tag:blogger.com,1999:blog-1752771132348583018.post6319730692116770504..comments2024-03-28T04:18:27.812-05:00Comments on Managerial Econ: Paper: Teaching Managerial Economics with Problems Instead of ModelsLuke Froebhttp://www.blogger.com/profile/06832270922187297624noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-1752771132348583018.post-12960433306377429092011-07-14T18:05:57.254-05:002011-07-14T18:05:57.254-05:00I think a problem-based approach worked extremely ...I think a problem-based approach worked extremely well for managerial economics, but it might not work as well in other subjects. Much of my practical knowledge of macro got tossed out the window in 2008. <br /><br />In physics, much of the interesting science occurs at critical points, called "phase transitions", where one local set of physical laws give way to a different set. T < 32F, you have ice. T > 32F, you have water. Knowing how ice behaves doesn't give you any predictive power if it turns to water. You have to understand the global physical laws (quantum mechanics) from which the local physical laws derive.<br /><br />Economic depressions appears to be a similar phenomenon. When consumption > saving, the economy is good, deficit spending is bad, austerity is good, and government spending crowds out. When saving < consumption, the economy is bad, deficit spending is good, austerity is bad, and government spending doesn't affect interest rates. Keynes shows how those two different sets of local laws are actually different manifestations of a more fundamental global law, and gives you at least *some* predictive power. Whereas an MBA with a head-full of rules of thumb would be lost.Mathew Binkleyhttps://www.blogger.com/profile/11955508356710726371noreply@blogger.com