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Classroom Simulation as a Pedagogical Device in Teaching Money and Banking

Published online by Cambridge University Press:  19 October 2009

William Breen  and
John Boyd
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Extract

The purpose of this paper is to describe a computerized classroom teaching tool for use in money and banking courses. A basic macroeconomic model and simulation program are introduced, along with classroom presentations and sample output. In addition, the technical details of the simulation, including operating costs, are explained.

Type
IX. Teaching of the Basic Money and Financial Institutions Course
Information
Journal of Financial and Quantitative Analysis , Volume 11 , Issue 4 , November 1976 , pp. 595 - 606
Copyright
Copyright © School of Business Administration, University of Washington 1976

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References

1 This approach may also be useful because it helps differentiate material from that presented in the basic macroeconomics course.

2 Kaufman, George G., Money, the Financial System and the Economy, New York: Rand McNally and Co. (1973).Google Scholar

3 Anderson, L. C. and Jordan, J. L., “Monetary and Fiscal Actions: A Test of Their Relative Importance in Economic Stabilization,” Review, Federal Reserve Bank of St. Louis (Vol. 50, November 1968).Google Scholar

4 This model is taken directly from Kaufman, Money, p. 293.

5 This is especially true of parameters a6 and a7 in the investment function.

6 See the Appendix for discussion of computer output.

7 Actually, the Kaufman model is not structured to represent precisely the interrelationship between monetary and fiscal policy, because the link between private bond holding and bank reserves is not specified. However, the comparative simulations still show that the policy is more expansionary, and probably more inflationary, as an increasing proportion of the deficit is financed by the Federal Reserve. Obviously, the results depend on parameter specifications. See Rasche, Robert H., “A Comparative Static Analysis of Some Monetarist Propositions,” Review, Federal Reserve Bank of St. Louis (December 1973), pp. 15–23.Google Scholar