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Last updated January 13, 2012 UNIVERSITY OF VERMONT Department of Economics EC 11 Principles of Macroeconomics Rowell 103 Spring 2012 Office hours: MW, 9-10 Professor Stephanie Seguino Phone: 656-0187 Office: Old Mill 340 Email: [email protected] Undergraduate Teaching Assistant: Erin White Email: [email protected] Syllabus Course Objectives Macroeconomists study the operation of the entire economy. This contrasts with the focus of microeconomists who focus on the behavior of individual households and businesses. To better appreciate the workings of the macroeconomy, this course will begin with a brief historical survey of the evolution of modern economic institutions and modern macroeconomic thought. We will study the theoretical frameworks that macroeconomists have developed to explain how contemporary capitalist economies function, and their ideas on the relationships between key macroeconomic phenomena – unemployment, inflation, economic growth, and economic relations with other countries. While our emphasis will be on the US economy, this course also considers the global economy, reflecting the fact that we live in an increasingly interdependent world. Throughout the course, in addition to exploring the theories and other tools economists use, we will discuss the applicability of these theories to real world issues and concerns; hence a critical perspective is also provided on the topics covered in this class. The economic tools you learn are intended to help you understand current issues such as: The causes of and policy responses to high unemployment Debates over federal deficits and debt Debate over tax policy The relationship between the economy and the environment The source, extent and effect of economic inequality The causes of the recent financial crisis. CLASSROOM RULES, OFFICE HOURS, AND HELPFUL TIPS Because material is presented in a building block fashion, attendance and reading of assigned materials are important in this class. I strongly recommend that students read the assigned readings BEFORE coming to class. Students are encouraged to ask questions and participate in classroom discussions and tutorials. I will be forming groups at the beginning of the semester for you to work in on your own and for specific assignments. The groups will be posted on Blackboard (bb.uvm.edu). 1 Last updated January 13, 2012 Blackboard [BB] is an important tool in this course, along with lectures and tutorials. I will pose exercises as well as critical thinking questions that serve as review guides for your exams. I strongly encourage you to do these exercises after each chapter to test your understanding. Some assignments will be turned in. I would appreciate it if you observe my office hours (see above). If this is not convenient, you may set up an appointment for an alternative time on MWF (please send advance notice for this). My undergraduate teaching assistant (UTA), Erin White, and I are available to help you in understanding the technical and other material of this course. Tutorial/review sessions will be arranged on a periodic basis and they are important supplements to the course. The UTA will go over the exercises and assignments, give a review for exams as well as entertain questions on the technical part of the course materials. The tutorial schedule will be posted on the BB once the meeting times and classroom arrangements are determined. Please note that substantive questions related to the course material should be brought to office hours. It is not possible to deal with them over email. A note about laptops and cell phones Cell phones should be turned off once you enter the classroom. Laptops are not permitted to be open during class. Internet browsing, checking emails, chatting, text messaging, etc. are not allowed. ACADEMIC INTEGRITY, STUDENT OWNERSHIP, AND RESPONSIBILITY Standards of academic conduct are set forth in the University’s Code of Academic Integrity. As a registered student, you are obliged to become familiar with your rights and responsibilities as defined by the Code. Violations of the academic integrity code will be treated seriously, and disciplinary actions will be taken, should such violations occur. In addition to the typical violations of integrity you are already aware of (e.g., plagiarism, information sharing during exams), note that i-Clicker misuse (e.g. registering someone else’s attendance in their absence with their i-Clicker) also violates academic integrity with ramifications for both the absent student and the student acting on their behalf. I trust that students in this course will follow the Code of Academic Integrity of the University in their exams, assignments, learning project, and papers. I encourage you to work with your fellow students for review or to discuss the lectures and assigned materials in class, but what you hand in or present to meet the requirements of this course must be your OWN work. TEXTBOOKS AND i-CLICKERS All of the below listed books are required reading and will be available for sale at the bookstore. You may also want to consider purchasing used copies at booksellers such as Amazon.com. 1. Goodwin, N., J. Nelson, & J. Harrison. (2009). Macroeconomics in Context. M.E. Sharpe. 