MBA 505-01/02 DOMESTIC & GLOBAL ECONOMICS
Seattle University
Winter, 2010
W 5:30-8:10 pm Thur: 6:00-8:40pm
Room: W: Bellevue; Th: P 202
Office hours: W, 4:00-5:30 in Bellevue; Th, 4:00-5:30 pm, Seattle
Website: https://angel.seattleu.edu
C. Fred DeKay, Ph.D.
(206)-296-5709
Office: P 521
dekay@seattleu.edu
Textbook & Required Readings:
Macroeconomics, by Rudiger Dornbusch, S. Fischer and Richard Startz, (2008, 10th ed. McGraw
Hill/Irwin). ISBN 978-0-07-312811-5.
E-book: http://www.coursesmart.com/0077282906?a=1079438
The Wall Street Journal, or The Economist or other financial press.
Student subscriptions to WSJ or The Economist can be found at:
www.EconomistAcademic.com (code: 1654) or http://.wsj.com/student
Students are expected to follow current developments in both the U.S. and world economy.
Description: Domestic and Global Economics is an intermediate level macroeconomics course dealing with
domestic and international economic events, analysis and policy as they apply to managerial decision-making. Our
course prepares professional managers to understand how policies and events affect national income,
unemployment, inflation and interest rates, so that they can make better informal short-run forecasts and better
understand the macroeconomic risks facing them when making business decisions. The art of fiscal and monetary
policymaking will also be explored along with their inherent political trade-offs, incentives and constraints. Several
formal economic models are employed to illustrate relationships and illuminate differences of opinion within the
profession. To gain deeper appreciation for the subject, class discussion will be related and applied to topics of
interest in the news.
Grading: Regular class attendance is expected, and in the case of absences, students bear the ultimate
responsibility for material covered in class. The basis for grading will be as follows:
30 pts. Homework, including presentations and class participation; (late assignments may be marked down)
100 pts. Midterm
120 pts Final
50 pts. Country Project
Class discussion may be considered at the discretion of the instructor. Homework assignments are designed to help
you focus on and develop an understanding of key material. Randomly chosen portions of homework assignments
will be graded. The schedule and procedures in this course are all subject to change in the event of circumstances
beyond the instructor’s control. I expect that student behavior will conform with the Seattle University Academic
Honesty Policy.
Country Analysis Project:
A 3-5 page single-spaced paper, supporting an analysis of macroeconomic conditions in a chosen country, other
than the US. More detail will be provided later in the quarter.
Class Presentations: A primary purpose of this class is to enhance your ability to monitor, read and interpret
news articles about macroeconomic topics. Once during the quarter each student will prepare for class presentation,
a 2 minute current macroeconomic data report, idea, issue, or article of your own choosing from a business news
source. To avoid duplication, THIS TOPIC MUST BE APPROVED BY the instructor before you prepare it. Useful
internet sources may include: http://www.nber.org National Bureau of Economic Research, www.economist.com,
http://www.wsj.com, and government websites listed below. The item you discuss should have appeared within the
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last week or two. Sample presentations can be found on Angel. A list of topics appears in the Chapter 1 Power
Point presentation. Students must post their presentation on Angel prior to the start of class.
If you have, or think you may have, a disability (including an ‘invisible disability’ such as a learning disability, a
chronic health problem, or a mental health condition) that interferes with your performance as a student in this
class, you are encouraged to arrange support services and/or accommodations through Disabilities Services staff in
the Learning Center, Loyola 100, (206) 296-5740. Disability-based adjustments to course expectations can be
arranged only through this process.
Laptop policy: Use of electronic devices in class must be related to class work and must not be
distracting to other students.
TENTATIVE COURSE SCHEDULE
Homework strongly affects performance on exams. Be sure to read the assigned materials before class. Even if
you don’t manage to entirely master a concept before class, reading will introduce you to the topics and will lead to a much
more productive discussion in class. Exams will include questions on the readings, even if not discussed in class.
Topics and Assignments
Date
1.
1/6,7
Ch. 1. Intro to Macroecon. Topics
Ch. 2. Nat’l Income Accounting:
Measuring the Economy
GDP, Inflation, Unemployment,
Trade Deficits, Budget Deficits
Readings
Dornbusch, Fischer & Startz, Chapters 1 and 2.
1. Bernanke: “On the Outlook for the Economy and Policy”, November 16,
2009, See First Day Assignment on Angel
2. The Economist, “Waiting for the midnight hour”, 4/19/01
3. The Economist, ”Measuring what matters.” 9/17/09
See First Day Assignment on Angel website: Read the testimony of Chairman Ben Bernanke, from November
16, 2009, http://www.federalreserve.gov/newsevents/speech/bernanke20091116a.htm and bring to class the
answers to questions in the First Day Assignment. (This is for discussion and does not need to be turned in.)
