Economics 302: Intermediate Macroeconomic Theory

This site provides resources for students in Economics 302 at the University of Wisconsin, Madison for Spring 2006 Semester

Instructor
Professor Menzie Chinn
Office Hours: MW 1-2 (tentative)
Office: 7418 Social Sciences Bldg.
Phone: (608) 262-7397
email: mchinn@lafollette.wisc.edu
Home Page

Teaching Assistant
Michael Malcolm
Office Hours: W 4-5, F 1:30-2:30
Office: 6473 Social Sciences
Phone: (608) 253-3884
Webpage:
email: mamalcolm@wisc.edu

Course Syllabus

Economics 302 is a course in intermediate macroeconomic theory and policy analysis. Students should have a familiarity with algebra (solving simultaneous equations). Knowledge of basic calculus (partial and total differentials) and introductory statistics (linear regression) will be helpful, but not required. The main part of the course will focus on the IS-LM framework. However, considerable attention will be devoted to international aspects, such as the trade deficit, international capital flows and the exchange rate, as well as domestic issues such as inflationary processes. Students enrolling in this course should be comfortable with algebraic and graphical analysis. It requires sustained immersion in relevant economic theory, and does not present a primarily descriptive or historical approach.

One semester of calculus (Math 221 or 211) is required. Math 221 is recommended.

Important Dates

• Midterm 1, Monday, 2/27.
• Midterm 2, Monday, 4/3.
• Final Exam, Friday, 5/12 7:25PM, Van Vleck B102

Course Materials and Sources of Economic Information

Downloadable Course Materials

• Textbook Macrosolve sites
• Lecture of Jan. 23, 25
• The Keynesian Model of Income Determination lecture of 1/25/06.
• The IS-LM Model lectures of 2/1/06-.
• Problem Set 1 handed out in lecture of 2/1/06, due 2/8.
• Problem Set 1 Answers
• Transactions and Portfolio Crowding Out (rev'd 2/13)
• Problem Set 2 handed out in lecture of 2/13/06, due 2/20.
• Problem Set 2 Answers corrected 2/25.
• Practice Midterm 1.
• Midterm 1 Answers.
• Midterm 1 Statistics/Grading Curve.
• Problem Set 3 handed out in lecture of 3/8/06, due 3/27.
• Problem Set 3 answers due 3/27.
• Practice Midterm 2.
• Problem Set 4 handed out in lecture of 4/5/06, due 4/17.
• Midterm 2 Answers.
• Midterm 2 Statistics and Grading Curve.
• Tables from OECD WP 306 (2001).
• Key Issues in International Macroeconomics lecture of 4/10.
• Problem Set 4 Answers due 4/17.
• Problem Set 5 due 5/3 (typo corrected).
• Lucas Supply Curve and Macroeconomic Policy Ineffectiveness Proposition
• Staggered Wage Setting
• Monopolistic Competition, Cost-Markup Pricing, Inflationary Pressures and Globalization.
• Chapter 16 Equations.
• Problem Set 5 Answers due 5/3.
• Practice Final Exam.

Required On-line Readings

• Trehan, "Why has output become less volatile?" FRBSF Economic Letters 2005-24 September 16, 2005.
• Fernald and Wang, "Shifting Data: A Challenge for Monetary Policymakers," FRBSF Economic Letters 2005-35 December 9, 2005.
• Wu,"Two Measures of Employment: How Different Are They?" FRBSF Economic Letters 2004-23 August 27, 2004.
• CBO, Economic and Budget Outlook, January 2006, Summary and Chapters 1 and 2 (note: entire PDF file is 2mb)
• The IS-LM Model lectures of 2/1/06-. <
• Chapter 1 of White House Council of Economic Advisers, The Economic Report of the President, 2006
• Notes on Aggregate Demand - Aggregate Supply
• Notes on AD-AS with Supply Shocks
• Fernald and Trehan,"Why Hasn't the Jump in Oil Prices Led to a Recession?" FRBSF Economic Letters 2005-31 November 18, 2005.
• Doms,"IT Investment: Will the Glory Days Ever Return?" FRBSF Economic Letters 2005-13 June 17, 2005.
• Notes on Open Economy Macro
• Chinn,"Getting Serious about the Twin Deficits," CSR 10, Council on Foreign Relations, September 2005.
• Transactions and Portfolio Crowding Out (rev'd 2/13)
• Notes on Markup Pricing
• Meyer, "Practical problems and obstacles to inflation targeting," FRB St. Louis Review 86(4) July 2004: 151-160.
• Bernanke, Issing, Kohn, "Panel Discussion: Inflation Targeting" FRB St. Louis Review 86(4) July 2004: 165-183.
• Daly and Furlong, "Gains in U.S. Productivity: Stopgap Measures or Lasting Change?," FRBSF Economic Letters 2004-23 August 27, 2004.

