Economics S-10b: Principles of Macroeconomics
Harvard University Summer School, 2014
Tuesday and Thursdays, 3:15-6:15 pm, June 23 – August 8
Professor: Steven Nafziger Office hours:
Associate Professor of Economics, Williams College TH, 9:30-11:45 am
E-mail: or by appointment,
Classroom: Harvard Hall 104 Boylston Hall, Room 105
Course description
This course provides an introduction to macroeconomics, the study of economics at a national or international level. The goal of this course is to help you develop a basic understanding of the major economic events that shape the world around us. Indeed, there may not be a better time to take this course! Recent years have seen crises in U.S. housing and financial markets spill over to the global economy, with significant effects on foreign trade, employment, production, and asset prices. In this class, we will explore the origins of the recent crises, develop tools to evaluate the recovery policies put in place by the U.S. and other countries, and explore how the recent macroeconomic developments relate to past experiences. Understanding macroeconomic crises and policy responses are just part of what the course covers. In addition, we will investigate the determinants of long-run economic growth, the tradeoffs between inflation and unemployment, the role (and solvency) of government spending and tax policies, and the international movement of assets and goods.
Microeconomics studies the behavior of component parts of the economy: individual people, firms, and markets. In contrast, macroeconomics is the study of the economy as a whole. We'll address a wide variety of questions such as the following: How can one measure the size of the economy and the cost of living? Why are some countries so poor and others so rich? What causes unemployment and inflation, and how are the two related? Why have wages become more unequal over the last several decades? What effects do tax cuts and government budget deficits have on the economy? What are stocks and bonds; what role do they play in the economy; and what role did financial markets play in the recent economic crises? Why do recessions and depressions happen? What can be done about them? What does Janet Yellen do? Why do American policymakers pay so much attention to what goes on in the Chinese economy? Why has the European economy been struggling to deal with its "Euro crisis"? Many of these and other questions that we consider will explicitly relate the concepts we are studying to the events of the last decade.
You should come out of the course with a more sophisticated and subtle grasp of these and other economic issues that you read about in the news and hear about in political debates. This, of course, does not mean that you will receive easy answers to the hotly debated economic questions of our time. Economics is not primarily a set of answers; rather, it is a method of reasoning. However, by the end of the semester, you should be able to use the tools of analysis from the course to form your own judgments about important economic matters, both in the United States and abroad.
Course Materials
The textbook:
The textbook for this course is Principles of Macroeconomics by Robert Frank and Ben Bernanke, 5th Edition (McGraw-Hill, 2013), which should be available at the Co-op. The first four editions are imperfect substitutes for the 5th edition, but they are OK if necessary. You should be aware that the numbering of chapters changed significantly between the different editions – the reading list below includes information on the 5th edition, but I can provide corresponding page or chapter numbers for earlier editions if requested.
Other Course Readings
Besides the textbook, additional readings/materials will be made available online at the course iSite (isites.harvard.edu/course/sum-30058/2014/summer). Some of these are to be considered required; some may be treated as optional – this is noted below. For required readings, you are expected to have read them carefully before the classes for which they are assigned. They will provide you with the background necessary to participate in class, perform well on quizzes and assignments, and deepen your understanding of the course material. Indeed, a number of these readings will cover several important topics in more depth than the textbook. Questions on the quizzes and exams may ask you to discuss arguments, ideas, and evidence from these required readings. In addition, the reading list has several multimedia items that are accessible online. These items should be treated just as the written items on the reading list.
Class Outlines and Notes:
Shortly before or after a lecture, I will post any slides that I present on our iSites site in that class’s folder. These will generally include a short outline of the lecture and will be VERY useful as study aids for the quizzes and exams. Shortly after each lecture, I will also post brief notes on the material covered. These will help in studying, but they will NOT substitute for class attendance.
When the Class Meets
The time slot for this course is T and TH, 3:15-6:15 pm in Harvard Hall 104. We will begin and end promptly. Once or twice per lecture, we will take short rest breaks.
Read the news
With the dynamic nature of the global economy, I urge you to read a newspaper such as The New York Times, The Financial Times, or The Wall Street Journal, or a periodical such as The Economist to keep up to date. Another great way to become and keep informed is by following NPR’s Planet Money, a blog and podcast that you can find here: http://www.npr.org/blogs/money/.
Teaching assistants
The teaching assistants for this course are Andrey Liscovich and Anna Kurguzova. They will hold optional (but highly useful!) TA sessions each week at times and places listed below, where they will take questions regarding the course material, offer suggestions on how to think about problem set questions, help with supplementary questions, and provide guidance on how to prepare for exams and quizzes. Andrey and Anna will also hold additional office hours, and they will help manage the grading process for assignments, quizzes, and exams, all of which will be evaluated by me and/or the course graders. You may submit problem sets early to them.
