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UNIVERSITY OF VERMONT DEPARTMENT OF ECONOMICS EC 11 Principles of Macroeconomics Fall 2013 Prof. Stephanie Seguino Office: Old Mill 340 Phone: 802.656.0187 Office Hours: T/TH 1-2pm (or by appointment) SYLLABUS COURSE OBJECTIVES Macroeconomics examines the behavior of the economy as a whole – at the national level. Today’s economic climate underscores the relevance of studying macroeconomics. High unemployment in the US and in other countries, debates about deficits and debt, rising inequality, and ecological degradation all pose challenges that require public engagement to identify viable fresh ideas and policy solutions. A key objective of EC 11 is to improve your ability to read about current events, understand the economic issues involved, and evaluate public debates on economic policies. Among the topics we will explore are the determinants of economic growth and differences in income and wellbeing across countries. We also will examine economic fluctuations – the causes of high unemployment and inflation, as well as the possible remedies. Understanding how the economy works on a macroeconomic level will help you develop well-reasoned answers to questions like: How much better off are Americans today than in the past? Can government policies promote faster economic growth? Can government policies prevent or shorten a recession? How do banks create money? How have policymakers responded to the housing crisis and credit crunch that began in summer 2007 and to the recession that followed? What is the “Fed?” Has it done enough to promote economic recovery? What are the arguments for and against budget cuts to reduce the federal deficit and debt? Is economic growth compatible with ecological sustainability? TEXTBOOKS All of the below listed books are required reading and will be available for sale at the bookstore. The first two books below are sold as one unit at the UVM bookstore. In addition to the required texts, further reading is listed in the syllabus, and in some cases, is posted on the Blackboard site for this course. We will occasionally watch video clips and discuss current newspaper articles in class. All such material is considered part of required reading for the course for exam purposes. 1. Colander, D. 2013. Macroeconomics (9th Edition). McGraw Hill. 2. Colander, D. and J. Gamber. 2013. Study Guide for Macroeconomics 9th edition. McGraw-Hill. 3. Dollars and Sense. Real World Macro (30th Edition). Dollars and Sense. Last revised August 21, 2013 GETTING HELP/ASKING QUESTIONS My office hours are noted at the top of the syllabus. You do not need an appointment to see me during that time. Just stop by. The only occasion on which you should use email in contacting me is in the case of a medical emergency. Mitchell Philbin is our undergraduate teaching assistant (UTA) for this course. He will be holding two review/discussion sessions each week. Attendance at these sessions is not required. There are, however, some incentives to participate, noted below under Course Requirements. Email Review/discussion sessions [email protected] M and W, 7pm, Angel B112 POLICIES o o o o o o o Exam dates are fixed and will not be changed. Exams can only be taken on the announced dates and times. Assignment due dates are tentative, and may be changed. Make sure to check syllabus and BB for changes. No make-up exams. Late assignments will not be accepted. Assignments are due at the start of class in which they are due. Cell phones turned off and computers/iPads closed and out of sight during class. Calculators (including those on cell phones) are not permitted during exams. For ease of handing in and out papers, each student will be assigned a number (a simple number, between 1 and 140), and this number should be placed on the top right of every assignment you hand in, including group assignments. Your number will be posted on Blackboard under the Grading section after the add-drop period. ATTENDANCE Attendance is required in order to do well in this course for a host of reasons. First, macroeconomics is taught in a building block fashion. In order to be able to understand the material as it becomes more complex throughout the semester, it will be important for you to