Download ECON 408-002 Intermediate Macroeconomic Theory

INTERMEDIATE MAROECONOMIC THEORY
ECONOMICS 408
SECTION 2
THOMAS CARR
OFFICE: ECON 401
OFFICE HRS:
12-1:30 MW
FALL 1987
CLASS HRS:
11-11:50 MWF
SUBJECT
Macroeconomics is the study of the economy in the aggregate.
The analysis centers on the factors determining the level
of
national
output,
employment ,
inflation,
and
interest rates.
There is considerab l e disagreement between various schools of
ma cr oaccn omi c
th o u g t,t a bout how the economy
works.
The
differenc e s
in theory lead to different policy prescriptions.
This course will provide an analytical framework to examine the
macroeconomic problems, evaluate the dominant macro theories, and
allow you to draw your own c o nclusions about how the economy
functions .
READINGS
1) Miller , R.L. and R. Pulsinelli, Macroeconomics 1986.
2) Readings package available at Kinko's.
3) Recommended newspapers and magazines:
Wall Street Journal,
Business Week, Barron's, The Economist, Newsweek, Time, etc.
EXAMS AND GRADING
The course grade is weighted by the following factors:
Midterm 1
30%
Midterm 2
30%
Final Exam
1Q; (comprehensive>
100%
In borderline cases,
factors such as class participation,
motivation,
and upward progress are considered.
The midterm and
final
exams are essay tests.
Bring bluebooks for these exams.
Makeup exams are not given as a matter of course policy.
OUTLINE
READING
Introduction
A. Background of Major Theories
B. Macro Measurement
I. Cl ass ic al Ec on omi c s
A. Say's Law
B. Output and Employment
C. Loanable Funds
D. Quantity Theory of Money
E. General Equilibrium
Chap.
Chap.
1
Cha p. 4
Chap. 5
II. Keynes: General Theory
A. Income Determination
1 . Consumption
2. Investment: MEC
3. Equilibrium Income: Keynesian Cross
1
Keynes
Chap. 6
B. Keynesian Monetary Theory
1. Money Demand: Liquidity Preference
2. Interest Rate Theory
I I I.
Chap. 7
(p . 174-188)
Nee-Keynesian: The Neoclassical-Keynesian Synthesis
1. IS-LM Model
Chap. 7
a . LM: Money Market
(p.188-200)
b. IS: Product Market
Chap. 8
c . E qui 1 i b r i um
MIDTERM I
October 2
2. Consumption
a. Permanent Income Hypothesis
b. Life Cycle Hypothesis
3. Investment
a. Accelerator Models
b. Jorgenson's Neoclassical Model
4. Money Demand
a. Inventory-Thoeretic Approach
b. Por tfolio Balance Theory
5. Labor Market
a . Neoclassical Labor Market
b . Contractural Labor Market
6. Aggregate Supply and Demand Model
7. Phillips Curve and Inflation
IV. Monetarism
A. Modern Quantity Theory
1. Friedman's Money Demand
2. Money and Income
B. Output and Inflation
1. Natural Rate of Unemployment
2. Long Run Phillips Curve
C. Monetarist Policies and Application
MIDTEF:M I I
No v ember
Chap. 9
Chap.
10
Chap.
11
Chap.
12
Okun
Chap.
13
p.292-295
Chap. 14
Chap. 18
Friedman
Cl ark-l•JSJ
Economist
12
V. New Classical Economics
A. Rational Expectations Hypothesis
B. Framework : Optimization and Equilibrium
C. Policy Ineffectiveness Postulate
VI. Oth e r Ke y n es i a n Branc h es
A. Post -Keyne s i ans
B . Disequi l ib r ium
Chap. 15
(p.400-409)
McCall um
Modi •;;J 1 i an i
Key n o n
VII. Growth and Supply-side Economics
A. Growth and Productivity
B. Supply-side Economics
Chap. 1~i
(p.409-417)
Chap. 19
Feldstein
Blinder
VIII. International Sector
Chap. 20
Wed. , Dec.
*** FINAL EXAM***
16, 1 987,
'7f: 30 am to
10. :
30
All,\