Download UNIVERSITY OF VERMONT DEPARTMENT OF ECONOMICS Principles of Macroeconomics

UNIVERSITY OF VERMONT
DEPARTMENT OF ECONOMICS
EC 11
Principles of Macroeconomics
Fall 2014
Prof. Stephanie Seguino
Office: Old Mill 340
Phone: 802.656.0187
Office Hours: T/TH 230-330pm
(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, debt, and taxes; 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 well-being
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:
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How much better off are Americans today than in the past? What is the prognosis for the ability of your
generation to have a decent standard of living with economic security?
Can government policies promote rising living standards? Is it enough to spur economic growth?
Can governments 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
The book listed below is required and will be available for sale at the bookstore. In addition to the required text,
further reading is listed in the syllabus, and in some cases, is posted on the Blackboard (BB) 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.
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Krugman, P. and R. Wells. 2014. Macroeconomics (3rd Edition). Worth Publishers.
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.
Note
Ø
Ø
For a variety of reasons, email is not efficient for communication. See me during office hours instead.
Make-up exams will be allowed only under extreme circumstances, such as illness. In order to
schedule a make-up exam you must notify me prior to the exam (this is the only case where email
communication should be used) and provide a written note from your doctor.
Last revised September 2, 2014 Ø
Ø
Please turn cell phones and computers off before class begins.
The midterm and final exam dates are written in stone, but assignment dates are tentative. Also, I
may choose to alter the chapter assignments (or omit chapters entirely) depending upon how long it
takes to cover essential material. Changes to the syllabus (if any) will be posted on Blackboard.
Ø Large classes present a challenge in that your individual behavior affects 140 other students. For that
reason, arrive on time and I should be alerted in exceptional circumstances of any early departures
before class begins.
Ø 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.
I will not be taking attendance directly. That is done indirectly via exams, if you get my point.
GRADING
DATE
September 30
October 30
November 6
November 20
December 9
Weekly
ASSIGNMENT
Exam 1
Exam 2
Survey
Volunteer assignment
Comprehensive final exam
Recitation section attendance
WEIGHT
20%
20%
10%
15%
25%
10%
Letter grades are assigned on a straight scale:
A is 90-100 percent
B is 80-89 percent
C is 70-79 percent
D is 60-69 percent
F is 59 percent or less
+/- will be assigned at the discretion of the professor.
PROJECTS AND IN-CLASS ACTIVITIES
There will be two projects for this course. The first is a team project and is a survey project, in which you will be
assigned to teams to conduct a survey of local businesses to test the validity of assumptions about how firms behave
2 Last revised September 2, 2014 as prices change or demand changes. You will write a short paper that summarizes your survey, your methodology,
and your analysis. This is due Nov. 6 and guidelines will be handed out later in the semester.
The second project is to volunteer for at least 2 shifts at a local food shelf or related social support organization. I will
be posting a list of agencies on BB. Your papers that summarize your work in this project and respond to related
questions is due Nov. 20th. By October 2nd you will submit your plan for this project to BB, which includes a) the
name of the agency you will work at, 2) the shifts you have signed up to work, 3) the name of the person at the agency
with whom you made this arrangement, and 4) any proposals for team work (no more than 2 to a team).
I will periodically ask you to write short answers to problems based on the lecture, or organize group exercises in class
related to the material we are studying. In-class assignments will be turned in at the end of class. There are no makeups for these assignments. Performance on these exercises will be used to help me determine grades in a borderline
case, as well as whether to assign a + or – to a grade.
WEEKLY RECITATION SESSIONS
Students are required to attend one recitation section per week. In total, there will be 7 recitation sections offered. You
will be assigned to one of these, based on your schedules and should attend the same session each week, except in the
case of documented emergency. In that case, in order to obtain credit, you should email Keith Williams at
[email protected]. In class, on September 4th, Mr. Williams will be in class to discuss recitation sections and the
process of assigning you to a particular section.
These sessions are led by advanced students who have proven to have exceptional skills in economics. The goal of
these sessions is to review the material covered in lectures, with an emphasis on technical material. This will be an
opportunity to get support and practice in solving problems or in discussing material. These sessions will begin by
September 8. In order to receive credit for attending a session, students must arrive on time and stay for the full
session. Late arrivals and early departures result in no credit. There will be no additional review sessions for exams in
this course; these sessions will function as continuous review sessions on a weekly basis for the entire semester.
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
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.
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
3 Last revised September 2, 2014 was last revised so that you will know if you have the most recent version. All readings are required, unless otherwise
noted. BB refers to article posted under “Course Materials” on Blackboard. For Krugman and Wells, the numbers
refer to the modules.
4 Last revised September 2, 2014 TENTATIVE COURSE SCHEDULE – SUBJECT TO CHAN GE
Topics, Readings, and Assignments
Week
Dates
Topic
Required Reading
Key Concepts
Krugman and Wells, 1 – 3;
Appendix A at the back of the
book
1
Aug. 25 - 27
Economics as a tool
to improve wellbeing
Opportunity cost
Production possibilities
curves
“Comparative Advantage.” (BB)
Scarcity and abundance
Coordination problem
Sept. 2 - 4,
Sept. 9 - 11
Early Economic
Systems
Comparative advantage
Heilbroner, R. and W. Millberg,
Chs. 2 - 3 (BB)
Feudalism
Supply and demand
Supply and Demand
2
4
Sept. 16 - 18
Origins of Capitalism
Krugman and Wells, 4 – 7
Price ceilings, floors
Ceteris paribus conditions
Dighe, R. 2014. “Legalize it: The
economic argument.”
