Florian Jung
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  • Publication
    An interactive primer on the macroeconomics of financial crises
    (Taylor & Francis, 2011-09-06)
    Gärtner, Manfred
    ;
    Griesbach, Björn
    ;
    Jung, Florian
    ;
    Kleiner, Andreas
    This learning package brings the macroeconomic implications of financial crises to the undergraduate classroom. It equips even apprentices of macroeconomics with tools enabling them to be active and constructive participants in discussions of the current crisis. It should also encourage undergraduate instructors to use the 2007 subprime crisis and its global effects as an extended case study, emphasizing the applied nature of macroeconomics and its potential to make developments and policy discussions in the real world more transparent. The package assumes familiarity with two workhorses of the undergraduate curriculum: the IS-LM and the Mundell-Fleming model. Extending textbook versions of these models, it shows how the emergence of financial crises, defined as deteriorations of confidence that lead to increasing risk premiums, affects money markets (via the LM curve) and capital markets (via the IS curve). Starting with an empirical comparison of key macroeconomic variables during the Great Depression of 1929-1933 and the current crisis, users then enter the interactive segment of the package. The Java applet that sits at the heart of this central section features a crisis version of the Mundell-Fleming model (to represent a small open economy) that is connected to a likewise modified IS-LM model (to represent the rest of the world). After being cautioned that financial crises come in many shapes (depending on the exchange rate sys-tem, on whether they erupt in the banking or corporate sector, at home or abroad) students may expe-riment with a variety of crises, experiencing their macroeconomic repercussions, and gaining hands-on experience as central bankers and government policy makers. This way students find out under what conditions financial crises threaten to generate major recessions, when textbook policy recom-mendations work or are turned upside down, and what kind of financial crises may even destabilize the economy with the prospect of an outright depression. [http://www.fgn.unisg.ch/eurmacro/xercises/crisis.html Link zum interaktiven Lernpaket / link to the interactive package]
    Type: journal article
    Journal: Journal of Economic Education
    Volume: 42
    Issue: 3
    DOI: 10.1080/00220485.2011.581963
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/93589
    Scopus© Citations 2
  • Publication
    The macroeconomics of financial crises : How risk premiums, liquidity traps and perfect traps affect policy options
    (Springer Verlag, 2011-02)
    Gärtner, Manfred
    ;
    Jung, Florian
    The paper offers an overview of what structural models of the IS-LM and Mundell-Fleming variety can tell about the macroeconomics of economic crises. In addition to demonstrating how the emergence of risk premiums in money and capital markets can generate liquidity traps at positive interest rates and may drive economies into recessions, it shows the following: (1) Fiscal policy works even in a small, open economy under flexible exchange rates when the country is stuck in a liquidity trap; (2) Near the fringe of liquidity traps, there may be perfect traps, in which neither monetary nor fiscal policy works when used in isolation but policy coordination is called for; and (3) Massive financial crises in the domestic money market may even destabilize the economy.
    Type: journal article
    Journal: International Advances in Economic Research
    Volume: 17
    Issue: 1
    DOI: 10.1007/s11294-010-9290-z
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/94562
    Scopus© Citations 1
  • Publication
    Clothes For the Emperor or Can Graduate Schools Learn From Undergraduate Macroeconomics
    (Department of Economics, University of St. Gallen (St. Gallen), 2010-06-29)
    Gärtner, Manfred
    ;
    Jung, Florian
    The current crisis is not only one of financial markets, but also of macroeconomics. Leading scholars call for a paradigm shift away from dynamic general equilibrium models, though some argue that the profession's arsenal already contains the tools and historical lessons needed to deal with such crises. Taking this view to the limit, this note demonstrates that the workhorse models of undergraduate macroeconomics not only permit a refined view and classification of financial crises. These models also identify scenarios under which either policymakers would be ill advised to follow conventional prescriptions, or full-scale depressions loom that cannot be fought by means of fiscal or monetary policy alone. [http://ideas.repec.org/p/usg/dp2010/2010-19.html#abstract Volltext herunterladen]
    Type: discussion paper
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/96258
  • Publication
    The macroeconomics of financial crises : How risk premiums, liquidity traps and perfect traps affect policy options
    (Department of Economics, University of St. Gallen, 2009-07-25)
    Gärtner, Manfred
    ;
    Jung, Florian
    The paper shows that structural models of the IS-LM and Mundell-Fleming variety have a lot to tell about the macroeconomics of the current global economic and financial crisis. In addition to demonstrating how the emergence of risk premiums in money and capital markets may drive economies into recessions, it shows the following: (1) Liquidity traps may occur not only when interest rates approach zero but at positive and/or rising rates as well; (2) Fiscal policy works even in a small, open economy under flexible exchange rates when the country is stuck in a liquidity trap; (3) Near the fringe of liquidity traps, the risk arises of perfect traps, in which neither monetary nor fiscal policy works when used in isolation, but policy coordination is called for; and (4) Massive financial crises in the domestic money market may even destabilize the economy. [http://ideas.repec.org/p/usg/dp2009/2009-15.html Volltext herunterladen]
    Type: discussion paper
    Issue: 2009-15
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/75766