Macalester College

Intermediate Macroeconomic Analsysis

Economics 371

Fall 2008

Professor: Pete Ferderer

Time & Place: MWF: 1:10-2:10 and 2:20-3:20, Carnegie 305

Office Hours: Monday, 3:30-4:30 p.m., Thursday 10:00-noon and by appointment

PDF File for Course Syllabus

Important Links:

Gap Minder

The History of Economic Thought Website

The Economist

Macro Data at the St. Louis Fed

Economagic Data

Reading List (Note that readings may change over the semester. Readings are listed in order of importance.)

Aug. 27 (W) -- Introduction

[1] Mankiw, Ch. 1.
[2] The Coolest Graphs Ever!

Aug. 29 (F) - Measurement of the Macroeconomy

[1] Mankiw, Ch. 2

[2] GDP: One of the Great Inventions of the 20th Century, Survey of Current Business, 2000, p. 1-6.
[3] The Economist, "Grossly Distorted Picture," 3/13/2008.

Sep. 3(W) - Measurement of the Macroeconomy

[1] The Economist, "Chasing the Leader," 2/8/2003.

[2] The Economist, "Feet, Dollars and Inches," 4/3/2008.

Sep. 5 (F) -- Microfoundations: Production and Factor Demands
[1] Mankiw, Ch. 3, pp. 44-59.

Sep. 8 (M) -- Microfoundations: Labor Supply and Income Distribution
[1] HET, "The Microfoundations," pp. 9-16.

[2] Yellen, "Economic Inequality in the U.S.," FRB of San Francisco Economic Letter, 12/1/2006.
[3] Ohanian, et al., "Work and Taxes: Allocation of Time in OECD Countries," FRB of Kansas City Economic Review, 3rd Quarter 2007.

Sep. 10 (W) -- Financial Markets
[1] Van Horne, "The Function of Financial Markets," In Financial Market Rates and Flows, 2001 (Moodle, Emphasis on p. 1-7)
[2] Mishkin, "Globalization and Financial Development," 4/26/2007, p. 1-4.

Sep. 12 (F) -- Microfoundations: Savings
[1] Mankiw, Ch. 16, pp. 461-71.

Sep. 15 (M) - Microfoundations: Investment
[1] Mankiw, Ch. 17.
[2] Duca, "Marking Sense of the U.S. Housing Market Slowdown," FRB of Dallas Economic Letters, 11/2006

Sep. 17 (W) - The Neoclassical Macromodel and Say's Law
[1] HET, The Fisherian Vision and the Macromodel, pp. 1-7.
[2] Mankiw, Ch. 3, pp. 59-72.
[3] Video: Schneirou on the Labor Question and American Railroads (1 and 2)

Sep. 19 (F) - Money in the Neoclassical Macromodel
[1] Mankiw, Ch. 4, pp. 76-89.
[2] HET, The Neoclassical Macromodel, pp. 7-9 & 16-20
[3] Video: The Centralization of Money

Sep. 22 (M) - Seigniorage and Nominal Interest Rates
[1] Mankiw, Ch. 4, pp. 89-97.
[2] The Economist, "Crisp and Even," 12/20/2001.

Sept. 24 (W) - The Role of Central Banks
[1] The History of Central Banking in the United States," FRB of MinneapolisRview
[2] Mankiw, Ch. 18, pp. 510-516.
[3] Cecchetti, "Crisis and Responses: The Federal Reserve and the Financial Crisis of 2007-2008," J. of Economic Perspectives, forthcoming. (Moodle)
[4] The Economist, "Bankers' Trust," 4/24/2008.
[5] Grant, "The Fed's Subprime Solution," NYT, 8/26/2007.
[6] Video: Cramer: Bernanke, Wake Up

Sep. 26 (F) - The Gold Standard and Fiat Monetary Systems
[1] Mankiw, Ch. 4, pp. 97-109.
[2] Video: Fiat Empire

Sep. 29 (M) -- First Exam (7:00-9:00 P.M.)

Evolving Conceptions of the Macroeconomy

Oct. 1 (W) - The Great Depression, Keynes and Friedman
[1] The Economist, "Skidelsky on Keynes," 11/25/2000.
[2] Video: Great Depression I
[3] Video: Great Depression II
[4] Audio: FDR's First Fireside Chat
[5] Video: Pain

Oct. 3 (F) - The Keynesian Cross
[1] Mankiw, Ch. 10, pp. 278-87.
[2] Piger, "Is the Business Cycle still an Inventory Cycle?" National Economic Trends, 1/2005.

Oct. 6 (M) - The Goods Market and IS Curve
[1] Mankiw, Ch. 10, pp. 288-392.

Oct. 8 (W) - The Money Market and LM Curve
[1] Mankiw, Ch. 10, pp. 292-302.

Oct. 10 (F) - Applying the IS-LM Model
[1] Mankiw, Ch. 11.1 and 11.3
[2] The Economist, "A Working Model," 8/11/2005.

