Colander, David. The Stories We Essay

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This holds that as "aggregate expenditures increased, it brought about a supply response from firms who increased output" (Colander 1995, pp. 174-175). Regarding both curves, even on an intuitive level, wages and prices are not perfectly flexible in the real economy, particularly in regards to decreases in price level. Deflation has not happened on a significant level since the 1930s, but both classical and Keynesian economic theories allow for considerably greater potential for prices to fall than seems likely in fact (Colander 1995, pp. 174-177).

The problem of how to teach introductory economics, according to Colander, is just as knotty as the problem posed by the as/AD curve itself. One solution, called the "pedagogy is dirty" solution, suggests that teachers simply assume that there is necessary simplification that must take place within the context of an undergraduate economics classroom, given the complexity of the material being taught (Colander 1995, p.179). However, learning an internally inconsistent model is more confusing for some students than learning a more complex model.

Another approach is to teach the models separately and 'banish' both into their respective categories of micro and macroeconomics (Colander 1995, p.180). Classical adherents say that 'macro' issues should not be part of a general principles class. Keynesian adherents advocate a return to stressing the Keynesian model alone. Colander states the Keynesian model over-emphasizes the impact and influence of fiscal policy in a way that is not coherent with today's economic realities (and thus shows his own bias in favor of the classical model).

Colander offers his own model to replace the current classical, Keynesian, or hybrid forms. In his model "the definition of the AD curve would be changed so that the AD curve would no longer be derived from the Keynesian AE/AP model. The shape of the AD curve would reflect only the direct effect of any combination of the Pigou effect, the Keynes effect, the international effect, and the intertemporal price level effect that one believes makes logical sense," without presupposing a multiplier effect (Colander 1995, p.180).

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"In such a specification there would be no general presumption that [fiscal] policies work, as there is in the Keynesian model, or do not work, as there is in the current classical model. Such discussions would be institutionally specific and open to discussion" (Colander 1995, p.181).

Towards the end of Colander's article, it gradually becomes clear that his intention is not merely to make economics more comprehensible and realistic for new students of the discipline, but to also advocate a particular point-of-view of the classical vs. Keynesian approaches. The intelligent classicist today, he says allows for muted multiplier effects but denies the government's ability to improve the situation with appropriate fiscal policy while the informed neo-Keynesian does believe that fiscal policy can improve the economy in a limited fashion. Of course, the 'good' modern Keynesian is less optimistic about the government's ability to remedy shifts in the business cycle with policy than the original Keynesian theorists. Given the bitterness of the current economic debate in the wake of the economic downturn, this analysis of different economic ideological camps seems no less simplistic or idealistic than the as/AD model Colander is attempting to criticize. Ultimately, Colander advocates teaching his own model as a solution to the problem of two competing approaches to dealing with economic problems. Perhaps the best solution of all is illustrated in Colander's show of bias -- like politics, economics is such a contentious discipline. Professors must accept there is no singular model, only different versions and opinions of how the economic world works. They should teach the most popular models (like the classical and Keynesian models) separately, rather than in conjunction, while still being mindful of highlighting these models' problems and the current debate as to which is superior. Teaching students of economics to deal with ambiguity is part of teaching them to understand the discipline.

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