This lecture goes through Standard Keynesian IS LM models and variations -- explaining the linkages between Demand Side Keynesian models and Supply Side DSGE type models, and the concepts of exogeneity, endogeneity, identification etc. which are the standard conceptual framework required for working with traditional macro models.
Final Exam Questions
1. Explain how the sequence of things which takes place in an economic system can lead to either supply side or demand side economics. Explicitly show the sequencing used by supply siders, and also the sequencing used by demand siders, and show how this leads to different views about "crowding out"
2. Explain the concept of endogeneity and exogeneity, and show how these are used and relevant in construction of models. Show that economists are confused about these concepts by showing a model where the same variable is taken as endogenous in one part of the model and exogneous in another part of the same model.
3. Explain how taking careful account of sequencing and exogeneity/endogeneity creates a version of the IS-LM analysis which is different from conventional IS-LM. Pickup at least one difference between the two and explain how it matters.
IS-LM Analysis with corrected causal sequencing and disequilibrium — Video Lecture 97min