Friday, April 25, 2014

Zero lower bound in macro models

Frederic Mishkin offers a tutorial about incorporating the zero lower bound into intermediate macro, and it looks like his approach mirrors the one presented by Buttet and Roy in J Econ Educ. I like their creativity, and maybe the very point is that an upward sloping aggregate demand curve is so very unintuitive. But I'm not sure it's the best approach in the classroom, where nifty changes to supply or demand curves beyond tinkering with the slopes seem to really snow students. I don't have any alternatives yet!