The Intermediate Macroeconomics Course: Current Challenges and Future Directions
Paper Session
Sunday, Jan. 4, 2026 8:00 AM - 10:00 AM (EST)
- Chair: Christopher Foote, Harvard University and Federal Reserve Bank of Boston
Is Intermediate Macroeconomics Good Enough for Graduate School? And if Not, What are we Missing?
Abstract
The state of macroeconomic theory (and policy) has widened significantly over the last 70 years. Back in the heyday of the Keynesian revolution, a well-informed student of macroeconomics could thrive with the Keynesian cross and a version of IS-LM under their belt. Nowadays, these tools barely scratch the surface. While the venerable IS-LM model remains full of insights and intuition, it falls short for students who want to take an academic or research career in macroeconomics. Whether we like it or not, the first year of graduate school macroeconomics has decidedly abandoned these models in favor of a dynamic general equilibrium approach. Moreover, faculty teaching these courses at the PhD level assume (perhaps incorrectly) that students already know about Bellman equations, numerical analysis, search models, or New Keynesian (NK) models. Second-year macro does not make things better, as the emphasis on going beyond the representative agent framework (e.g., heterogeneous-agent NK models) presents a completely different -- and more complicated -- toolkit. While not every economics major will end up in a graduate program, we are ill-preparing those who want to do so. This lack of preparation seems obvious when we look at undergraduates in any applied microeconomics field: it is not uncommon for students to learn about differences-in-differences, regression discontinuity, event studies, and other tools of causal inference. What would happen if these students were only taught basic OLS regression? Would they thrive in grad school? Of course not. Then why are we not providing our macroeconomists with the same treatment? This paper argues that we must make space to think about what a course in intermediate macro ought to look like, thinking about what an undergraduate should know given what the profession looks like today, not what it looked like 70 years ago.Changes in Fed Tools: Classroom Implications
Abstract
Changes around the implementation of monetary policy in the US in recent decades have posed challenges for instructors of macroeconomics, including those teaching intermediate macroeconomic theory. In this paper, I show how the tools that have been used by the Fed since the Great Recession have changed the way we need to talk about monetary policy in the classroom. In the new regime of abundant reserves, open-market operations have different effects than before. A daily model of the reserves market may be helpful in guiding students to understand the mechanism by which the Fed operates. However, the danger of that model is that students may be misled about the longer-run implications of Fed policy decisions. I illustrate how to combine both short-run and long-run models of Fed policy actions.Beyond Solow: Long Run Growth in Intermediate Macroeconomics
Abstract
For decades the Solow model has been a workhorse in intermediate macroeconomic classrooms and textbooks. The explanatory power, analytic simplicity, and intuitive graphical exposition combine to make the model an indispensable part of the undergraduate macroeconomic canon. There is much less consensus on what, if anything, should be covered beyond the Solow model. I argue that two important learning objectives in intermediate macroeconomics are to understand economic growth over the broad course of human history and model economic growth at the frontier. While the former might seem overly ambitious, a simple version of the Malthusian model explains global economic growth, or the lack thereof, before the Industrial Revolution. Clark (2008) and Galor (2022) have made the point to a general audience and either of these could usefully complement the more technical derivations in class. The Malthusian model requires no additional prerequisite mathematical knowledge beyond what is required for the Solow model. As a matter of fact, learning the Malthusian model first helps prepare students for the Solow model.After covering the Malthusian and Solow models, the sensible next step is to model sustained economic growth. Endogenous growth models have traditionally been used to explain growth at the frontier. While those are useful, Jones (1995) convincingly argues that semi-endogenous growth models are more consistent with the data. Semi-endogenous growth models are just as accessible as the scaled down versions of the Lucas (1988) and Romer (1990) models usually found in textbooks. Taken together, the Malthusian, Solow, and semi-endogenous growth models give students a more comprehensive, yet accessible, view of (macro)economic history.
Discussant(s)
Avi J. Cohen
,
University of Toronto
Julie Smith
,
Lafayette College
Scott Wolla
,
Federal Reserve Bank of St. Louis
Christopher Foote
,
Harvard University
JEL Classifications
- A2 - Economic Education and Teaching of Economics