MTH 1:30 - 2:45
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.
Edward McPhail, Landis House #10
Office Phone: 245-1264 (message)
Hours: M 4:30 -5:30, T 3:30 -4:30 & by appointment.
home page: www.edwardmcphail.com
Your course grade will be based on homework assignments, three exams, and a project/presentation. The grading breakdown is as follows:
Final Exam: 200pts
There are no make-up exams scheduled. If a medical emergency occurs, please prepare adequate documentation from the appropriate authorities.
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.
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.
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.
Exams are tentatively scheduled to be held in class on
In Class Exam #1
In Class Exam #2
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