master the tools learned early in the semester. Second, much of what I discuss in class in lectures is not covered in the book, including spontaneous discussions of economic news. The textbook is only a supplement. Third, roughly on a weekly basis, there will be some in-class activity or assignment that will require turning in a paper at the end of class. These assignments are not eligible to be made up if you are absent. GRADING DATE ASSIGNMENT October 1 October 31 December 10 Throughout semester Exam 1 Exam 2 Comprehensive final exam Short papers, problem sets, WEIGHT 2 25% 25% 25% 25% Last revised August 21, 2013 team projects, in-class activities (total of 10; lowest grade of in-class assignments dropped) SHORT PAPERS, PROBLEM SETS, TEAM PROJECTS, AND IN-CLASS ACTIVITIES I will periodically ask you to write short answers to problems based on the lecture, answer questions on the Real World Macro or other readings, or organize group exercises in class related to the material we are studying. Assignments will be turned in at the end of class. (To help you prepare, I have prepared a list of questions to think about when reading the assigned articles. These are posted to BB). I will also assign at least 3 short projects, and due dates are noted in the syllabus. There are no make-ups for these assignments, but at the end of the semester I will drop the lowest score, so you can miss one in class assignment without penalty. Failure to turn in any of the short projects, however, will result in a zero for that assignment. The table below indicates how I will grade these assignments. In cases where the work is really exceptional, I’ll award a check-plus-plus so it’s equivalent to 5 points of extra credit. Grade ✓+ ✓ ✓0 Points 100 75 50 0 Meaning Excellent Average/Good Sub-par Fail/Absent WEEKLY DISCUSSION SESSIONS Students may participate in weekly discussion/review sessions. Attendance and participation are optional. However, by attending these sessions, students can add points to their midterm and final exam scores (one point maximum per week of attendance). These sessions will begin one to two weeks after the first class, depending upon how soon rooms are made available. THE STUDY GUIDE One of the best ways to learn is by doing. To that end, I have ordered the Study Guide for you to practice various concepts and materials covered in class. For example, we will discuss supply and demand in second week. By going through the questions in the Study Guide on this topic after the class lecture, you will understand this material much better than by simply passively absorbing lectures. The combination of extensive notes taken during lectures and doing practice problems will help you immeasurably. The initiative and discipline to do practice problems, however, is going to be largely under your control. I will only occasionally assign problems to be turned in, and may use some problems from the Study Guide for in-class exercises. I’ve posted to BB a list of questions or problems in the Study Guide that will offer you some good practice. Each week, consult the list of suggested questions/problems for that week and answer them. If you have difficulties, you can bring these to the weekly discussion sessions and ask Mitch to help you with them or see me. Working on groups on these exercises is ideal. ACADEMIC INTEGRITY Standards of academic conduct are set forth in the University's Code of Academic Integrity. http://www.uvm.edu/policies/student/acadintegrity.pdf 3 Last revised August 21, 2013 By registering, you have acknowledged your awareness of the Academic Integrity Code, and you are obliged to become familiar with your rights and responsibilities as defined by the Code. Violations of the Academic Integrity Code will not be treated lightly, and disciplinary actions will be taken should such violations occur. Please see me if you have any questions about the academic violations described in the Code in general or as they relate to particular requirements for this course. In writing papers, you must properly cite all sources (1) directly quoted, (2) paraphrased, or (3) consulted in any fashion. Sources include all printed material as well as the Internet. It is also considered plagiarism if you merely rework source material, placing an author's thoughts in other words without contributing your own ideas. For that reason, you must include some kind of source citation or note whenever drawing on someone else's interpretation. 