Just to show how antidiluvian I am, when I last taught macro in the early 90s I
used pass-through analysis. I reasoned out with the students the factors that
would increase the ability of firms to pass costs through to prices and workers
to pass prices through to wages. Then the ceteris paribus relationship between
real aggregate demand (in the Keynesian sense) and the rate of inflation
follows. By the way, I would let students guide me in their analysis each time
I did this, and the exact list of factors would change slightly from class to
class (although it always included unemployment and capacity utilization). I
never worried about it. The goal, after all, is to help students acquire the
ability to reason their way through macro after they've forgotten everything
they tried to memorize for their exams.
Peter
"J. Barkley Rosser, Jr." wrote:
> Peter,
> You can SAY it. But being able to show
> it on a blackboard or an overhead or a
> power point, or whatever, in a graph, gives
> it some analytical and visual impact. Does
> a freshman with no econ know why
> "overheating an economy with bottlenecks"
> will cause inflation without more of a model
> to hang these remarks on?
> Barkley Rosser
