DOCSLIB.ORG

Loyola University New Orleans

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Loyola University New Orleans Loyola University College of Business Administration Intermediate Macroeconomic Analysis Economics 206 - Section 001 Instructor: Dr. Barnett Semester: Spring, 2016 Class meetings: Mondays, and Wednesdays, 8:00 a.m. to 9:15 a.m. Room: 112 Miller Hall Office: 319 Miller Hall. Office hours: Office hours: Mondays and Wednesdays, 1:00 p.m. – 3:00 p.m.; Tuesdays, 8:00 a.m. - 10:00 a.m.; and, by appointment. Phone nos.: Office: 864-7950; E-mail: [email protected] Course prerequisites: Principles of Macroeconomics (ECON B101) N.B. This is a reading intensive, lecture/discussion class. Students are encouraged to ask questions. Catalog description: This course considers various theories concerning the functioning of the macroeconomy: Classical, Keynesian and the Neoclassical Synthesis, Monetarism, Supply-Side, Post Keynesian, and Austrian. Rational Expectations, Real Business Cycles and Dynamic Stochastic General Equilibrium, and New Keynesianism will also be considered Course purpose: It is not inaccurate to say that macroeconomic theory is in a state of disarray. Unlike the period from the time of the General Theory, in the mid-1930s, until the early 1970s, when there was “an” orthodox view based on the conventional Keynesian model,1 today no consensus exists. Rather, a number of competing theories coexist. The purpose of this course is to examine these theories in more depth than is the case in the principles of macroeconomics course, and to consider the policy implications of each. Thus we shall be analyzing, comparing, and contrasting the following theories and hypotheses: the Pre-Keynesian/Classical, orthodox Keynesian, Neoclassical Synthesis, Monetarist, Supply-Side, Post Keynesian, including Minsky’s Financial Instability, Fisher’s Debt-Deflation, and the Austrian Business Cycle theories, as well as Rational Expectations, Real Business Cycles and Dynamic Stochastic General Equilibrium, and New Keynesianism theories. However, despite the fact that that there is no agreement as to which is the best theory, given the current state of the economy, and the policy-makers clear reliance on Keynesian in its most crude form, regardless of the modern variant of macroeconomic theory to which they might claim allegiance, short shrift will be paid to Rational Expectations, Real Business Cycles and Dynamic Stochastic General Equilibrium, and New Keynesianism theories. 1 As we shall see, there are those who think that standard or orthodox Keynesianism is not true Keynesianism, in the sense of what Keynes himself really meant. 1 Course Learning Objectives Students completing this course successfully will: 1) be able to explain Pre-Keynesian/Classical theory and its implications for governmental policies; 2) be able to explain the Keynesian theory and its implications for governmental policies; 3) be able to explain the Neoclassical Synthesis and its implications for governmental policies; 4) be able to explain the Monetarist theory and its implications for governmental policies; 5) be able to explain the Supply-Side theory and its implications for governmental policies; 7) be able to explain the Post Keynesian theory, including Minsky’s Financial Instability Hypothesis, and its implications for governmental policies; 9) be able to explain Fisher’s Debt-Deflation Theory; 10) be able to explain the Austrian Business Cycle theory and its implications for governmental policies; and, 11) be able to explain the major flaws in Rational Expectations, Real Business Cycles and Dynamic Stochastic General Equilibrium, and New Keynesianism theories. This is a reading intensive, lecture/discussion class. Students are encouraged to ask questions. Text: Snowden, B., and H. R. Vane. 2005. Modern Guide to Macroeconomics: Its Origins, Development and Current State., Edward Elgar. Ebeling, R., ed. 1996. The Austrian Theory of the Trade Cycle and Other Essays. (Ludwig von Mises Institute.) Referred to in the schedule as