Professor Steven Horwitz
Fall 2000

108 Hepburn Hall
T Th 2:30 - 3:50

229-5731 (office)
113 Hepburn Hall

379-9737 (home, before 9pm)

Office Hourse: M,W 1-2; F 9 -10:30
and by appointment

Email: sghorwitz@stlawu.edu
AIM: sghorwitz Web: http://myslu.stlawu.edu/~shorwitz

This course is one of the two required courses in intermediate economic theory. Along with Econ 251, this course forms the core of the theoretical courses in economics. Like 251, this course has a fair deal of mathematical and geometrical analysis. Also like 251, we will try to apply this theoretical work to real world problems of economic growth and economic policy. However, there are two big differences between this course and 251. The first one is that this is a macro course and our focus will be on issues of GDP, inflation, unemployment, and monetary and fiscal policy. The second difference requires some additional explanation.

Unlike 251 where you were generally presented with *one* theoretical
structure that was then deployed to explain economic phenomena, there is
far less agreement on what counts as good macroeconomic theory. As a result,
one aspect of this course will be the exploration of the differences between
*various*
macroeconomic theories. We will explore these theoretical differences in
terms of how they relate to one general model. Your textbook constructs
a loanable funds-based circular flow model that I think nicely captures
many of the major elements of good macroeconomics. The first two-thirds
of the semester will be devoted to understanding that model and exploring
how it can be used to shed light on alternative macroeconomic approaches.
These sections of the course move from the immediate effects of macroeconomic
disturbances and policy changes to the short run, intermediate run, and
long run effects. This is an effective way of developing your "macroeconomic
way of thinking." One of the important aspects of this course is to acquire
and refine the tools of macroeconomic theory so that you can make use of
them in later courses.

After we work through all of those runs of time, we will look at the
conduct of monetary and fiscal policy. We will focus on the issues of inflation
and the federal government's budget to illustrate both the way policy is
made and how it relates to our theoretical discussions. There is only one
text for this course, Meir Kohn's *Macroeconomics*. The bulk of the
work is homework questions/problems and exams. Be prepared for a constant
level of work and exams that ask you to interpret, apply and assess course
material.

I will be archiving this syllabus and all other course material possible on my web site. Go there and click on the cell for Economics 252 - http://myslu.stlawu.edu/~shorwitz/Fall00/Econ252/index.htm.

ASSIGNMENTS AND GRADES

Your grade will be based four *exams*, one *quiz*, a number
of *homework assignments*, and a* short policy analysis paper*.
The first three hour exams will count 15% each and will be based on the
material discussed in class. The fourth exam will take place at the scheduled
time for the final, and will be slightly longer and worth more (20%) than
the other two. It will ask you to draw a little bit on material from earlier
in the semester. My exams are *short-answer *oriented, along with
some mathematical or geometrical problems. They will ask you both to demonstrate
your understanding of the material and critically compare and assess it.
The quiz will count 5% and will be in-class and around five questions long.

The homework assignments involve answering questions and solving problems
from the textbook. The exact questions corresponding to each reading assignment
are listed later in the syllabus. You are responsible for doing *9 of
the 11* assignments. If you do more, you can receive extra credit. Each
assignment is worth 9 points and I will take your total score on however
many you do, and that total is worth 15% of your final grade. There will
also be a writing assignment in the policy section that I will discuss
as it nears. That will be worth 15% of your grade. Although the general
format of the class will be lectures, there will be plenty of room for
questions, discussions, and applications to current events. I will make
every effort to avoid lecturing at you too much.

Below is the grading breakdown along with the dates and times of all the major assignments. THE DATES FOR THE EXAMS ARE NOT WRITTEN IN STONE. I haven't taught this course for a few semesters, and have never taught it on Tuesday and Thursday, so things might wind up being off by a day or two. I will give you plenty of warning about any changes, HOWEVER, IT IS YOUR RESPONSIBILITY TO BE AWARE OF SUCH CHANGES.