Homework: Ch 1: Problems: Technical 1; Empirical 1. Ch 2: Problems: Technical 3. Due 1/13,14
2.1/13,14 Measuring the economy, continued. Dornbusch, Fischer & Startz, Ch 7, p148-174, Ch. 3, p53-61
Macro Data Presentations. Problem Set on price indices handed out. Due 1/20, 21
3.
1/20,21
Ch. 5 Agg. Demand and Agg. Supply
Ch. 9 Income and Spending: The
Determination of Output in the Short
Run: The Keynesian Model
▪Y=C+I+G+X-M
Dornbusch, Fischer & Startz, Ch 9 Income and Spending (Read for
understanding)
Ch 5 (Read for overview. We will return to this later. )
Ch 8 Policy Preview p. 184-188 (Read for overview. We will return to
this later. )
Macro Data Presentations. Problem Set on equilibrium income handed out. Due 1/27,28
4.
1/27, 28 



Monetary Policy
Money Demand
Banking system and credit
Interest rates and investment
Goals and Tools of the Fed
Dornbusch, Fischer & Startz: Ch. 15 p373-382; Ch. 16 p394-404
Ch 18 p445- 451; Ch. 10
The Economist, “A Working Model: Is the World Experiencing Excess
Saving or Excess Liquidity”, 8/13/05.
Macro Data Presentations. Homework: Ch.10 : Conceptual 1,6; Due 2/3, 4
2
Date
5.
2/3, 4
Topics and Assignments
Policy Analysis with the IS/LM model;
Limits and risks with Monetary policy and
Fiscal policy
Government budget constraint
Readings
Dornbusch, Fischer & Startz: Ch. 11 Ch 17, p 417-427
The Economist, “Putting the Air Back In”, 10/30/08.
The Economist, “Much ado about multipliers”, 9/26/09.
Macro Data Presentations. Homework: Ch.11: Conceptual 4, Technical 1; Due 2/10, 11
Theory of Economic Growth: Assessing
6.
Prospects
for Output in the Long Run
2/10, 11
Optional Reading:
“Cross-country Productivity Growth”, FRB
St Louis, Nov., 2005.
http://research.stlouisfed.org/
publications/iet/20051101/cover.pdf
Optional: Dornbusch, Fischer & Startz: Ch.
3 and 4 for background reading
1. Rivlin, Alice M., “The Challenge of Affluence”, Business
Economics, 12/2001, pp. 6-12.
2. Jordan, Jerry, “How to Keep Growing “New Economies””,
Economic Commentary Series, Federal Reserve Bank of Cleveland,
August 15, 2000.
http://www.clevelandfed.org/research/Commentary/2000/0815.htm
3. David M. Gould and Roy J. Ruffin, “What Determines Economic
Growth?”, Federal Reserve Bank of Dallas Economic Review, 2nd
Quarter, 1993, p. 25-27 and 31 -36.
Macro Presentations. Homework: Outline 2 of 3 readings 1 page each. DUE 2/10, 11. Late papers NOT accepted.
7. 17,18
Midterm Exam, 1 hour.
Assessing International Environments
Dornbusch, Fischer & Startz: Ch. 12
Basics of international transactions.
Macro Data Presentations. Country Analysis assigned. Due 3/10, 11
Assessing International Environments;
8.
Dornbusch, Fischer & Startz: Chapter 12
2/24,25 Exchange rates, Balance of Payments in an
Owen Humpage , “A Hitchhiker's Guide to the U.S. Current Account
Open Economy.
Problem”, October 1, 2004,
.Policies affecting exchange rates and trade http://www.clevelandfed.org//Research/Commentary/2004/1001.
IS-LM-BP
Macro Data Presentations. Homework Ch. 12: Conceptual 4; Technical 1.
9.
3/3,4
Aggregate Supply and Agg. Demand
Macro Data Presentations
10.
3/10,11
Aggregate Supply and Aggregate Demand
Alternative theories: Real Business Cycles,
Rational Expectations, Monetarists, Etc.
Due 3/3,4
Dornbusch, Fischer & Startz: Chapter 5 ,
“A Falling Speed Limit”, The Economist, Oct 28, 2006.
Ch. 6, 137-141; Ch. 19 pp 482-483
Navarro, Peter, “Principles of the Master Cyclist”, Sloan
Management Review, 45(2) pp. 20-24, 2004.
Macro Data Presentations. Country analysis due. Discussion of Country Analyses in class.
11.
3/17,18
Final Exams. W and Th, March 17&18, 2010. Please adjust your travel schedule to accommodate this exam.
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See the “Reading List” on the Angel website for links to articles. You will have to log onto the
Lemieux Library website to access many of these materials. Let me know if you have difficulties
accessing these articles, as the links change without warning. Readings are online via the
Library. Instructions for accessing the articles are found under Readings on Angel.
Text Corrections: Ch. 8 Box 8.3. The answer in 4. is “6 percent” not “3 percent’.
