EC1B3 Macroeconomics I Syllabus
Lecturer
Dr. Antonio Mele
Department of Economics, LSE
Email: A.Mele1@lse.ac.uk
Tel: 020 7107 5686
Room: SAL.4.29
Office Hours: Thursdays 2.30-3.30 PM in my office
Course Manager (for everything admin)
Mateusz Morais
Department of Economics, LSE
Email: M.P.Morais@lse.ac.uk
Office Hours: LSE LIFE (schedule to be confirmed)
Course Description
This course is an introduction to macroeconomic analysis. We will study how countries’
economic performance is determined in the long run. We will learn why we observe
economic growth and development in some countries but not in others. We will discuss
how the labour market works and how unemployment is determined. We will analyse how
the largest components of GDP, consumption and investment, are formed. We will also
cover the role of policy and how it affects the economy. In particular, we will look at fiscal
challenges in the long run. Emphasis will be given to concepts and tools used by
macroeconomists in the analysis of macroeconomic phenomena, with a specific attention to
quantitative methods. Being comfortable with mathematical manipulation of equations and
diagrams is crucial for performing well in this course.
Lectures
Lectures will be held in the Peacock Theatre on Mondays at 3 PM and Thursdays at 1 PM.
There is a Reading Week in week 6, during which we will not have lectures or classes.
Material
The material for the course will be available on Moodle. We will upload the slides for the
lectures a few hours before the lecture (apart from the first one which will be a surprise!).
There will be a weekly problem set, which we will post on Moodle every Thursday at 2 PM
(i.e. after Thursday’s lecture). Readings for each week will be indicated on Moodle.
Communication and Moodle
We will communicate with you via announcements on the Moodle page. You will receive
notifications about these messages in your LSE email account. We will assume that you
have read these messages, and it is your responsibility to know what has been
communicated.
We will also assume that everything that is available on Moodle is known to you. Please
make sure you familiarise with all the sections on Moodle, and their content. There is often
important and crucial information there that if missed can create a lot of headaches for you.
Our Ed Discussion forum will also be helpful to you in case you have questions or want to
clarify some doubts. It also makes a lot of sense to be up to date with the discussions going
on in the forum, as very often the answers provided there will be helpful for most students.
Please be sure to access it regularly and read the provided answers.
Textbook(s)
Every week you will have some reading material. The readings are integral part of the
course, and you are expected to know the content of these readings even if not all the
details will be covered in the lectures.
Most of the reading material will be coming from one of these textbooks.
•
[CJ] Charles Jones, Macroeconomics, International Student Edition, W. W. Norton
Publishing, 5th edition or more recent editions
•
[GM] Gregory Mankiw, Macroeconomics, Worth, 10th edition or more recent
editions
•
[SW] Stephen Williamson, Macroeconomics, Pearson, 5th edition, or more recent
editions
Copies of these books are available online via the LSE Library website. There are also
several physical copies in the Library. You can consult the link above for more details.
When I will assign a reading from one of these books, I will use the bold code on the left.
For example, assigning a reading from the second book, I will write:
GM 22.3
Which means, read the paragraph 3 of chapter 22 of the second book (the one by Gregory
Mankiw).
Additional readings from other sources, either mandatory or optional, may be suggested
during the term. I will provide a digital copy (pdf) or a link, depending on the format.
A Typical Macro Week
What will happen in a standard Winter Term week for this course? More generally, how
should you approach the study of this course?
Tips for being successful in EC1B3
Let me answer the second question first. You will have lectures, readings, problem sets,
classes. At the end of the course you will sit an exam.
Each one of these components is important for your learning and has been designed to
provide both content and skills that you will need to acquire during this term.
It is crucial that you read the material assigned every week. Even better, it is important that
you read the material WHEN I suggest you read it, as this will make your attendance to
lectures and classes so much easier, and working on problem sets productive for your
learning.
Each problem set will ask you to apply concepts and tools presented in the lectures and in
the assigned reading material. You won’t be able to work on the problem set without
attending the lecture and reading the compulsory material. Please act accordingly.
It is important that you attempt to answer the questions posed in the problem sets. This is
the way in which you learn the content and the skills needed for macroeconomic analysis.
From our analysis of previous iterations of the course, the best indicator of good
performance in the course is the regular submission of problem sets.
Weekly schedule
Here is a breakdown of what you are supposed to do every week:
Monday Lecture (3 PM):
•
We will discuss the topic of the week, with examples and exercises.
•
The session will be recorded.
Monday to Thursday:
•
Read the material indicated on Moodle.
Thursday Lecture (1 PM):
•
We will discuss the topic of the week, with examples and exercises.
•
The session will be recorded.
Weekend:
•
Read the material indicated on Moodle.
•
Work on the problem set (to be submitted by Sunday at 6 PM on Moodle).
Sometime during the week:
•
You will have a class with your assigned class teacher. The class will cover the
content of the problem set. You should attend the class that has been assigned to
•
•
•
•
you. If you need to change your class, either temporarily of permanently, please
check how to do it on Moodle in the Course Information section.
You revise the solutions for problem set of the previous week which will be released
every week on Friday at 6 PM after all the classes have been completed
(optional) visit the Economics Support Lab at LSE LIFE in the library
(optional) ask questions on the Ed Discussion forum
(optional) go to Antonio’s office hours
Assessment
The final mark for EC1B3 has two components.
