Monday, May 19, 2008

What an econ major takes 

Arnold Kling says no macro, but includes environmental and resource economics. Macro is basically a history of economic thought course in his view. I think I'm supposed to protest this as someone who teaches macro, but I would gladly trade the intermediate macro class out for a good history of economic thought class plus a course in money and banking. Kling prefers a course in finance, but my experience with finance majors in the money and banking class is that their knowledge of financial institutions is quite sterile. Of course, I drag economic history of bubbles, the First and Second Banks of the United States, etc., into the M&B class. So maybe we're not so far off. Ten years ago our department dropped history of thought and M&B from the required courses in favor of more electives; I still am miffed about this.

I still think you need a model that says how you get the "big prices" in the economy, like the real interest rate or the price level or the real exchange rate between countries, but the principles course can do this well enough. Intermediate macro repeats that story, adds on IS-LM and AD-AS, and that's pretty much it. I argue continually that when you talk to economists my age about a policy issue, our answers almost always have some IS-LM diagram behind them, but in ten years I'll be old enough to ... teach history of economic thought.