Suresh Naidu [email protected] Office Hours: MW 11-12 place tba
Lecture Meets: MWF 10-11, 70 Evans
Sections Meet: MW 9-10, WF 8-9, 41 Evans
This is the syllabus for the first half of Economics 101b, Macroeconomics. It carries the course up until October 12. The syllabus for the second half will be distributed at the end of September. It will depend on (a) how well the class does in the month of September, and (b) what are currently "hot topics" in the economic news. The U.S. budget deficit, the looming possibility of a major U.S. dollar-financial crisis, the dilemmas of Federal Reserve policy, and the ongoing industrial revolutions in East and South Asia will certainly be on the second-half syllabus, but there will be other topics as well.
This is the go-faster and do-more version of macroeconomics--the study of the determination of output, production, income, employment, and prices in the economy as a whole. Four books are required:
- The intermediate macroeconomics textbook I am most comfortable with is the one that I and Marty Olney have written. DeLong and Olney (2005), Macroeconomics 2nd ed. (New York: McGraw-Hill/Irwin) http://www.amazon.com/exec/obidos/asin/0072877588. Here is our explanation of why we wrote it the way we did: http://www.j-bradford-delong.net/Teaching_Folder/manifesto.html
- The Economic Report of the President, available online at http://w3.access.gpo.gov/eop/. (You might also browse, for recent economic data, the CEA-JEC Economic Indicators http://www.access.gpo.gov/congress/eibrowse/broecind.html.
- Robert Heilbroner's The Worldly Philosophers (New York: Touchstone) http://www.amazon.com/exec/obidos/asin/068486214X/.
- Alan Blinder and Janet Yellen's (2001) The Fabulous Decade (New York: Century Foundation) http://www.amazon.com/exec/obidos/asin/0870784676.
If you want alternative takes at the subject matter, let me recommend two alternative textbooks: Greg Mankiw's Macroeconomics http://www.amazon.com/exec/obidos/ASIN/0716752379, and Olivier Blanchard's Macroeconomics http://www.amazon.com/exec/obidos/ASIN/0131860267/.
Since this is a go-faster do-more course, we will go faster and do more. As a group, the class will be made up of people comfortable using calculus, so we'll feel free to use it in lectures, handouts, and in problem sets (and on exams). If you aren't comfortable using calculus, you probably don't belong here and may well not have a good time...
We--Suresh Naidu and I are keenly aware that almost everybody signing up for this course could alternatively take and do very well in Economics 100b. We are anxious not to have students vote with their feet for an easier course and learn less because they fear the consequences of lowering their grade point average. Therefore this course will have a high curve: the idea is that nobody should get a lower grade than they would have gotten had they decided to take Economics 100b instead: Grades will be based on the following:
- 30% from a (short: two hours long) Final Exam to be given Tuesday December 13 8-11 AM
- 20% from a first Midterm Exam to be given Wednesday September 28. (This is really early to give a midterm. Nevertheless it is important to give a midterm exam early in the course to serve as a reality check: so that students in trouble can figure out how much trouble they are in, and also--more important--so that at least one of us (DeLong) can figure out how unrealistic and detached from reality his beliefs about his teaching effectiveness are.)
- 20% from a second Midterm Exam to be given November 13.
- 20% from Problem Sets and other assignments to be due at the start of section. Problem Sets will be graded either 0 points (didn't hand it in at start of section), 1 point (handed it in but didn't make an effort), and 2 points (made an effort--whether successful or not--to solve all the problems).
- 10% on section participation.
No makeup exams will be offered. Students who miss one of the three exams will have their scores for the other exams reweighted to add up to 70%. Students who miss two of the three exams should not expect to pass.
- DeLong and Olney (2005), Macroeconomics 2nd ed., chs. 1-3
- Heilbroner, The Worldly Philosophers, entire.
M Aug 29: Introduction to Course, and National Income Accounting
W Aug 31: The Index Number Problem, and Key Economic Variables F Sep 2: How Macroeconomists Think (problem set 1 issued)
Sections: erosion of Okun's Law Handout http://www.j-bradford-delong.net/movable_type/2003_archives/002121.html.
Long-Run Economic Growth
- DeLong and Olney (2005), Macroeconomics, chs. 4-5.
- Michael Kremer (1993), "Population Growth and Technological Change: One Million B.C. to 1990," Quarterly Journal of Economics 108:3 (Aug 1993), pp. 681-716. (Alternative link.)
W Sep 7: Patterns of Economic Growth and Divergence: Facts
F Sep 9: Theories of Economic Growth and Divergence: The Solow Model (problem set 2 issued/problem set 1 due)
Sections: only one section this week.
M Sep 12: Using the Solow Model
W Sep 14: Inadequacies of the Solow Model
F Sep 16: Extensions and Puzzles (problem set 3 issued/problem set 2 due)
Sections: Kremer (1993) QJE on the question was an industrial revolution inevitable?
If There Were No Business Cycles Proper
Readings: DeLong and Olney (2005), Macroeconomics, chs. 6-7.
M Sep 19: Components of Aggregate Demand: C, I, G, NX
W Sep 21: Flexible-Price Equilibrium
F Sep 23: Using the Flexible-Price Model (problem set 3 due/mock midterm handed out)
Sections: Go over problem set 2. Cover wealth in the consumption function; behavioral theories of consumption; cash flow and investment.
Monetary Economics When Prices Are Flexible
Readings: DeLong and Olney (2005), Macroeconomics, ch 8.
M Sep 26: The Quantity Theory of Money
W Sep 28: FIRST MIDTERM EXAM
Sections: one section only this week.
Business Cycles Proper
- DeLong and Olney (2005), Macroeconomics, chs. 9-12.
- Olivier Blanchard (1981), "Output, the Stock Market, and Interest Rates," American Economic Review 71:1 (March), pp. 132-43 http://links.jstor.org/sici?sici=0002-8282%28198103%2971%3A1%3C132%3AOTSMAI%3E2.0.CO%3B2-Q.
- J. Bradford DeLong (1997), "America's Peacetime Inflation," in Christina Romer and David Romer. eds., Reducing Inflation: Motivation and Strategy (Chicago: University of Chicago Press, 1997)http://www.j-bradford-delong.net/pdf_files/Peacetime_Inflation.pdf
- James Galbraith (1997), "Time to Ditch the NAIRU," Journal of Economic Perspectives Vol. 11, No. 1. (Winter), pp. 93-108 http://links.jstor.org/sici?sici=0895-3309%28199724%2911%3A1%3C93%3ATTDTN%3E2.0.CO%3B2-H.
- Joseph Stiglitz (1997), "Reflections on the Natural Rate Hypothesis," Journal of Economic Perspectives Vol. 11, No. 1. (Winter), pp. 1-8. http://links.jstor.org/sici?sici=0895-3309%28199724%2911%3A1%3C3%3AROTNRH%3E2.0.CO%3B2-C.
F Sep 30: Sticky Prices, Consumption, and the Multiplier (problem set 4 issued)
M Oct 3: Investment and the IS Curve
W Oct 5: Using the IS Curve to Understand the Economy
F Oct 7: Inflation and the Phillips Curve (problem set 5 issued/problem set 4 due)
Sections. Go over midterm. Cover Blanchard (1981).
M Oct 10: The Natural Rate of Unemployment and the Federal Reserve
W Oct 12: From the Short Run to the Long Run
F Oct 14: Understanding American Business Cycles Using the Phillips Curve/Monetary Policy framework (problem set 6 issued/problem set 5 due)
Sections: go over problem set 4, and supply shocks.