Office: 201 College Hall
Telephone: 895-4208 (voice mail)
Class Times: 9:15-11:30 Monday--Friday
Office Hours: 11:30-12:00 Monday--Friday (except first two Tuesdays of block)
Additional hours as needed or by appointment
Required Texts: Farmer, Roger E. A., Macroeconomics, second edition
Quantitative Reasoning Jessica Johanningmeier
Consultant: 125 Library
895- 4222 or JJohanningmeier@cornellcollege.edu
Tentative Office Hours: 2:30-3:00 Monday--Friday
Macroeconomics is the study of economies as a whole. In this class we will attempt to answer five primary questions:
(1) What are the sources of growth and why do some countries grow faster than others?
(2) What are the causes of recessions and can they be eliminated?
(3) Is there anything the public or the government can do to maintain full employment of the work force?
(4) What creates inflation and is it possible to maintain stable prices?
(5) Is international trade beneficial and what are its macroeconomic implications?
In order to answer these questions, our primary focus in this class will be on developing a model of the U.S. economy that helps us explain and predict the aggregate performance of the economy. Our model will attempt to explain the behavior of economic variables such as interest rates, output, inflation, money growth, exchange rates, and unemployment, to name a few. Because these factors play a fundamental part in your everyday lives regardless of your chosen career, the “real world” applicability of this course is very high. This is the reason why an active interest in the world around you will serve you well in understanding classroom material. I encourage you to pay attention to current events and bring in any relevant newspaper articles to share with the rest of the class.
In building our economic model in this class, our ultimate objective will be to develop “guidelines” for the conduct of monetary and fiscal policy. As we shall see, however, economists do not agree upon on how monetary and fiscal policy should be conducted (hence, the popular portrayal of economists as bickering and indecisive). As a result, policy guidelines for the conduct of monetary and fiscal policy are controversial. Even though there is no consensus on the ‘right’ or ‘wrong’ ways to enact policy, by fully understanding the current debates in Macroeconomics, students will become more discerning consumers of information from the economic world that surrounds them.
Economics is more than a discipline of study. It is also a way of thinking and approaching problems in a systematic manner. This class, together with Intermediate Microeconomics, composes the core courses in the Economics major. As a result, my expectations for students of this course are very high. The workload for this class is significant and you will be expected to come to every class fully prepared to participate in all discussions and answer all questions.
Remember: "The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist."
-- John Maynard Keynes
Grading: Course grades will be determined by four classes of assignments and will be based on 450 possible points. I reserve the right to use my discretion at the margin and things such as class participation will be considered in borderline cases.
(1) Exams: Two midterm exams and a comprehensive final exam will be given. Each midterm will be worth 100 points and the final will be worth 125 points. If a make-up exam is needed, a time must be arranged in advance of the test date.
(2) Homeworks: Homeworks, roughly 4-5, will be given periodically throughout the term. The purpose of these homeworks is to give you an opportunity to identify your areas of weakness before an exam and also to ensure that you do not fall behind in class preparation. The total points from homeworks will sum to 50 points.
(3) Paper: Each student will be required to write one short paper on a published newspaper or magazine article that I will choose. This paper will be related to a topic of current economic interest and also will have some relationship to class material. Included in your paper should be a brief review of the article, an explanation of the author’s point of view, and a critical analysis of the article. This paper should be 3-5 pages long, excluding graphs, and will be worth 40 points.
(4) Class Participation: Class participation will count for 35 points toward the final grade and will be assigned on the basis of both quantity and quality of participation. Topics that are important enough to find their way onto exams will definitely be reviewed extensively in class. If you miss a class it is your responsibility to find out what announcements and other materials or assignments were presented in class.
Class Format: I plan on using class time in the following way. The morning sessions will consist of lecturing from our main textbook, Farmer. The afternoon sessions will primarily be used for three purposes. First, exams will be given and reviewed during this time. Second, class discussions will be conducted on any assigned readings outside of the textbook that will be assigned. Third, in-class problem sets will be worked on in an effort to review important concepts from the lectures.
Academic Honesty: Academic dishonesty will not be tolerated and will be dealt with in accordance with Cornell’s student regulations.
Learning Disabilities: Cornell College is committed to providing equal educational opportunities to all students. If you have a documented learning disability and will need any accommodation in this course, you must request the accommodation(s) from [the instructor of the course] as early as possible and no later than the third day of the term. Additional information about the policies and procedures for accommodation of learning disabilities is available on the Cornell web site at http://cornellcollege.edu/academic_affairs/disabilities/.
OUTLINE OF TOPICS AND READINGS
Also, additional articles and topical readings will be assigned throughout the semester.
Section 1: Introduction to Macroeconomics
Monday #1: History of Macroeconomics
Intro to Macroeconomics F: Chapter 1
Tuesday #1: Measuring the Economy F: Chapter 2
Macroeconomic Facts F: Chapter 3
Section 2: The Classical Model and Long-Run Macroeconomics
Wednesday #1: Classical Theory of Aggregate Supply F: Chapter 4
Thursday #1: Classical Theory of Aggregate Demand F: Chapter 5
Friday #1: Savings and Investment F: Chapter 6
Section 3: The Neoclassical Model and Growth
Monday #2: Neoclassical Growth Theory F: Chapter 15
Tuesday #2: Neoclassical Growth, cont.
Wednesday #2: Money Supply F: Chapter 10
Thursday #2: Unemployment F: Chapter 7
Friday #2: Keynesian Theory of Aggregate Supply F: Chapter 8
Monday #3: Money Demand and LM Curve F: Chapter 9,11
Capital Markets and IS Curve
Tuesday #3: IS/LM Model and Aggregate Demand F: Chapter 12
Wednesday #3: Rational Expectations F: parts of Chapter 18
Thursday #3: Exam #2
Friday #3: Stabilization Policy and the Natural Rate Hypothesis
Section 5: Open Economy Macroeconomics
Monday #4: Intl’ Trade and Exchange Rates F: Chapter 13
Short Paper Due
Tuesday #4: Intl’ Trade, cont.
Conclusions F: Chapter 19
Wednesday #4: Comprehensive Final Exam