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I agree with Prof. Rao that it would be nice to distinguish between Walrasian and
Keynesian adjustment.  But the reality is that these terms are only meaningful for
historians of thought these days. Why I tried to put any such discussion in either my
intro or intermediate text reviewers strongly object--there goes Colander on one of his
history of thought binges. Most professors don't want to teach their students such
distinctions at either the principles level or the intermediate level. Unfortunately the
effect is self-reinforcing; the new professors coming out of graduate school haven't
learned it, and don't feel comfortable teaching it.
 
 
A couple of other comments on Prof. Rao's post: He writes: 
> In a rudimentary attempt (Rao, 1993) it was found that more than 85% of the U.S. GNP
transactions take place in the Keynesian markets. If this is further corroborated, the
standard ISLM plus the Phillips curve would be adequate for the principles texts.>
 
I think his work on empirical significance is important, which is why I presented most
markets as quantity adjustment in the macro section of the intro book. Blinder's work
(Asking About Prices) is also relevant here. But I don't
call them Keynesian markets; they are just markets. As for making the standard IS/LM model
part of the principles text, it isn't in the cards for U.S. books, and has not been
presented at the principles level for years.
 
He also writes: 
>May I say that it would be useful to replace or add to the current complicated
diagrammatic expositions, simple numerical dynamic simulations to explain the split
between quantity and price changes, for a given change in the so called AD. Perhaps the
new generation of textbook writers would consider my suggestion and strengthen the
structure and relevance of the macro models, instead of perpetuating confusions between
the Keynesian and Walrasian approaches.>
 
Here I agree with him. I think simple numerical dynamic simulations would be far more
helpful in presenting macroeconomic issues than the graphs we currently use, and are the
wave of the future. In the Complexity and The Teaching of Economics book I edited that was
a major theme. But it will involve a new genenation of texts. Buz Brock suggested these
new books would be like Roughgarten's book in ecology, in which computer simulation was a
central part of the course.
 
But I also argued in that book that such changes involved a major change in the way
economics was taught--from a deductive model to a much more inductive model, and that so
much was intertwined in the presentation, that it wasn't going to happen anytime soon.
 
Dave Colander 
 
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