Edward McPhail
Economics-268
Spring 2006
MTH 1:30 - 2:45

Intermediate Macroeconomics

This course addresses classical and contemporary issues in the theory of output, employment, and the price level.  Topics covered include: the measurement of gross domestic product, theories of aggregate demand and aggregate supply, theoretical and practical aspects of monetary and fiscal policies, money creation and economic stabilization policy.  We shall pay particular attention to four schools of thought: New Classical, New Keynesian, Post Keynesian, Post Walrasian, and Real Business Cycle. 

Office Hours

Edward McPhail, Landis House #10

Office Phone:  245-1264 (message)

Hours:  M 4:30 -5:30, T 3:30 -4:30 & by appointment.

email:  mcphail@dickinson.edu

home page:  www.edwardmcphail.com

Course Requirements

Your course grade will be based on homework assignments, three exams, and a project/presentation.   The grading breakdown is as follows:

                        Homework:       100pts

                        Exam#1:            100pts

                        Exam#2:            100pts

                        Project:              100pts

                        Final Exam:       200pts

There are no make-up exams scheduled.  If a medical emergency occurs, please prepare adequate documentation from the appropriate authorities.

Homework

Over the course of the semester I will assign problems from the text and hand out worksheets which will help you prepare for the exams.  Your task is to answer all of the assigned questions and to hand them in on time. No late assignments will be accepted.  In the interest of promoting class discussion, if circumstances dictate, I may assign popular readings on current world events.  A student may be asked to present the reading and lead a class discussion. 

Presentations

The class will form groups and each group will give a web-based presentation that will take place the last two weeks of class.  Presentations will consist of talks @20-30 minutes in length (we may make changes in this as time and class size dictate).  The point of this exercise is to give you some experience applying the tools that you have learned in class.  It lets you hone your research skills and gives you a chance to practice speaking in front of an audience (and a sympathetic one at that).  Both of these skills are highly prized in the business world and the more practice you get the better off you are.  During the course of the semester, I will suggest possible topics and you are free to propose your own.  However, I must approve whatever topic you choose.

Required Textbook

Macroeconomics Update Edition plus MyEconLab, 5/E, by Andrew Abel and Ben Bernanke [AB], Addison Wesley. This text is a very readable, modern treatment of intermediate macroeconomics with a somewhat Keynesian emphasis. It gives a nice balance of theory, real world applications and political considerations. The text stresses intuition over formal models and mathematics.

Books of Some Interest

Below are listed short, pithy monographs on current (and not so current) issues in macroeconomics.  You may find them in the library or purchase them online from www.barnesandnoble.com or www.amazon.com.  These may well provide information for your class presentation.

1. Peddling Prosperity: Economic Sense and Nonsense in the Age of Diminished Expectations, by Paul Krugman, Norton, 1994. This monograph is a more politically oriented discussion of economic conditions and policy during the 1980s and early 1990s than Krugman's other popular book The Age of Diminished Expectations.  Paul Krugman is a professor of economics at Princeton, is the winner of the John Bates Clark Medal, and is a strong contender for receiving the Nobel Prize in Economics.  Also, he writes an editorial column for the New York Times

2.  Memos to the President: A Guide through Macroeconomics for the Busy Policy Maker, by Charles L. Schultze, Brookings, 1992. Charles Schultze was on President Carter's Council of Economic Advisors and this monograph is a collection of "memos" briefing a hypothetical president on economic issues.

3.  Hard heads, Soft Hearts, by Alan Blinder, Addison Wesley, 1987. Alan Blinder is a professor of economics at Princeton University and was vice chairman of the Federal Reserve System.

4.  The Misunderstood Economy, by Robert Eisner, Harvard Business School Press, 1994. Robert Eisner was a professor of economics at Northwestern University and a former president of the American Economic Association.

5.  The Age of Diminished Expectations, Third Edition by Paul Krugman, MIT Press, 1994. This is a very well written short monograph on current economic conditions and economic policy.

Examination Schedule

Exams are tentatively scheduled to be held in class on

In Class Exam #1

In Class Exam #2

Final Exam

Monday March 6

Thursday April 20

Tuesday May 9 2:00PM

There will be no make-up exams scheduled.  If a medical emergency occurs, please prepare adequate documentation from the appropriate authorities.

The following tentative course outline gives the proposed order of topics for the course and the readings that will provide background for the lectures.

Tentative Course Outline

1.           Introduction to Macroeconomics

              AB, Ch. 1,  pp. 2-22.

2.           Measurement and Structure of the National Economy

              AB, Ch. 2, pp. 23-58.

3.           Productivity, Output, and Employment

              AB, Ch. 3, pp. 60-104.

4.           Consumption, Saving, and Investment

              AB, Ch. 4, pp. 108-145.

5.           IS Curve

              AB,  Ch. 9, pp. 304-311.

6.           Asset Market, Money, and Prices

              AB, Ch. 7, pp. 242-267.

7.           The LM Curve

              AB, Ch. 9,  pp. 311-339.

8.           Business Cycles

              AB, Ch. 8, pp. 274-301

9.           Real Business Cycle and New Classical Theories

              AB, Ch. 10,  pp. 351-383.

10.         New Keynesian Theories

              AB, Ch. 11, pp. 390-423

              AB, Appendix 12.A pp. 428-430

Additional topics will be added over the course of the semester as time permits.

11.         Unemployment and Inflation (tentative)

              AB, Ch. 12, pp. 434-466

12.         Saving and Investment in the Open Economy (tentative)

              AB, Ch. 5, pp. 168-202

13.         Macroeconomic Policy  in the Open Economy (tentative)

              AB, Ch. 13, pp. 471-512

14.         Monetary Policy and The Federal Reserve System (tentative)

              AB, Ch. 14, pp. 520- 561

15.         Government Deficits and Debt (tentative)

              AB, Ch. 15, pp. 563-595