2002/03
Teaching staff
Prerequisite
Module aims
Learning objectives
Delivery mechanisms
Student workload
Summative assessment
Formative assessment
Assessment criteria
Communication
DUO
Obtaining help
Module syllabus
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NB This handbook is intended for the guidance of students taking this module in 2002/2003.
Whilst the details contained in this handbook represent teaching staff intentions at the time of writing, it is in the nature of higher education that some module information, such as syllabus, reading lists and assignments, may be subject to modifications during the teaching of a module.
Teaching staff reserve the right to make such changes in the matters covered by this publication and will endeavour to publicise any such changes as widely and as promptly as possible.
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2002/03
STAFF
MODULE LEADER:
OTHER TEACHING STAFF:
Dr Leslie J. Reinhorn
Tel: 0191 374 7285 (x7285)
E-mail: L.J.Reinhorn@durham.ac.uk
Dr Thomas I. Renström
Tel: 0191 374 7279 (x7279)
E-mail: T.I.Renstrom@durham.ac.uk
Economic Principles I: Macroeconomics
The module seeks to:
 develop your knowledge and analytical skills in advanced macroeconomic theory, by building on the second-year macroeconomics module;
 provide you with the opportunity to participate in student-centred learning drawing on recent research;
 offer you the opportunity to develop some key skills.
At the conclusion of the module you should:
 be able to understand research contributions in macroeconomics (journal publications)
 be able to solve macroeconomic problems at an advanced level
 have had the opportunity to formulate your own research questions
In addition, you will have had the opportunity to develop the following key skills:

Written communication - e.g. through formative assignments and summative assessment.

Interpersonal communication - e.g. by using e-mail to communicate with other students and class leaders; discussing prepared material in classes with both the class leader and other students in the group.

Oral presentation - e.g. by explaining the answers to class questions to other students and the class leader; in general, by actively participating in discussion during classes.

Planning, organisation and time management - e.g. by preparing for classes; observing the strict assignment deadlines; downloading before the relevant lectures any OHPs from DUO; revising relevant material before lectures; preparing for examinations.

Problem solving and analysis - e.g. by applying the necessary analytical and quantitative skills, as well as the ability to manipulate concepts in macroeconomics, in answering class questions and undertaking assessed work.

Initiative - e.g. by searching relevant literature and information in preparation of the formative assignment and student-centred learning.
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
Computer literacy and information retrieval - e.g. by word-processing the formative assignment; accessing, and downloading teaching material from DUO; using e-mail to communicate with the class leader and other students; undertaking bibliographical search and information retrieval for student-centred learning.
The module is delivered by a mixture of lectures, tutorials, and student-centred learning as follows:
Lectures
Number
22
Tutorials* 8
Student-centred learning 4
Frequency
1 per week
Duration
1 hour
4 in term 1 & 4 in term 2 1 hour
4 in 2nd term 1 hour
* Tutorials, of which there are 8 throughout the year, provide a structured programme of work designed to reinforce knowledge and encourage independent study. The problem sets for these will be posted on DUO in advance. All students are expected to prepare answers to all problems for each tutorial and to be prepared to participate fully in the discussion.
In addition to attending lectures and tutorials and undertaking preparation for tutorials and formative assignments, you are expected to undertake independent reading and learning. This module is one of six you take during the year and you should therefore devote approximately one-sixth of your (fulltime) working week to teaching and learning for this module. Obviously, there will be some weeks in which you devote more time to one module and less to others, but on average about one-sixth of your work time should be devoted to this module. As a guide, the University Teaching and Learning
Handbook defines a single undergraduate module as a study unit comprising 200 hours of Student
Learning Activity Time (SLAT) per annum. The SLAT hours include all learning activity such as lectures, tutorials, essay writing, private study, etc.
The module is assessed by means of an exam in May/June. Details of the format are shown in the final honours handbook (see the section ‘Assessment of Performance’) and on the exams noticeboard. The final honours handbook also contains information on how we mark, including grade descriptors.
The main aim of the formative assessment is to help you, in a structured way, to understand the material and its applications, consolidate your knowledge and further develop relevant skills.
Students will undertake one formative assignment during the year. This will be an assignment corresponding to 1500 words to be submitted no later than 12 noon on the relevant date which will be posted on DUO. Details of the assignment will also be posted on DUO.
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Performance in the formative and summative assessments for the module is judged against the following criteria:

