues.
Instructors need to be well versed
in financial history and emerging
market issues.
-
8/7/2019 article 1 - group 4
12/13
At the principles level, we should spend more time teaching about
financial intermediation, bubbles, and shadow banking system. At the graduate level, we should go to much greater lengths to teach both
economic history and the history of economic thought.
To understand tomorrow we again need to look back in economic history
and the writings of earlier economists.
Overall, the crisis has raised the relative status of generalists, compared to
specialists.
Tyler Cowen
-
8/7/2019 article 1 - group 4
13/13
There can be two approaches to the teaching of macroeconomics:
Focus on the historical perspective alone Focus on research into certain functional areas.
Combine the learning from history and recent researches
The consensus of our group is that a combination of both research and
history will keep economics in good stead.
Conclusions