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Teaching Real Business Cycles to Undergraduates

Author

Listed:
  • Brevik Frode
  • Manfred Gärtner
Abstract
We start by reviewing the graphical approach to teaching the real business cycle model introduced in Barro (1984). We then look at where this approach cuts corners and suggest refinements. Finally, graphical and exact models are compared by means of impulse response functions. The graphical models yield reliable qualitative results. Sizable quantitative differences exist, but these can partly be remedied by adding appropriate refinements. Used by experienced instructors the graphical analysis of the real business cycle equips students with a first understanding of the economy‘s supply side and generates results that will survive closer scrutiny later in the curriculum.

Suggested Citation

  • Brevik Frode & Manfred Gärtner, 2004. "Teaching Real Business Cycles to Undergraduates," University of St. Gallen Department of Economics working paper series 2004 2004-05, Department of Economics, University of St. Gallen.
    • Handle: RePEc:usg:dp2004:2004-05
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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/dp2004/dp05_gae_ganz.pdf
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    References listed on IDEAS

    as
    1. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    2. Fischer Black, 1982. "General Equilibrium and Business Cycles," NBER Working Papers 0950, National Bureau of Economic Research, Inc.
    3. Long, John B, Jr & Plosser, Charles I, 1983. "Real Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 39-69, February.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Borner, Silvio, 2010. "Die Finanzkrise von 2008/09 im Lichte der Konjunkturschwankungen von Walter Adolf Jöhr von 1952," Walter Adolf Jöhr Lecture 2010, University of St. Gallen, School of Economics and Political Science, Institute of Economics (FGN-HSG).
    2. Wyplosz, Charles, 2009. "Macroeconomics After the Crisis," Walter Adolf Jöhr Lecture 2009, University of St. Gallen, School of Economics and Political Science, Institute of Economics (FGN-HSG).
    3. von Weizsäcker, Carl Christian, 2011. "Staatliches Gewaltmonopol, Staatsverschuldung und individuelle Vorsorge," Walter Adolf Jöhr Lecture 2011, University of St. Gallen, School of Economics and Political Science, Institute of Economics (FGN-HSG).

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    More about this item

    Keywords

    Undergraduate teaching; macroeconomics; real business cycles; fluctuations;
    All these keywords.

    JEL classification:

    • A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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