How has the crisis changed the teaching of economics?

There is an excellent discussion on Economist on this topic.

Number of economists chip in – Hal Varian, Tyler Cowen, Alberto Alesina, Michael Bordo etc. Two broad ideas emerge which need to be included in economics – One economic history and two basic concepts of finance.

Assorted links

There are a couple of interesting links :

• Tyler Cowen suggests Fed should adopt a inflation target of 3% which will then help in faster recovery of US economy. Once Fed says it will keep expanding money supply till inflation reaches 3%, then people might just begin spending rather than just hoard.
• Krugman says US should not bother if China keepinstops buying US Treasuries
• Shiller says knowing economic history and behavioral economics is important to understand crises
• Jeff Frankel looks at main questions asked from NBER as it said recession ended in June 2009.
• Economists debate whether the recession has ended? Superb stuff this with most saying we are still stuck in recessionary conditions

 

Taylor revisits Japan’s intervention in forex markets

Japan is intervening in currency market to prevent appreciation of Yen. This is done by buying US Dollars and selling Japanese Yen. There is an interesting development thatUS need not worry that Chinese will stop buying US Treasuries. Now with Japan buying USD there are high chances that the USD would also be deployed in US Treasuries.

Interestingly, Japan did that in 2002 as well. John Taylor  was U.S. Treasury Under Secretary for International Affairs. He recounts the experiences then.