UNITED STATES NAVAL ACADEMY Course Description, Text …...UNITED STATES NAVAL ACADEMY...

UNITED STATES NAVAL ACADEMY Economics Department

Spring 2014 FE312 Macroeconomics

Sections: MWF 1001 1st period, 2001 2nd period Professor: Adjunct Instructor James D. Buttinger Office: Nimitz G57 Office Hours: by appointment (arrange at end of a class or email [email protected]) Phone: NA E-‐mail: [email protected]

Course Description, Text Book, Web Application, e-mail

FE312 Macroeconomics is front-‐page news “above the fold” (OK, for you all, “most read” or “trending”). Macroeconomics is about the over all (aggregate) well-‐being, growth, productivity, and stability of the way of life of societies. If the macro economy of a society is not growing, producing and stable, over all and for individuals within a society, history informs us that sooner than later uncertainty leads to social revolution. !On a learning level, and to set student expectations, macroeconomics is about models; models used to explain, predict and control; models in words, graphs and mathematics: oh yes, mathematics. Make no mistake; this course requires solid work in “reading, writing and arithmetic”, mathematics at the level of algebra and the rudimentary calculus. !At the end of the course, students will be able to:

• Understand measures of economic activity • Build and use models of the economy (IS-‐LM, AS-‐AD, Cobb-‐Douglas, Solow,

Phillips, Okun and others) • Examine the macroeconomic foundations of aggregate supply and demand • Integrate the closed economy into the international economy • Investigate the implications of fiscal and monetary policy • Understand the effects of exchange rates, expectations • Read a news article with macroeconomic content in a different and more

educated manner than before the course • Understand generational and geo-political differences in economic

perspectives • Write a paper as preparation for the FE475 Capstone course • See the relationship of other courses in the Economics major to the

macroeconomics course !!!!!

mailto:[email protected]

Required Resources Text: Blanchard, Olivier, Macroeconomics, 6th Ed., Pearson Education Prentice Hall, Inc. myeconlab: An on-‐line web application for Blanchard text found at http://pearsonmylabandmastering.com/ will be used for homework, quizzes, course calendar and real-‐time grade feedback. http://jamesbuttinger.com/FE312buttinger/Welcome.html will be used to deliver course content.

Daily Conduct of the Course

Students are expected to have reviewed the assigned chapter before class. Slides adapted from the text material and myeconlab and material from instructor notes found at http://jamesbuttinger.com/FE312buttinger/Welcome.html will be used to deliver course content. Articles in the news will be referred to when newsworthy topics relate to the work of the day. Students will be expected to do board work in class. !Laptops and web/net enabled mobile devices may not be open in class except on days required by the instructor. !Calculators used in exams must be standard issue Academy provided or limited to only four function (+, -, *, /). Mobile phones may not be used as calculators. No devices or machines may be interactive with the web/internet during exams.

Grading

There will be 20 graded homeworks given on myeconlab. The student may do and redo the homework within the web-‐published time until they get all of the answers correct. Twenty graded quizzes, one each for each chapter assigned, will be administered on myeconlab. The student will be constrained to 30 minutes in which to take the quiz but may start the quiz any time within the web-‐published time. Both homework and quizzes are open book and notes. Students may receive help from classmates while doing the homeworks on myeconlab but the student may not receive any help from anyone while doing the quizzes in myeconlab. Students with more than 5 past due and zeroed out homework or quizzes at the end of the semester will receive zeroes for all of their homeworks or quizzes and probably flunk the course. There will be no reopening of homework or quizzes. If you do not do them before the due date, they will be zeroed out. There will be 5 paper tests given in class as per the schedule. Each test will be a set of problems or derivations (of IS-‐LM, AS-‐AD models and others) using graphs, arithmetic, algebra and occasionally, the rudimentary calculus. A one sheet formula sheet will be appended to each test. There will be one paper due that replicates one of the macroeconomic mathematical constructs in the text. The final exam will be comprehensive with one multiple part question from each block including one question common to all FE312 Macroeconomics sections. !

