Macroeconomics
Economics 515
Fri 3:45-5:15, 5:30-7:00
Sat 12:15-1:45, 2:00-3:30
May, June 2014
Rawls 2058
Purdue University
Krannert School of Management
Department of Economics
Co-Professor
Co-Professor
Matthew Hoelle
E-mail:
Office:
mhoelle@purdue.edu
KCTR 226
Kevin Mumford
E-mail:
Office:
mumford@purdue.edu
Rawls 4026
Prerequisites
None (though intuition from previous coursework in Microeconomics might be useful)
Course description
The course will cover both quantitative macroeconomics and macroeconomic
policymaking. The first provides students with the understanding about how
macroeconomic data is collected and analyzed. The second provides students with
examples of the current models used by economists to make policy recommendations.
The goals of policymakers include (among other things): growth, employment, and
distributional equity. In order to achieve these goals, policymakers must understand how
the policies, combined with other institutional features present in the economy, affect the
macroeconomic variables. This requires a theory about how the decisions of consumers
and firms are affected by prices and policy, and how market prices respond to shocks.
For this reason, the course focuses on macroeconomic models that are micro-founded,
meaning that decisions are made at the household and firm level by households and firms
that solve constrained optimization problems.
This course covers models useful in explaining the recent global financial crisis of 20072008.
Learning outcomes
 Analyze macroeconomic data.
 Understand the mechanisms in the economy using macroeconomic models that
are micro-founded.
 From predictions about the causes of the recent global financial crisis and the
potential causes of future crises.
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Course websites
The Katalyst site will contain (i) all course files, (ii) 1 course quiz, (iii) course grades,
and (iv) a link to the Sharepoint site.
The Sharepoint site will contain (i) all course files (organized chronologically) and (ii) all
course videos.
A previous version of the syllabus listed the course text as Economics: A Survey (Barron,
Blanchard, and Lynch). We will not use this text in this course. The text is a useful
reference for some of the topics that will be covered. However, all material for this
course will be provided on the course websites.
Course structure
The courses consists of 3 sessions, taking place in 2-day windows on three different
weekends.
May 23, 24
Taught by Kevin Mumford
Topics:
1. Macroeconomic accounting
a. national accounts
b. savings and wealth
c. interest rates
d. government debt
2. Macroeconomic models
a. productivity, output, and employment
b. consumption, savings, and investment
c. Solow growth model
Materials: May 23 slides, May 24 slides, Interim Exam (2013 course)
June 6, 7
Prepared by Matthew Hoelle, taught by a computer
Quiz 1: 30 minute quiz beginning at 3:45 pm on June 6
Online material on Macroeconomic Accounting
1. Product markets
a. Background
b. Measurement example
c. Data analysis
2. Price indices: Data analysis
3. Labor markets: Data analysis
4. Bond markets
a. Background
b. Measurement example
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c. Data analysis
5. Stock markets: Data analysis
Homework 1 will contain 2 questions from Product markets (1 on measurement
and 1 on data analysis), 1 question from Price indices (on data analysis), 1
question from labor markets (on data analysis), 2 questions from Bond markets (1
on measurement and 1 on data analysis), and 1 question from Stock markets (1 on
data analysis).
Materials: Quiz 1 (available in Katalyst), Homework 1 questions, Macroeconomic
Accounting notes, online videos (available in Sharepoint, 3 on Product markets, 1
on Price indices, 1 on Labor markets, 3 on Bond markets, and 1 on Stock markets)
June 20, 21
Taught by Matthew Hoelle
Homework 1: Due by 3:45 PM on June 20
Lecture 1: Real Business Cycle Models
Lecture 2: New Keynesian Models
Lecture 3: Leverage Cycle Models
Lecture 4: Challenges and Future Crises
Quiz 2: 30 minute quiz beginning at 3:00 pm on June 21
Materials: Real Business Cycle Models slides, New Keynesian Models slides,
Leverage Cycle Models slides
Methodology
The course will be based on a series of lectures and online videos. The course material is
reinforced by:
1) Quiz 1
Quiz 1 will take place at the beginning of the session on June 6 (the
session begins at 3:45 pm).
Quiz 1 will be a multiple-choice examination containing 10 questions.
Students are permitted 30 minutes to complete the quiz.
Questions will be similar to (i) the 10 questions from the Multiple Choice
section of the 2013 Interim Exam, (ii) Question 1 from the Short Answer
section of the 2013 Interim Exam, and (iii) Questions 2, 3, and 5 (no
demand curve graph for Question 5) from the Problems section of the
2013 Interim Exam.
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2) Homework 1
The questions from Homework 1 can be answered by watching the videos
assigned for the classes on June 6, 7.
Students are encouraged to work in their assigned study groups, but each
individual must submit his/her own homework solutions.
Homework 1 must be submitted at the beginning of the session on June 20
(the session begins at 3:45 pm).
Homework 1 will contain 2 questions from Product markets (1 on
measurement and 1 on data analysis), 1 question from Price indices (on
data analysis), 1 question from labor markets (on data analysis), 2
questions from Bond markets (1 on measurement and 1 on data analysis),
and 1 question from Stock markets (1 on data analysis).
3) Quiz 2
Quiz 2 will take place at the end of the session on June 21 (the session
ends at 3:30 pm).
Quiz 2 will be a multiple-choice examination containing 10 questions.
Students are permitted 30 minutes to complete the quiz.
The questions will cover the material presented on June 20, 21. The
presentation slides will be made available.
Assessment
Quiz 1
Homework 1
Quiz 2
1/3
1/3
1/3
NB: Given the online nature of the classes on June 6, 7 (Quiz 1 is an online quiz and the
material to complete Homework 1 will only be available online), please let me know if
you have a work or personal conflict with the meeting times on these dates. If such a
conflict exists, you will be permitted to complete the work online.
The huge advantage of completing Homework 1 on campus on June 6, 7 is that
individuals are permitted to work with their assigned study groups to answer the
questions.
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