PUBPOL 556 Macroeconomics
(3 credits) - Winter 2008
This course will teach students the basic tools of macroeconomics and apply
them to real world economic policy. The goals of the course are for students to
(a) understand how to evaluate macroeconomic conditions such as unemployment,
inflation, and growth (b) understand how monetary policy and fiscal policy can
be used to influence macroeconomic conditions (c) understand media accounts of
macroeconomic events. The course will cover a broad range of topics in
macroeconomic policy. Examples of issues to be discussed include the role of
fiscal and monetary policies in stabilizing the economy, the relationship
between inflation and unemployment, the role of government policy in promoting
long-term economic growth, monetary and fiscal policies in an open economy,
deficits and debt, and European Monetary Union. The course will be structured
around the tools (models) of macroeconomics, using primarily graphs, and occasionally
equations. However, motivation for these tools, and examples of their use will
always be taken from current and recent real-world macroeconomics events and
conditions.
SYLLABUS: Winter 2008
(NON-TEXTBOOK) READING ASSIGNMENTS* (WINTER 2008):
*Important Copyright Information: Single copies of each article below may be downloaded and printed for the reader's personal research and study only.
Class 1: Introduction
"Macro Economic Data," Federal Reserve Bank of Richmond . http://www.richmondfed.org/publications/economic_research/macro_economics/index.cfm
Abraham, K., "What We Don't Know Could Hurt Us: Some Reflections on the Measurement of Economic Activity," Journal of Economic Perspectives , volume 19, No. 3, Summer 2005, 3-18.
"Measuring Economies: Garbage In, Garbage Out", The Economist , May 27th 2004
"Measuring Inflation: Costs Of Living," The Economist , June 3rd 2004
"The Informal Economy: In the Shadows", The Economist , June 17, 2004
"GDP versus GNP: Measure for Measure", The Economist , October 14, 2004
"Measuring Economies: Grossly Distorted Picture", The Economist, February 9, 2006
"Recalculating China's GDP," The Economist, Dec 19, 2007
Class 2: The Macroeconomy in the Long Run I
"National Productivity Statistics," Economic Quarterly , Federal Reserve Bank of Richmond , iv. 84, Winter 1998, pp. 45-64. http://www.richmondfed.org/publications/economic_research/economic_quarterly/pdfs/winter1998/webb.pdf
"GDP Growth: Europe versus America", The Economist , Jun 17th 2004
"A Productivity Primer," The Economist , Nov 4th 2004
"Slow Road Ahead," The Economist, Oct 26 2006
Class 3: The Macroeconomy in the Long Run II
"Why Wages Do Not Fall in Recessions," The Economist , February 26, 2000
"Debating the Minimum Wage," The Economist , February 1, 2001
"The Reserve Army (Of Unemployment)," The Economist , Feb 12th 2004
"Why France's Unemployment is Proving so Intractable," The Economist, April 21, 2005
"Are 5.1m Americans Missing from the Unemployment Figures?" The Economist, July 28, 2005
"Trade's Victims: Helping the Losers from Globalisation," The Economist, January 18, 2007
"Japan's Labor Market," The Economist, November 29, 2007
Tille, C. and Yi, K.M.,"Curbing Unemployment in Europe: Are There Lessons From Ireland and the Netherlands ?" Current Issues in Economics and Finance , May 2001, v.7 no.5, pp 1-6. http://www.newyorkfed.org/research/current_issues/ci7-5.pdf
Saint-Paul, G. "Why are European Countries Diverging in their Unemployment Experience?", Journal of Economics Perspectives , V.18, 4, Fall 2004, 49-68.
Class 4: Money, Inflation and Interest Rates
"Heading For a Fall, By Fiat? Paper Money," The Economist , Feb 26th 2004
"Unnatural Causes of Debt," The Economist, Sep 14, 2006
Class 5: Central Banks and Monetary Policy
Romer, Christina and David Romer, "Choosing the Federal Reserve Chair: Lessons from History", Journal of Economic Perspectives , 18, 1, 129-162, Winter 2004.