Knowledge of relevant concepts and issues

Depth of understanding and extent of critical evaluation (including evidence of wider reading)

Evidence of appropriate analysis

Ability to synthesise relevant material from a range of sources

Structure and clarity of presentation.
Staff will communicate with you via announcements in lectures and classes, notices on the notice boards, e-mails, the internal post and the announcement board on DUO. You should check your e-mail and notice boards in the Department regularly, possibly once a day. You should also check regularly the module entry on DUO, where lecture material will be available before each lecture. If you need to meet teaching staff during term time, simply go to their offices during the Student Consultation Hours posted on their office doors and on DUO, when an appointment is not needed. If you cannot do so because of timetable constraints, or because it is an urgent matter, you can arrange to see staff outside their consultation hours. The most effective way to arrange a meeting is by e-mail; alternatively, you can use the telephone or the internal post, or briefly talk to staff after lectures and classes, keeping however in mind that they may have to rush to another teaching session.
If you wish to communicate with fellow students on matters relating to the module, you may ask your lecturer/tutor to make an announcement at the beginning/end of a lecture or class. Alternatively, you may send group e-mails via DUO, or individual e-mails.
The following material will be posted on DUO:

A copy of this handbook

Lecture notes (preferably to be viewed prior to the topic being covered in the lecture)

Problem sets for classes

Formative assessment details

Timetable changes

Additional references

Web links

Other announcements
You should consult the module entry on DUO at least every 3 days.
You should always feel welcome to talk to staff whenever you wish to discuss any aspect of the module. Please keep in touch with us. A small misunderstanding can turn into a big problem if it is not dealt with in a timely manner. We shall be pleased to help you achieve your educational objectives for this module.
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The first port of call for any queries relating to your understanding of the material and study skills should be your module’s tutor. You should however feel free to get in touch with any of the relevant lecturing staff, especially for queries relating to the module's outline, lecture material and readings.
The ultimate responsibility for the success of the module rests with the module leader, who is happy to discuss any aspect of the module with you and welcomes comments and suggestions on how to improve the module at any time during the year.
The following pages give details of topics covered by the module. Further information will be provided on DUO as the module progresses. It should be noted that each topic does not necessarily correspond to a single lecture. Lectures will cover topics selected from 1-9, while topic 10 is based on student-centred learning.
Main references

Blanchard, O.J., and S. Fischer (1989), Lectures on Macroeconomics , MIT Press.

Ljungquist, L., and T.J. Sargent (2000), Recursive Macroeconomic Theory , MIT Press.
Other references

Aghion, P., and P. Howitt (1998), Endogenous Growth Theory , MIT Press.

Chow, G.C. (1997), Dynamic Economics , Oxford University Press.

Cooley, T.F. (1995), Frontiers of Business Cycle Research , Princeton University Press.

Romer, D. (2001), Advanced Macroeconomics , McGraw-Hill.

Sargent, T.J. (1987), Dynamic Macroeconomic Theory , Harvard University Press.

Stokey, N.L., and R.E. Lucas, with E.C. Prescott (1989), Recursive Methods in Economic Dynamics ,
Harvard University Press.

