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Econ 371 |
PETER ALONZI,
Ph.D. |
Spring, 2011 |
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Click for: [Objectives] [Outline] [Grading] [Reading Assignments] [Homework] [Semester Project]
Contact Information: by phone or email at: 708-524-6483 or Lpalonzi@email.dom.edu
Office Hours:
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Day |
Monday |
Tuesday |
Wednesday |
Friday |
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Time |
1:30-3:00
p.m. |
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1:30-3:00
p.m. |
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Place |
Fine
Arts |
Fine
Arts |
Fine
Arts |
Fine
Arts |
Texts:
* Hand Out:
Policano, Andrew J. An Introduction to the Theory of
Unemployment and Inflation.
* Mankiw, N. Gregory. Macroeconomics,
7th, 6th , or 5th ed.
New York: Worth Publishers, 2010, 07, or 03.
Objectives:
[return to top]
In the Principles of
Economics courses Econ 190 and Econ 191 you became acquainted with a structured
way of thinking, an apparatus of the mind. This course presents you the
opportunity to broaden and deepen the structured way of thinking about the
macro economy, in particular how household, business, bank, government (fiscal
policy of Treasury), central bank (monetary policy of the Fed), exporter, and
importer decisions affect the nation’s gross domestic product (GDP), interest
rates, consumer price index (P), inflation (∆P/P), unemployment, and GDP growth.
The successful student
will:
1. Add many new words to their vocabulary.
2. Learn and be able to conduct comparative static (model method of) analysis with
the demand and supply framework of a competitive market,
3. Be able to discuss the influence of consumption, investment, government
spending/taxes (fiscal policy), money, Fed (monetary policy), exports, &
imports on GDP, CPI, unemployment, & interest rates.
4. Be able to set up three basic macro models: [a]
Classical macro model, [b] Keynesian macro model, and [c]. The Aggregate
Demand/Aggregate Supply (AD/AS) model.
5. Be able to use these models to conduct comparative
static analysis (show how exogenous variables influence endogenous variables).
Specifically be able to relate fluctuations in GDP, interest rates, the price
level, and unemployment to changes in household, business, bank, exporter,
importer, and government behavior.
6. Understand the limitations of the models developed and of the equilibrium
approach to analysis,
7.Be able to face the unresolved issues/questions macroeconomists pose and address.
Course Outline [return to top]
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1. Tools & Basics |
a. Circular Flow |
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2. An Economy in the
Short Run: |
a. Behavior of Major
Participants |
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3. From Short Run into
the Long Run: |
a. The Labor Market |
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4. Using AD/AS Model |
I. Using AD/AS Model
in the Short Run |
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5. Growth |
a. Capital
Accumulation |
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6. International
Aspects: |
a. Exports and Imports |
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7. Policy Debates |
a. Active or Passive? |
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8. Microeconomics
Behind |
a. Consumption, b.
Investment, c. Money Supply. d. Adv in Business Cycle Theory |
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9. Summing Up and the
Frontier |
a. Four Most Important
Macro Lessons: |
Grading [return
to top]
Basis of the Grade:
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Task |
Participation |
Quizzes |
Homework |
Sem. Project: |
Sem. Project: |
Policano Model Exam |
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% of Grade |
10% |
3% |
40% |
10% |
20% |
17% |
Grading Scale:
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Grade |
A |
A- |
B+ |
B |
B- |
C+ |
C |
C- |
D |
F |
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% |
100-90% |
90-87% |
87-85% |
85-77% |
77-75% |
75-72% |
72-62% |
62-60% |
60-50% |
under 50% |
Academic Integrity
Each student is expected to adhere to the highest standards
of academic integrity. Any student who does not will be penalized
severely. In the past the penalty included but was not necessarily
limited to a score of zero on the task in question. There can be other
sanctions Prof. Alonzi deems appropriate including failure of the course.
Conduct that fails to adhere to the highest level of academic integrity
includes but is not limited to dishonesty, cheating, plagiarism, and forgery.
See pages 29-30 of the 2010-12 Dominican University Undergraduate Bulletin for
the University’s Academic Integrity Policy & definitions of dishonesty,
cheating, plagiarism, forgery, misuses of university documents or dishonest
acts at:
https://jicsweb1.dom.edu/ics/Resources/Student_Services/Registrar's_Office/Undergraduate_Students/Undergraduate_Bulletin.jnz
Participation:
Your participation is
assessed both objectively and subjectively. Objectively: if you are
absent you cannot participate. Subjectively you know the degree of your
participation. It can range from mere
physical presence but mentally disengaged (BIS) to mentally engaged
fully and publicly evidenced by responding in class, proactively raising
questions, furthering the discussion, and leading the participation. So you
will be given multiple opportunities throughout the course to assess your own
participation. Each time you will give yourself a score for your
participatory contribution to the class. The scale for self assessment is
provided in the following table. On any one self assessment, I reserve
the right to adjust your self assessment up or down one degree (or if there is
a range in a degree then several percentage points). Your participation
grade for the course will be the average of your participation self
assessments. For example, suppose there were only three self assessments taken
and suppose you scored yourself 84%, 92%, & 76% and I agreed. Here is
the computation: your average self evaluation was 84% [ =
(84%+92%+76%)/3 = (252%)/3 = 84%].