Coursework (10%)
The coursework mark has two components: Engagement and Mock Exam Questions.
Engagement mark (4%)
You will submit answers for the weekly problem set. Each week, a new problem set will be
posted on Thursday at 2 PM, with deadline Sunday at 6 PM. You will submit it via
Gradescope. There will be a total of 10 problem sets. If you submit 8 (or more) out of 10,
you will get full marks for these submissions.
Each submission will count for 5 marks out of a total of 40 marks available for this
part of the Coursework mark.
We are not looking for perfect answers here. We only want you to submit your best attempt
to answer the questions, and we will weekly check that your submission shows you have
put a reasonable effort in addressing the questions. We reward engagement rather than
correct answers. But of course it is in your interest to answer correctly if you can!
Mock Exam Questions (6%)
Two problem sets (PS3 and PS8) will be special, as they will be fully marked (with marks
assigned question by question by our team of class teachers) and we will be looking for
correct answers here. You will also receive feedback on the way you answer questions,
which will be helpful for your preparation before the exam.
Each one of these special problem sets will give a total of 30 marks, for a total of 60
marks assigned via Mock Exam Questions on the Coursework mark.
You will submit these special problem sets via Gradescope, but notice that in this case it
will be IMPORTANT that you identify in which page your answer is for each question. Not
doing so will make it impossible for us to mark your submission, and you will not
receive a mark for your work.
Notice: the submission of these special problem sets will also count for the Engagement
mark.
Exam (90%)
The exam will be held in Spring Term. The date will be communicated by the School in due
course. We will share a Mock Exam towards the end of the term to help with your
preparation. You can also consult the Past Exams section on the Library website to find old
EC1B3 exams.
Summarising:
Your final mark for EC1B3 will be calculated in the following way:
Final Mark = 0.1 × Coursework Mark + 0.9 × Exam Mark
where
Coursework Mark = min{(N. Submitted PS) × 5,
40} + Mark PS3 out of 30
+ Mark PS8 out of 30
Weekly plan
The following is a more detailed description of the topics we aim to discuss each week.
EC1B3 Topics
1.
Introduction to Macroeconomics.
–
2.
We will start with an unorthodox discussion of what macroeconomics is
about, what kind of questions macroeconomists are interested in, and how
macroeconomists think
–
We will also introduce some macroeconomic data: what do we measure and
how? How we can get insights from aggregate data?
The economy in the long run (I)
–
3.
We will look at what happens to economies in the long run, over decades
rather than months or years. Do they grow? Why some countries are poor
and others are rich? What determines economic growth?
–
Starting from data, we will highlight several important facts related to
economic growth
–
We will then begin analysing a theoretical model that has been used to think
about economic growth: the Solow growth model.
The economy in the long run (II)
–
4.
We will continue exploring the Solow growth model, and use it to try to
explain some of the facts about economic growth
–
We will reach the conclusion that the Solow growth model is mute on the
main determinant of growth, i.e. sustained and prolonged growth of
productivity
The economy in the long run (III)
–
–
5.
We will try to understand the determinant of productivity growth.
Human capital, innovation, and the likes: what makes advanced economies
grow?
The economy in the long run (IV)
6.
–
Continuation of previous week
–
Policy for growth and development
Reading Week (no lectures nor classes)
7.
Unemployment
–
8.
We will define the main variables in the labour markets, and look at data
about unemployment, employment, and other aspects of the labour markets
–
We will study how labour markets work, and how they interact with labour
market institutions to determine the unemployment rate
Consumption and savings
–
9.
How individual decisions about consumption and savings are related to
aggregate consumption, the largest component of aggregate expenditure? We
will look at the data and then at several theories about consumption.
–
We will briefly discuss how financial markets have an effect on these
decisions
–
We will discuss consequences for fiscal policy
Investment
–
Investment in macroeconomics refers to new plants, equipment and
machines that become productive in the future. The concept is therefore
different from the standard financial definition of investment.
–
We will analyse firms’ investment decisions and how they determine
aggregate investment
–
We will explore the relation between financial markets and productive
capital
10. Fiscal policy and government debt sustainability (I)
–
We will start thinking about the fiscal policy and the government budget
constraint in a long run perspective
–
We will discuss the main determinants of the fiscal budget, and think about
how demographic trends affects the fiscal constraints via pension systems,
healthcare systems, etc.
–
We will look at the main determinants of government debt over time, and
introduce scenario analysis as a tool for making reasonable predictions about
it.
11. Fiscal policy and government debt sustainability (II)
–
We will discuss different types of pension systems and the consequences for
government budgets and debt accumulation over time
–
–
We will also present recent cases of excessive government debt accumulation
that lead to crisis (Eurozone crisis, etc.)
We will speculate on how current and recent events may affect government
debt sustainability in the next few decades.
SUMMER TERM
1.
Revision week
Support
The EC1B3 Team will mainly provide support via the ED Discussion Forum and the
Economics Support Labs in the library.
ED Discussion forum
The ED Discussion forum will be the main source of support for this course. I strongly
recommend you post all your questions on ED Discussion. I have instructed the class
teachers to not respond to questions related to the course via email. Remember that you
can ask questions anonymously on ED Discussion, and we encourage you to do so if you
prefer.
Economics Support Labs
The EC1B3 Team will also be available at LSE LIFE in the library during the week. You can
go in set days and time and ask questions to class teachers in person. We will announce
more details later. This support will start in week 3.