Additional Optional Readings

• Bernanke, "The Economic Outlook," Council of Economic Advisers, September 8, 2005

News Reports

• "Oil and the global economy: Counting the cost,"Economist, Aug. 25
• "Global Agenda: Reluctant party-poopers," Economist online, Sep. 21
• "First on Bernanke's To-Do List: Tame Inflation," NY Times, October 25, 2005
• "Bernanke's Models, and Their Limits," NY Times, October 30, 2005
• "WashingtonPost Fed Coverage"
• "Economists fail to reach consensus on global outlook," FT, January 25, 2006
• "China’s booming economy pushes UK to fifth place," FT, January 25, 2006
• "China to ease foreign exchange accumulation," FT, January 25, 2006
• "What Growth? Economy Is Getting Worse Under Bush, Americans Say," Bloomberg, January 27, 2006
• "U.S. Treasury Notes Head for Weekly Drop; Growth May Spur Rate Increases," Bloomberg, January 27, 2006
• "Greenspan Will Leave Legacy of Rising Prosperity Burdened by Soaring Debt," Bloomberg, January 26, 2006
• "Greenspan tees up last rate rise," BBC online, January 31, 2006
• "Challenges ahead for US economy," BBC online, January 2, 2006
• "Deficits could harm Greenspan's legacy," BBC online, January 29, 2006
• "US growth suffers sharp slowdown," BBC online, January 27, 2006
• "US government near to debt limit," BBC online, March 6, 2006
• "U.S. Stocks Slide for Third Day, Year's Longest Losing Streak," Bloomberg online, March 6, 2006
• "US gasoline, diesel fuel retail prices soar: gov't," Reuters online, March 7, 2006
• "Treasury yields at 21-month peak," FT.com, March 6, 2006

News Sources

• Financial Times online Subscription form for student rate.
• New York Times online Free registration required.
• Washington Post online
• BBC news online
• Reuters online
• Bloomberg online
• The Economist

Weblogs and Perspectives

• ArgMax.com Left leaning macro oriented blog.
• Brad DeLong's UC Berkeley blog
• David Altig's UChicago B-school blog
• Econbrowser (UCSD and UW-Madison)
• SF Fed "FedViews"
• Nouriel Roubini's WebPage on Global Macro Issues
• Morgan Stanley Global Economic Forum Commentary on international macro issues.

Economics and Economic Policy Links

• Resources for Economists Extensive links to data sources, working papers and organizations.
• American Enterprise Institute Right of center think tank.
• Brookings Institution Moderate/left of center think tank.
• Institute for International Economics
• Institute for International Finance Think tank associated with international banks.
• Economic Policy Institute Left of center labor-oriented think tank.

International Organizations

• International Monetary Fund
• Bank for International Settlements Central banks' central bank.
• Organization for Economic Cooperation and Development Developed country research organization.

U.S. Government Agencies

• White House Council of Economic Advisers
• U.S. Department of the Treasury
• Congressional Budget Office Nonpartisan analytical agency of the Congress.
• Federal Reserve Board

Current and Historical Data

• St. Louis Fed economic database Thousands of time series on economic activity, in an easily downloadable form.
• Yahoo finance website Current financial data.
• ino.com Futures data.
• White House Economic Briefing Room Contains current economic data.
• Federal Reserve Board data Monetary, financial and output data collected by the Nation's central bank.
• Bureau of Economic Analysis, Dept. of Commerce Data on GDP and components (the national income and product accounts) as well as other macroeconomic data.
• Bureau of the Census, Dept. of Commerce Data on the characteristics of the US population as well as of US firms.
• Bureau of Labor Statistics, Dept. of Labor Data on wages, prices, productivity, and employment and unemployment rates.
• Energy Information Agency, Dept. of Energy Data on on energy (electricity, gas, petroleum) production, consumption and prices.
• Statistical Abstract of the US A compilation of statistics about the US, from government and nongovernment sources.
• Economic Report of the President, various years. The back portion of this annual publication contains about 70 tables of government economic data.
• Economic Time Series page A large collection of economic time series.
• J.P. Morgan This site provides world financial data.
• NBER Data Specialized economic databases created by economists associated with the National Bureau of Economic Research.