"Monopoly Power over Money," The Economist , November 27, 1999
"E-Money Revisited", The Economist , July 22, 2000
"Central Banks in Concert," The Economist, December 13, 2007
U.S. Monetary Policy: Part 1: How Is The Fed Structured And What Are Its Policy Tools? January 16, 2004 FRBSF Economic Letter
U.S. Monetary Policy: Part 2: What Are The Goals Of U.S. Monetary Policy? January 23, 2004 FRBSF Economic Letter
U.S. Monetary Policy: Part 3: How Does Monetary Policy Affect The U.S. Economy? January 30, 2004 FRBSF Economic Letter
U.S. Monetary Policy: Part 4: How Does The Fed Decide The Appropriate Setting For The Policy Instrument? February 6, 2004 FRBSF Economic Letter
Class 6: The Open Economy
Higgins, M. and Klitgaard, T., "Viewing the Current Account Deficit as a Capital Inflow," Current Issues in Economics and Finance , Dec 1998, v.4 no.13, pp 1-6. http://www.newyorkfed.org/research/current_issues/ci4-13.pdf
Mann, C.,"Perspectives on the U.S. Current Account Deficit and Sustainability", Journal of Economic Perspective , 16, 3, Summer 2002, 131-152.
"PPP: Food for Thought," The Economist , May 27, 2004
"Wise Men at Ease and the US Current Account Deficit," The Economist, April 28, 2005
"Traffic Lights on the Blink? Global Economic Adjustment," The Economist, August 18, 2005
"McCurrencies," The Economist, July 5, 2007.
"An Old Chinese Myth," The Economist, January 3, 2008
Class 7: Short Run Economic Fluctuations
Class 8: The Role for Government I
"A Stimulating Debate: How Should Fiscal Policy Be Used to Support a Slumping Economy?" The Economist, October 25, 2001.
"US Imbalances: A Series of Fortunate Events," The Economist , November 25, 2004
"America's Economy: Aspirin not Morphine", The Economist, January 3, 2008
Class 9: The Role for Government II
Class 10: Policy Goals in the Short Run
DeLong, J. Bradford, "Keynesianism, Pennsylvania Avenue Style: Some Economic Consequences of the Employment Act of 1946," Journal of Economic Perspectives, vol.10, no.3, Summer 1996, pp. 41-53.
"Ideas and the World: Skidelsky on Keynes," The Economist , November 25, 2000
"Of Shocks and Horrors," The Economist , September 26, 2002
"Defining the R-Word," The Economist , September 26, 2002
"Weapons of Mass Distraction," The Economist , September 26, 2002
" Japan 's Lost Decade," The Economist , September 26, 2002
"New Policies for a New World ", The Economist , Sep 30th 2004
"After Hurricane Katrina," The Economist, September 1, 2005
Class 11: Inflation and Unemployment I
Espinosa-Vega, Marco A., and Russell, Steven, "History and Theory of the NAIRU: A Critical Review," Economic Review , Federal Reserve Bank of Atlanta , Second Quarter 1997, pp. 4-25. http://www.frbatlanta.org/publica/eco-rev/rev_abs/97er/q2/espinosa.pdf
"Up the Nairu Without a Paddle," The Economist , March 6, 1997
"A New Economy for the New World ", The Economist , September 25, 1999
"Seeking the Right Medicine: Japanese Deflation," The Economist , June 19th 2003
"Neutral Interest Rates: Aiming For a Happy Medium," The Economist , Dec 16th 2004
"The Phillips Curve: Fashionable Again," The Economist, Sep 28, 2006
"Sticky Prices," The Economist, Nov 9, 2006.
"Heroes of Zeros," The Economist, October 18, 2007.
Ball, L. and Mankiw, N.G., "The NAIRU in Theory and Practice," Journal of Economic Perspectives , 16, 4, Fall 2002, pp. 115-136.
Svensson, L. "Escaping from the Liquidity Trap and Deflation: The Foolproof Way and Others," Journal of Economic Perspectives , V.17, 4, Fall 2003, 145-166.
Class 12: Inflation and Unemployment II
Chang, Roberto, "Policy Credibility and the Design of Central Banks," Economic Review , Federal Reserve Bank of Atlanta , First Quarter 1998, pp.4-15. http://www.frbatlanta.org/publica/eco-rev/rev_abs/98er/q1/chang.pdf
"Policymaking on the FOMC: Transparency and Continuity", FRBSF Economic Letter , September 2005. http://www.frbsf.org/publications/economics/letter/2005/el2005-22.pdf
"On Target?" The Economist , August 30, 2001
"Coming in from the Cold", The Economist , September 25, 1999
"Central Banks: It's Not Always Good To Talk," The Economist , July 22nd 2004
"The Oracle Becomes Less Oracular," The Economist, Nov 30, 2006
"Talk is Expensive," The Economist, October 18, 2008
Appendix to chapter 14 (in Mankiw text).
