Economics 501.001
Macroeconomics
Spring 2009, Mondays 5:30-8:00 pm, Ward 2
Professor:
Telephone:
Office:
Office hours:
Email:
Ellen Meade
(202) 885-3997
Roper Hall 223
Mondays 4-5 pm, Wednesdays 2-3 pm, Fridays 2-4 pm
meade@american.edu
put “Econ 501” in the subject line
Teaching Assistant:
Office hours:
Seidu Dauda
Mondays 4:15-5:15 pm, Thursdays 4:15-5:15 & 5:30-6:30 pm
in Roper 121
Class website:
AU blackboard
Course Description
Economics 501 is a masters-level course on macroeconomic theory and policy. This course is
open to MA students and to advanced undergraduates who have met the requirements. The
required prerequisite courses are: intermediate-level, undergraduate macro theory (Econ
301 or 603 or the equivalent), and Introduction to Mathematical Economics (Econ 505)
which may be taken concurrently. Some background in statistics and econometrics is helpful,
but is not required. While it is expected that you know calculus, much of the material can
and will be covered without it.
Macroeconomics is the study of aggregate economic performance. This is a rigorous and
technically demanding course which focuses on the main theoretical models that
professional economists (both at universities and in the policy world) use to analyze
macroeconomic issues.
In addition to the study of pure theory, we will evaluate the application of the theory and
its ability to explain actual macroeconomic performance. For example, we will discuss the
impacts of the on-going housing/financial crisis, the effects of “shocks” to energy and food
prices, and the parallels between the current recession and the Great Depression.
Required readings
1.
Olivier Blanchard (2009), Macroeconomics, 5th edition, New Jersey: Pearson
Prentice Hall.
2.
Robert J. Shiller (2008), The Subprime Solution, Princeton: Princeton University
Press.
3.
Supplementary readings/articles posted in Blackboard.
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Assignments and Grading
Item
% of final
grade
Dates
4-5 Problem sets
10.0
Throughout the semester (see below)
Country project/paper
25.0
Details to follow soon; due April 27 (last class)
Midterm exam
30.0
March 2
Final exam
30.0
May 4, 5:30-8:00 pm
Class participation
5.0
Throughout the semester (see below)
Problem Sets
Problems will be assigned from the text about one week before the due date (and will be
posted in the “Assignments” area of the Blackboard site). You are permitted and encouraged
to work together on the problem sets. These problem sets are graded on the basis of
effort, and will be marked “plus” (100%), “minus” (60%), or “unacceptable” (0%). Late
problem sets will not be accepted. Answer keys will be posted in Blackboard.
Country project and paper
The initial research on the project will be undertaken in small teams of students. Each team
will give a short presentation (10 minutes) after spring break in order to get feedback from
the class. Each student will write his/her own paper (10-12 pages) that will be due on April
27th. The project will involve research on a particular country and its experience during a
macroeconomic and/or financial crisis. You will be given a list of countries/time periods from
which to choose. Additional details on the assignment will be distributed soon.
Exams
Note the dates for the midterm and final, and make sure to schedule your travel
accordingly.
Class participation
Part of your grade comes from class participation and includes attendance. Because this is a
graduate class and we will move very rapidly through the material, I expect you to attend all
classes. In addition, you will be expected to ask questions, participate generally in class
discussion, and, prepare some remarks on the assigned readings.
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Class policies
Make-up tests
(exams & quizzes)
Not given, except for absences caused by an unavoidable medical or
family situation that can be documented and verified.
AU’s Academic
Integrity Code
In effect at all times. No plagiarism, no submitting work that is not your
own, no violations of any kind. Violations will be prosecuted!
Ipods, computers,
cell phones, other
electronic devices
Not in use at ANY time during class. If a student is found in violation of
this rule, he or she will be asked to leave the class on that day.
Exceptions for the use of a computer during class will be made only upon
request of an academic advisor.
Blackboard
It is your responsibility to configure your email properly so that you can
receive email messages from Blackboard about this course.
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Course outline and schedule
Readings other than Blanchard and Shiller are found in the “Course Documents” area of the
Blackboard site. All readings are required. It is advisable to read through the assigned
materials prior to their discussion in class, and then to study them more carefully after the
class.
Chapters 1-6 of the Shiller book will be assigned during the semester.
I. Introduction & National Income Accounting (1 class)
Blanchard: Chapters 1 & 2 plus appendices, Appendix 1 at the end of the book
Charles I. Jones (2002), “Using Chain-Weighted NIPA Data,” FRBSF Economic Letter,
Number 22.
II. The Short Run: Business Cycle Fluctuations & the IS-LM Model (3 classes)
Blanchard: Chapters 3-5, 22
David Romer (2000), “Keynesian Macroeconomics without the LM Curve,” Journal of
Economic Perspectives 14, pp. 149-169. [A much longer version of this analysis entitled
“Short-Run Fluctuations” is available on the author’s web site:
http://elsa.berkeley.edu/~dromer/.]
Tao Wu (2004), “Understanding Deflation,” FRBSF Economic Letter, Number 8.
III. The Medium Run: Aggregate Supply & Demand, Inflation, & Unemployment (3 classes)
Blanchard: Chapters 6-9, 13-1 to 13-3
Laurence Ball and N. Gregory Mankiw (2002), “The NAIRU in Theory and Practice,” Journal
of Economic Perspectives 16, pp. 115-136.
Jayati Ghosh (2008), “Chasing Volatility” Frontline (India’s National Magazine), August 30September 12, http://www.frontlineonnet.com/fl2518/stories/20080912251808900.htm.
Gilles Saint-Paul (2004), “Why Are European Countries Diverging in their Unemployment
Experience?” Journal of Economic Perspectives 18, pp. 49-68.
IV. Expectations, the Federal Reserve, Hyperinflation, & Debt Dynamics (2 classes)
Blanchard: Chapters 14 (pp. 292-303), 17, 25, 23, 26
Ben S. Bernanke, Vincent R. Reinhart, and Brian P. Sack (2004), “Monetary Policy
Alternatives at the Zero Bound: An Empirical Assessment,” Brookings Papers on Economic
Activity 35, pp. 1-100 (read pages 1-24 only).
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Credit Suisse (2008), “Quant easing: What is it? How does it work? What does it mean?”
mimeo, December 2.
V. The Long Run: Economic Growth & the Solow Model (2 classes)
Blanchard: Chapters 10-12
Christopher Crowe and Ellen Meade (2007), “Central Bank Governance: What Is It and Does
It Matter?” Journal of Economic Perspectives 21, pp. 69-90.
Rafael Di Tella and Robert MacCulloch (2006), “Some Uses of Happiness Data in Economics,”
Journal of Economic Perspectives 20, pp. 25-46.
VI. Open Economy Macroeconomics (2 classes or whatever time we have left)
Blanchard: Chapters 18-20
“Chapter 6: The US Capital Account Surplus” (2006), Economic Report of the President,
Washington: US Government Printing Office.
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