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!

Paper: Macroeconomic Mathematical Construct from Text

A paper is due as scheduled. Every class day late will be a reduction of one full letter grade. The paper must be in Times New Roman 12 pt font double-‐spaced and is limited to a word count of ~3,500 (~10 pages). Graphs, charts, tables, do not count toward the 10 pages of text write up, must be of uniform size and must be cut into the text flow and not dropped to the end. The paper is based upon an assigned macroeconomic mathematical construct from the text (e.g., calculate Okun’s Law coefficients for Slovakia for representative period since The Wall came down). A suggested outline and a list of constructs to be assigned for the paper are provided at the end of the syllabus. Paper will be graded on 40% presentation and 60% content. Presentation means how does the paper “look” (Crisp, clean paper, dark ink, nice format, sub-‐heads, editorially and stylistically correct, inserted titles for tables and graphs, no widows/orphans, 3rd person, simple declarative sentences in academic style. Readable, well-‐structured and labeled graphs. Nicely expressed visual display of quantitative information. Rather than: ratty, wrinkled paper with disappearing ink. Their instead of there. There instead of their. First person. Vulgarities. Emotional outbursts. Minuscule graphs with no labeling, requiring my pet eagle to read—I do NOT have a pet eagle, you are out of luck!). See below for more grading guidelines.

Participation and Classroom Civility

This course is an applied social science course using the words, graphs and mathematics of macroeconomics. Positive class participation includes, but is not limited to, daily preparation as evidenced by answering questions of the day and participating in discussion and interpretation of the textbook and macroeconomic models presented. !Negative class participation includes, but is not limited to, lack of daily preparation as evidenced by not being able to answer questions of the day, talking out of turn or other disruptive behavior, and sleeping. Sleeping will not be tolerated and is considered rude to your classmates and the instructor; if you find yourself drowsy, stand up in the back of the room, go to the head and dowse yourself with cold water.

Final Exam Common Question Matrix

Fed. Reserve Action

Short Run Medium Run

OMO RR DR Graph Price level

RGDP Int Rate

Employ Graph Price level

RGDP Int Rate

Employ

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Grades

Grades will be calculated on a 1200 point total scheme: 20 homeworks 100 points 20 quizzes 200 Paper 200 Test 1 (Ch 1-5) 150 Test 2 (Ch 6-9) 150 Test 3 (Ch 10-‐13) 100 Test 4 (Ch 18-‐21) 50 Test 5 (Ch 14-‐17) 50 Final Exam 200 Final Exam points Total 1200 total points !The grading scale is as follows: A 90%-‐100% B 80%-‐89% C 70%-‐79% D 60%-‐69% F 00%-‐59% !There will be no other opportunity to earn points for this course other than stated in this syllabus. No extra credit will be offered.

No Make-up Tests

No make-‐up tests will be given. If you miss a test, your average will be based on tests taken. !!Honor Code and Plagiarism !This course is taught under The Honor Concept of the Brigade of Midshipmen and the norms of academic excellence and correctness especially with regards to published plagiarism guidelines. Midshipmen are expected to do the right thing—even when no one is looking. !Plagiarism -‐-‐ The practice of taking someone else’s work or ideas and passing them off as one’s own. Oxford Dictionary of American English. We embrace fairness in all actions. We ensure that work submitted as our own is our own, and assistance received from any source is authorized and properly documented. We do not cheat. USNA Honor Concept. Academic plagiarism is the use of words, information, insights, or ideas of another without crediting that person through proper citation. Unintentional plagiarism, or sloppy scholarship, is academically unacceptable; intentional plagiarism is

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dishonorable. You can avoid plagiarism by fully and openly crediting sources. Faculty Senate Statement. !Observations from Previous Semesters !1. Students tend to become tired at the end of the semester or blow off the final

exam and consequently more students are hurt by the final exam than helped. 2. Students tend to go glazed eyed as the semester progresses regards the manner

of delivery of the course (projection of written notes and figures from the text or news articles) and blow off listening in class-‐-‐mistake: specific questions on the tests and even the answers are often given in the class lectures.