ATTC. NB: Some important readings are attached. Grading: There will be two examinations. It is my normal practice to weight, on an individual basis, the exam with the more favorable outcome 60% and the exam with the less favorable outcome 40%.. I reserve the right to adjust your final grade upward or downward by one letter grade based upon your classroom performance. The grading scale is: A>89≥A->86≥B+ >82≥B>79≥B->76≥C+>72≥C>69≥C->66≥D+>62≥D>59≥F. Attendance: You will be held responsible for all lecture material and class discussions as well as all of the reading assignments. Therefore, although there is no formal attendance requirement, you are strongly urged to attend all class meetings. Communications: All Loyola email correspondence will be directed to students’ Loyola email address only. You are responsible for any communications addressed to your Loyola email account. Academic Integrity Statement: I consider honesty and integrity to be of the utmost importance and presume that my students do also, and thus that each and every one of you is a person of integrity. Therefore, I have one simple rule: you are to do your own work. I will not tolerate academic dishonesty in any way, shape, or form. The penalty in my class for cheating, no matter how minor the infraction might appear to be, is an F for the course. If you have any doubt 2 whatsoever as to whether a particular course of action or inaction would constitute academic dishonesty, you should consult me immediately. Electronic Devices: Absolutely no electronic devices of any type are allowed during exams. If you use one during an exam you will receive an F for the course. Disabilities: If you have a disability and wish to receive accommodations, please contact Sarah Mead Smith, Director of Disability Services at 504-865-2990. If you wish to receive test accommodations (e.g., extended test time), you will need to give the course instructor an official Accommodation Form from Disability Services. The Office of Disability Services is located in Marquette Hall 112. Emergency Statement: At times, ordinary university operations are interrupted as a result of tropical storms, hurricanes, or other emergencies that require evacuation or suspension of on-campus activities. To prepare for such emergencies, all students will do the following during the first week of classes: 1. Practice signing on for each course through Blackboard. 2. Provide regular and alternative e-mail address and phone contact information to each instructor. In the event of an interruption to our course due to the result of an emergency requiring an evacuation or suspension of campus activities, students will: 3. Pack textbooks, assignments, syllabi and any other needed materials for each course ad bring during an evacuation/suspension 4. Keep up with course work during the evacuation/suspension as specified on course syllabi and on-line Blackboard courses. 5. Complete any reading and/or writing assignments given by professors before emergency began. Assuming a power source is available.... 6. Log on to university Web site within 48 hours of an evacuation/suspension. 7. Monitor the main university site (www.loyno.edu) for general information. 8. Log on to each course through Blackboard or e-mail within 48 hours of an evacuation/suspension to receive further information regarding contacting course instructors for assignments, etc. 9. Complete Blackboard and/or other online assignments posted by professors (students are required to turn in assignments on time during the evacuation/suspension period and once the university campus has reopened.) 