Download ECON 3080-002 Intermediate Macroeconomic Theory

ECONOMICS 3080
INTERMEDIATE MACROECONOMIC THEORY
Spring 2001
Instrnctor: Professor Fred R. Glahe
Prerequisites: Econ I 0000 or 2020 and, Econ 1078 and Econ 1085, or equivalent.
Lecture: 12:30 - 1:45, Tuesday and Thursday.
Text: MACROECONOMICS: Theories & Policies, 6th Ed, by Richard T. Froyen
Workbook: Study Guide to MACROECONOMICS, by Lawrence S. Davidson
Office: Room 105, Economics Building
Office Hours: 2:00 - 3:30, Tuesday and Thursday, or by appointment.
Office Phone: 303-492-5186
e-mail: [email protected]
Home Phone: 303-443-1716
Course Content
I. What are the main themes?
1. Economic growth
2. The general price level
3. Inflation - continuous increase in the price level
4. Prolonged periods of high involuntary unemployment.
II. Classical Economics
1. Ideas of such 18th and l 9thcentury economists such as:
Adam Smith
Thomas Malthus
David Ricardo
James Mill
III. Neo-Classical Economics
1. Begins around 1870 with
Carl Menger
Leon Walras
William Stanley Jevons
F. Y. Edgeworth
A.C. Pigou
and especially Alfred Marshall
2. Keynes calls Pigou' s 1931 book, Economics of Welfare, the essence of ''classical" economics
IV. High and Sustained unemployment in the U.K. in the 1920's and in the U.K. and U.S.A. in the 1930's led
economist's to question the classical view or vision.
V. Keynes in his 1936 book, the General Theory of Employment, Interest and Money, argued that the
market economy might not be essentially stable.
VI. Acceptance of Keynesianism
1. By 1964 most economists were Keynesians
2. The first Keynesian guided U.S. president was J.F. Kennedy.
3. Richard Nixon said, "we're all Keynesians now."
Vil. Break down of Keynesian Monopoly on Economic Ideas
1. Starting in the 1950's Milton Friedman challenges the Keynesian view.
2. Friedman produces .a series of theoretical and empirical works which argue against Keynesian ism.
These ideas are called Monetarism.
3. Friedman predicts in 1967 that high rates of inflation will cause unemployment to increase.
4. Friedman's predictions come true in the late 1960's and the 1970's.
VIII: New Classical Economics
1. Building on Monetarism, economists such as Robert Lucas, argue that monetary and fiscal policy can
only affect the "real" portion of the economy when their use is unexpected. Since it is thought that
policy changes cannot be kept secret in the modern economy, New Classical economists concluded that
anticipated government action can have no impact on the economy. Hence, the economy will, under
active or passive government action, tend to be at high levels of employment and economic growth .
Since these are the views of the classical economists (perhaps even more so) those economists which
hold these views are called New Classical Economists.
There will be two examinations given on the dates indicated below and there will be a final examination on the
date and at the time specified by the College of Arts and Sciences.
Date
Topic
Text Assignment (pages)
January 16
Introduction to Course
1-12
January 18
Measurement of National Income
13-30
January 23
The Classical System I
31-48
January 25
The Classical System I
31-48
January 30
The Classical System I
31-48
February 1
The Classical System II
49-65
February 6
The Classical System II
49-65
February 8
The Classical System II
49-65
February 13
The Keynesian System I
66-92
February 15
The Keynesian System I
66-92
February 20
The Keynesian System I
66-92
February 22
Test I
February 27
The Keynesian System II
93-132
March 1
The Keynesian System II
93-132
March 6
The Keynesian System II
93-132
March 8
The Keynesian System III
133-154
March 13
The Keynesian System III
133-154
March 15
The Keynesian System III
133-154
March 20
The Keynesian System IV
155-189
March 22
The Keynesian System IV
155-189
March 27
Spring Break, No Class
March 29
Spring Break, No Class
April 3
Monetarism
April 5
Test II
April IO
Monetarism
190-211
April 12
Monetarism
190-211
April 17
Keynesianism vs. Monetarism
212-231
April 19
Keynesianism vs. Monetarism
212-231
April 24
New Classical Economics
232-251
April 26
New Classical Economics
232-251
May 1
New Classical Economics
232-251
May3
Last Day of Class
190-211