3. Students want to come in for EI “on a regular weekly basis” but come in unprepared without specific questions-‐-‐again, mistake: you will be asked to leave and come back when prepared with specific questions.

4. Students realize early on they can “game” the homework by simply tabbing through incorrect answers to allow the machine to reveal and answer with the correct answer-‐-‐mistake: there is a direct correlation between really doing the homework and grades on quizzes and tests (the professor knows by certain logs available to him who is really doing the homework and who is faking it).

5. Students who pay attention in class, ask questions and relate learning to macroeconomic news of the day end up with better grades. !

There are five blocks in the course: short run, medium run, long run, open economy, expectations. The following schedule shows what chapters are covered on what days during each block of the course. There are four types of special days in the schedule: News Days, Lab Days, Homework and Quiz Due Days, Paper Days. !News Days: on news days, news articles relating to the block and noted at http://jamesbuttinger.com/FE312buttinger/News.html will be projected onto the board and read by every one, be ready to discuss. !Lab Days: on lab days, students must bring their laptops to class and be ready to ask questions on homework or quiz problems they have had trouble with. !Homework and Quiz Due Days: Homework and Quizzes are due by 0700 on these dates. Past due homework and quizzes will be zeroed out at 0700 on the due date. !Paper Days: on paper days, students must bring their laptops to class and be ready to work on their paper based upon guidance from this syllabus and the professor. !

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Macroeconomic Mathematical Construct Paper Required Outline !Title Page (1 page, does not count against word count limit) Title of study (centered, mid-‐top); course name/number, instructor name, date (all lower right) !Abstract Page (1 page 1 paragraph, does not count against word count limit) Brief description of macroeconomic mathematical proposition and results !Table of Contents (1 page, does not count against word count limit) Use style sheet capability in Word, must also include Table of Figures, Table of Tables !Statement of Purpose (1 page) Clearly state and define the assigned macroeconomic mathematical construct, the specific context of the construct, the hypothesis and the expected results !Introduction (3 pages) Summary of three previous uses of the macroeconomic mathematical construct that provide a baseline and points of contrast or comparison, including the history and historical context, use, limitations and criticisms, or relevant economic history of the generational periods of the nation studied in the context of the macroeconomic mathematical construct !Application of Macroeconomic Mathematical Construct and Results (2 pages) Apply the macroeconomic mathematical construct for the assigned context, portray results in tables and graphs !Compare and Contrast Results (3 pages) Compare and contrast results with expected results and previous uses. Provide a creative and interesting Visual Display of Quantitative Information (VDQI) that makes the point of this section http://www.edwardtufte.com/tufte/ !References (1 page, does not count against word count limit) There must be three (3) physical books from Nimitz library used as references. about.com, wikipedia.com and other meta search sites are not allowed as cited sources. A meta search site such as econlit.com, nber.org may be used to find a source but the cite referenced must be the journal article. Include the sources and uses of data. Most data will be found at http://research.stlouisfed.org/fred2/ , http://data.worldbank.org and other legitimate sites like http://www.cbo.gov and http://www.whitehouse.gov/omb/budget !Footnotes do not count against 3,500 word count limit nor does the list of references. !!!

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Grading guidelines: !All papers will start at a “B” (85) and move up or down from there. “A” papers will have a creative visual display of quantitative information (VDQI) that tells compare and contrast story. Every class day late will be a reduction of one full letter grade. !

Grading Grid FE312 Macroeconomic Mathematical Construct Paper !Name: !

!