10. Contact professors during an evacuation/suspension (or as soon as classes resume on campus) to explain any emergency circumstances that may have prevented them from completing expected work. Further information about student responsibilities in emergencies is available on the Academic Affairs web site: http://academicaffairs.loyno.edu/students-emergency-responsibilities 3 All dates, except that of the final exam, are approximate. Dates Material Readings (classes) Jan. 20 (1) Introduction Text Ch. 1 & Preliminary Materials section of the Readings Jan. 25-Feb. 3 (4) Keynes and the Old Classical School Text Ch. 2 & Classicals section of the Readings Feb. 15-24 (4) Keynes & the Orthodox Keynesian School Text Ch. 3 & the Keynes section of the Readings Feb. 29-Mar. 2 (2) The Orthodox Monetarist School Text Ch. 4 and section of Readings on Friedman Mar. 7-9 (2) The Supply-Side School Hailstones, T. 1962. A Guide to Supply-Side Economics. Robert F. Dame. & Fink, R.H. 1982. Supply- side Economics. Alethia Books. Chapters 1,3,5,7,& 9 (These books are on reserve.) Mar. 14 (1) First Exam Mar. 9 (3) Mar. 16-30 (2) The New Classical I School and the Real Business Text Ch. 5-6 Cycle School Apr. 4 (1) The New Keynesian School Text Ch. 7 Apr. 6-13 (3) The Post Keynesian School, Minsky’s Financial Text Ch. 8 + sections of Instability Hypothesis, & Fisher’s Debt-Deflation Readings on Minsky and Theory. Fisher Apr. 18-May 11 (8) The Austrian School Text Ch. 9 & The Austrian Theory of the Trade Cycle and other essays MAY 16 FINAL EXAM (9:00 a.m.-11:00 p.m.) All dates, except that of the final exam, are approximate. 4 PRELIMINARY MATERIALS “Refresher” Mankiw, N. G. 1990. “A Quick Refresher Course in Macroeconomics.” Journal of Economic Literature. 28(4): 1645-1660. Read papes 1645-1648. http://scholar.harvard.edu/mankiw/files/Quick_Refresher.pdf Various Economists on the State of Macroeconomics Stiglitz, Jonathan M. Orszag and Peter R. Orszag (2002): Implications of the New Fannie Mae and Freddie Mac Risk-based Capital Standard http://www.pierrelemieux.org/stiglitzrisk.pdf Bernanke (2002): http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm Solow (2003): Dumb and Dumber in Macroeconomics. http://www2.gsb.columbia.edu/faculty/jstiglitz/festschrift/Papers/Stig-Solow.pdf Bernanke (2004): The Great Moderation. http://www.federalreserve.gov/boarddocs/speeches/2004/20040220/default.htm Mankiw (2006): The Economist as Scientist and Engineer. http://www.economics.harvard.edu/files/faculty/40_Macroeconomist_as_Scientist.pdf Chari and Kehoe (2006): Modern Macroeconomics in Practice: How Theory Is Shaping Policy.
Load more

Recommended publications
  • Expectations and the Meaning of Institutions
    EXPECTATIONS AND THE MEANING OF INSTITUTIONS FOUNDATIONS OF THE MARKET ECONOMY SERIES Edited by Mario J.Rizzo, New York University and Lawrence H.White, University of Georgia A central theme of this series is the importance of understanding and assessing the market economy from a perspective broader than the static economics of perfect competition and Pareto optimality. Such a perspective sees markets as causal processes generated by the preferences, expectations and beliefs of economic agents. The creative acts of entrepreneurship that uncover new information about preferences, prices and technology are central to these processes with respect to their ability to promote the discovery and use of knowledge in society. The market economy consists of a set of institutions that facilitate voluntary cooperation and exchange among individuals. These institutions include the legal and ethical framework as well as more narrowly ‘economic’ patterns of social interaction. Thus the law, legal institutions and cultural or ethical norms, as well as ordinary business practices and monetary phenomena, fall within the analytical domain of the economist. Other titles in the series THE MEANING OF MARKET PROCESS Essays in the development of modern Austrian economics Israel M.Kirzner PRICES AND KNOWLEDGE A market-process perspective Esteban F.Thomsen KEYNES’ GENERAL THEORY OF INTEREST A reconsideration Fiona C.Maclachlan LAISSEZ-FAIRE BANKING Kevin Dowd EXPECTATIONS AND THE MEANING OF INSTITUTIONS Essays in economics by Ludwig Lachmann Edited by Don Lavoie London and New York First published 1994 by Routledge 11 New Fetter Lane London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York NY 10001 © 1994 Don Lavoie All rights reserved.
    [Show full text]
  • Why Didn't Economists Predict the Great Depression?
