Edward McPhail Economics-112
Fall 2006 MTh 1:30-2:45
Dana 101 3:00-4:15
Introduction to Macroeconomics
For many of you, Econ-112 will be your first and last course in macroeconomics. During this time, with some effort on your part (and mine), you can come to know the rudiments of macroeconomic analysis and, more importantly, acquire the ability to use these principles as informed participating citizens. Since human behavior does not follow simple, mechanical rules, Macroeconomics is, in many ways, even more complex and baffling than physical phenomena. Predicting the weather is easier than predicting GDP from one quarter to the next. Like the "harder" sciences, economics relies on mathematics to ensure the internal consistency of models and, like the "softer" social sciences, story telling (hopefully truthful) plays an important role. A well thought out parable can convey economic intuition unlike any mathematical model. As you will see in this class the most successful theories are, time and again, those with a simple but intuitive metaphor. The following quote gives us one economist's view about the relative difficulty of economics.
An Indian-born economist once explained his personal theory of reincarnation to his graduate economics class. "If you are a good economist, a virtuous economist," he said, "you are reborn as a physicist. But if you are an evil, wicked economist, you are reborn as a sociologist." [1]
Peddling Prosperity p. xi
One of the most influential economists of this century, John Maynard Keynes, put it this way: "The theory of economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique of thinking which helps its possessor to draw correct conclusions."
In this course we will pay particular attention to the impact that economic ideas have on policy and the lives of those who are affected by those policies. Economic ideas have consequences. As Keynes put it
| The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, in distilling their frenzy from some academic scribbler of a few years back . . . soon or late, it is ideas, not vested interests, which are dangerous for good or evil. |
John
Maynard Keynes The General Theory
of Employment,Interest, and
Money pp. 383-384 |
Office Hours
Edward McPhail, Landis House #10
Office Phone: 245-1264 (message)
Hours: MTh 4:30 Ð 5:30 & by appointment.
email: mcphail@dickinson.edu
Home page: www.edwardmcphail.com
Class Lectures
In class I will use a variety of different tools: overhead projector, computer presentations, handouts, and the ye olde trusty blackboard. I will experiment with a variety of methods of presenting the material to see what works best and what does not. Your input will play an integral role in this matter. Helpful suggestions and constructive criticism are always welcome.
The course home page is located at www.edwardmcphail.com. Right now the page is under construction. Over the course of the semester I will make class material available to you on the home page. Any posted excerpts from class lectures are intended to improve the quality of your notes. They are not substitutes for attending class and taking your own notes.
Attendance
Although I will not take attendance on a regular basis, I will note, from time to time, whether or not you show up for class. When final grades are tabulated, class attendance and participation will play a role in determining the course grade for those students with a borderline grade. I do not advise skipping class. Lectures play a fundamental role in this class and although I may post excerpts from the lectures on the web, they are no substitute for the real thing.
Texts
The textbook is Macroeconomics by Krugman and Wells.
Worksheets
Over the course of the session I will hand out worksheets that will help you prepare for the exams. Your task, if you choose to accept it, is to answer all of the worksheet questions and to hand them in on time. Late worksheets will not be accepted. Worksheets make up 1/6 of your final grade.
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 to real world events and to familiarize yourself with electronic media. During the course of the semester I will suggest possible topics and you are free to suggest your own. I must approve whatever topic you choose. Your presentation will make up 1/6 of your final grade.
Course Grades
Grading will be based on homework assignments, two in class exams, a class presentation and a cumulative final exam. Exams will cover material from the lectures, the text, problem sets, and any class handouts (columns, newspaper clippings, on line material etc.). The first test, the second test, the worksheets, and class presentations count 100 points each. The final examination counts 200 points. This is a total of 600 points.
Exams are tentatively scheduled to be held in class on
| Section |
In Class Exam #1 |
In Class Exam #2 |
Final Exam |
| 1:30 PM MTh |
Monday October 2 |
Thursday November 16 |
Friday, December 15 2:00 PM |
| 3:00PM MTh |
Monday October 2 |
Thursday November 16 |
There are 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 and review of microeconomics (supply and demand)
chapters 1-3 Macroeconomics
2. Measuring economic activity
chapters 6 and 7 Macroeconomics
3. Supply and demand in the labor market
pp. 368-377 Macroeconomics
4. Supply and demand in the loanable funds market
chapter 9 Macroeconomics
5. Aggregate supply and aggregate demand for goods and services: Classical and Keynesian foundations of aggregate supply and aggregate demand.
chapters 10 and 11 Macroeconomics
6. Fiscal policy
chapter 12 Macroeconomics
7. Money and the banking system
chapter 13 Macroeconomics
8. Monetary Policy
chapter 14 Macroeconomics
9. The unemployment-inflation tradeoff and expectations - the Phillips Curve
pp. 378-389 and chapter 16 Macroeconomics
10. Stabilization policy
class notes Macroeconomics
11. Economic growth
chapter 8 Macroeconomics
12. The Great Depression and recent U.S. economic history
pp. 142-144, 237-239,418-420, 245-246 Macroeconomics
13. Models of the Business Cycle
class notes Macroeconomics
14. Macroeconomic Policy Challenges
chapter 16 Macroeconomics
15. International trade
chapter 18 Macroeconomics
16. International finance
chapter 19 Macroeconomics
| Section |
Final Exam |
| 1:30 PM MTh |
Friday, December 15 2:00 PM |
| 3:00PM MTh |
[1] By this, he does not mean that sociology is useless or boring. Rather, I take it that he means that sociology is even more difficult than economics. The greater difficulty of conducting crucial experiments and quantifying phenomena, two hallmarks of the "harder" sciences, make sociology even more challenging than economics.