2. Frank, R. (1999). Luxury Fever. The Free Press. 3. Reich, R. (2010). After-Shock. Alfred A. Knopf or Vintage Press (paperback). 2 Last updated January 13, 2012 4. i-Clicker, available at the bookstore. (If you purchase a used i-Clicker from another student, be sure to go in and change the registration to your name before using in class at http://www.iclicker.com/). COURSE REQUIREMENTS Your final course grade is based on: Three exams Class assignments and attendance Reaction paper ‘Social Classroom’ Learning Project 1. 60% 15% 10% 15% Exams There will be three short exams (20% each). First exam Second exam Final exam (comprehensive, 10:30-1:15pm) February 24 March 28 May 4 Please make your travel plans accordingly. There will be no make-up exams except in case of medical emergency, which requires a medical note from one’s doctor AND advance notice (before the exam begins). Make-up exams are more difficult and longer than the regular exam. If you have received permission for exam accommodations, you must see me at least one week in advance of the exam to make arrangements 2. Assignments and attendance (15%) There will be 1-2 written assignments prior to each exam. These are practice exercises and are meant to help you understand the concepts, tools and their applications, provide practice problem solving and help prepare you for the exams. Some involve questions at the end of the chapter and others will require problem-solving or economic analysis of data obtained from government or international institution, e.g., World Bank and UNDP websites. Solutions will be discussed during the tutorial sessions. Impromptu in-class writing and problem-solving assignments may be used to assess your individual preparation or your understanding of class material. Some of these assignments will be collected and graded; others will be spot-checked and you will earn points based on whether or not you completed the task. There are no make-ups on these in-class assignments. These assignments, together with attendance, constitute 15% of your grade. Late submissions: Please note that each assignment will have 2 points (out of 10) lowered for each day past beyond the due date (during class period). The material in this course is presented in building-block fashion. Also, a great deal of the material covered in lectures is not taken up in the assigned texts. For these reasons, class attendance is emphasized. The single most important action you can take to do well in this class is to ATTEND 3 Last updated January 13, 2012 EVERY LECTURE. 3. Reaction paper (10%) Each student will write a short reaction paper on a relevant (macroeconomics-related) news article from the Financial Times, New York Times, the Washington Post, the Economist, and/or Wall Street Journal (the article MUST have been published between January and April 2011). Alternatively, you may consult any of the blogs below for an article of interest. Economics Blogs US Economic Issues (and some Europe) Economix: http://economix.blogs.nytimes.com/ Economist’s View: http://economistsview.typepad.com/ Economists’ Forum: http://blogs.ft.com/economistsforum/#axzz1U6P9jYef Nancy Folbre: http://economix.blogs.nytimes.com/author/nancy-folbre/ Jamie Galbraith: http://utip.gov.utexas.edu/JG/Comments%20and%20Interviews.html Grasping Reality with Both Hands: http://delong.typepad.com/ Greg Mankiw's Blog: http://gregmankiw.blogspot.com/ Paul Krugman: http://krugman.blogs.nytimes.com/ Planet Money: http://www.npr.org/blogs/money/ Global Economic Issues Dani Rodrik: http://rodrik.typepad.com/ The Guardian: http://www.guardian.co.uk/commentisfree/america IMFdirect: http://blog-imfdirect.imf.org/ Naked Keynesianism: http://nakedkeynesianism.blogspot.com/ New Deal 2.0: http://www.newdeal20.org/ Real World Economics Review Blog: http://rwer.wordpress.com/ Triple Crisis Blog: http://www.triplecrisis.com/ Due date (in class, no exceptions): April 11 A reaction paper should be an informed analysis and commentary of either a newspaper article or blog entry. It consists of four parts: 1. A brief summary (one or two paragraphs only) of the salient points of the article. [NOTE: the news article should be attached to your paper]. 