    Why Didn’t Economists Predict the Great Depression? Leon Taylor KIMEP Social Research Working Paper No. 6 February 2011 © Copyright 2011 Leon Taylor KIMEP Social Research Working Papers ISSN 1996 -7020 2 Why didn’t economists predict the Great Depression? Leon Taylor 1 The Department of Economics and the Office of the President Kazakhstan Institute of Management, Economics and Strategic Research (KIMEP) Almaty, Kazakhstan Draft: January 2011 Version for researchers Abstract Economists failed to forecast the Great Depression, perhaps largely because they had lacked reason to theorize about business cycles. This paper tries to explain the lack of incentives. Since theory is a public good, the market produces too little of it. One non-market incentive, ex post fame, may be proportional to the value of the theory -- and thus induce more theory as its value grows. But fame comes from explaining famous events. A theory may explain a potential disaster so well as to enable policymakers to avert it. Since the event does not occur, its explainer cannot become famous. Theorists who anticipate this paradox will avoid work on the potential event; theorists who work nonetheless on events never to occur will become obscure. Another factor retarding business-cycle theory is scale economies. Learning-by-doing can induce theory by cutting its cost. Scale economies favor the first theories to be well-developed. These dealt with markets – not with business cycles – in the decades before the Depression which redirected attention to macroeconomics. ( JEL classifications: B10, E32) I. Introduction The Great Depression bemused economists of the day. “The slump in trade and employment and the business losses which are being incurred,” Keynes (1963: 148) said in 1931, “are as bad as the worst which have ever occurred in the modern history of the world.” Economists were caught off-guard.
    [Show full text]
  • The Great Recession: Market Failure Or Policy Failure? (Studies in Macroeconomic History) Hardcover
    THE GREAT RECESSION Since publication of Robert L. Hetzel’s h e Monetary Policy of the Federal Reserve (Cambridge University Press, 2008 ), the intellectual consensus that had charac- terized macroeconomics has disappeared. h at consensus emphasized ei cient markets, rational expectations, and the ei cacy of the price system in assuring macroeconomic stability. h e 2008–2009 recession not only destroyed the pro- fessional consensus about the kinds of models required to understand cyclical l uctuations but also revived the credit-cycle or asset-bubble explanations of recession that dominated thinking in the nineteenth century and i rst half of the twentieth century. h ese “market-disorder” views emphasize excessive risk taking in i nancial markets and the need for government regulation. h e pres- ent book argues for the alternative “monetary-disorder” view of recessions. A review of cyclical instability over the last two centuries places the 2008–2009 recession in the monetary-disorder tradition, which focuses on the monetary instability created by central banks rather than on a boom-bust cycle in i nan- cial markets. Robert L. Hetzel is Senior Economist and Research Advisor in the Research Department of the Federal Reserve Bank of Richmond, where he participates in debates over monetary policy and prepares the bank’s president for meetings of the Federal Open Market Committee. Dr. Hetzel’s research on monetary pol- icy and the history of central banking has appeared in publications such as the Journal of Money, Credit, and Banking; the Journal of Monetary Economics ; the Monetary and Economics Studies series of the Bank of Japan; and the Carnegie- Rochester Conference Series .
    [Show full text]
  • Financial Markets and Economic Growth Eduard Braun
    Financial Markets and Economic Growth Eduard Braun To cite this version: Eduard Braun. Financial Markets and Economic Growth. Economics and Finance. Université d’Angers, 2011. English. tel-00968723 HAL Id: tel-00968723 https://tel.archives-ouvertes.fr/tel-00968723 Submitted on 1 Apr 2014 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. Université d’Angers Année 2011 N° d’ordre 1182 Financial Markets and Economic Growth Thèse de doctorat en sciences économique Ecole doctorale DEGEST Présentée et soutenue publiquement le 27 Septembre 2011 à Angers par Eduard BRAUN Devant le jury ci-dessous : Renaud Fillieule, Rapporteur Université de Lille 1 Antoine Gentier, Rapporteur Université Paul Cézanne Aix- Marseille 3 Jörg Guido Hülsmann, Directeur de thèse Université d’Angers Thorsten Polleit, Rapporteur Frankfurt School of Finance and Management Bruno Séjourné, Examinateur Université d’Angers Directeur de thèse : Jörg Guido HÜLSMANN Groupe de Recherche Angevine en Economie et Management (GRANEM) N° ED 20077353 ii CONTENTS LIST OF ABREVIATIONS.................................................................................................................................