Oct. 13 (M) - The AS-AD Model
[1] Mankiw, Ch. 11.2. & Ch. 13 (Sticky-Wage Model)
[2] Computer Simulations of AD-AS Shocks 1 2 3

Oct. 15 (W) - The Neoclassical Synthesis
[1] Blanchard, Olivier J. "Neoclassical Synthesis." The New Palgrave Dictionary of Economics. Second Edition.
Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008.

Oct. 17 (F) - Fall Break

Oct. 20 (M) - The Phillips Curve and Natural Rate Hypothesis
[1] Hall, T. The Rotten Fruits, Ch. 2. (Moodle)
[2] The Economist, "A Natural Choice," 10/12/2006.

Oct. 22 (W) - The Great Inflation
[1] Hall, The Rotten Fruits, Ch. 4 and 8. (Moodle)
[2] The Economist, "The Crude Art of Policymaking," 6/12/2004.

Oct. 24 (F) - MEA Conference

Oct. 27 (M) - New Classical Macroeconomics
[1] The Economist, "Tales of the Expected," 12/10/1990. (Moodle)
[2] The Economist, "Rules v. Discretion," 3/2/1991. (Moodle)
[3] Mankiw, Ch. 19. p. 528-37.

Oct. 29 (W) - New Keynesian Macroeconomics
[1] Mankiw, Ch. 19, p. 537-45.
[2] The Economist, "Sticky Situations," 11/11/2006.

Oct. 31 (F) - Behavioral Macroeconomics
[1] Kopcke, et al. "How Humans Behave: Implications for Economics and Economic Policy," FRB of Boston New England Review
[2] Video: Dot.Bomb

Nov. 3 (M) - Taylor's Rule & The Great Moderation
[1] The Economist, "Measuring the Taylor Rule's Performance," June 2007.
[2] Taylor, "Has the Fed followed the Taylor Rule?"
[3] Konig and Ball, "The Great Moderation," FRB of Dallas Economic Letter, 9/2006.

Nov. 5 (W) - Second Exam

The Open Economy

Nov. 7 (F) - Introduction
[1] Mankiw, Ch. 5. (pp. 115-131).
[2] Kumar, "Does Foreign Direct Investment Help Emerging Economies?" FRB of Dallas Economic Letters, 1/2007
[3] The Economist, "Policing the Frontiers of Finance," 4/10/2008.

Nov. 10 (M) - Savings, Investment and Capital Flows in Open Economies
[1] Mankiw, Ch. 5. (pp. 121-131).

Nov. 12 (W) - Capital Flight and Capital Immobility
[1] Reinhart and Rogoff, "Is the 2007 U.S. SubPrime Financial Crisis So Different: An International Historical Comparison,"
[2] Quintin and Lopez, "Mexico's Financial Vulnerability: Then and Now," FRB of Dallas Economic Letters, 6/2006.

Nov. 14 (F) - Floating Exchange Rates
[1] Mankiw, Ch. 5 (pp. 131-41).
[2] Wolf, "Falling Dollar Saga Still has a Long Ways to Go," Financial Times.
[3] The Economist, "The Domino Effect," 7/3/2008.
[4] Video: Falling Dollar

Nov. 17 (M) - Fixed Exchange Rates
[1] The Economist, "Revaluation by Stealth," 1/1/2008.
[2] The Economist, "A Tale of Two Worlds," 5/8/2008.
[3] Video: China Delinks

Nov. 19 (W) - Purchasing Power Parity and Vehicle Currencies
[1] Mankiw, Ch. 5 (pp. 141-45).
[2] The Economist, "The Big Mac Index: Sandwiched," 7/24/2008.
[3] The Economist, "Losing Faith in the Greenback," 11/29/2007.

Economic Growth in the Long Run

Nov. 21 (F) - Introduction
[1] Mankiw, Ch. 7.
[2] Data

Nov. 24 (M) - The Solow Model
[1] Mankiw, Ch. 7.

Nov. 26 (W) - The Golden Rule, Solow's Surprise & Convergence
[1] Mankiw, Chs. 7.
[2] Easterly, The Elusive Quest for Growth, Ch. 3.

Dec. 1 (M) - The Role of Technology
[1] Mankiw, Ch. 8, pp. 216-20.
[2] Jones, "The Economics of Ideas." (Moodle)
[3] Video: Quadir: Mobile Phones and Growth

Dec. 3 (W) - Endogenous Growth Theory and Demographics
[1] Warsh, Knowledge and the Wealth of Nations, Chs. 18, 22 & 24. (Moodel)
[2] DeLong & Olney, "The Reality of Economic Growth," 2006, pp. 120-28. (Moodle)
[3] The Economist, "Catch the Wave," 2/2/1999.
[4] Video: Rosling on Growth

Dec. 5 (F) - Policy and Institutions
[1] Mankiw, Ch. 8, pp. 220-34.
[2] Sokoloff and Engerman, "Institutions, Factor Endowments, and the Paths of Development in the New World," JPE, 2000.
[3] The Economist, "Roots of Development," 11/5/02.

Dec. 8 (M) - Third Exam (4:00-6:00 PM)