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ERIC Number: EJ781650
Record Type: Journal
Publication Date: 2007
Pages: 22
Abstractor: Author
Reference Count: 10
ISSN: ISSN-0022-0485
A Simulation of Counter-Cyclical Intervention: Some Practical Lessons
Grawe, Nathan D.; Watts, Michael, Ed.
Journal of Economic Education, v38 n4 p371-392 Fall 2007
The author introduces a simulation of counter-cyclical interventions that highlights important issues surrounding the practice of government intervention. The simulation provides experiential insight as to why economists have long debated the degree of persistence exhibited by disequilibrating shocks and connects this debate to discussions about policy lags. In addition, the author explores the related issues such as unintended procyclical stimuli created by the political business cycle, the importance of central bank independence, the role of automatic stabilizers, and the value of forecasting. The simulation reminds students of the real-life complexities behind curve-shifting textbook problems and cautions that even optimal strategies may fail over short time horizons. (Contains 10 figures, 4 tables, and 7 notes.)
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Publication Type: Journal Articles; Reports - Descriptive
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A