ECON-100 Principles of Macroeconomics

Dr. Martha Starr

Department of Economics

American University

Spring 2006

Telephone:         (202) 885-3747

Office: Roper Hall 201

Office hours: W and Th, 3:45-5:15 pm, and by appointment

Email:                   mstarr@american.edu

Class webpage: AU blackboard

Course description

This class provides an introduction to macroeconomic analysis. Whereas the field of microeconomics studies individual markets for goods, services, and factors of production, the field of macroeconomics studies the behavior of the economy as a whole. Central problems in macroeconomic analysis include: how to measure and evaluate macroeconomic performance (GDP, inflation, unemployment, human well-being, ecological sustainability); what causes macroeconomic fluctuations; uses of fiscal and monetary policy to offset booms and busts; linkages between national economies via international trade and finance; and the promise and perils of globalization.

Required readings

The text for the class is N. Gregory Mankiw, Principles of Macroeconomics, 3rd edition. Additional readings are found in the “Course Documents” area of the class Blackboard site, or will be distributed in class. As we will be discussing current macroeconomic news, it will also be beneficial for you to read high-quality economic/financial press, such as the Wall Street Journal, New York Times business section, or The Economist magazine.

Overview of grades, tests and dates

Item	% of final grade	Dates
Group projects (3)	30.0	Feb. 16, Mar. 6, Mar. 27
Assignments (~ 4)	20.0	Distributed as we go along
Midterm	17.5	Thurs., March 30
Final exam	25.0	Thurs., May 4, 8:30-11:00 am
Class participation (real life + blog)	7.5	Throughout the semester

CLASS WILL NOT MEET ON THESE DATES:

· March 27 –- but Group Project #3 is due in the Economics Department office (Roper Hall, Rm. 105) by 4:00 pm that day, so you may want to use the time to finish it up.

· April 20 -– BUT you may want to use this time to work on Assignment #4 (together if you like).

. ECON-100 Course outline
	Section	Approx. dates	Readings MK=mankiw, BB=blackboard, RP=resource packet	where?
1.	Introduction to economics	1/19 to 1/26
			“On Economists …”	RP
			Chaps. 1 and 2 (skip ‘Circular Flow’ and ‘Production Possibilities’, read Appendix if needed!)	MK
			Heilbroner and Thurow, “Capitalism: Where do we come from?”	RP
2.	How markets work: Supply and demand	1/30 to 2/6
			Hubbard and O’Brien, “Where Prices Come from: The Interaction of Demand and Supply” (note: Mankiw Chap. 4 can be used as extra reference)	RP
			The Economist, “Markets vary in the extent of competition”	BB
			The Economist , “Drowning in cheap coffee”	BB
3.	Measuring and evaluating economic performance	2/9 to 2/23
A	GDP		Chap. 10	MK
			"If GDP is Up, Why is America Down?"	BB
			Genuine progress indicator – update	BB
B	Cost of living, real Incomes		Chap. 11, and pp. 363-373.	MK
C	Unemployment		Chap. 15	MK
D	Alternative issues and measures		The Economist –- two articles on happiness	BB
			“Ecological Footprint of Nations,” pp. 7-12	BB
			Selections from Inequality Matters	RP
4.	Macroeconomic fluctuations -- and what can be done about them	2/27 to 3/20
a	Background		“The Great Depression”	BB
			Hubbard and O’Brien, “Business cycles”	RP
b	Aggregate supply and demand		Chap. 20	MK
c	Monetary policy		Chaps. 16 and 21	MK
d	Fiscal policy		Chap. 21 and pp. 279-283	MK

5	International economics	4/3 to 4/27
a	Institutions		“International institutions”	BB
b	International trade		Chap. 3 -– read for main idea of comparative advantage	MK
			Chap. 9	MK
c	International finance		Hubbard and O’Brien, “Macroeconomics in the Open Economy”	RP
			Hubbard and O’Brien, “The International Financial System”	RP
			The Economist: “Hamburgers should be a part of everyone’s diet”	BB
			The Economist: “Can America go on borrowing abroad indefinitely?”	BB
D	Globalization		The Economist, “Globalization and its critics”	BB
			Jeffrey Sachs, “Unlocking the mysteries of globalization”	BB

Class policies
Attendance	Expected! Don’t worry about occasional, unavoidable absences -- but check with a classmate about missed work.
Make-up exams	Not given, except for absences caused by an unavoidable medical or family situation that I can verify (e.g. note from health-care provider)
Late assignments	Accepted, but with points deducted.
Submitting assignments and projects	Assignments and projects must be submitted in class (not emailed, put in my box, or slipped under my door) -- unless you make a prior arrangement with me.
Working together on assignments	Encouraged! But you must write up your answers independently.
Email to Prof. Starr	Please put “Econ-100 Macro” in the subject line, so your email doesn’t look like spam.
AU’s Academic Integrity Code	In effect at all times! No plagiarism, no submitting work that is not your own, no ‘collaboration’ in exams, etc. Violations will be prosecuted!

GROUP PROJECTS

There will be 3 group projects over the course of the semester. Detailed instructions for each project will be handed out in class and posted in the “Assignments” area of Blackboard. The projects require you to work in groups of 5 or 6 people. Group membership will be assigned in the first project; you can choose your group mates in the second two. In all three projects, the group will submit a report written together; the first two also require presentation of the group’s work in class.

	Topic	Group membership	Due date	Presented in class same day?
1	Field research: Analyzing price dispersion	Assigned	Thurs., Feb. 16	Yes
2	Debates about macroeconomic performance	Chosen	Mon., Mar. 6	Yes
3	Mock monetary-policy decision (dovetails with the real-life FOMC meeting on Tuesday, March 28)	Chosen	Mon., Mar. 27: No class that day, but projects must be submitted to the Economics Dept. office (Roper Hall Rm. 105) by 4:00 pm	No -- but work will be discussed Thurs., Apr. 2

Your grades for the group projects are a function of:

· your group’s report (graded by Prof. Starr)

· your group’s presentation (evaluated by your classmates) –- for projects #1 and 2

· your contribution to the group (evaluated by your group mates)

ASSIGNMENTS

Assignments will be handed out over the course of the semester and will usually be due one week after they are handed out; they will also be posted in the ‘Assignments’ area of the Blackboard site. There will probably be four of them. Assignments will typically involve two types of work:

(1) Mini-research projects. These are intended to build your skills in collecting, interpreting and analyzing economic data and your ability to relate your findings in a clear, compelling way. Instructions will be distributed on how to collect good-quality economic information from electronic and other sources. Analyses should be thoughtful, accurate, and complete, and should demonstrate creative application of analytical and empirical concepts developed in class.

(2) Practice problems. These are quantitative exercises intended to provide practice for quantitative-type questions that could appear on exams. You may work together on problem sets, but you must write up your answers independently.

CLASS PARTICIPATION

7.5% of your total grade comes from participating in the class, both in real-life class discussions and in the class blog. Good participation in class consists of regularly asking and answering questions and offering insightful comments. Good participation in the blog –- which can be found at http://macro-matters.blogspot.com/ -- consists of posting material or responding to posted material in ways that evaluate, challenge, affirm, extend, etc. the ideas being explored in class. You need to make at least two good-quality blog contributions during the semester.