Tyler and Alex’s Big Adventure

It is a *Principles of Economics* book. I want one:>Marginal Revolution: How our macro book differs: Alex already has suggested some points related to economic growth; I’ll add to that:>1. We make macroeconomics as intuitive as microeconomics.  Our macro is based on the idea of incentives, consistently applied.>2. We cover the current financial crisis.>3. We show a simple — yes truly simple — way of teaching the Solow Growth model.  I call it Really Simple Solow.  But if that’s not simple enough for you, you can skip it and just call it Long-Run Aggregate Supply.>4. We offer equal and balanced coverage of neo Keynesian and real business cycle models.  Most other texts emphasize one or the other.>5. We offer an intuitive way of teaching real business cycle theory.  No intertemporal optimization representative agent models.  Can you explain to your grandmother why swine flu has been bad for the Mexican economy?  If so, you also think that real business cycle theory can be taught simply and intuitively.>6. Our version of the AD-AS model actually makes sense.  We don’t mash together real and nominal interest rates into the same diagram, we don’t treat the Taylor rule as an assumption for deriving an AD curve, and we do the analysis consistently in terms of dynamic rates of change.  (On the latter point for instance it is the rate of inflation which influences economic behavior, not the absolute level of prices per se, yet so often “p” rather than “pdot” goes on the vertical axis.) The AD-AS analysis covers both neo Keynesian and RBC models and can be done with three simple curves in one simple graph.  There is only one (consistent) model which needs to be taught for presenting the major macro ideas.>Alex and I vowed we would not stop working on this book until macro ceased to be the “ugly sister” of the micro/macro pair.  Modern Principles: Macroeconomics is the result of that Auseinandersetzung.


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