2. Clear definition of the macroeconomic issue(s) in your own words. Explain the issue(s) being 4 Last updated January 13, 2012 addressed using the economic tools/concepts you have learned in class and discussed in the required readings. You are encouraged to relate your article to any of the issues discussed in Reich or Frank and to conduct additional research on the issue. If you do the latter, you must cite your references. For a guideline on how to cite references and the format for a bibliography, see http://www.feministeconomics.org/pages/author-instructions/style-guidelines/. At that webpage, scroll down to the section on References for guidance on in-text citation and your bibliography. [Please do NOT use Wikipedia as a source]. Use data you have collected or graphs to illustrate your points, if relevant. 3. Provide a policy recommendation or solution to the problem (which may be similar or different from the author’s view) and 4. Explain the expected outcome (using economic theory or reasoning) of your policy recommendation. The paper should be typewritten, double-spaced with a maximum length of 3 pages in 12-inch font (not including the bibliography). You should attach a copy of the news article with your paper. Late papers submitted beyond the class period of the due date will have the grade lowered by 10% for each day (or fraction thereof) beyond the due date it is not turned in. Make sure that proper citation of all references (including data, statistics, etc.) is made in a separate reference section of your paper (this is an extra page) as this will be part of the grading. The paper will be graded based on: a. your ability to integrate economic concepts/tools and class reading materials into your analysis of the issue(s) (40%); b. the clarity and logic of the analysis of the economic problem and corresponding recommendation (30%); c. organization and adherence to the guidelines of the paper, including citation of references (20%); and d. writing skill and general appearance of the paper (spelling, etc.) (10%). 4. ‘Social Classroom’ Learning Project (15%) This requirement takes you out of the classroom and beyond learning from class lectures and textbooks. Choose an economic issue, concern or topic covered in the course and then conduct your own investigative learning project that involves any one of the following: 1) Design a small survey, choosing a sample and conduct interviews to learn more about a particular economic issue or problem discussed in class, or a particular product/service in the Burlington community or neighborhood. For example, you can examine the factors that affect supply and demand, job opportunities, student loans, firm behavior regarding hiring and firing during economic downturns. (A description of your survey design, sample selection method and list of interview questions must be provided in the appendix). Topics should be 5 Last updated January 13, 2012 related to macroeconomics. Please note that there are guidelines on ethics and confidentiality that you need to follow. 2) Work with/volunteer at a non-profit organization whose work is related to poverty, employment, economic policy advocacy, welfare, such as a homeless shelter, affordable housing agency, or soup kitchen) for at least 2 days and describe/reflect on your experience and what you have learned in class. You must provide a description of your work, the nature of organization and the number of days work as well as a contact number for the organization in the appendix). 3) Attend two (2) related congressional hearings in Montpelier on an economic issue we covered in class. LOGISTICS AND REPORT DUE DATE You will organize the entire project and work out the logistics among yourselves. You can work individually or as a team of two (maximum) people. If you are working as a team, be sure to make plans ahead with your partner and be sure to agree on a fair way of sharing the work. Your report should describe what you have learned about economic issues/policies and concerns and policy making in the real world (4 page maximum for individual reports; 6 page maximum for two-person report) on day of final exam in class, May 4. No extensions will be given. The report should consist of: 1) cover page, 2) a brief description of the main economic issue/policy that you want to examine, 3) background information on the conference, hearing, organization or a description of the survey or interview methodology, 4) and most importantly, what you have learned from your project - analysis of the discussions or survey/interview results, your reflection, thoughts and ideas based on your project experience. A good project must incorporate sound economic reasoning and the application of any tools learned in class. Your papers should be informative, thoughtful, and