Turnovsky, S.J. (1996), Methods of Macroeconomic Dynamics , MIT Press.
You are expected to study on more than one textbook and supplement textbook material with additional
2.
1.
(i) readings. In addition, notes relating to some of the topics will be placed on the module’s web site for your use. Additional references will be provided during the year. You should also undertake your own search for additional relevant literature and follow up relevant references contained in the literature identified below.
Continuous-Time Growth Models
The Planner’s Problem
Blanchard and Fischer, Ch. 2.1.
Romer, Ch. 2.1-2.6.
(ii) Recursive Competitive Equilibrium and Welfare Properties
Blanchard and Fischer, Ch. 2.2
Turnovsky, Ch. 9.1-9.2
Policy in Continuous-Time Growth Models
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(i)
(ii)
(iii)
The First Best
Blanchard and Fischer, Ch. 2.3.
Romer, Ch. 2.7.
Turnovsky, Ch. 9.3-9.7.
Second-Best Tax Policy
Blanchard and Fischer Ch. 2.3.
Turnovsky, Ch. 11.9.
The Time-Inconsistency Problem
Turnovsky, Ch. 11.10.
Discrete-Time Growth Models
Discrete-Time Hamiltonian
Chow, Chs. 1-2.
4.
(i)
3.
(i)
(ii)
(ii)
Discrete-Time Dynamic Programming and Relation to Computing Algorithms
Ljungqvist and Sargent Chs. 2-3.
Overlapping-Generations Models
The Golden Rule, Competitive Equilibrium and Welfare Properties
Blanchard and Fischer, Ch. 3.1.
Ljungqvist and Sargent Ch. 8.
Romer, Ch. 2.8-2.11.
Government Policy: First-Best
Blanchard and Fischer, Ch. 3.2.
Romer, Ch. 2.12.
Government Policy: Second-Best and Time-Inconsistency
5.
(i)
(iii)
(ii)
(iii)
Endogenous Growth
AK-models and Government Policy
Aghion and Howitt, Chs. 1and 5.
Ljungqvist and Sargent, Ch. 11.
Turnovsky, Ch. 13.
Human Capital Accumulation and Government Policy
Aghion and Howitt, Ch. 10.
Research and Government Policy
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9.
(i)
(ii)
8.
(i)
(ii)
6.
(i)
(ii)
(iii)
7.
(i)
(ii)
(iii)
10.
Aghion and Howitt, Chs. 6-7.
Romer, Ch. 3.
Stochastic Models
Recursive Competitive Equilibrium under Uncertainty and Welfare Properties
Ljungqvist and Sargent, Chs. 6-7.
Precautionary Savings
Ljungqvist and Sargent, Ch. 14
The Equity Premium
Ljungqvist and Sargent, Ch. 10.
Equilibrium Business Cycle Theory
Foundations and Welfare Properties
Blanchard and Fischer Ch. 7.
Cooley, Chs. 1-2,4-6.
Romer, Ch. 4.
Government Policy
Cooley, Ch. 12.
Models with Money
Overlapping-Generations Models
Blanchard and Fischer, Ch. 4.1.
Cash-in-Advance Models
Blanchard and Fischer, Ch. 4.2.
Ljungqvist and Sargent, Ch. 17.
Search Models
Ljungqvist and Sargent, Ch. 19.
Heterogeneous Agents
Aggregation
Cooley, Ch. 4.
Distribution
Cooley, Ch. 4.
Indivisible Labour in Dynamic Economies
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This topic is not formally covered by lectures, but is intended to help you to further develop skills of student-centred learning. In particular, having undertaken study on this topic, you should be able to:

Understand and evaluate arguments regarding indivisible labour within a dynamic macroeconomic framework

Be able to undertake bibliographical search and information retrieval to identify key papers

Be familiar with recent findings on the topic
In addition, you should be able to answer the following question which will be summatively assessed on the examination paper:
Discuss the role of indivisible labour supply in the theory of real (equilibrium) business cycles. What does the second-best tax policy look like, and to what extent does it differ from a model with divisible labour?
The answer to this question should provide evidence of wide awareness of the literature, critical evaluation and should demonstrate an understanding which goes beyond any material covered in lectures.
In order to achieve these objectives participating students will be allocated to groups and encouraged to investigate the topic in these groups. This process will take place as follows:
1.
Groups of 4-5 students will be identified by staff.
2.
Students should read an assigned journal article (reference be announced on DUO)
3.
Each group should then meet at an agreed time (meeting 1) and discuss that paper. In discussing this paper you should identify the main issues that relate to the above question. These should be written as a summary in bullet point form (maximum 500 words) and submitted to the group tutor, who will circulate the summary to all groups who have submitted a summary by the deadline.
4.
Students should work independently to undertake bibliographical and on-line searches to identify other key and recent papers. The group should then meet (meeting 2) and produce an agreed reading list for further research. This will be circulated through the tutor as in 3 above. In addition, groups may choose at this meeting to allocate specific papers to individuals for investigation.
5.
Students should then write summaries of the articles they have read and these summaries should be circulated to other students in the group and the tutor in advance of the third meeting.
6.
The group will then meet (meeting 3) to discuss the work to date, exchange ideas, identify difficulties and areas where help is needed from the tutor. A list of issues should be forwarded to the tutor.
7.
The tutor will arrange a meeting with all groups (meeting 4) to go through issues raised by students.
Details of meetings will be posted on DUO in the second term.
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