Syllabus
Economics 514
Macroeconomic Analysis
David Cook
Office: 2346
Phone: 2358-7614
Fax: 2358 2084
Email: davcook@ust.hk
Home Page: http://home.ust.hk/~davcook/EC514.html
Course Description: Macroeconomics is the study of national (or regional)
economies in aggregate. In particular, we are concerned with the phenomenon
of long-term growth, business cycles and unemployment, inflation and
financial markets. This course will focus on both macroeconomic theory and
the analysis of macroeconomic data. Marginal analysis and optimization are
central elements of modern macroeconomic theory. This course will introduce
simple models which will be solved using optimization. Macroeconomics is
oriented toward explaining phenomena observed in aggregate and financial
market data. The course will also introduce some quantitative method used by
professional economists to analyze data.
Learning Outcomes This course is the principal basis of a M.Sc. learning
outcome: “Graduates will be able to use theories and knowledge from
macroeconomics to understand and explain economic and monetary policies,
trade, and economic growth,” and “Graduates will grasp mathematical methods
related to real analysis, static optimization, and dynamic optimization.” Note:
No real analysis will be used in this course.
Readings Parts of our main textbook, David Romer, Advanced Macroeconomics
3rd Edition. McGraw-Hill, 2006, touch on most of the main elements of the course.
We will use additional readings to supplement the work.
Course Requirements The grading will be based on 3 homework assignments and 3
exams. The exams will occur throughout the course and in the finals week. The dates
are as yet advisory and will be updated throughout.
Exam
Date
Grade
1
October 16th (advisory)
25%
2
November 15th
30%
3
TBA
30%
Theoretical Assignments
Empirical Assignments
As assigned
15%
Outline
A. Long-term Models
I.
Economic Growth (Topics include Production Functions, Growth Accounting,
Neo-Classical Growth Model, Endogenous Growth)
`
Reading List
ROMER (Chaps. 1 & 3)
Additional Readings
o Jones, C. I. “Introduction to Economic Growth”, Chapter 1-3
o De Long, J. B. “Macroeconomics” Chapter 4-5
o Williamson, S.D. “Macroeconomics” Chapter 8
o Branson, W. H. “Macroeconomic Theory and Policy,” Chapter 27.
II.
Structural Unemployment (Topics include Search, Efficiency Wages)
Reading List
ROMER (Chaps. 9)
Additional Readings
o Williamson, S.D. “Macroeconomics” Chapter 15
o Farmer, R.E.A. “Macroeconomics” Chapter 7
B. Medium-term Models
I.
Investment and Savings (Topics include the Rental cost of capital, q theory of
investment, cash flow effects on investment, Utility Maximization, Permanent
Income Hypothesis, Precautionary Savings, Current Account, ).
Reading List
ROMER (Chaps. 7 & 8)
Additional Readings
o Branson, W. H. “Macroeconomic Theory and Policy,” Chapter 12,13.
o Obstfeld, M., and Rogoff, K.S. Fundamentals of International
Macroeconomics
II.
Fiscal Policy (Topics include Tax Policy, Deficits, Social Pensions)
Reading List
ROMER (Chaps. 11)
Additional Readings
o Miles D. and Scott A. “Macroeconomics: Understanding the Wealth of
Nations,” Chapter 10, 11.
o Auerbach, A.J. and Kotlikoff, L.J. “Macroeconomics: An Integrated
Approach,” Chapter 7.
C. Short-term Models
I.
Inflation and Exchange Rates (Topics include Money Demand & Seignorage,
Hyper-inflation, Purchasing Power Parity & Real Exchange Rate
Appreciation, Real Interest Rate Parity)
Reading List
ROMER (Chaps. 10)
Additional Readings
o Branson, W. H. “Macroeconomic Theory and Policy,” Chapter 14.
o Sachs J.D. and Larrain, F.B. “Macroeconomics in the Global Economy,”
Chapter 8, 10, 11, 21.
o Krugman, P.R. and M. Obstfeld, “International Economics: Theory and
Policy,” Chapter 15.
II.
Monetary Policy (Topics include Business Cycles w/o LM Curve, Expected vs.
Unexpected Shocks to Money, Time Consistency, Monetary Policy Rules)
Reading List
ROMER (Chaps. 5,6,10)
Additional Readings
o Scarth, W.M. “Macroeconomics: An Introduction to Advanced
Methods” Chapter 6
o Romer D. “Keynesian Macroeconomics without the LM Curve” NBER
Working Paper.
Technical Supplements
I.
National Income Accounts
Reading List
Krugman, P.R. and M. Obstfeld, “International Economics: Theory and Policy,”
Chapter 12.
II.
Regression Analysis
Reading List
Ray, D. Development Economics, Appendix 2: Elementary Statistical Methods
III.
Elasticities
Reading List
Branson, W. H. “Macroeconomic Theory and Policy,” Chapter 19, Appendix.