Download ECON 408-004 Intermediate Macroeconomic Theory

INTERMEDIATE MAROECONOMIC THEORY
ECONOMICS 408
SECTION 2
FALL 1987
CLASS HRS :
11-11:50 MWF
THOMAS CARR
OFFICE: ECON 401
OFFICE HRS:
12-1:30 MW
SUBJECT
Macroeconomics is the study of the economy in the aggregate .
The analysis centers on the factors determining the level
of
national
output,
employment,
inflat ion,
and
interest rates.
There is considerab l e disagreement between various schools of
mac roe c c nomic
thought about how the economy
works.
The
differences in theory lead to different policy prescriptions.
This course will provide an analytical framework to examine the
macroeconomic prob lems , evaluate the dominant macro theories, and
allow you to draw your own conclusions 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 Econom ist, Newsweek, Time, etc.
EXAMS AND GRADING
The course grade is
Midterm 1
Midterm 2
Final Exam
weighted by the following factors:
30%
30%
40% (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. C l as s ica l Economics
A. Say 's Law
8. Output a nd E mp l oy me nt
C. Loanable Fund s
D. Quantity Theor y of Money
E. General Equilibrium
II .
Chap. 1
Chap. 2-3
Ch a p. 4
Chap. 5
Keynes: General Theor y
A. Income Determination
1. Consumption
2. Investment: MEC
3. Equilibrium Income : Keynesian Cross
1
Keynes
Chap. 6
''
I
B. Keynesian Monetary Theory
1. Money Demand: Liquidity Preference
2. Interest Rate Theory
Chap. 7
(p.174-188)
III. 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. Equilibrium
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. Portfolio 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
MIDTERM I !
Chap. 9
Chap.
10
Chap.
11
Chap.
12
Okun
Chap.
13
p.292-295
Chap. 14
Chap. 18
Friedman
Clar k-l,JS,1
Economist
Nov ember 12
V. New Classical Economics
A. Rational Ex p ecta tions Hypothesis
B. Framework: Optimization and Equilibrium
C. Policy Ineffectiveness Postulate
McCallum
Modigliani
VI. Other Keyn esian Branc h es
A. Post-Keynesians
B. Disequilibrium
Keyn o n
Chap. 1!:-j
Chap.
15
( p. 400-4-09)
(p. 409 -417)
VII .
VIII.
Growth and Supply-side Economics
A. Growth and Productivity
B. Supply-side Economics
Chap. 19
Feldstein
Blinder ·
International Sector
Wed . , Dec.
***
FINAL
16, 1 987,
Chap. 20
EXAM ***
~:30 am to 10.:30
~~