Princeton University Department of Economics Undergraduate Program Link : http://faculty.washington.edu/ghiro/ECO301Syll.htm Macroeconomics Spring Term 2005 Tuesday and Thursday, 1:30 – 2:50 pm Room: Computer Science 104 Syllabus Fabio Ghironi Contact Information Office: 312 Fisher Hall Office Hours: Tuesday, 11:00 am – 12:15 pm and 3:00 – 4:15 pm Phone: 609-258-0047 E-mail: [email protected] or [email protected] http://www2.bc.edu/fabio-ghironi Preceptors Nicolas Depetris and Rujikorn Pavasuthipaisit Office: TBA Phone: TBA E-mail: [email protected] and [email protected] Precepts: TBAPurpose of the Course, Prerequisites, Course Materials, Requirements and Grading, Course Outline Purpose of the Course: This course covers the theory of modern macroeconomics in detail. We will focus on the determination of macroeconomic variables – such as output, employment, prices, and the interest rate – in the short, medium, and long run, and we will address a number of policy issues. We will discuss several examples of macroeconomic phenomena in the real world. A central theme will be to understand the powers and limitations of macroeconomic policy in stabilizing the business cycle and promoting growth. Prerequisites: The prerequisites for this course are ECO 100 and ECO 101. Course Materials: The textbook for the course is Macroeconomics, by Olivier Blanchard, Prentice Hall, Third Edition, 2003. The Study Guide by David Findlay is also required. Some additional readings are listed in the Course Outline section of the syllabus, including links to downloadable versions when available. These readings are also available on reserve. In addition, you should also follow current economic events by reading newspapers (Financial Times, The New York Times, The Wall Street Journal, The Washington Post) and magazines (Business Week, The Economist, Fortune). Textbook and study guide can be bundled in a "value pack" including also an Interactive CD and a subscription to the online version of The Economist. Alternatively, you can subscribe to The Economist at http://www.EconomistAcademic.com. The IMF’s World Economic Outlook is a good source of information on recent economic developments (and you can also download figures and data). Other course materials – such as my lecture notes, homework, and homework solutions – will be posted in the course web site on Blackboard.Requirements and Grading: Your grade for the course will be based on a combination of requirements: - (Approximately) Weekly Homework Assignments - A Midterm Exam - A Final Exam Active class participation is not a formal requirement, but I encourage you to ask questions at any time during lectures. I want you to learn how to think about macroeconomic issues and to interpret phenomena that you are exposed to in the media. Homework Assignments will help you to develop this ability. The harder you work on the assignments, the more likely it is that you will do well in the exams, since these will consist mostly of homework-type questions. I encourage you to form groups to discuss the homework, but each member of a group must turn in her/his own answers. Your homework answers will be graded by the Preceptors, Nicolas Depetris and Rujikorn Pavasuthipaisit. Grades will be on a scale from 0 to 100. Nicolas and Rujikorn will prepare homework answers that will be distributed and reviewed in precept meetings. (Precept meetings will also be occasions to discuss the additional readings mentioned in the Course Outline section of the syllabus.) The Midterm Exam will take place in class, at our usual meeting time on Tuesday, March 8. For this exam, you will be responsible for the material covered up to and including the last lecture before the exam. You should use the exercises in the textbook’s Study Guide to practice for the midterm and final exams. The Final Exam will take place on DATE, TIME, AND ROOM TBA. The exam will again consist of homework-type questions. It will cover material from the entire course. The weights of the various requirements in your final grade will be as follows: - Homework Assignments: 20 percent - Midterm Exam: 30 percent - Final Exam: 50 percentImportant: At the end of the Course Outline, I describe an exercise that will allow those of you who participate to receive extra credit. Course Outline: Following is a list of the topics we will cover, along with the references to textbook and additional readings. Part I. Introduction - The Vocabulary of Macroeconomics, Blanchard, Chapter 2. (Read chapters 2 and 1 in advance – in that order.) - Macroeconomics in the Real World, Blanchard, Chapter 1. Additional Reading: - IMF, World Economic Outlook, September 2004, Chapter 1. Part II. The Core The Short Run - The Goods Market, Blanchard, Chapter 3. - Financial Markets, Blanchard, Chapter 4. - Goods and Financial Markets: The IS-LM Model, Blanchard, Chapter 5. The Medium Run - The Labor Market, Blanchard, Chapter 6. - Putting All Markets Together: The AS-AD Model, Blanchard, Chapter 7. - The Natural Rate of Unemployment and the Phillips Curve, Blanchard, Chapter 8. - Inflation, Activity, and Nominal Money Growth, Blanchard, Chapter 9. Additional Readings: - Ball, Laurence, and N. Gregory Mankiw (2002): “The NAIRU in Theory and Practice,” Journal of Economic Perspectives 16(4): 115-136. (Link: NBER Working Paper version.)- Romer, David (2000): “Keynesian Macroeconomics without the LM Curve,” Journal of Economic Perspectives 14(2): 149-169. (Link: JSTOR.) - Taylor, John B. (2000): “Reassessing Discretionary Fiscal Policy,” Journal of Economic Perspectives 14(3): 21-36. (Link: JSTOR.) The Long Run - The Facts of Growth, Blanchard, Chapter 10. - Saving, Capital Accumulation, and Output, Blanchard, Chapter 11. - Technological Progress and Growth, Blanchard, Chapter 12. - Technological Progress, Wages, and Unemployment, Blanchard, Chapter 13. Additional Readings: - Ball, Laurence, and Robert Moffitt (2001): “Productivity Growth and the Phillips Curve,” NBER Working Paper 8421. - Oliner, Stephen D., and Daniel E. Sichel (2000): “The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?” Journal of Economic Perspectives 14(4): 3-22. (Link: JSTOR.) Part III. The Role of Expectations - Basic Tools, Blanchard, Chapter 14. - Financial Markets and Expectations, Blanchard, Chapter 15. -