Teaching Real Business Cycles to Undergraduates

University of St. Gallen Discussion Paper No. 2004-5

37 Pages Posted: 4 May 2004

See all articles by Frode Brevik

Frode Brevik

University of St. Gallen - SEPS: Economics and Political Sciences

Manfred Gartner

University of St. Gallen - SEPS: Economics and Political Sciences

Date Written: January 2004

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.

Keywords: Undergraduate teaching, macroeconomics, real business cycles, fluctuations

JEL Classification: A22, E32

Suggested Citation

Brevik, Frode and Gartner, Manfred, Teaching Real Business Cycles to Undergraduates (January 2004). University of St. Gallen Discussion Paper No. 2004-5, Available at SSRN: https://ssrn.com/abstract=526082 or http://dx.doi.org/10.2139/ssrn.526082

Frode Brevik

University of St. Gallen - SEPS: Economics and Political Sciences ( email )

Rosenbergstrasse 51
St. Gallen, St. Gallen CH-9000
Switzerland

Manfred Gartner (Contact Author)

University of St. Gallen - SEPS: Economics and Political Sciences ( email )

Rosenbergstrasse 51
St. Gallen, St. Gallen CH-9000
Switzerland

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