    [Show full text]
  • Monetary and Fiscal Unification in Nineteenth-Century Germany : What Can Kohl Learn from Bismarck? / Harold James
    ESSAYS IN INTERNATIONAL FINANCE ESSAYS IN INTERNATIONAL FINANCE are published by the International Finance Section of the Department of Economics of Princeton University. The Section sponsors this series of publications, but the opinions expressed are those of the authors. The Section welcomes the submission of manuscripts for publication in this and its other series. Please see the Notice to Contributors at the back of this Essay. The author of this Essay, Harold James, is Professor of History at Princeton University. His publications include The German Slump: Politics and Economics 1924–1936 (1986), A German Identity (1989), and International Mone- tary Cooperation Since Bretton Woods (1996). He is also a coauthor of The Deutsche Bank 1870–1995 (1995). PETER B. KENEN, Director International Finance Section INTERNATIONAL FINANCE SECTION EDITORIAL STAFF Peter B. Kenen, Director Margaret B. Riccardi, Editor Lillian Spais, Editorial Aide Lalitha H. Chandra, Subscriptions and Orders Library of Congress Cataloging-in-Publication Data James, Harold. Monetary and fiscal unification in nineteenth-century Germany : what can Kohl learn from Bismarck? / Harold James. p. cm. — (Essays in international finance ; no. 202) Includes bibliographical references. ISBN 0-88165-109-5 1. Monetary policy—Germany—History—19th century. 2. Fiscal policy—Germany— History—19th century. 3. Monetary unions. I. Title. II. Series. HG136.P7 no. 202 [HG998] 332.4′943′09034—dc21 97-2800 CIP Copyright © 1997 by International Finance Section, Department of Economics, Princeton University. All rights reserved. Except for brief quotations embodied in critical articles and reviews, no part of this publication may be reproduced in any form or by any means, including photocopy, without written permission from the publisher.
    [Show full text]
  • Economic Quarterly
    German Monetary History in the First Half of the Twentieth Century Robert L. Hetzel t the end of 1998, the German Bundesbank turned over the adminis- tration of monetary policy to the European Central Bank (ECB). In Athe years between World War I and 1998, the Bundesbank had come to embody the modern central bank. What history did Germany traverse to make possible the creation of such an institution? And how does that history help us define a modern central bank? Today, a central bank chooses one of two objectives. It may target either the exchange rate or domestic economic conditions, including the inflation rate. In either case, the central bank is the unique institution charged with controlling the chosen objective. Such control relies exclusively on the central bank’s management of its own balance sheet. In particular, the central bank controls its liabilities (the monetary base) through its asset acquisition.1 Conversely, a country with a modern central bank does not rely on govern- ment intervention in specific markets to achieve either price-level or exchange- rate objectives. If the central bank targets the exchange rate, the country does not rely on exchange controls, multiple exchange rates, tariffs, quotas, or other This history will be continued in a related article, to appear in a future issue of the Economic Quarterly. It will consider how Germany came to define stability of the mark in terms of its internal value (price level) rather than external value (exchange rate). It will also explain the reasons for the creation of the European Monetary System and its successor, the European Monetary Union, and review the political process that led to the creation of the ECB.