“Look” 40% Content 60%

clean paper mathematical construct identipied

crisp ink mathematical construct depined

toc hypothesis stated

sub-‐heads literature search relevant

page #s three physical books referenced

footnotes economic history related to construct

references compare/contrast thorough

titles pigures/tables results clear

pigures/tables referenced meaning of results related to context

legible charts, tables, data lasting impression-‐-‐the story

readable visual display quantitative information

consistent “voice” creative

word use

no personal pronouns

correct spelling, et al

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Common Errors on Paper !1. Make “voice” scholarly, academic, not personal, conversational, write for

an economics journal not for a professor. Read abstracts and journal articles for “voice”.

2. Relate economic history to topic, the point of the assignment, not general history.

3. Learn to use “Insert Captions” in Word for titles for Figures, Tables. 4. Learn to use references rather than stringing quotes together one after

another e.g., rather than using references from A-‐B-‐C like this A-‐A-‐A-‐A B-‐B-‐B-‐B C-‐C-‐C-‐C use them like this A-‐B-‐C, B-‐A-‐C, A-‐C-‐B, C-‐B-‐A, one method is to put references, cites on an index card (physical or virtual) and shufple them.

5. Use uniform sizes for all graphs/tables. 6. “It” is ambiguous, avoid. 7. Use simple declarative sentences in past tense, active voice, avoids passive

voice, personal pronouns, run-‐on sentences, verb-‐subject and verb tense mismatch.

8. Use the full title and the full name of a person the pirst time in an article then use the last name (Federal Reserve Chairman Ben Bernanke then Bernanke, President George H. W. Bush, then President Bush-‐-‐always use title before name of Presidents).

9. Use at least 3 physical books from Nimitz library as sources as well as noted legitimate on-‐line sources. !

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Macroeconomic Mathematical Construct Paper Topics !Constructs from the text. !

# Ch pp item Requirement

Short run

1 23 496 Fig 1 Extend back to 1945 and forward to 2013, break up 1945-‐2013 into economic periods (e.g., 1970s oil shocks, 2007-‐2013 “The Great Recession”)

2 23 500 eq 23.5

Use eq 23.5, U.S. debt ratio 1945-‐2013, break up 1945-‐2013 into economic periods (e.g., 1970s oil shocks, 2007-‐2013 “The Great Recession”)

3 23 503 para 5 Extend U.S. cyclically adjusted depicit 1945-‐2013, break up 1945-‐2013 into economic periods (e.g., 1970s oil shocks, 2007-‐2013 “The Great Recession”)

4 3 47 c0 , c1 Extend autonomous consumption, propensity to consume 1945-‐2013, break up 1945-‐2013 into economic periods (e.g., 1970s oil shocks, 2007-‐2013 “The Great Recession”)

5 3 55 Fig 1 Extend back to 1945 (annual only, not by quarter), break up 1945-‐2013 into economic periods (e.g., 1970s oil shocks, 2007-‐2013 “The Great Recession”)

Medium run

6 6 113 Fig 6-‐2 Construct for each year of 1994-‐2011, make inference on natural rate of unemployment, extend back to 1945 and forward to 2013

7 6 119 Table 1 Replicate for manufacturing, retail 1945-‐2013 compare, contrast with respective wage rates (efpiciency wage, minimum wage)

8 7 155 Table 7-‐1

Break up 1945-‐2013 into economic periods (e.g., 1970s oil shocks, 2007-‐2013 “The Great Recession”), add two rows to Table 7-‐1 “Monetary contraction” “Depicit expansion”, determine for each period the actual qualitative descriptors in each cell (note: some rows may be blank)

9 6, 8 (When) Does the minimum wage raise or lower the (natural) rate of unemployment? (see Krueger, et al)

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10 8 162, 165, 168

Fig 8-‐1, 8-‐2, 8-‐5

Italy: break up 1945-‐2013 into 3 periods that make economic sense, replicate the appropriate Phillips Curve

11 8 162, 165, 168

Fig 8-‐1, 8-‐2, 8-‐5

France: break up 1945-‐2013 into 3 periods that make economic sense, replicate the appropriate Phillips Curve

12 8 162, 165, 168

Fig 8-‐1, 8-‐2, 8-‐5

Poland: break up 1945-‐2013 into 3 periods that make economic sense, replicate the appropriate Phillips Curve

