Incorporating the Great Recession into Principles of Economics Courses
After the great recession, there has been a heated debate between the Keynesian and Classical economists about how to combat the worst economic crisis since the great depression of 1930s. The purpose of this assignment is to make students understand the major differences between macroeconomic policies.
In this assignment, students are asked to follow the blogs of two prominent economists with opposing macroeconomic views starting from the beginning of the semester. Students learn the Keynesian and Classical macroeconomic policies that can be implemented to achieve macroeconomic goals, which are economic growth, full employment, and price stability throughout the semester in the class. Students are asked to write a report on the current macroeconomic policy implemented by the government and evaluate the alternative policy that could be implemented to achieve macroeconomic goals. Students then advise the Congress in this report which macroeconomic policy could help the economy achieve higher economic growth rates and full employment . Lastly, students discuss their opinions in the classroom in a classroom debate.
By completing this activity, students will have evaluated the key differences between Keynesian and Classical economic thought and master the following key concepts:
Keynesian and Classical Economic Thought
Keynesian Fiscal Policy
Supply Side Fiscal Policy
Context for Use
This activity is appropriate for any class size.
This is a semester long project. Students are expected to follow the economists' blogs and learn their opinions on macroeconomic issues throughout the semester. Students form their own opinions at the end of the semester after learning the macroeconomic theory and policy.
Students need internet connection for this activity.
Before submitting their report, students should have mastered the major schools of economic thought, macroeconomic theory and fiscal policy to be able to evaluate two opposing macroeconomic views. This activity can be done both in face to face and online classes.
Description and Teaching Materials
Students choose at least one economics blog for each macroeconomic thought authored by a prominent economist. Some suggestions are below:
Robert Reich (UC Berkeley) Blog
Paul Krugman Blog (Princeton University)
John Taylor (Stanford University) Blog
Gregory Mankiw (Harvard University) Blog
Teaching Notes and Tips
The assessment is based on thorough understanding of the major schools of economic thought and applying them in current economic situation. The assessment should also be based on how students support their ideas using the macroeconomic theory. Since economists and policy makers disagree on macroeconomic policies, we can't expect students to agree on a single solution. The instructor should not favor one view over the other one. There is no right or wrong in terms of recommending the Keynesian or the Classical solution to the Congress. Students will get full credit regardless of their recommendation as long as they are consistent with the economic theory and policy.
For the classroom debate, students in groups are divided into pairs. Each pair is assigned to argue one of the positions. For example, one group of two is assigned to explain the reasons that the Keynesian view is a better policy option to combat the current economic problems while the other group of two is assigned to defend the Classical view. After the first round, pairs in groups exchange positions and defend the opposite view. In the final step each group of four attempts to come up with a common position and present it to the class. Students get participation points based on the depth and complexity of their arguments.
References and Resources
This link provides an example for a debate between Keynesian and Classical views.