reflect your curiosity on a particular economic topic, as well as your resourcefulness and creativity. Some questions to reflect upon (depending on your project): What new learning resulted from the survey interviews, hearings, or your volunteer work environment, that you did not expect? How is the real world different or similar to what you have learned in class? What do you know now that you wish you had known before you began the project? What were the most valuable aspects of your experience, academically and personally? Your grade will be based on: 6 Last updated January 13, 2012 1) relevance and ability to connect the project with concepts and tools learned in class (20%), 2) the rigor of your economic reasoning and analysis (40%), 3) creativity and resourcefulness (30%), 4) writing skill, appearance (spelling, etc.) and adherence to guidelines of structure (10%). COURSE OUTLINE AND READING ASSIGNMENTS The following is a tentative schedule with the exception of the exam dates, which are fixed. Reading assignments should be completed by the first day the topic is covered in class. Please note there will be no classes on February 8 or April 23. Make-up classes are scheduled for Friday, February , 4-5pm and Friday, April 27, 4-5pm. Attendance is required. Both make-up classes will be held in 301 Williams. I. INTRODUCTION WEEK 1 (January 18-20) Introduction to the course Required readings: Goodwin, et al., Chapters 1 and 2. Frank, Chapters 1-5. WEEK 2 (January 23-27) Economic Tools and the Workings of an Economy Required readings: Goodwin, et al, Chapter 3. Krugman, P. “The Death of Horatio Alger.” [BB] Assignment 1 on PPF handed out. Due in class on February 3. WEEK 3 (January 30-February 6) Evolution of Economic Thought: Contributions of Adam Smith and Ricardo, Supply and Demand Required readings: Goodwin, et al, Chapter 1, pp. 14-19 (overview) and Chapter 4. Adam Smith, The Wealth of Nations, Volume I, Chapters I.1 and I.2 (http://www.econlib.org/library/Smith/smWN.html) Note: February 6 teams formed to work on Assignment 2. 7 Last updated January 13, 2012 Assignment 2 on supply and demand handed out. Due February 15. WEEK 4 (February 10) Evolution of Economic Thought: Karl Marx No class February 8. Make-up class Friday, February 10, 4-5pm. Required reading Miller, J. “Coming Clean on Class Conflict.” [BB] Week 5 (February 13 – 17) Say’s Law, and the Rise of Neoclassical Economics Required reading: Frank, remainder of book. Week 6 (February 20 -22) Macroeconomic measurement: Current approach Exam on February 24 Required reading: Goodwin, et al, Chapter 5. Assignment 3 handed out. Due March 2 in class. Week 7 (February 27 – 29) Macroeconomic measurement: Environmental and Social Dimensions Required reading: Goodwin, et al, Chapter 6. Week 8 (March 2-14) The Great Depression and the Keynesian Revolution Required reading: Goodwin, et al, Chapter 7. Reich, R., Chapters 1-3. Week 9 (March 16-23) Aggregate Demand and Economic Fluctuation Required reading: Goodwin, et al, Chapter 8. 8 Last updated January 13, 2012 Submission of SCLP topic and plan (one paragraph) due March 23, Friday. Week 10 (March 28-30) Fiscal Policy Exam March 26 Required reading: Goodwin, et al, Chapter 10. Reich, R., Chapter 6: “The Great Prosperity: 1947-75.” Week 11 (April 2-6) Money and Monetary Policy Required reading: • Goodwin, et al, Chapters 11 and 12. Week 12 (April 9-13) Monetarism, Supply-Side Economics, and the Debate over Debts, Deficits, and Taxes. Required reading: Goodwin, et al, pp. 247-249. Koechlin, T. “ The Wrong Deficit.” [BB]. Krugman, P. “The Tax Cut Con.” [BB]. Reaction paper due in class April 11. Assignment 4 handed out. Due April 18. Week 13 (April 16-20) Are There Macroeconomic Implications of Growing Income Inequality? Required reading: Goodwin, et al, Chapter 3, Section 3. Reich, R., Chapter 4: “How Concentrated Income at the Top Hurts the Economy.” Week 14 (April 25-27) The Financial Crisis No class April 23, make-up class April 27, 4-5pm. 9 Last updated January 13, 2012 Required reading: Handout on Minsky and Kindelberger. Reich, R., Chapters 7-8. 4: Week 15 (April 30-May 2) Macroeconomic Challenges of the Twenty-First Century Required reading: Goodwin, et al, Chapter 15. Reich, Chapters 7-8, all of Part III. [Part II is optional but a good read]. Social Classroom Learning Project due May 4 at the time of the final exam. 10 Last updated January 13, 2012 Summary of due dates 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Assignment 1, February 3 Assignment 2, February 15. Exam 1, February 24 Assignment 3, March 2. SCLP project description and plan, March 23 Exam 2, March 26. Reaction paper, April 11. Assignment 4, April 18. Final exam: May 4, 10:30am, 103 Rowell. SCLP project, May 4. 11