PROFESSOR: Robert B. Archibald

OFFICE: Morton 125

PHONE: 221-2366 (office)

565-0712 (home)

EMAIL: rbarch@wm.edu

OFFICE HOURS: M 2:00-3:00

TuTh 9:00-10:00

W 10:00-11:00

or by appointment

TEXTS: Macroeconomics, by Olivier Blanchard (Prentice Hall, 1997)

Macroeconomic Essentials for Media Interpretation, by Peter Kennedy (MIT Press, 1998)

COURSE DESCRIPTION: This course is designed to be the second course in macroeconomics. Principles of Macroeconomics (Economics 102 or 152 at the College of William and Mary) is a prerequisite. The course is primarily a course in economic theory, though at the end of the course we will discuss policy debates. Macroeconomics is not a settled discipline; economists are learning and changing their theories. The models presented in this course are as close to "consensus" models as are available.

OBJECTIVES OF THIS COURSE: When faced with a question about macroeconomic behavior, a successful student in Economics 304 should apply a model (or models) to find the answer. To accomplish this task he or she should know: (1) how to translate a question into the technical language of macroeconomics, (2) how to select the appropriate macroeconomic model (or models) to use to answer the question, (3) how to produce results with the model, including understanding what portions of the predictions of the model are most hotly debated and why, and (4) how to explain the answer to the question to a non technical audience.

DESIGN OF THE COURSE: We will use three main aids to help accomplish the four objectives. The first is the textbook by Olivier Blanchard. This textbook gives an excellent presentation of modern macroeconomic models. A student who masters this material will be able to accomplish objectives (2) and (3). The ordering of topics for the course follows the outline of the Blanchard text. The second aid is the text by Peter Kennedy. This text focuses on translating macroeconomic discussions one finds in magazines and newspapers into more technical language of macroeconomics. A student who masters this material will be able to accomplish objectives (1) and (4). The third aid is the class lectures, exams, and problems. The lectures will focus on tying the topics in the two textbooks together, and the exams and problems will give student opportunities to demonstrate that they have mastered the four course objectives.

STUDYING FOR ECONOMICS 304: I will offer two hints about studying for this course. First, keep up with the reading. It is not absolutely necessary to do the reading before going to class. Some students find the textbooks easier to understand after the lecture, and other students find the lectures easier to understand after reading the textbook. There is no one correct procedure, however all correct procedures involve reading the textbooks. It is important to do the reading. Frequently the models we discuss are constructed in a series of steps. If you miss one step, the following steps will not make sense. This course is one in which major catch up efforts are difficult. The amount of reading assigned is not excessive, successful students do all of the reading. Am I making myself clear? Second, make your studying active. Passive studying, i.e. just reading the text and going over one's notes, is not likely to be sufficient in this course. We will be building and discussing several models. In most cases these models are described graphically or with a series of equations. Successful students in Economics 304 are those who are able to use these graphs or equations to derive results. Practice using the models. If the first exam is the first time you have actually tried to use one of these models, you are very likely to make mistakes. The required problems represent a minimal amount of active studying.

PROBLEMS: Required Problems – There will be seven problem sets handed out during the semester. Students will be required to hand in five of them to be graded. Each problem set will be handed out at least a week before it is due and will be returned prior to the examination on the material covered on the problem set. Additional Problems - Both textbooks have questions and problems at the end of each chapter. These can be very valuable study aids. Following the advice about active studying, I encourage you to actually write out answers to the questions that are answered in the back of the Kennedy text and compare your answers with the book'’ answers. Answers to these problems in the Blanchard text are available from the instructor. Also there are several additional problems available on the instructor’s webpage (wm.edu/~rbarch/). Answers to these problems are available on the web.

EXAMS: There are three in-class exams and a final exam in this course. The in-class exams will be time-pressured exams, i.e., it will be important to know the material and know how to answer questions quickly. The final exam will not have this time pressure.

GRADING: Grades will be based on three in-class exams, the problem sets, and the final exam. The in-class exams will be 100 point exams, there are 50 points possible for the problem sets, and the final will be a 200 point exam.

Dates Topic Reading

Jan 20,22 Introduction and Macro Indicators B 1,2; K 1,2

Jan 25,27,29 The Goods Market, Statics and Dynamics B 3,4; K4,7

[Problem Set 1 – Jan 29]

Feb 1,3,5 Financial Markets, IS-LM B 5,6; K8,10

[Problem Set 2 – Feb 8]

Feb 8,10,12 IS-LM, Expectations B 7

FIRST EXAM Feb 12 (B 1-6; K 1,2,4,7,8,10 )

Feb 15,17,19 Expectations, Goods and Financial Markets B 8,9; K 11

[Problem Set 3 – Feb 22]

Feb 22,24,26 Policy & Expectations, Openness B 10,11; K15

[Problem Set 4 – Mar 1]

Mar 1,3,5, More Open Economy Model B 12,13; K18

SECOND EXAM Mar 5 (B 7-13, K 11,15,18)

Mar 15,17,19 The Labor Market B 15; K 3

Mar 22,24,26 The Full Model, Phillips Curves B 16,17; K 5

[Problem Set 5 – Mar 26]

Mar 29,31 Apr 2 Inflation and Unemployment B 18, K 12

[Problem Set 6 – Apr 5]

Apr 5,7,9 Economic Growth B 22,23; K 6

THIRD EXAM Apr 7 (B 15-18: K 3,5,12)

Apr 12,14,16 Technological Progress B 24,25

[Problem Set 7 – Apr 21]

Apr 19,21,23 Policy Problems B 20,21; K 13,14

Apr 26,28,30 Policy Debates B 27,28,29; K 9,16

Econ 304-02

May5 (8:30-11:30) FINAL EXAM

Econ 304-03

May 4 (8:30-11:30) FINAL EXAM