13 8 162, 165, 168

Fig 8-‐1, 8-‐2, 8-‐5

Greece: break up 1945-‐2013 into 3 periods that make economic sense, replicate the appropriate Phillips Curve

14 Italy: break up 1945-‐2013 into 3 periods that make economic sense, replicate Beveridge Curve

15 France: break up 1945-‐2013 into 3 periods that make economic sense, replicate Beveridge Curve

16 Poland: break up 1945-‐2013 into 3 periods that make economic sense, replicate Beveridge Curve

17 Greece: break up 1945-‐2013 into 3 periods that make economic sense, replicate Beveridge Curve

18 1 31 Fig 2-‐5 Italy: break up 1945-‐2013 into 3 periods that make economic sense, replicate Okun’s Law

19 1 162, 165, 168

Fig 2-‐6 France: break up 1945-‐2013 into 3 periods that make economic sense, replicate Okun’s Law

20 1 162, 165, 168

Fig 2-‐7 Poland: break up 1945-‐2013 into 3 periods that make economic sense, replicate Okun’s Law

21 1 162, 165, 168

Fig 2-‐8 Greece: break up 1945-‐2013 into 3 periods that make economic sense, replicate Okun’s Law


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Long run

22 11 236, 240, 241

Fig 11-‐6, 11-‐7 Table 11-‐1

Break up the U.S. economy 1945-‐2013 into periods that make economic sense, replicate Fig 11-‐6, 11-‐7 and pill in Table 11-‐1 for those periods i.e., pind the actual numbers for the U.S. economy, e.g., s-‐savings

rate, ∂-‐depreciation rate, ∝ and 1-‐∝ in the Cobb-‐Douglas production function…

23 12 255, 260

Table 12-‐1, 12-‐2

Break up the U.S. economy 1945-‐2013 into periods that make economic sense, replicate Table 12-‐1, 12-‐2 for those periods for U.S.

24 12 265, 266

Appdx Break up the U.S. economy 1945-‐2013 into periods that make economic sense, use the Solow math to measure technological growth for each of those periods

Open Economy

25 18 384 Fig 18-‐3

Break up the U.S. economy 1945-‐2013 into periods that make open economy sense, replicate Fig 18-‐3 for $ against the £, €, ¥

26 19 410, 421

Appdx Break up the U.S. economy 1945-‐2013 into periods that make open economy sense regards depreciation, does the Marshall-‐Lerner condition hold?

27 19 410, 421

Appdx Break up the Japanese economy 1945-‐2013 into periods that make open economy sense regards depreciation, does the Marshall-‐Lerner condition hold?

28 19 413 Fig 19-‐6

Break up the U.S. economy 1945-‐2013 into periods that make open economy sense regards depreciation, build Fig 19-‐6, the J-‐curve, for those periods

29 19 413 Fig 19-‐6

Break up the Japanese economy 1945-‐2013 into periods that make open economy sense regards depreciation, build Fig 19-‐6, the J-‐curve, for those periods

30 20 434, 435

Table 1, 2

Break up the U.S. economy 1945-‐2013 into periods that make open economy sense, replicate Table 1, 2 does Mundell-‐Fleming model hold?


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!

Expectations

31 14 302 Fig 14-‐5

Break up the U.S. economy 1945-‐2013 into periods that make economic sense, build Fig 19-‐6, the interest J-‐curve, for those periods

32 15 322 Fig 1 Break up the U.S. economy 1945-‐2013 into periods that make economic sense, build the yield curve for those periods

33 15 324, 325

15.9 -‐ 15.12

Break up the U.S. economy 1945-‐2013 into periods that make stock market sense, “backcast” to test the validity of the equations for Alcoa, DuPont, GE, AT&T

34 15 347 Fig 1 Break up the U.S. economy 1945-‐2013 into periods that make stock market sense, “backcast” to test the validity of Tobin’s q for Alcoa, DuPont, GE, AT&T


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