4 Last revised August 21, 2013 TENTATIVE COURSE SCHEDULE – SUBJECT TO CHANGE Topics, Readings, and Assignments Preliminary course outline The following schedule is tentative. It may be revised as the semester progresses. Additional readings may be added. Please check this syllabus on Blackboard for updates. I update the header (top right of page) with the date the syllabus was last revised so that you will know if you have the most recent version. All readings are required, unless otherwise noted. RWM refers to your Real World Macro book. Week 1 Dates Aug. 2729 Topic Economics as a tool to improve well-being Required Reading Colander, 1 & 2 RWM, 8.2: Vasudevan, R. “Comparative Advantage.” Key Concepts Opportunity cost Production possibilities frontiers Scarcity and abundance Coordination problem Feudalism Mercantilism Supply and demand Invisible hand Economic growth Efficiency Productivity Say’s Law Circular flow Business cycles Wages and profits Recessions & depressions, Stabilization The demand-driven economy Unemployment Aggregate demand & supply GDP 2 Sept. 3-5 3 Sept. 1012 4 Sept. 1719 Early Economic Systems Supply and Demand No classes. Origins of Capitalism Colander, 3 (pp. 71-73 only), 4, & 5 Make-up class Sept. 25, 108 Lafayette, 530 to 630 pm Colander, 3 and rest of Appendix A Adam Smith, The Wealth of Nations, Book I, chs. 1-3 (BB) Carr, N. “Is Google Making Us Stupid?” Atlantic Monthly, July/August 2008. (Google it!) 5 5 Sept. 24 Sept. 2526 The Great Depression and the Keynesian Revolution Measuring the aggregate economy 6 Oct. 1 Exam 1 6 Oct. 3 Measurement, continued: Real and Homework/ Projects Colander, 6 & 17 (pp. 363-373 only) RWM, 2.2: “The Real Unemployment Rate.” Colander, 7 Sept. 25 class at 515 to 630 pm, 108 Lafayette RWM, 2.3: “GDP and Its Discontents” 5 Real and nominal prices Consumer Price Project due Sept. 17 (supply and demand) Project due Oct. 8 nominal GDP, economic growth The Basic Keynesian Model 7 Oct. 8-10 8 Oct. 1517 The Basic Keynesian Model, continued 9 Oct. 2224 Fiscal policy Money: What it is and what it does Monetary Policy and the Banking System 10 Oct. 29 Lecture, Prof. David Colander, 4-6pm Carpenter Auditorium, Given Hall 10 Oct. 31 Exam 11 Nov. 5 The unemploymentinflation trade-off 11 Nov. 5-7 Deficits and Debt Index Colander, 9 RWM, 4.6: “No More Savings!” Colander, 9w (on McGraw-Hill website) RWM, 5.4: “Who Are the 47%?” Colander, 12 & 13 RWM, 6.1: “What is Money?” AS/AD model Short- and long-run Multiplier Automatic stabilizers Banking system Money creation Interest rates Open market operations Fractional reserve system RWM, 6.2: “How Do Fiscal and Monetary Policy Compare?” “The US Policy Dilemma and Why it's going to be Really Hard to get a Job” Colander, 18 RWM, 7.1: Vasudevan, R. “The Relationship Between Unemployment and Inflation.” Colander, 15 & 16 Last revised August 21, 2013 (measuring GDP) Sources of inflation Philips curve Conflict theory of inflation Reaganomics Project due Nov. 7 (debts and deficits) RWM, 5.6: Friedman, G. “Myths and Realities of Government Spending.” 12 12 Nov. 12 Nov. 14 The Housing Bubble and the Great Recession of 2008 Gender and Race in the US Economy Henley, J. ‘Recessions Can Hurt, But Austerity Kills.” The Guardian. May 15, 2013. Colander, 14 RWM, 6.7: “We Are All Minskyites Now” RWM, 1.5: Albelda, R. “Under the Margins: Feminist Economists Look at Gender and Poverty.” RWM, 7.7: Boushey, H. “Women Breadwinners, Men Unemployed” RWM, 7.6: Alegretto, S. and S. Pitts. “How Blacks Might Fare in the Jobless Recovery.” 6 Job segregation Opportunity hoarding Stratification Last revised August 21, 2013 13 Nov. 1921 The Growth vs. Development Debate Colander, 10 & 22 Wisman, J. “The Growth Trap, Ecological Devastation, and the Promise of Guaranteed Employment.” (BB) RWM, 1.4, Rowe, J. “The Growth Consensus Unravels 14 Dec. 3 Inequality TBA Final Exam Comprehensive Optional: Erickson, J., et al. “Vermont Genuine Progress Indicator 1960-2011.” (BB) RWM, 3.1, Tilly, C. “ Geese, Golden Eggs, and Traps: Why Inequality is Bad for the Economy.” 7