The applicability of the IS-PC-MR model on the UK economy during the crisisUCL WP (2015)
Since the 2008 great recession, it has been a very interesting time for macroeconomics. There has been a movement to revamp how economics is taught, challenging the ability of models and mathematical equations to map agents’ behaviour and the economy. This debate has inspired my interest on the applicability of economic theories. It is argued that oversimplification and generalization of assumptions make models too abstract and impractical, yet, at various points in time, models have been relatively successful in mapping out general movements in economies. As logical beings, we are constantly seeking coherence in daily occurrences and given all its drawbacks, economic models might still currently be the best solution to understanding reality. A core model of macroeconomics is the IS-PC-MR model (3EM), and having just spent a good portion of time learning the closed economy 3EM, I thought it was apt to examine if this model accurately reflects reality and its ability to analyse shocks of such magnitude.
Publication DateWinter March 18, 2015
Citation InformationJia Wei Choo. "The applicability of the IS-PC-MR model on the UK economy during the crisis" UCL WP (2015)
Available at: http://works.bepress.com/michael_andersons/13/