ECONOMICS 102
INTERMEDIATE MACROECONOMICS
Department of Economics
Spring 2006
Instructor: Guido Menzio, gmenzio@sas.upenn.edu
Teaching Assistant: Javier Gonzales, javiergz@ssc.upenn.edu
Office Hours: McNeil Building 467, Wednesday
10:00-12:00 (Instructor)
McNeil Building 539,
Wednesday 17:00-19:00 (Teaching Assistant)
Prerequisites: Econ 101, Multivariate Calculus
Textbook: Williamson, S. D. 2005. Macroeconomics.
Syllabus in PDF: [syl]
Objective and Content of the Course
The course introduces you to the
methodology of modern macroeconomics and exposes you to some of the main
findings developed in the literature over the past 35 years. The primary
objective of the course is to enable you to analyse current macroeconomic
phenomena and discuss policy issues in a rigorous and independent way. The
secondary objective of the course is to prepare you (and make you ask) for more
specialized macroeconomic classes (monetary economics, labor economics,
international trade, growth theory).
The course begins with the
mathematical description of the dynamic decision problems faced by households, firms
and the government. In particular, we are interested in the consumption-saving
and the work-leisure decisions of the households, in the hiring and investment
decisions of the firms, in the consumption and taxing decisions of the
government. From the solution of the decision problems of the economic actors,
we derive the demand and supply of labor, private and public consumption goods
and investment goods. Then, we introduce the definition of market equilibrium
and use it to pin down the prices of labor, consumption goods and investment.
This completes the characterization of the general equilibrium of the model
economy.
In the second part of the course, we
use the model to study three important macroeconomic topics. First, we want to
understand the mechanisms through which public policy affects aggregate output,
consumption, investment and ultimately social welfare: The model sheds light on
why tax cuts are sometimes ineffective at increasing economic activity, on why
temporary changes in government spending affect the economy differently than
permanent changes, on whether the government can improve the well-being of the
households with the appropriate mix of taxes and subsidies.
Secondly, we want to understand the
causes of fluctuations in aggregate economic activity. More specifically, we
derive the empirical regularities of the
Finally, we want to identify the
engines of economic growth. Using the model, we show that physical capital
accumulation cannot explain why the
Course Calendar
January 10 |
Introduction |
Chapter 1 + Intro_Slides
|
January 12-19 |
National Accounting |
Ch 2,3, Nipa_Slides
+ Measurement_Slides
|
January 24-26 |
Households’ Problem |
Chapters 4, 8 + Slides |
January 31-February 2 |
Firms’ Problem |
Chapters 4, 8 + Slides
|
February 7 |
Government |
Chapter 8 + Slides |
February 9 |
Midterm #1 |
|
February 14-21 |
Competitive Equilibrium |
Chapters 5, 9 + Slides |
February 23 |
Welfare Theorems |
Chapter 5 + Slides |
February 28 |
Fiscal Policy |
Chapters 5, 9 + Slides |
March 2 |
Business Cycle Theories |
Chapters 9, 11 + Slides |
March 16-21 |
Business Cycle Theories |
Chapters 9, 11 + Slides |
March 23 |
Midterm #2 |
|
March 28-30 |
Growth Facts and Accounting |
Chapter 6 + Slides
|
April 4-6 |
Malthusian Growth Model |
Chapter 6 + Slides |
April 6-11 |
Solow
Growth Model |
Chapter 7 + Slides
|
April 13-18 |
Physical
and Human Capital |
Chapter 7 + Slides
|
April 20 |
Midterm #3 |
|
Exams and Grades
There are three midterms and a final
examination. Your final grade is determined by the two highest scores on the
midterms (25%, 25%) and by the score on the final (50%). If you miss the final
examination for a valid and documented reason, you can sign-up for the make-up
exam at the beginning of the next semester. If you miss two or more midterms,
your grade is computed by putting appropriately more weight on the outcome of
the final examination. According to recent departmental policies, all
complaints concerning grades have to be put in writing and submitted to the
instructor and the teaching assistant.
Throughout the semester, review
questions are posted on the class website. You are not required to solve the
review questions, but you are recommended to do so in order to verify your
understanding of the material and to practice your exam-taking skills. Review
questions are neither graded nor solved during lecture, but you can and should
discuss them with the teaching assistant during office hours.
Homework 1: Problems 1, 2, 5, 7, 9 at the end of Chapter 2 in Williamson and problems 1, 8 at the end of Chapter 3.
Solution as a pdf file [sol1]