Role-Playing Exercise: Policy Response to the Great Recession
In this role-playing exercise, students will study the causes and policy responses to the Great Recession. To prepare for the class, students will read articles by economists presenting alternative views on these issues. On the day of the excercise, students will be assigned to groups representing the various institutions charged with monetary and fiscal process. Students will use what they have learned from the course and the assigned articles in attempting to agree on their institution's response. At the conclusion of the exercise, each group will report on its recommendations.
Context for Use
Description and Teaching Materials
At least one class period ahead of the activity, assign two articles discussing alternative opinions about the causes of the Great Recession and ensuing policy responses. I have cited two examples, authored by leading proponents of contrasting views. The Krugman article presents a Keynesian view; the Taylor article is more typical of a monetarist approach. Some class time may be necessary to explain concepts discussed in the articles. It should be noted that both authors criticize the actual policy response. The Krugman article is longer than the Taylor article and may be shortened by only assigning the introduction and Part 1.
On the day of the activity, divide the class into groups of 6-8 students. Assign each group a name (Senate, House of Representatives, Presidents Council of Economic Advisors, and Federal Reserve Open Market Committee are the four I have used). Instruct each group to formulate a policy response to the Great Recession as if it was 2007-2008, using the information from the course and the articles read in preparation for the class. I make it clear that students should feel free to present their own points of view, but that the goal is to reach an agreement as to a policy response within the group. If they can't reach agreement, then they may present majority and minority reports.
Emphasize that students are to use economic analysis in their discussion of the problems presented and in making recommendations. Their recommendations should be in the context of the institutional role they have been assigned. Legislative and executive bodies should propose fiscal solutions and monetary institutions should propose monetary solutions. 30-45 minutes should be sufficient for group discussions, with another 30-45 minutes allowed for presentation of the various points of view and concluding remarks by the professor. Time permitting, I have someone from each group present a summary of their group's recommendations with a minority report if necessary. To minimize "free riding," I always have each student list his or her recommendations during the exercise and turn it in as evidence of participation in the activity.
Instructors unfamiliar with using small groups in their classrooms will find helpful information in the Starting Point module on cooperative learning.
Teaching Notes and Tips
I have found it is particularly important to keep emphasizing the need to use economic analysis in approaching policy questions throughout the semester. This concept needs to be explained several times during the semester, and this is a good opportunity to repeat the explanation. The professor can then point out how well the various groups employed economic analysis in their recommendations.
Assigning articles that use economic reasoning, but present alternative views, is important. This requires students to evaluate and attempt to reconcile opposing economic arguments. Textbooks generally present concepts about which most economists agree. Monetary and fiscal policy is controversial, so this is a good time to start presenting alternative points of view. Well informed students are generally familiar with the party lines of the two political parties and have frequently adopted one or the other as their own. When you hear these party line statements, it is important to have the students try to identify the economic assumptions that underlie these statements.
Role-playing gives students who may be reluctant to commit to a point of view or have no strong opinions some "cover" to try out arguments in a role playing context. Students may try to reconcile the arguments presented, or use the arguments presented by one author against advocates for other points of view. One or two students may dominate the discussion in each group. Some students just listen. I like to move from group to group during the exercise and try to draw out the quieter students by directing questions to them. This is not always successful, but sometimes it breaks the ice and encourages more participation.
This exercise is conducted near the end of the semester when students have completed the relevant chapters. By this time in my class they will have participated in several other group activities. I usually start out assigning them to groups with other students they are sitting close to geographically. The advantage to this is that they get to know those they are sitting around and they start to develop familiar work groups. This might be a good time to randomly reassign students to new work groups so that they have the experience of working with different people.
References and Resources
2. Taylor, How Government Created the Financial Crisis, Wall Street Journal, Feb. 9, 2009, http://online.wsj.com/news/articles/SB123414310280561945