New York University, SPS Millicent Budhai
ECON1-UC 342.001 – Intermediate Macroeconomics
T, 6:20PM – 8:50PM
1/26/2015 – 5/10/2015
As per the catalogue: A study of aggregate economic analysis, with particular attention to the theories of determination of the level of income, employment and price inflation. The theories and policies associated with these topics are critically examined.
The prerequisites for the course are Introduction to Macroeconomics, Introduction to Microeconomics, and Mathematical Economics or Algebra and Calculus with Applications to Business and Economics.
The course analyses the aggregate economic issues of output, employment and price levels through different time horizons and through different schools of thought. Ideas and theories are placed in their historic, economic, social and political context at the time they emerged.
We start with a brief overview of the development of macroeconomic thought, from Mercantilism through the Classicals, Keynesian, and post-Keynesian schools such as the New Classicals and New Keynesians.
We begin with a detailed analysis of the Keynesian model of business cycle fluctuation in the short run. By the post-war period, the ideas of John Maynard Keynes were taking root. Given the historical context of the Great Depression, Keynes focused on the macroeconomy in equilibrium in the short run, a period in which there are market rigidities, such as price controls and wage and price contracts, a period not long enough for these inflexibilities to be overcome. The macroeconomy may not equilibrate at full employment. This paves the way for a role for government fiscal and monetary policies to try to nudge the economy away from under or over full employment and closer to full employment. This amounts to stabilizing business cycle behavior.
Next, look at the economy in the very long run, when resources can be augmented. This section focuses on economic growth, using the Solow growth model. We look at economic growth in a global context, examining how the model informs policy on growth and development in the developing and developed countries.
We also look at some post-Keynsian schools of thought and modern approaches to macroeconomics such as the microeconomic foundation of macroeconomics. If time allows, we will also look at the Classical model.
The objective of the course is to equip students with tools to be able understand, analyze and suggest solutions to important macroeconomic issues and problems. By the end of the course students should:
- Understand different theoretical models of how the macroeconomy functions
- Understand the behavior of the macroeconomy through different time horizons.
- Compare and contrast different perspectives/schools of thought on macroeconomic issues and policies and examine how they inform policy.
- Gain perspective on the global macroeconomic environment in which countries interact
- Understand the coordination of fiscal and monetary policies domestically and internationally and the role of institutions.
- Critically apply theories and perspectives to analyzing and understanding current macroeconomic issues. To this end, students are expected to read a daily newspaper to keep abreast of current macroeconomic issues.
REQUIREMENTS AND GRADING CRITERIA
Exam 1 30% about the 8th class
Exam 2 30% the last class – make travel plans accordingly
Journal/paper 15% due class before the last class, promptly at 6:20pm
Quality of class contribution 10%
Exams: The exams will be a combination of problem solving, essays and objective questions. Review questions will be distributed regularly. Students are expected to prepare the assignments although they will not be graded. For the problem solving and essay questions, detailed responses are required. For the problems, show your work and be sure to identify the theoretical framework you are using to answer the question. A bunch of numbers is meaningless – they must be rooted in some model or theory. For the essays, responses must be organized, coherent and thoughts supported by theories, specific evidence and examples from the literature. General and vague discussions are not adequate. HOW ideas are expressed is also important, that is, quality writing.
Exam 1 covers the introductory material, historical overview, and the Keynesian model.
Exam 2 is cumulative and will cover all the course material.
Journal and Presentation: Students are required to track and analyze a current macroeconomic issue and present their findings, if time allows. Details follow separately.
Class Participation: complete readings ahead of class and read the newspapers to foster class discussions.
ATTENDANCE, LATE WORK, INCOMPLETES:
- Late work will be penalized up to 50%. The instructor reserves the right not to accept late work, in which case the work will be assigned a grade of zero.
- No make-ups or incompletes will be given EXCEPT UNDER EXTREME CIRCUMSTANCES, and only with prior permission.
- A student is allowed up to 2 absences without penalty. More than 2 absences may adversely affect your grade. If you anticipate missing more that 2 classes, it is advisable to drop the course or discuss it with me at the beginning of the semester.
- Classes begin promptly at 6:20 pm. More than 3 times late may adversely affect your grade.
PLAGIARISM AND CHEATING
Students are reminded that their work should be authentic. Credit should be given to quotes, paraphrasing or ideas taken from others. Software may be used to check for plagiarism.