Sources of Economic Data
Websites of interest:
For current economic data releases and analysis:
www.economist.com,
http://www.wsj.com,
http://www.marketwatch.com
http://abcnews.go.com/
For Macroeconomic articles, current and historical data
http://libguides.seattleu.edu/content.php?pid=71391&sid=0 A site prepared by the SU Library
http://federalreserve.gov Federal Reserve Board Site, Interest rates, financial data
http://www.nber.org National Bureau of Economic Research. It’s all here.
http://www.census.gov/ Site for the U.S. Census Bureau, Family Income data
http://access.wa.gov/
Washington State Data
http://www.conference-board.org
Index of Leading Economic Indicators, Consumer Confidence
http://www.bls.gov/
Bureau of Labor Statistics. CPI, PPI, Unemployment
http://www.gpoaccess.gov/eop/index.html Economic Report of the President
http://www.bea.gov/ Bureau of Economic Analysis, GDP estimates, GDP deflator
http://www.clevelandfed.org/research Site for articles on macro topics.
http://www.findarticles.com/PI/index.jhtml
Generic article search site
www.rfe.org Resources for Economists
*http://www.transparency.org/policy_research/surveys_indices/cpi Corruption rankings for countries
*http://www.heritage.org/research/features/index/ Information on economic freedom for 161 countries
*http://www.doingbusiness.org/ World Bank assessment of business environment
*http://www.gcr.weforum.org/ World Economic forum Competitive conditions for 131 countries
*http://worldbank.com/ The World Bank
*http://www.ecb.int European Central Bank
*http://imf.org International Monetary fund
*http://globaledge.msu.edu/ibrd/countryindex.asp Country specific information
**GMID Country Database via Lemieux Library website
Federal Reserve Publications
Contact the individual banks to be placed on the mailing list for free publications announcements or releases of
data. A few of the more useful addresses follow:
Publication Services
Division of Administrative Services
Board of Governors of the Fed. Reserve System
Washington, D.C. 20551
Public Information
Federal Reserve Bank of San Francisco
101 Market Street.
San Francisco, CA. 94105
Other branches include: Boston, Chicago, Cleveland, Dallas, Richmond, Kansas City, Minneapolis, Atlanta, New
York, Philadelphia, and St. Louis
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Current readings of interest:
1. William Dudley, NY Fed, Financial Market Turmoil: The Federal Reserve and the Challenges Ahead”
3/6/09. http://www.newyorkfed.org/newsevents/speeches/2009/dud090306.html
2. Charles P. Kindleberger and Robert Aliber, Manias, Panics and Crashes: A History of Financial
Crises, 5th ed.,Wiley, 2005.
3. Guide to Economic Indicators: Making Sense of Economics, 5th ed. (The Economist Series) 2003.
4. Doing Business 2009, The World Bank, Sept. 2008.
5. World Trade Indicators, The World Bank, June 2008.
6. Joseph G. Haubrich, “Does the Yield Curve Signal Recession?”, April 15, 2006,
7. http://www.clevelandfed.org/Research/Commentary/2006/0415.pdf
8. Joseph G. Haubrich and Katie Corcoran, “What is the Yield Curve Telling Us?”, 9/19/07.
http://www.clevelandfed.org/research/trends/2007/1007/01monfin_091907.cfm
9. Bernard Baumohl, The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and
Investment Opportunities, Wharton School Publishing, 2005.
10. Russell Roberts, The Choice: A Fable of Free Trade and Protectionism, 3rd ed., Pearson/Prentice Hall, 2007.
11. Drezner, Daniel, “The Outsourcing Bogeyman”, Foreign Affairs, May/June.
12. Thomas Friedman, The World is Flat, 2005.
13. Muhammad Yunus, Banker to the Poor, Public Affairs, 2003. Inspiring method of battling poverty.
14. “The Commanding Heights”, a PBS website and video series on the influence of economists and
macroeconomics on society over the last century. There is some good history on a number of
influential economists (Keynes, Von Hayek, Marx…) and interviews with prominent politicians from
many countries. You can watch the entire show on the web. (Requires Realtime player).
http://www.pbs.org/wgbh/commandingheights/hi/story/
Academic Honesty
Seattle University is committed to the principle that academic honesty and integrity are important values
in the educational process. Academic dishonesty in any form is a serious offense against the academic
community. Acts of academic dishonesty will be addressed according to the Seattle University Academic
Honesty Policy. These acts include (but are not limited to) using unauthorized written or electronic
materials on an exam, copying another student’s exam or allowing another student to copy yours, copying
another student’s homework assignment and passing off someone else’s writing or ideas as your own in
writing assignments. The University policy can be found at the address below:
http://www.seattleu.edu/regis/Policies/Policy_2004-01.htm
If you are not sure whether a particular action is acceptable according to the Academic Honesty Policy,
you should check with your instructor before engaging in it. If you are not certain what constitutes
plagiarism please review this definition.
http://www.georgetown.edu/honor/plagiarism.html
Laptop policy: Use of electronic devices in class must be related to class work and not be distracting to
other students.
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