Economics 303: Macroeconomics
Prof. A. Villamil: avillami@uiuc.edu, 331 Wohlers Hall, 244-6330
Office hours: 9:30-10:00 Tuesday and Thursday, Tuesday 12-1
Fall 2004
Course Objectives. The purpose of this course is to introduce you to current theoretical and policy
problems in macroeconomics. We will address the following questions:
1. What determines an economy’s “standard of living” and growth path?
2. What is “the business cycle” (i.e., fluctuations and co-movements in consumption, investment,
employment, output, interest rates, inflation, etc.)?
3. What can/should a government do when an economy experiences macroeconomic fluctuations?
4. What are the effects of monetary policy, fiscal policy, trade policy, and exchange rate policy?
Course Requirements and Evaluation Procedure. Your course grade will be determined by your
performance on two mid-term examinations and a comprehensive final examination. In addition, there will
be homework to assist you in mastering the material. The homework will also be used to determine final
course grades for scores that fall “on the margin.” The exam dates are:
ƒ Mid-term Exam I: October 7 (30 points)
ƒ Mid-term Exam II: November 18 (30 points)
ƒ Final Exam: Wednesday, December 15, 8 – 11 am, regular room (40 points)
Note: Requests for re-graded exams must be handed in no later than one week after the exam is returned.
Note: The deadline to drop an undergraduate class without a grade of “W” is October 15, 2004.
Text & Readings: N. Gregory Mankiw, Macroeconomics, 5th edition, 2003, Worth Publishing. Some
additional readings are listed below. Others readings related to current policy will be assigned in class (e.g.,
from the New York Times). You will find the course more enjoyable if you use Mankiw’s website at
http://www.worthpublishers.com/mankiw and read a newspaper to follow current events, e.g. the New York
Times at http://www.nytimes.com
CourseWebsite: I will post course material at http://compass.uiuc.edu
Please follow the login instructions.
Other Issues. If you have any problems with the course, please see me as soon as possible.
Tentative Schedule
Session 1: August 26. Overview, introduction and growth facts: What Determines the Wealth of Nations?
READ: Parente and Prescott, “Changes in the Wealth of Nations,” FRB of Minneapolis Quarterly
Review (1993), at: http://research.mpls.frb.fed.us/research/economists/ecp.html
Session 2: August 31. Measures of Macro Performance
READ: Mankiw chapters 1, 2, 6
Session 3: September 2. Measures of Macro Performance continued: “jobless recovery”
READ: Schreft and Singh, at: http://www.kc.frb.org/publicat/econrev/er03q2.htm#jobless
Session 4: September 7. National Income & Micro Review
READ: Mankiw chapter 3
Session 5: September 9. National Income & Micro Review continued
READ: Mankiw chapter 3 and the Appendix
Session 6: September 14. Growth Model and the “Golden Rule”
READ: Mankiw chapter 7 and the Lecture Note on Economic Growth
Session 7: September 16. Population Growth and Technological Progress
READ: Mankiw chapter 7 and the Lecture Note on Economic Growth
Session 8: September 21. Technological Progress, Accounting, Policy and Endogenous Growth
READ: Mankiw chapter 8 and the Lecture Note on Economic Growth
Session 9: September 23. Homework review, problem session, and policy discussion
Session 10. September 28. Policy Applications: Growth in Asia and recent crises
READ: “Asia: A Billion Consumers,” The Economist, 10/30/93, 1-22
Session 11: September 30. “Long-term” Growth (Money and Inflation)
READ: Mankiw chapter 4
Session 12: October 5. Review and Problem Session
Session 13: October 7. Exam I
Session 14: October 12. International Trade
READ: “The Miracle of Trade,” The Economist, 1/27/96 (posted on compass)
Session 15: October 14. The Open Economy
READ: Mankiw chapter 5
Session 16: October 19. The Linear Keynesian Model: the Keynesian Cross
READ: Mankiw chapters 9, 10, and 11
Session 17: October 21. The Linear Keynesian Model (simple IS-LM and AS-AD Closed Model)
READ: Mankiw chapters 9, 10, and 11
Session 18: October 26. Effects of Monetary Policy over time on gdp, inflation, & interest rates
Session 19: October 28. Effects of Fiscal Policy & P shocks over time on gdp, inflation, & interest rates
Session 20: November 2. The Linear Mundell-Fleming Model: Flexible exchange rates
READ: Mankiw chapter 12
Session 21: November 4. The Linear Mundell-Fleming Model: Fixed exchange rates
READ: Mankiw chapter 12
Session 22: November 9. Policy Application: TBA
READ: TBA
Session 23: November 11. Business Cycles
READ: Mankiw chapter 19
Session 24: November 16, Review and policy discussion
Session 25: November 18. Exam II
Thanksgiving Break: No Class Nov. 23 or 25
Session 26: November 30. Business Cycles
READ: Mankiw chapter 19
Session 27: December 2. Business Cycles continued
READ: Mankiw chapter 19
Session 28: December 7. Money Demand and the Money Supply Process
READ: Mankiw chapter 18 and Lecture Note
Session 29: December 9: Policy Debates, Review and Summary
READ: Mankiw Epilogue: What We Know, What We Don’t
Session 30: Final Exam. Wednesday, December 15, 8-11 AM (regular room)