    [Show full text]
  • The Austrian School of Economics
    e Austrian School of Economics e Austrian School of Economics A History of Its Ideas, Ambassadors, and Institutions Eugen Maria Schulak and Herbert Unterköfler Translated by Arlene Oost-Zinner Ludwig von Mie Intitute AUBURN,ALABAMA Copyright © 2011 by the Ludwig von Mises Institute Published under the Creative Commons Attribution License 3.0. http://creativecommons.org/licenses/by/3.0/ Ludwig von Mises Institute 518 West Magnolia Avenue Auburn, Alabama 36832 Ph: (334) 844-2500 Fax: (334) 844-2583 mises.org 10 9 8 7 6 5 4 3 2 1 ISBN: 978-1-61016-134-3 Translator’s Note e goal of this translation is accurately to convey the content of its original German counterpart, as well as the breezy style of its unmistakably Austrian authors. Word choice was of prime consideration throughout, followed by clear English syntax and contemporary idiomatic usage. e book contains many citations from German works never before translated. All passages falling into this category have been rendered in English for the first time in this edition. e translator wishes to thank Douglas French and Jeffrey Tucker of the Mises Institute for bringing this important project to her attention; Nathalie Charron Marcus for countless hours of tracking down details; and Robert Grözinger, whose preliminary translation proved helpful throughout. Auburn, Alabama February , v Contents Preface to the English Edition ix Preface xi e Austrian School in Brief xv 1 Vienna in the Mid-Nineteenth Century 2 Economics as an Academic Discipline 3 e Discovery of the Self: e eory of Subjective Value 4 e Emergence of the Austrian School in the Methodenstreit 5 Carl Menger: Founder of the Austrian School 6 Time is Money: e Austrian eory of Capital and Interest 7 Friedrich von Wieser: From Economist to Social Scientist 8 Eugen von Böhm-Bawerk: Economist, Minister, Aristocrat 9 Emil Sax: e Recluse from Voloska 10 Further Students of Menger and Other Supporters 11 Money Makes the World Go Round: e Monetary eory of the Business Cycle vii viii CONTENTS 12 Joseph A.
    [Show full text]
  • Mises: the Last Knight of Liberalism
    This book can be purchased in hardback from Mises.org The Ludwig von Mises Institute dedicates this volume to all of its generous donors and wishes to thank these Patrons, in particular: The Lowndes Foundation, Douglas E. French and Deanna Forbush, Hugh E. Ledbetter, Frederick L. Maier I Christopher P. Condon, R.E. Fox, Mr. and Mrs. Michael L. Keiser, Richard J. Kossman, M.D., Mr. and Mrs. R. Nelson Nash, Dr. and Mrs. William H. Peterson, Sheldon Rose, Chris Rufer, Art Schumer I Lloyd Alaback, Wesley and Terri Alexander, Ross K. Anderson, Anonymous, Robert G. Beard, Jr., JD, CPA, Elsie K. Beekley, Mr. and Mrs. William M. Benton, Professor Walter Block, John Hamilton Bolstad, Herbert Borbe, Mr. and Mrs. J. Robert Bost, Philip G. Brumder, Aubrey T. Carruth, Dan H. Courtney, Professor Jim Cox, Mr. and Mrs. Jeremy S. Davis, Mr. and Mrs. Charles F. de Ganahl, Michael H. and William E. Denyer, Dr. and Mrs. George G. Eddy, Dr. Larry J. Eshelman, Clyde Evans, Robert S. Ferguson, Mr. and Mrs. Willard Fischer, James W. Frevert, Henry Getz, Stewart B. Gillespy, Brian J. Gladish, Charles C. Groff, Charles F. Hanes, Keith M. Harnish, Mr. and Mrs. John A. Hayes, Jule R. Herbert, Jr., Dr. Frederic Herman, Dr. James M. Herring, Adam L. Knott, David M. Kramer, Sylvio O. LeComte, Arthur L. Loeb, James Mahannah, Ronald Mandle, Mr. and Mrs. William W. Massey, Jr., Wesley G. McCain, Joseph Edward Paul Melville, A. Minis, Jr., Dr. Dorothy Donnelley Moller, Karlheinz Muhr, The Orcas Bay Foundation, George A. Peterson, Professor and Mrs.
    [Show full text]