**Grading breakdown and due dates:**
**Grading scale:**

Quiz | Thur Sept 14 | 5% | 4.0 | (93-100) | |

First hour exam | Thur Sept 28 (evening) | 15% | 3.5 | (88-92) | |

Second hour exam | Thur Oct 19 | 15% | 3.0 | (83-87) | |

Third hour exam | Thur Nov 16 | 15% | 2.5 | (78-82) | |

Fourth hour exam | Wed Dec 20 6pm | 20% | 2.0 | (73-77) | |

Homework | (various) | 15% | 1.5 | (68-72) | |

"Start to finish" paper | Tues Dec 12 | 15% | 1.0 | (60-67) |

The grading scale reflects the baseline from which any curve will be constructed. The curve will be no harder than this, but it may be easier. Although this course will ask a lot of you, it is one that both has great importance and it is one I enjoy teaching. If you have questions or problems, please call or stop by my office.

Topic (approximate # of class days)
Readings

---------------------------------------------------------------------------

THE MACROECONOMIC UNIVERSALS OF TIME AND MONEY (4)

Introduction
Kohn (1)

The market for time
Kohn (2)

The supply and demand for money
Kohn (3)

THE SHORT RUN: SHOCKS AND POLICY IN THE CIRCULAR FLOW (4)

The circular flow in a closed economy
Kohn (4)

Loanable funds and foreign exchange
Kohn (5)

IS-LM AND THE QUANTITY THEORY (5)

The Keynesian cross and ISLM models
Kohn (7)

Money prices and output in the long run
Kohn (8)

AGGREGATE SUPPLY AND DEMAND IN THE LONG RUN (6)

Aggregate supply and demand
Kohn (9)

Inflation and its consequences
Kohn (10)

Goals, institutions, and expectations
Kohn (11)

MACROECONOMIC POLICY (6)

The development of macroeconomic policy Kohn
(12)

Monetary policy
Kohn (13)

Fiscal policy
Kohn (16

CHAPTER | PAGES | QUESTIONS TO DO | DUE DATE |

Chapter 2 | p. 52 | #4, 7, 8, 10 (do the last three graphically) | Friday Sept. 9 |

Chapter 3 | p. 85 | #1, 3 | Tuesday Sept. 12 |

Chapter 4 | p. 112 | #1-4 (do the loanable funds part graphically) | Friday Sept. 22 |

Chapter 5 | p. 140 | #4-6 | Tuesday Sept. 26 |

Chapter 7 | p. 205 | #1, 2, 5, 7-10 (do 1, 2, 5, 7 and 8 graphically) | Friday Oct. 6 |

Chapter 8 | p. 235 | #2, 3, 5-7 | Wednesday Oct. 11 |

Chapter 9 | p. 271-2 | #1, 4, 8, 10, 11 | Friday Nov. 3 |

Chapter 10 | p. 305 | #1, 4-6 | Thursday Nov. 9 (noon) |

Chapter 12 | p. 362 | #1, 2, 5, 7-9 | Friday Dec. 1 |

Chapter 13 | p. 389 | #1, 2, 5-6 | Friday Dec. 8 |

Chapter 16 | p. 480 | #1, 3 | Friday Dec. 15 |

If a chapter reading is not listed here, there is no homework assignment that goes with it.

Homeworks are due at the start of class on Tues/Thurs due dates, and
at 3pm on other days (with the exception of Thursday Nov. 9^{th},
which is due at noon).

**There are 11 different assignments here. You are expected to do 9
of them.** Each one will be worth 11 points for a total of 99 (everyone
gets a bonus point to make it 100). You may do more than 9, and any additional
points will be considered extra credit. It is therefore possible to get
a homework grade of more than 100 if you do more than 9 assignments.

For the questions that require written, not numerical, answers, typing them would be preferred. I will return them corrected as soon as possible so that you can use them as study aids.

TEXTS:

Kohn, Meir. 1997. *Macroeconomics*. Cincinnati: South-Western College
Publishing