Or, How to adapt the intermediate macro syllabus to an altered world
This semester is the first time I’ve taught intermediate macroeconomics link in over two years. The last time I taught this course in the Spring of 2007, the key topics were inflation, the possibility of stagflation, and the possibility of containing the ongoing housing slowdown.
There’s been a debate over the cause of the trade flow drop-off, with varying explanations being offered. Broadly speaking, the explanations are (1) trade credit and credit crunch more broadly, (2) enhanced vertical specialization implying higher income elasticities, and (3) compositional effects (the trade dependent sectors were those most highly affected in the latest recession). Without necessarily offering definitive evidence one way or the other, I wanted to quantify the extent to which income elasticities had to be higher in order to rationalize the movements observed in US data.
That’s a question recently taken up by
the Wall Street Journal. Here are my thoughts.
From Peter Hooper, Torsten Slok, Christine Dobridge, “Robust growth needed to avoid jobless recovery,” Deutsche Bank Global Economic Perspectives (Dec. 9) [not online]:
I’ve been discussing possible explanations for the recent tendency of the dollar prices of commodities to move together. On Friday we received a very useful data point for distinguishing between the different hypotheses.
My colleague Charles Engel has a new paper circulated by the Dallas Fed entitled “Exchange Rate Policies”, which brings theory to bear on the topic. From the introduction:
Some quick excerpts of what others are saying.
…and an initial read on monthly GDP.