A Ready Reckoner Package for Macroeconomics Teaching

In the teaching of macroeconomics, the quantitative aspects of the policy debate are often neglected. Students may be able to derive algebraic expressions for such quantities as the government expenditure multiplier and to obtain inequalities relating it to the tax cut multiplier, but they often have little idea of the magnitude of the likely effects on GDP of, say, cutting income tax by two pence or increasing government expenditure by some equivalent amount. More generally, the possible effects of a reflationary package aimed at reducing unemployment, such as those advocated by the opposition parties at the last general election, may be discussed in broad terms, but typically cannot be quantified in terms of the likely cost on the PSBR, current account inflation, and so on. This paper presents a computer package, based on two large-scale macroeconomic models, that allows issues such as these to be addressed in the classroom. Copyright 1989 by Blackwell Publishing Ltd