Aligning basic to intermediate macroeconomics to current central bank practice - new suggestions and some unfinished business

The present paper aims at providing a framework for teaching macroeconomics at the introductory to intermediate level. In doing this, my principal concern is to align current teaching models with the modern practice of central banking. In the spirit of Romer (1999), I introduce a simple monetary policy rule, which is shown to make the LM curve redundant. This approach is consistent with the more traditional ISLM, but provides a basis for addressing some important stylized facts very early in the course in a straightforward and much more natural way. Particular attention is devoted to issues such as liquidity traps and monetary policy in an open economy. Finally, directions for further improvements are pointed out. I think that the new family of teaching models I present should not crowd out ISLM but rather complement it.