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ECONOMICS 7020 Fall 1989 Introductory Macroeconomics Bill Kaempfer Econ 115, x24486 Office Hours: Computer Mail Address: CUBLDR::KAEMPFER_W Required Textbooks: William H. BRANSON, Macroeconomic Theory and Policy, 3rd Ed. Harper and Row, 1989. Bernhard FELDERER and Stefan HOMBURG, Macroeconomics and New Macroeconomics, Springer-Verlag, 1987. Optional Background Textbooks (not ordered at any bookstore): William M. SCARTH, Macroeconomics: an Introduction to Advanced Methods, Harcourt Brace Jovanovich, 1988. Thomas M. HAVRILESKY and John T. BOORMAN, Money Supply, Money Demand and Macroeconomic Models, 2nd Ed. Harlan Davidson, Inc., 1982. Examinations and grading: Three midterm exams will be given at approximately the end of each month. Exams will be given during extended class hours. Time and place will be announced. Each exam will have two questions and each question will take approximately one hour to answer. The final examination is scheduled to be held on Tuesday, December 19 from 7:30 p.m. until 10:30 p.m. The final will be comprehensive and will have three questions. In general, this course does not require a great deal of reading. However, I expect you to actually read all of the below assignments. Over the course of the semester, a review of the mathematical appendices provided by Felderer and Homburg as well as Branson is also a good idea. Outline of Topics Fall 1989 Assignment 9-19 9-21 9-26 9-28 Introduction Microfoundations: Production, Labor Supply and Saving The Classical Model: Markets and Equilibrium Consumption: Life Cycle Hypothesis Consumption: Permanent Income Hypothesis Investment Theory Demand for Money Portfolio Balance Model EXAM 1 10-3 10-5 10-10 10-12 10-17 10-19 10-24 10-26 10-31 11-2 Goods and Money Market Equilibrium Cramer's Rule Applications Labor Markets and Aggregate Supply Keynesian Equilibrium Sticky Wages Equilibrium Unemployment Exogenous Shocks Policy Shocks Monetarism and the Pigou Effect EXAM2 8-31 9-5 9-7 9-12 9-14 11-7 11-9 11-14 11-16 11-21 11-28 11-30 12-5 12-7 12-12 12-19 · Expectations Models Phillips Curves Rational Expectations The Government Budget Constraint, Part 1 The Government Budget Constraint, Part 2 Open Economy Macroeconomics, Part 1 Open Economy Macroeconomics, Part 2 EXAM3 Neokeynesian Macroeconomics, Part 1 Neokeynesian Macroeconomics, Part 2 FINAL EXAM IA IB IC IIA mm IIB IIC IIC IHA ltlttltf IIIB IIIC IVA tflttl IVB tttttf IVC&D VA fttl "" VB mt vc '"' VD Utt Reading Assignments: I. Microfoundations and the Classical Model A. Introduction Felderer and Homburg, Part One (1-16) Branson, Chs. 1-3 B. Microfoundations Felderer and Homburg, Ch. IV (17-21) C. Classical Equilibrium Felderer and Homburg, Ch. IV (22-29) II. Sectoral Behavior A. Consumption Theory Branson, Ch. 12, pp. 239-266 Felderer and Homburg, Ch. V (30-33) Modigliani and Brumberg, "Utility Analysis and Consumption" Friedman, "The Permanent Income Hypothesis" B. Investment Branson, Ch. 13, pp. 285-314 Felderer and Homburg, Ch. V (34,38) - Jorgenson, "The Theory of Investment Behavior" C. Money Demand Branson, Ch. 14 Felderer and Homburg, Ch. V (37) Felderer and Homburg, Ch. VIII (63-65) Tobin, "Liquidity Preference as Behavior Toward Risk" III. The Keynesian Model A. The Aggregate Demand Model Branson, Chs. 4 and 5 Felderer and Homburg, Ch. V (35-36, 39) B. Labor Markets and the Supply Side Branson, Chs. 6 and 7 C. The Keynesian Equilibrium Branson, Ch. 8 Felderer and Homburg, Ch. V (40-42) IV. Keynesian Model Adjustment A. Sticky Wages and Unemployment Branson, Ch. 10 Felderer and Homburg, Ch. V (43-45) B. Adjustment to Shocks Branson, Ch. 9 Felderer and Homburg, Ch. VI (46-58) Scarth, pp. 40-45 C. Real Balance Effects Branson, Ch. 12, pp. 276-283 Felderer and Homburg, Ch. VII (59-62) D. Monetarism Felderer and Homburg, Ch. IX ( 66-69) V. Additional Topics A. Expectations Branson, Ch. 11 and Ch. 12, pp. 266-276 Felderer and Homburg, Ch. X (70-75) Humphrey, "Some Recent Developments in Phillips Curve Analysis" B. )'he Government Budget Constraint Branson, Ch. 16 Scarth, pp. 102-107 Meyer, "Financing Constraints and the Short-Run Response to Fiscal Policy" C. Open Economy Macroeconomics Branson, Ch. 17 D. NeoKeynesian Models Branson, Ch. 18 Felderer and Homburg, Ch. XI (76-83) Winetraub, "The 4827th Reexamination of Keynes' System"