This way of assessing
participation places heavy weight on attendance. Attendance is most important in two
regards. One, we develop much of the
material in class. Consequently absence
puts you in a big hole. Two, oral
presentations are a time to engage what your colleagues are sharing!
I expect you to be present for all the oral presentations of your colleagues!
Absences on those days will impact greatly your participation grade.
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89-85% |
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84% |
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Quizzes
There will be two
quizzes: #1 on economic statistics and #2 on notation of the Policano
model. There is no makeup opportunity for a missed quiz. Each quiz
is worth 1.5%.
Homework [return
to top]
1. There are 10 homework assignments.
2. Homework is due in class on the date designated
in reading assignments.
3. Late homework is unacceptable (if you are sick send it in with a classmate or
email it or…
It is your responsibility to
deliver the homework to Prof Alonzi by the beginning on the due date.
4. You are to bring the original and a copy of
homework to class. The original is to be place on Prof. Alonzi’s desk at
the beginning of the designated class session and you are to keep the copy at
your seat for your reference during the class discussion.
5. You may work together on homework only if each
student participates fully in the discussion of the assignment contributing
his/her fair share to the response to the homework task.
6. Handing in another person’s work or group’s work
as your own is prohibited. Both the copier and the source will receive a
zero on the copied assignment.
7. Each student must hand in her/his own assignment
(written or typed by her/him).
Semester
Project [return to top]
The work we do in this
course develops a basic macroeconomic model. This base-case model is the
equivalent of the simplest, least frills car you can imagine. I think of
the original VW Beetle automobile. Not the 2000’s model but the original,
simple version that hit the
The project requires you to demonstrate your mastery of macroeconomics both
with a written paper and an oral presentation based on your work producing your
written paper. No teams,
Your project can focus
on macroeconomics in one of three ways.
One way: Extend the model: One way to demonstrate your
mastery of macroeconomics is to extend the model. Continuing with the automobile
analogy extending the model is similar to installing a CD player or speakers or
a sunroof or… We will have two examples of extending the model in the
course: first when we add the banking system to our basic model and second when
we add the labor market to our model. There are several additions that
can be made to the model. We will not be covering the chapters on
Investment (ch 17) and Consumption (ch 16). Either of these two areas are
natural ones for extending our basic model with requisite, fundamental
information provided in the chapters. In addition to using one of these
chapters as the base for extending the model there are several other extensions
that are available: adding inflationary expectations (see Professor Alonzi
re Policano info on this) or writing out and solving the set of equations
underlying the geometry of the basic model or growth theory (ch 7).
A second way: analyze a
current macro economy issue: A second way to demonstrate your mastery of macroeconomics
is to use our model to analyze a current macro economy issue. If you were
to choose this second way of demonstrating your mastery of macroeconomics, you
would first identify the issue, second evaluate the opposing views on the issue
as well as their suggested policy action, and third use our basic macroeconomic
model to illustrate the effects/implications of opposing policy actions. A
huge issue is “if you macroeconomists have this model of the macro economy, how
did the financial crisis of 2008 lead to such a huge recession?” Another question is what is the most
effective monetary policy/fiscal policy mix for bringing the economy back to
full employment? Another is the
comparison and evaluation of the formulation and conduct of monetary policy
before and after the financial crisis. A fourth focuses on the debate over the
effects of the Federal Deficit and the National Debt. A fifth focuses on whether, in light of
Riccardian equivalence, a tax cut decreases or simulates consumption or saving?
A sixth focuses on whether the cause of an increased deficit (increased
government spending vs decrease in taxes) alters the effect of fiscal policy on
GDP, inflation, and interest rates.
Sixth, what are the Rajan Fault Lines in the economy and what are the
implications of these fault lines?
These are examples and
do not exhaust the set of issues from which can choose for your paper topic. If
however you want to analyze a current macroeconomic issue other than the ones
listed here, you need to discuss the issue with me to obtain approval. We start our conversation with your writing
statement of the issue you are interested in examining and coming to office
hours to discuss the topic and receive approval. You must submit your
written statement with enough forethought and advanced notice so that you can
do an effective job completing your project in the term if it is approved.
The third way: analyze a
controversy in macroeconomic theory: A third way to demonstrate your mastery of macroeconomics
is to use our model as a point of reference to study a controversy in
macroeconomic theory
> What
caused the great depression [see P. Temin and M. Friedman for a start],
> How do Post Keynesians
differ from Keynesians?
> Monetarists vs.
Keynesians: what was all the fuss?
> What’s the big deal about
New Classical, New Keynesian, Austrian macro schools of thought?
> How does the equation of
exchange, velocity, and the quantity theory of money relate to the basic
Macromodel we developed in
class?
