Prof. Maurice Weinrobe
126 Jonas Clark Hall
Office Hours: M & TH, 3-4 pm
The following is from the catalogue. "Macroeconomics is one of the core elements of economics. The subject includes the study of the determinants and behavior of the aggregate economy, including income, employment and the price level. The economy is examined at a point in time (statics) as well as over time (dynamics)."
This catalogue description is a good map of the course. Everyone has their own emphasis in such a course, however, and I would offer the following addendum. We will be building a macroeconomic model of an advanced economy, one with a well developed financial sector, and investigating the influence of policies and other factors on the model's equilibrium. This is not a course about the U.S. economy, but the U.S. economy certainly fits the description of an advanced economy.
We will occasionally have reason to use data from public sources, including government agencies. I will mention the sources as we move along, but it is helpful to have some basic places for you to get information. An excellent site to begin from is the Clark Library Home Page. This provides links to various internet (or electronic) reference sources. Most, but not all, are found under the heading: Economic Data..
A site I find quite helpful for quick and current economic information about the U.S. is provided by the White House. It is The Economic Statistics Briefing Room.
It is possible to view the Economic Report of the President on line. Here is the site. The Economic Report of the President.
Finally, the publisher of your text, (Macroeconomics by O. Blanchard), Prentice-Hall, has a website for the book. which includes links to a very wide variety of economics related sites. Like so many sites, you have to play around a little to get a good sense of what is available. I found the "research links" to be particularly fruitful.
More references will be mentioned and added during the semester.
Grades are determined primarily by your performance on exams, but two other contributing factors are participation in class discussion and your work on homework assignments. We will have a single midterm exam and a comprehensive final. The exams will count for approximately 85 percent of the final grade with the midterm representing 35 percent and the final 50 percent. Scheduled exam dates are:
Midterm: March 4, 2004
Final: May 11, 2004 4 - 6 PM.
There is a single text for the course. It is Macroeconomics 3rd Ed., by O. Blanchard.
Because so much of macroeconomics is policy oriented I strongly encourage you to keep up on current economic news. The best source of financial/macro news remains the Wall Street Journal. It is available through the class at discounted subscription rates. (A print subscription also allows you to have an electronic subscription.)
Finally, a word about attendance. I do not keep a formal record of attendance. This should not be read to imply that I am indifferent to your attendance. You cannot participate in class if you are not there, and you cannot take advantage of the opportunity to address issues or questions of concern. I expect you to attend class.
Note: Reading assignments shown are in Blanchard. As mentioned above, additional material from public sources will be suggested throughout. The number of meetings is a rough guide to how much time will be spent on each topic. The date of the midterm is fixed. The coverage will depend on our rate of progress.
What is macroeconomics, what will be covered in this course, what is the current state of the economies of the world? (3 meetings)
Chapters 1, 2. You will have an assignment to collect data on a specific country.
II. The Core Model -- the short run.
As you have seen in other courses in economics, the equilibrium level of aggregate income is determined in the first instance by aggregate demand and aggregate supply. The core static model begins with the investigation and formulation of the determinants of aggregate demand. Very quickly one is forced to recognize the potential role of financial variables and financial markets. The culmination of the core static model is the integration of the so-called goods market and the financial or money market. This is done through a reformulation of aggregate equilibrium using the IS and LM functions. (5 meetings)
A. Basic model of aggregate demand. Chapter 3.
B. More complete static model (IS-LM). Chapters 4 & 5.
III. The labor market, inflation and macro equilibrium.
This is the "medium run" analysis. The basic model of part II is expanded to include the labor market, and then it is used to reanalyze unemployment and inflation. Those two variables are the focus of most macroeconomic policy. They are the political hot spots and the criteria on which politicians are evaluated. The basic model tends to be a static model, and analysis tends to be one of comparative statics. With the study of inflation one moves into dynamics. One could stop at this point and feel as if one had a satisfactory introduction to macroeconomics. (6 meetings)
A. The labor market. Chapter 6.
B. The complete static model (Aggregate demand and supply). Chapter 7.
C. Dynamics of the medium run: unemployment and inflation. Chapters 8 & 9.
Midterm Exam: March 4, 2004
IV. Economic growth -- the long run.
Keynes remarked that "in the long run we are all dead." True, but that does not mean economists should turn a blind eye to the subject of economic growth. Like corporate CEOs, politicians and voters tend to be focused on the short and medium run, but the long run determines much more about overall economic well being of the populace. We in the advanced countries of the world enjoy a standard of living that is appreciably greater than that of the developing countries. Why? How did we get here and how does an advanced country maintain its level of well being? (6 meetings.)
Chapters 10 - 13.
The subject of expectations has been one of the liveliest of the last twenty years. The simplest macro model has people acting as if there is very little that happened before and as if nothing will happen in the future. Of course that is silly. Is it possible to model expectations? If so, has does that change the basic model? (4 meetings.)
Chapters 14, 16 & 17.
VI. Macro Policy Revisited.
We will deal with these subjects as time permits. Macroeconomics exists because of the feasibility of macroeconomic policy. There are as many issues of policy as there are elements of macro theory. We will treat this subject briefly, not out of a lack of respect for it, but in admiration of its difficulty.
Chapters 24 - 26.