Macroeconomic Analysis
ECON 6022A Level I
Fall 2013
Sept 7, 2013
1
General Information
Instructor: Dr. Heng CHEN
Office: 915 KKL
Office Hours: Saturday 1:00-2:00pm and by appointment
Email: hengchen@hku.hk
Class Meeting: 2pm, Saturday
Teaching Assistant: Kenneth CHU (engitian@gmail.com); Office Hours: Saturday 11:00-12:00am
Textbook: Macroeconomics by Andrew B. Abel, Ben S. Bernanke, and Dean Courshore, 8th edition,
Perason Addison Wesley. (ABC)
Suggested Reference: Macroeconomics: Economic crisis update, Charles Jones. Norton.
Lecture Notes: Lecture notes for each class will be posted on the course website a few days prior to the
class.
Problem Sets and Tutorial: Problem sets are important part of the course and they are intended to help
students better understand the class materials. Some of the questions are taken from the main textbook
(ABC). Others are complimentary to the lectures. Students are encouraged to work in groups, but it
is necessary to turn in solutions individually. Occasionally, optional problems are assigned. They are on
average more challenging but not counted in students’ grades. However, students who are eager to gain
deeper understanding of the lectures should work on those questions.
2
Course Description
This course is an introduction to the study of macroeconomics at an intermediate level. Macroeconomics is
the study of the economy as a whole. And it is concerned with many exciting questions in economics: Why
some countries are so poor while others are rich? Why some countries grow and others stagnate? What
drives the booms and recessions? How do government policies affect aggregate output, unemployment and
inflation? It proves to be difficult to understand all these questions with one theory or within a single model.
1
4 COURSE INFORMATION
Macro-economists develop models to deepen the understanding from different angles. This course aims to
introduce students to basic workhorse models in each topic.
The course covers three broad topics in modern macroeconomics:
• Economics growth
• Business cycles
• Money and prices
If time allows, we will also cover a few selected topics, for example, international macroeconomics,
macroeconomics with inter-temporal approach and optimal polices, etc.
One of the main goals of this course is to help students understand real-world issues with economic theories
they learn from the course. Therefore, many articles from various sources are provided for each topic. They
are chosen based on the following criteria: they have to be relatively new; the priority is given to articles
on China or Hong Kong. Students are advised to read those articles. Some of the articles demonstrate how
economic theories are applied in the analysis of real-world issues. Others provide or describe interesting
economic phenomena, which can be analyzed with theories from the course.
3
Course Objectives and Learning Outcomes
3.1
Course objectives:
The course aims to
• equip students with modern macroeconomics knowledge;
• and help students develop skills and intuition for the analysis of the economy from the macroeconomics
perspective.
3.2
Learning outcomes:
By the end of the course, students should be able to
• process and analyze macroeconomic data;
• analyze real world macroeconomic issues with macro models;
• and provide critical analysis of macroeconomic policies.
4
Course Information
4.1
Prerequisites
• Students without any calculus background are required to take the math preparation course.
• Students are expected to be comfortable with math materials on “Math for Econ 6022 A”. This note
is posted on the course website.
2
4
4.2
COURSE INFORMATION
Assessment:
• Bi-weekly Problem Set, 20%
• Mid-term exam, 20%
• Final exam, 60%
4.3
Topics and Schedule
• Week 1 : Introduction and National Income Accounting
Lecture note 1 and 2; ABC 2;
– Krugman: “Stimulating Happiness” (March 14, 2011)
– Stiglitz : “GDP Fetishism” (September 7, 2009)
• Week 2 : Production Function and Labor Market
Lecture note 3; ABC 3;
– The Economist: “End of an experiment” (July 15, 2010)
– The Economist: “China’s tricky wage dynamics” (April 5, 2011)
– Valentina Romei: “Chinese wage inflation raises doubts over cheap labour” (April 5, 2011)
• Week 3 : Saving, Investment and Goods Market
Lecture note 4; ABC 4;
• Week 4 : Economic Growth
Lecture note 5; ABC 6;
– Alwyn Young, The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian
Growth Experience, The Quarterly Journal of Economics, Vol. 110, No. 3 (Aug., 1995), pp.