Class 14: The Open Economy in the Short Run I
Class 15: The Open Economy in the Short Run II
"Fix or Float?"(Global Finance Survey, part 6)," The Economist , January 30, 1999
"Fix or Float?," The Economist , Sep 11, 2003
"Losing Faith in the Greenback," The Economist, Nov 29, 2007
Cavallo, M., "To Float or Not To Float? Exchange Rate Regimes and Shocks" FRBSF Economic Letter, January 7, 2005. http://www.frbsf.org/publications/economics/letter/2005/el2005-01.pdf
Class 16: European Union
Dominguez, Kathryn M.E., "The European Central Bank, the Euro, and Global Financial Markets," Journal of Economic Perspectives, 20, 4, Fall 2006, 67-88.
"Germany 's Euro Test," The Economist , June 12th 2003
"Europe: Growing Apart," The Economist , Sep 30th 2004
"European Union Enlargement," The Economist, April 28, 2005
"The Hare and the Tortoise," The Economist, September 24, 2005
Class 17: Economic Growth and Convergence I
"Rainy-Day Blues", The Economist , December 2, 2000
"A Saving Grace: Japanese Saving," The Economist , July 3rd 2003
"The Shift Away from Thrift," The Economist, April 7, 2005
"Pensions by Default," The Economist, August 25, 2005
"The Great Thrift Shift," The Economist, September 24, 2005
"Anatomy of Thrift," The Economist, September 24, 2005
"The Viagra Economy," The Economist, September 24, 2005
"The Frugal Giant," The Economist, September 24, 2005
"Reversal of Fortune," The Economist, September 24, 2005
"Rebalancing Act," The Economist, September 24, 2005
Class 18: Economic Growth and Convergence II
Solow, Robert M., "Perspectives on Growth Theory," Journal of Economic Perspectives, Winter 1994, vol. 8, no. 1, pp. 45-54.
Glaeser, E., La Porta, R., Lopez-de-Silanes, F., Shleifer, A., "Do Institutions Cause Growth?", NBER Working Paper #10568, 2004.
"Simulating the Century," The Economist , January 6, 2000
"Does Population Matter?" The Economist , December 5, 2002
"Lion Cubs on A Wire: Growth In Africa ," The Economist , Aug 14th 2003
"Education and Growth: Counting Heads," The Economist , Aug 26th 2004
Class 19: Deficits and Debt
Cavallo, M., "Understanding the Twin Deficits: New Approaches, New Results," FRBSF Economic Letter, 2005-16, July 22, 2005. http://www.frbsf.org/publications/economics/letter/2005/el2005-16.pdf
"Into the Valley Of Debt : Developing Countries," The Economist , Sep 25th 2003
"Government Debt: In The Long Run We Are All Broke," The Economist , Nov 20th 2003
"Japan 's Debt: Grey Hair, Red Ink, but Blue Skies?," The Economist , June 24th 2004
"Europe: Virtue Unrewarded," The Economist , Nov 18, 2004
"Forever Free," The Economist, September 24, 2005
"The Price of Priviledge," The Economist, September 24, 2005
Class 20: Stabilizations and Reform I
Whitt, Joseph A., Jr., "The Mexican Peso Crisis," Economic Review , Federal Reserve Bank of Atlanta, Jan/Feb 1996, pp. 1-20. http://www.frbatlanta.org/publica/eco-rev/rev_abs/96er/j_whi811.pdf
"Sick Patients, Warring Doctors," The Economist , September 18, 1999
"Roots of Development," The Economist , October 3, 2002
"Peso Crisis Ten Years On," The Economist , December 29, 2004
Class 21: Stabilization and Reform II
Rodrik, Dani, "Understanding Economic Policy Reform," Journal of Economic Literature , v. 34 no. 1, March 1996, pp. 9-41.
Fraga, Arminio, " Latin America Since the 1990s: Rising from the Sickbed?", Journal of Economic Perspectives , V.18, 2, 89-106, Spring 2004.
"Crises and Growth: No Pain, No Gain," The Economist , December 11, 2003
"Emerging Economies: Climbing Back," The Economist, January 19, 2006
Class 22: Stabilization and Reform III
Arslanalp, Serkan and Peter Blair Henry, "Debt Relief," Journal of Economic Perspectives , V.20, 1, Winter 2006, 207-220.
Easterly, William, "Growth Implosions and Debt Explosions: Do Growth Slowdowns Cause Public Debt Crises?", Contributions to Macroeconomics , Vol. 1, 2001.
Easterly, William, "Can Foreign Aid Buy Growth?", Journal of Economic Perspectives, V.17, 3, Summer 2003, 23-48.