Or the third way could
be to look behind an assumption. You could delving more deeply into the
Federal Government budget (including: what % of government spending goes
to what areas, how are taxes broken down across taxed groups, what do Piper and
Eisner reveal about the government budget). You could delve more deeply
in the mysteries of Fed watching and the process of Fed behavior.
Important Perspective on
the Semester Project
As you enter the course you are beginning the process
of identifying your topic. One hurdle you have is the need for a point of
reference. You need to learn the basic model before you can extend it or apply
it or contrast it to other perspectives. Learning this basic model is a
process, the “Jell-O process.” With consistent, constant effort the
model starts to come together in your mind—it jells! As the model is
starting to jell in your mind you will see that things are missing or
incomplete. Or questions will arise that you want to answer. You
are starting to identify your project topic!
Identifying your topic is often awkward and is somewhat messy. It is a
process. You don’t have to do it alone. Talk with your classmates.
Use office hours so we can talk about the process you are going through, your journey
of epiphany. I anticipate that for most students, conversations with me will
clarify your choice of topic.
What does the project
entail:
Regardless of which way
you take to demonstrate your understanding of macroeconomics you will:
1. Identify your project topic in writing (typed) no later than March 4. One typed paragraph is sufficient. But be
specific. [A] State which type of project you will be doing (extending
the model, using the model to analyze a macro economy problem, using the model
as a point of reference to study a macroeconomic theory dispute). [B]
State the specific topic or research question.
2. Communicate your
work in a classroom presentation.
a. You will have 15 minutes for your oral presentation.
b. Much can be done in 15
minutes when you are well prepared and concise!
c. Remember you will be the
expert in an area and will be informing your classmates on a topic that extends their knowledge. The
presentation should be professional and an effective use of your, their, my time.
d. Presentations will be made
at the end of the course from April 18-29.
e. Attendance at your
colleagues presentations is expected and weighs heavily in the determination of you participation grade.
f. Later in the course I will
create a signup sheet for the presentation dates but you and your classmates can start discussing the timing
of when who will do his/her presentation. Later in the course I will give you the rubric for
the presentation.
3. Communicate your
work in a written paper. Your paper should be long enough to complete the
task but short enough to demonstrate concisely that you have developed a firm,
clear mastery of macroeconomics. The paper will be assessed on the basis
of content (demonstrated mastery of concepts), clarity (well structured
with introduction, development in body, and conclusion/summary; section
headings present that reveal the structure to and guide reader), and
conventions (correct spelling, proper grammar). The paper is due no later than
the start of class on April 29, 2009. Submitting your paper after the deadline will result in a penalty. Your paper’s grade will be reduced by 33% of a perfect score for each day it is past due with a partial day counting as a full
day. So a paper 1 day late can at best earn a 67%, a paper 2 days late at
best can earn a 34%, & a 3 day late paper can earn at best 1%.
If you bring a draft
(not your first one) of your paper to my office before April 15th, I can give you feedback and you can revise
your paper before its final submission. But remember while I will work to be timely with my feedback,
the closer we get to the end of the term the more scarce time becomes for
Professors just as it does for students. This increased scarcity slows
down turnaround time.
Note the relationship
between a presentation and its paper. Presentations are neither merely nor always the reading of
the entire paper. Often the expert selects a portion of the work that
captures the kernel of the study. Or the expert presents the general
scheme of the work: the question, the perspective on why it is important, the
approach, the results, and unanswered questions/issues to be resolved.
Often times the presentation is the form of power point. A power point
file is not a paper. Papers are written with
> an introduction setting forth the theme and
approach,
> a body that presents each of
the relevant aspects developing the theme (there might be
several sections
in the body and each section indicated by its heading),
> a summary and or conclusion.
By this extended
discussion of the semester project I trust you see that I believe that the
project is a process not an event. This process is evident in the
sequence of related due dates. They continue throughout the semester.
Engage the process! Remember: success is the by-product of effort, not
the end product!
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Project
Item |
Item
Due Date |
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Project
Topic Identification |
March
4 at the latest |
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Paper
Rough Draft Submission |
No
later than Monday April 15 |
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Presentations |
April
18-29 |
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Paper
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April
29 at the beginning of class |
Policano Model Exam
The Policano Model exam will be drawn from the
homework problems or very similar to the homework problems. Essentially
you will be required to do one problem during the final exam session. The
exam will be closed book, no notes, no assistance from electronic devises or
classmates.
Planned Reading Assignments as of 1/10/11 [return to top]
(Revised reading
assignments will be posted if the need arises. Check the date in the upper
left-hand corner to assure most recent assignments.
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M: pp. 17-32 |
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#4/ Jan 21 Fri |
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M: pp. 36-40, ch 6 esp
169-75 |
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#6/ Jan 26 Wed |
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Quiz #1 on notation |
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Quiz #2: Take Ch 2 On
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#20/Feb 28 Mon |
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#21/ Mar 2 Wed |
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P: 64-69 |
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* Aggregate Supply (AS)
Underpinnings |
P: 64-69 |
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M: Ch 10 |
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#41/April 27 Wed |
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Final
Exam Period May 2-5 |
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