Bremmer, B. and V. Del Giudice..
2014. “Legal weed’s strange
economics in Colorado.”
Adam Smith, The Wealth of Nations,
Book I, Chs. 1-3 (BB)
Invisible hand
Economic growth
Carr, N. “Is Google Making Us
Stupid?” Atlantic Monthly,
July/August 2008. (Google it!)
Efficiency
Productivity
Say’s Law
Circular flow
Business cycles
5 Homework
/Projects
Last revised September 2, 2014 4-5
6
6-7
Sept. 23 - 25
Sept. 30
Oct. 2 -9
The Great
Depression and the
Keynesian
Revolution
Wages and profits
Krugman and Wells, 9, 13 , 14, &
47, pp. 491-493; Appendix B
Recessions & depressions,
Stabilization
The demand-driven
economy
Unemployment
Krugman and Wells, 10, 11, & 12
Aggregate demand & supply
Exam 1
Measuring the
Aggregate Economy
GDP
“GDP and Its Discontents.” (BB)
Real and nominal prices
Consumer Price Index
Krugman and Wells, 24 - 31
8-9
Oct. 14 - 23
The Basic Keynesian
Model
Money: What it is
and what it does
Submission of
name of agency
and shifts
assigned, as well
as any team
work due Oct. 2
at the beginning
of class.
Income-expenditure model
AS/AD model
“No More Savings!” (BB)
Multiplier
Fiscal policy
Krugman and Wells, 33-35
Banking system
Automatic stabilizers
Federal reserve system
10
10
11
Oct. 28
Oct. 30
Nov. 4 - 6
Monetary Policy and
the Banking System
“What is Money?” (BB)
Exam
Monetary Policy
Krugman and Wells, 36 - 38
Money creation
“How Do Fiscal and Monetary
Policy Compare?” (BB)
Interest rates
12
Nov. 11 -13
Long-run Economic
Growth
Fractional reserve system
Open market operations
Krugman and Wells, 17- 19
6 Survey results
and analysis due
at the beginning
of class, Nov. 6
Last revised September 2, 2014 Wisman, J. “The Growth Trap,
Ecological Devastation, and the
Promise of Guaranteed
Employment.” (BB)
“We need a (green) jobs program.”
(BB)
Rosin, H. 2012. “Who Wears the
Pants in This Economy? New York
Times, August 30.
Optional: Erickson, J., et al.
“Vermont Genuine Progress
Indicator 1960-2011.” (BB)
“ Geese, Golden Eggs, and Traps:
Why Inequality is Bad for the
Economy.” (BB)
14
Dec. 3
Inequality
More material will be provided in
measuring inequality.
Dec. 9
Final Exam Comprehensive
7 Last revised September 2, 2014 Guidelines for Volunteer Work in a Soup Kitchen or Homeless Shelter
In order to experience some aspect of our economic world beyond the textbooks, each student will volunteer to work
in a soup kitchen or homeless shelter and submit a written report.
The Urban Institute estimates that the number of homeless people in the United States is between 567,000
and 600,000 with more than 4 million Americans living in poverty or near poverty. The first alternative assignment
has to do with this national tragedy. There is a massive amount of literature on the topics of homelessness and
poverty. You should first read widely, perhaps choosing magazine and newspaper articles to prepare a background
understanding. Then, you should volunteer your help with an organization servicing the homeless or the economically
deprived in the area. The two most likely possibilities are to work in a soup kitchen or in a homeless shelter. A list of
possible organizations for you to contact and an idea of the type of service that is needed is posted on BB. If you have
another organization for which you would like to volunteer time, please consult with me first. Students should
commit to at least 2 shifts, or a minimum of 8 hours of service.
Use your observations and your newly acquired economic understanding to address the following:
1. Who are the homeless and/or poor? What are the demographic characteristics (age, sex, race) of the
people you observed? How many appeared to be single and how many in family units? Compare the
national data to your observations of the demographic characteristics at the agency at which you have
volunteered. What are your reactions?
2. Are shelters/emergency food shelves the answer if the questions are:
a) insufficient affordable housing
b) lack of skill training
c) lack of day care facilities
d) debilitating illness
e) wages that are too low
f) temporary transitional space or support
g) the need for a fixed address or minimum sustenance in order to find employment?
3. If shelters/food shelves provide any of the above, in what form? Of what duration?
4. If they do not provide any of the above, should they? For what duration?
5. Are there permanent solutions? If so, what? If not, then what?
6. Your paper (between 6-10 pages) should also include a summary of the work you did at the agency,
and of course the name of the agency, and dates worked.
7. Papers should also include a bibliography, page numbers, and other formatting that is expected
formal papers. No binders, just a paper that is STAPLED.
Answer these questions based on your own observations from your volunteer experience as well as you understanding
of the problem. You are encouraged to discuss these issues with other volunteers, directors of agencies, and in
particular, with the clients of these agencies. Clients are usually very interested in discussing their situations with
volunteers who demonstrate a willingness to listen and sensitivity, and so you should not be hesitant to do this. I think
you will learn a lot.
Deadlines
You will turn in the name of the agency for which you will volunteer, the times and dates of the shifts you have
scheduled to work, and the name of the person at the agency you scheduled this with by October 2nd. The purpose of
this deadline is to ensure that you contact agencies and make arrangements ahead of time so that you are able to
complete your project on time.
Papers are due Nov. 20th.
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