"Development Piecemeal," The Economist , Aug 5th 2004
"To Give or Forgive," The Economist, June 16, 2005
Class 24: What We Know/What We Don't
Chari , V.V., and Patrick J. Kehoe, "Modern Macroeconomics in Practice: How Theory is Shaping Policy," Journal of Economic Perspectives , V.20, 4, 2-28.
Mankiw, N. Gregory, "The Macroeconomist as Scientist and Engineer," Journal of Economic Perspectives, V.20, 4, 29-46.
|
Problem Sets (Winter 2008) |
| Midterm Questions (exam in-class on February 19) |
| Problem Set #4 |
| Problem Set #5 |
| Final Exam Questions (exam in-class on April 15) |
COURSE GROUP PROJECT (Due April 3rd)
Introduction
The Classical Model
Unemployment
Money, Inflation and Interest Rates
Central Banks and Monetary Policy
The Open Economy
Short Run Economic Fluctuations
The Role for Government I
The Role for Government II
Policy Goals in the Short Run
Inflation and Unemployment I
Inflation and Unemployment II
The Open Economy in the Short Run I
The Open Economy in the Short Run II
European Union
Economic Growth and Convergence I
Economic Growth and Convergence II
Deficits and Debt
Stabilization and Reform I
Stabilization and Reform II
Examples of Course Group Projects from Fall 2005
"The Republic of Moldova: An Assessment of Macroeconomic Policies 1998-2001 and Recommendations" by Shannon Hill, Liana Mesropyan, and Chad West (ppt slides)
"Ireland: Trouble on the Horizon?" by Michael Delaney, Jeffrey Lee and Scott Schlimmer (ppt slides)
"Estonia: at the Crossroads," by Vivian Horn and Kirk Sanderson (ppt slides)
"New Zealand: A Macroeconomic Review," by Kyle Browning and Adrienne Fernandes (ppt slides)
"Vietnam: Mobilize the People to Sustain Boom," by Ayako Ariga and Chih Chia Lin (ppt slides)
"Tied up with a Black Velvet Band: Will Immigration and Foreign Investment Strangle Ireland's Economy?" (ppt slides)
Examples of Course Group Projects from Winter 2005
"The Debt: Australia's New Ball and Chain?" by Adrienne Hosek and Kate Pomper
"India: Long Term Growth and Rooms for Improvement" by Nam Nguyen, Joy Silvern and Ruifeng Fang
"A Chile in Transition: Stability brings Change" by Alex Rosaen, Neerav Shah and Elias Walsh (graphs)
"Philippines: The (Jaded) Pearl of East Asia" by Geronald Bell, Julian Davis and Rebecca Gordon
"China: A Short Run Macroeconomic Analysis" by Pierre Bull, Bum Jung Kim
Examples of Course Group Projects from Winter 2003
"Kenya: A Macroeconomic Analysis," by Gale Raj, Anna Stinchcomb and Amy Upston
"Canada: A Macroeconomic Study," by Jyarland Jones, (Davy) Lei Lin and Sharmilee Mohan
"Productivity Growth in China, 1961-1999" by Thomas Flores, Gil Krakowsky and Joel Simmons
Examples of Course Group Projects from Winter 2002:
"The Romanian Economy" by Sarah Borwick, Katie Johnson, Casey Robinson and Monica Tijerina
"Changing GEARs: South Africa and the Growth, Employment, and Redistribution Policy of 1996" by Tim Bucknell, Hannah Lee, Patty Skuster and Mary Thornton (appendix)
"Japan: Where Will You Go?" by Tsutomu Hayafuji, Mitsuru Ikeda and Hironori Yamada
"Dealing with the Slowdown: China Report" by Norikazu Ishii, Changbin Wang and Akihiro Obata
"Norway" by Philip Maxwell, Elizabeth Jablonski and Valenta Kabo
"Chile: A Macroeconomic Analysis" by Lee Moore, Jose Stevenson and Rico X
"Macroeconomic Policy Assessment of Ireland" by Hillary Mull, Jared Page and Laura Smith
Examples of Course Group Projects from Winter 2001:
"Botswana" by Heather Brownfield
and Lynn Watkins
"Status of Ireland’s
Macroeconomy" by Katherine Brady, Dana Hopings and Lyndsay Huot
Examples of Course Group Projects from Winter 2000:
"A Macro Analysis of the UK" by
David Levy and Brian Gormley
"What Economic Effect Does A Zero Interest Rate
Have? Analsysis of the Current Japanese
Monetary Policy" by Osumu Aruga, Aoi Suzuki, Mika Takezaki and Kiyoto
Yoshikoshi (tables, ISLM graph).
"The Spanish Economy: Recent Performance" by Kieh-Anh
King and Sarah Lyberg