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ECNS 502 Macroeconomic Theory Montana State University – Depart ECNS 502 Macroeconomic Theory Montana State University – Depart. of Ag. Econ. & Econ. Course Number 30020 Spring 2017 Course Packet Dr. Gilpin Course Schedule Term Paper Homework Week Date Topic Due Dates Due Dates 1 Jan 12 Syllabus & Lecture 1 2 17 Lecture 2 2 19 Lecture 3 & Lit. review guidelines 3 24 Lecture 3 con. Topic 3 26 SAS Module 1: Importing/exporting data 4 31 Lecture 3 con. 4 Feb 2 Lecture 3 con. 5 7 Lecture 4 Step 2 (references) 5 9 SAS Module 2: Cleaning data 6 14 Lecture 5 6 16 Lecture 5 con. 7 21 Lecture 5 con. 7 23 Lecture 5 con. 8 28 SAS Module 3: Merging data 8 Mar 2 Exam I: Lectures 1- 5 (LINH 306 – during class time) 9 7 Lecture 6 Step 3 (summaries) 9 9 Lecture 6 con. 10 14 Spring Break (no class) 10 16 Spring Break (no class) 11 21 Lecture 7 Step 4 (paper outline) 11 23 Lecture 7 con. 12 28 Lecture 8 12 30 Lecture 8 con. 13 Apr 4 Lecture 8 con. 13 6 Lecture 8 con. 1st draft of research paper 14 11 Lecture 9 14 13 Lecture 9 con. 15 18 Lecture 9 con. 15 20 Student Presentations Present research 16 25 Student Presentations Present research 16 27 Review for exam 17 May 1 Final Exam: Lectures 6 – 9 (LINH 406 2-3:50 pm) Final draft This page is intentionally left blank ECNS 502: Macroeconomic Theory Dr. Gilpin Table of Contents ______________________________________________________________________________ Syllabus ............................................................................................................................................ i Lecture 1: Introduction to Macroeconomics` ..................................................................................1 Lecture 2: Macroeconomic Growth Empirical Facts .....................................................................21 Lecture 3: Solow Growth Model ...................................................................................................33 Lecture 4: Applications Using the Solow Growth Model .............................................................65 Lecture 5: Neoclassical Growth Model .........................................................................................71 Lecture 6: Applications Using the Neoclassical Growth Model .................................................107 Lecture 7: Overlapping Generations Model ................................................................................123 Lecture 8: Applications Using the Overlapping Generations Model ...........................................139 Lecture 9: Fiscal and Monetary Policy ........................................................................................173 Midterm Exam Information and Practice Exam ..........................................................................203 Final Exam Information and Practice Exam ................................................................................207 Reading Article I ..........................................................................................................................211 Reading Article II ........................................................................................................................215 Research Project Requirements ...................................................................................................223 ______________________________________________________________________________ This page is intentionally left blank Montana State University – Depart. of Ag. Econ. & Econ. ECNS 502 Macroeconomic Theory (3 credits) Instructor: Dr. Gilpin Office: 313B Linfield Hall Office Hours: M - R: 9 – 10 am & by appt. Phone: 994-5628 Class Website: dropbox.com (will receive invitation) Email: [email protected] Course Description This course provides the bridge from undergraduate to introductory Ph.D.-level macroeconomics. The foundation of modern macroeconomics and dynamic economic analysis are rigorously presented. The macroeconomic workhorses: the Solow growth model, the Neoclassical growth model, the overlapping generations model, and models of technological change and technology adoption are surveyed along with many extensions to those models. Additional topics include time inconsistency, dynamic efficiency, and the Lucas critique. The official prerequisite for this course is a passing grade in ECNS 302. However, basic calculus skills, such as the ability to use derivatives and integrals, and the knowledge of optimization are required. Student Learning Outcomes Upon completion of this course, students should be able to: • Assess various models that explain how countries grow, both in the short and long run. • Apply mathematical tools necessary to analyze modern macroeconomic models. • Explain the effects of fiscal and monetary policies on the macroeconomy. Course Material - There are