SPS defines plagiarism as: “Plagiarism is presenting someone else’s work as thought were one’s own. More specifically, plagiarism is to present as one’s own a sequence of words quoted without quotation marks from another writer; a paraphrased passage from another writer’s work; creative images, artwork, or design; or facts or ideas gathered, organized, and reported by someone else, orally and/or in writing and not providing proper attribution. Since plagiarism is a matter of fact, not of the student’s intention, it is crucial that acknowledgement of the sources be accurate and complete. Even when there is no conscious intention to deceive, the failure to make appropriate acknowledgement constitutes plagiarism. Penalties for plagiarism range from failure for a paper or course to dismissal from the University.”
Cheating will not be tolerated and will result in a grade of zero for the exam or assignment, and a possible failure of the course. Cheating includes copying others’ assignments, copying from the internet or other places, or having someone else complete the assignment for the student.
“If you are a student with a disability who is requesting accommodations, please contact New York University’s Moses Center for Students with Disabilities at 212-998-4980 or [email protected] You must be registered with the Moses Center to receive accommodations. Additional information can be found at www.nyu.edu/csd. The Moses Center is located at 726 Broadway on the 2nd floor.”
Gregory Mankiw, Macroeconomics, 9th edition, Worth Publishers. (An older edition will do)
Materials are regularly posted on NYU Classes. Please check regularly, though email alerts are usually sent out when materials are posted.
|1||1/26||Course overview; brief overview of macro thought||Mankiw 9th ed – ch 1, 2; handouts|
|THE KEYNESIAN MODEL – Keynesian Cross; IS/LM; AD/AS – weeks 2-7|
|2||2/2||Economic fluctuation (10) (A) The Keynesian Cross – output (11)||Mankiw ch 10, 11|
|(B) The IS/LM model – output and interest rate||Mankiw ch 11|
|The goods market and the IS curve (11)|
|3||2/9||The money market and the LM curve (11) IS/LM equilibrium (11)|
|4||2/16||Policy in the IS/LM model||Mankiw ch 12|
|5||2/23||The IS/LM in the open economy – output and exchange rates||Mankiw ch 13|
|6||3/1||(C) The AD/AS model – output, interest rates and prices: The AD curve (12) The AS curves (14); equilibrium||Mankiw ch 12, 14|
|7||3/8||Inflation, Unemployment and the Phillips curve||Mankiw ch 14|
|8||3/22||EXAM 1 – about week 8 – advance notice will be given|
|GROWTH THEORY – The Solow Model – weeks 9, 10|
|9||3/29||Changes in factors of production – capital and labor||Mankiw ch 8,|
|10||4/5||Changes in factors of production – technology||Mankiw ch 9|
|POST KEYNESIAN – THE MICRO FOUNDATION OF MACRO (weeks 11-13)|
|11||4/15||New Classicals and New Keynesians – general equilibrium||handouts|
|14||5/3||Reflections and presentations (if time allows)|
ADDITIONAL READINGS, ESPECIALLY ON CURRENT EVENTS APPLICATIONS, WILL BE ASSIGNED THROUGHOUT THE SEMESTER.
MATERIAL ARE POSTED REGULARLY ON CLASSES – PLEASE CHECK
Anita Ghatak – Macroeconomics: A Mathematical Approach, Concept Publishing
Oliver Blanchard, Macroeconomics, Prentice Hall
Stephen Williamson, Macroeconomic, Addison-Wesley
Choose a topic that is current and active in macroeconomics. Collect an average of about one article per week for about 8 weeks.
Journaling – seeing the trees
As you collect each article, write a one-paragraph summary – example – identify factors, movements, etc.
Overview – seeing and explaining the forest
Write a 5 to 7 page overview of your topic. See the big picture of how your topic evolved and the dynamics of its evolution. Identify factors affecting its evolution such as:
- Economics factors
- Economic fundamentals – how changes /reports of economic data/facts affect your topic
- Economic policy – the influence of government economic policy – fiscal and monetary policies
- Political factors – did political events play a role – example, wars, elections etc
- Market psychology – people’s subjective beliefs/disbeliefs; which ones had a lasting impact, which did not.
Framework – use a theoretical framework to aid in your overview
Data Use tables, graphs and other statistical tools to aid in your overview – feel free to seek data outside of the articles to aid in your overview.
Policy Recommendations – make any suggestions – where relevant – as if you were a policy advisor
References – feel free to use additional sources – textbook, jounal articles etc – to frame your discussions
Attach the articles; date and source them
Journals will be graded based on content, depth of analysis, organization, presentation.
If time allows, Students will do a 5 to 10 minute presentation in class to present their findings and make suggestions as if you were a policy advisor. Be prepared to answer questions from the class.