Macroeconomic Theory and Macroeconomic Pedagogy

This book aims to showcase and advance recent debates over the extent to which undergraduate macroeconomics teaching models adequately reflect the latest developments in the field. It contains 16 essays on topics including the 3-equation New Consensus mod

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Macroeconomic Theory and Macroeconomic Pedagogy Edited by

Giuseppe Fontana University of Leeds, UK, and University of Sannio, Italy

and

Mark Setterfield Trinity College, Hartford, USA

Selection and editorial content © Giuseppe Fontana and Mark Setterfield 2009 Foreword © Carl E. Walsh 2009 Individual chapters © contributors 2009 Softcover reprint of the hardcover 1st edition 2009 978-0-230-20203-0 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6–10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2009 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978-0-230-27763-2 ISBN 978-0-230-29166-9 (eBook) DOI 10.1007/978-0-230-29166-9

This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. 10 9 8 7 6 5 4 3 2 1 18 17 16 15 14 13 12 11 10 09

Transferred to Digital Printing in 2010

Contents List of Figures List of Appendices Notes on the Contributors Foreword by Carl E. Walsh

vii x xi xix

Macroeconomic Theory and Macroeconomic Pedagogy: An Introduction Giuseppe Fontana and Mark Setterfield

Part I 1

1

The 3-Equation New Consensus Macroeconomic Model

Teaching Intermediate Macroeconomics using the 3-Equation Model Wendy Carlin and David Soskice

13

2

Bringing Undergraduate Macroeconomics Teaching Up to Date Simon Wren-Lewis

36

3

Monetary Policy Analysis: An Undergraduate Toolkit Jagjit S. Chadha

55

4

Rescuing the LM Curve (and the Money Market) in a Modern Macro Course Roberto Tamborini

5

The New Consensus in Macroeconomics: A Critical Appraisal Philip Arestis

6

Complexity and Macro Pedagogy: The Complexity Vision as a Bridge betwe