no required texts for this course. Grades The course grades will be determined by one midterm exam (25%), homework assignments (20%), a project (20%), and a final exam (35%). The project is based on a presentation (4%) while the paper is (16%) of your final grade. Please inform me ahead of time if the exam date has an unavoidable conflict. There is no extra credit work assigned or accepted during the semester. Grading Scale A (93-100), A- (90-92), B+ (87-89), B (83-86), B- (80-82), C+ (77-79), C (70-76), D (69-60), F(<60). Homework There are homework assignments throughout the semester. Homework assignments are workout problems similar to those discussed in-class. These will prepare you for the midterm and final exams. i Expectations • Don’t be late to class. • Review the previous class’s notes and do any assignments. o Try to work as independently as possible on the homework. • Participate in class discussions and problem solving. Ask all of the questions you have. o Don’t eat, text, or otherwise engage in activities that draw your attention away from the lecture. o Multitasking learning with trivial matters is stupid. • Final grades reflect outputs, not inputs. Additional Information 1. If you desire classroom/testing accommodations for a disability, please contact me outside of class to present the written supporting memorandum of accommodation from the office of Disability Student Services. Requests for accommodations for disability must be received and authorized by me in written form no less than two weeks in advance of need in order to allow adequate time to review and make appropriate arrangements. No accommodation should be assumed until authorized. 2. I follow the policies in the MUS Policy and Procedure Manual with regard to cheating, plagiarism, and academic dishonesty. A grade of zero will be given for any assignment or examination on which the student is in violation of a policy, and the incident will be reported to the Office of the Dean of Students. I reserve the right to refuse to sign a drop form if cheating has been committed on an examination. 3. I expect you to follow the MSU Student Conduct Code. No form of harassment is tolerated. 4. I adhere to the policies in the MSU Catalog on assigning grades of incomplete. I only award a grade of incomplete upon the student proving there was such a hardship that would render it unjust to hold the student to the time limits previously fixed for the completion of his/her work. 5. Any student desiring to observe a religious holiday must contact me before the absence. Regarding assignments due on a religious holiday, it is preferable that they be submitted before observance; however, the due date will be extended to the next school day following the holiday if the student chooses. 6. I adhere to the policies in the MSU Catalog on change of grades. Final grades will not be changed except in the case of clerical error on my part or if it was fraudulently obtained. A change of final grade does not mean allowing additional time to complete the work of a course or allowing the student to submit work or to take or to retake examinations after the conclusion of the semester. 7. The information in this syllabus, including the schedule and grading information is not concrete. Any changes to the syllabus will be discussed in class. 8. You are required to attend the writing center to obtain feedback on all written assignments. ii Lecture 1: Introduction to Macroeconomics 1. Modern macroeconomics Macroeconomics is the study of the performance of the economy as a whole. There are five pillars of modern macroeconomics: 1. Output: the production of goods and services. 2. Prices: the cost of purchasing inputs and outputs over time. 3. Employment: the utilization of economies’ key resource. 4. Finance: how credit markets create economic efficiency and improve wellbeing. 5. Government policy: how government policies effect the economy. These five pillars are typically analyzed over three different time periods: 1. Long run: decade to decade changes in the economy. 2. Medium run: Referring to the business cycle (recessions and expansions). 3. Short run: year to year changes in the economy. Due to inflation, macroeconomic variables are categorized by whether they net out price changes. 1. Real: Variables that net out changes in price (inflation). 2. Nominal: Variables that are not adjusted for changes in price. 1.1 Aggregate output Aggregate output is the total quantity of goods and services produced in an economy during a particular time period. The main measures of aggregate output are Real Gross Domestic Product (RGDP or Real GDP) and Real Gross Domestic Product per Capita (RGDPP or Real GDPP). Over the last 100 years: 1. U.S. RGDP has grown by 3.4% annually. 2. U.S. RGDPP has grown by 2.2% annually.
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