641-680
– Alwyn Young, Gold into Base Metals: Productivity Growth in the People’s Republic of China
during the Reform Period, The Journal of Political Economy, Vol. 111, No. 6 (December 2003),
pp. 1220-1261
– Paul Krugman, The Myth of Asia’s Miracle, Foreign Affairs; Nov/Dec 1994; Vol.73, Iss. 6; pg.
62, 17 pgs
– Paul Romer: “For Richer, For Poorer” (January 27, 2010)
– The Economist: “Is China approaching a growth slowdown?” (April 17, 2011)
– The Economist: “Imitate or Die” (November 8, 2007)
• Week 5 : Money and Prices
Lecture note 6; ABC 7;
– The Economist: “A Worthless Currency” (July 17, 2008)
– Geoffrey A. Fowler and Juying Qin: “QQ: China’s New Coin of the Realm?” (March 30, 2007)
3
4
COURSE INFORMATION
• Week 6 : Business cycle facts
Lecture note 7; ABC 8;
– Charles I. Plosser, Understanding Real Business Cycles, The Journal of Economic Perspectives,
Vol. 3, No. 3 (Summer, 1989), pp. 51-77
• Week 7 : In-class mid-term exam (October 20)
• Week 8 : IS-LM model/AD-AS model
Lecture note 8; ABC 9;
– Krugman: “A Note On Household Balance Sheets” (March 12, 2011)
– Bernanke: “Remarks: Asset-Price “Bubbles” and Monetary Policy” (October 15, 2002)
– Volcker, Paul: “How to Reform Our Financial System” (January 31, 2010)
– The Economist: “Hong Kong phew-whee” (March 3, 2010)
• Week 9 : IS-LM model/AD-AS model (cont’)
Lecture note 8; ABC 9;
– Mankiw: “The IS-LM Model” (MAY 30, 2006)
– Krugman: “There’s something about macro”
– Binyanmin Appelbaum: “Stimulus by Fed Is Disappointing, Economists Say” (April 24, 2011)
• Week 10 : Classical Analysis
Lecture note 9; ABC 10;
– Mulligan: “Stimulus and Private-Sector Hiring” (September 8, 2010)
– Stoddard: “Over a million immigrants land U.S. jobs in 2008-10” (Jan 20, 2011)
– Mulligan: “The Minimal Impact of the Stimulus” (March 2, 2011)
– Rampell: “Your Friends Are Making You Fat and Lazy” (November 9, 2010)
– Poutvaara, Panu, Priks, Mikael, (2006), Hooliganism in the Shadow of the 9/11 Terrorist Attack
and the Tsunami: Do Police Reduce Group Violence? HECER Discussion Paper No. 134
• Week 11 : Keynesian Analysis
Lecture note 10; ABC 11;
– N. Gregory Mankiw: “It May Be Time for the Fed to Go Negative” (April 18, 2009)
– Robert J. Shiller: “Animal Spirits Depend on Trust” (January 27, 2009)
– Krugman: How Much Of The World Is In a Liquidity Trap? (March 17, 2010)
– Krugman: The humbling of the Fed (September 22, 2008)
• Week 12 : Selected Topics
Lecture note 11;
– The Economist: “Hong Kong too-y” (March 7, 2011)
4
5
CLASS CONDUCT
– Yang, Dennis Tao, Zhang, Junsen, Zhou, Shaojie: “Why are Saving Rates so High in China?”
(February 23, 2011)
– Song, Zheng, Storesletten, Kjetil, Zilibotti, Fabrizio: “The “real” causes of China’s trade surplus”
(May 2, 2010)
– Song Zheng and Yang Dennis, (2010): Life Cycle Earnings and Saving in a Fast-Growing Economy,
Working Paper
– Wei, Shang-Jin: “The mystery of Chinese savings” (February 6, 2010)
5
Class Conduct
• Cheating in exams is not allowed. Students found cheating will be punished.
• Please be on time when coming to class.
• Please turn off mobile phones and any devices that would cause disturbance to others.
5