So now that you’re steeped in the aggregate-demand/aggregate-supply analysis, you’re better prepared to think about the contemporary debate about the near-term trajectory of GDP and inflation raging in- and outside the halls of Congress.

To do so, take a look at each of the three DB 5 readings, posted in the Week 5 Content Module of our course web page. Remarkably, you’ll find references to what we’re currently discussing in each of these articles, which, again, are written for the general public. As you read the Economist piece, take note of the reference to Robert Lucas. Messr. Lucas was one of the founding fathers of the New Classical School, whose approach to macroeconomic thinking we reviewed in the second half of our Week 5 class. You’re also welcome, if you wish, to read the posted optional R. Barro article. By way of background, Messr. Barro (Harvard) would be closer to the New Classical School than most contemporary economists.

Your task this week? If you were hired as a top Administration official, which body of thought would you call on to guide your analytical recommendations about what should be done going forward? The New Keynesians? The New Modern Monetary theorists (read the Wall Street Journal article!)? The New Classicals? Explain your reasoning in the context of the evolution of GDP, inflation, and interest rates.

Note: For this DB, as a minimum you must cite references from the articles to be eligible to earn full credit. Outside references, of course, are always welcome as well.

Best wishes for an engaging dialog about the schools of macroeconomic thought in the context of contemporary policy. It is not everyday, mind you, that you’ll find articles in the popular media about what might appear to be such a mundane topic. So this is certainly a unique time to be studying this material. And shows just how meaningful abstract theory can be. To include two peer responsesSlide 1 of 3

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