TA Sessions, Office Hours, and Contact Information
Andrey Liscovich:
TA Sessions: Mondays, 12:45 and 2 pm [2 sessions] in Sever Hall, Room 209
Office Hours: Mondays, 3:15 – 5 pm at 113 Mt. Auburn St., Suite 100, Office 122
Anna Kurguzova:
TA Sessions: Wednesdays, 12:45 and 2 pm [2 sessions] in Sever Hall, Room 209
Office Hours: Wednesdays, 3:15 – 6:00 pm in Sever Hall, Room 205
Please put Econ S10-b in the subject line of all emails to the TAs and myself.
Course Requirements
Grades will be determined according to the following weights:
Problem sets (4) 20%
Quizzes (3) 10%
Class participation/attendance 5%
Midterm exam 25%
Final exam 40%
Class Attendance and Participation
Attendance is necessary (but not sufficient) for mastering the material in this course. Simply reading the required texts WILL NOT be enough, as the quizzes, midterm, and the final exam will draw on our class discussions of material that are not covered in the textbook or the course packet. At the same time, it is not enough just to come to class. I expect you to all participate in class (perhaps not every meeting but as much as possible). This requires reading the assigned readings before coming to class, thinking about the material, and engaging in class discussions and activities.
Problem sets:
There will be 4 problem sets. I will post the problem sets on iSites at least a week before they are due. The due dates are indicated on the schedule below, although these may be slightly revised as we go along. Late problem sets will not be accepted except under the most extraordinary circumstances. This is necessary because I plan to make suggested solutions available shortly after the due date. You may submit problem sets early to the TAs. Problem sets will be graded on a 0-10 scale. You are welcome to engage in collaborative work on these problem sets, although you MUST write up your own solutions. Please write the names of your collaborators on your problem set. Note that the first three problem sets are due in class on the dates designated below. The fourth problem set will be due by 4 pm on Friday, August 1, at a location to be announced. Although problem sets count for only 20% of your final grade, completing and understanding the material within them will be crucial to your success on exams.
Quizzes
There will be three quizzes of approximately 15 minutes each on the dates noted below (at the end of class). These will cover your working knowledge of the course material. UP TO AND INCLUDING THE MATERIAL COVERED ON THE DAY OF THE QUIZ. As such, they will require some preparation. However, if you are keeping up with the reading and problem sets and attending class, the quizzes should function more as checks on what you already know. I will drop the worst of your three quiz grades in calculating your final course grade.
Exams
The primary form of assessment in this course will be through exams that cover the class lectures, textbook material, and other assigned readings and materials. The midterm will take place in class on Thursday, July 17. It will take-up approximately ½ of class that day, with the other half dedicated to a more informal discussion of some key issues related to the Economic Crisis of 2007-9. Please let me know as soon as possible if you require special arrangements for exams. Our final exam is scheduled for the last class period on TH, August 7. The final exam is comprehensive, with a slight emphasis on the second half of the course. Attendance at the final exam is mandatory for passing the course. Supplementary study materials for the exams will be posted on the iSites site at least one week prior to each exam.
Laptop/Tablet/Smartphone Policy
Please leave them at home or in your bags. If you absolutely cannot take notes without them, I am willing to negotiate, but you must ask me for permission. Otherwise they are banned unless I specifically allow them for a particular purpose, such as an in-class exercise.
Disabilities
I encourage students who may need disability-related classroom or exam accommodations for this course contact the Disabilities Services Office to make necessary arrangements.
Office hours
My regular office hours are Thursdays, 9:30 am – 11:45 am and will take place in Boylston Hall, Room 105. I am also available by appointment at select other times if you have a conflict with my regular office hours. Please just email me with Econ S-10b somewhere in the subject line to set something up. I encourage you to stop by if you have any questions or to discuss topics we don't have time to cover in class.
Academic honesty
Harvard takes matters of academic honesty very seriously. While you may discuss course coverage and assignments with your classmates and others (and may work collaboratively on problem sets), make sure that any written material you submit is entirely your own work. Use of old course materials, such as exams (including from online sources), is prohibited. You should consult the web site of the Harvard Summer School and the website http://www.summer.harvard.edu to familiarize yourself with the possible serious consequences of academic dishonesty. Examples of unacceptable conduct include plagiarism, cheating on examinations, unauthorized collaboration, etc.
Finally
If you have other, more general questions regarding the course or studying at the Harvard Summer School, please refer to the Student Handbook or get in contact with me.
SCHEDULE AND READING LIST FOR ECONOMICS S-10b
Summer 2014, Professor Nafziger
F&B is the textbook (by Frank and Bernanke). Other required and optional readings and audio-visual materials may be found on the course’s iSite. Given the currency of many of these topics, some additional optional readings may be added during the course.
Part 1: Introduction and Review of Microeconomic Concepts1 / Tu, June 24
In-class diagnostic quiz / Background: Comparative Advantage and Trade; Supply, Demand, and Market Equilibrium; and Market Failures
· F&B Ch. 1-3
Part 2: Macroeconomics in the Long Run
2 / Th, June 26 /
Measuring the Macroeconomy: GDP, the Price Level, and Inflation
· F&B Ch. 4-5· Optional: Jon Gertner, "The Rise and Fall of GDP," New York Times, May 2010.
· Optional: Listen to "When a Poor Country Gets a Lot Richer," (2013), a podcast from NPR’s Planet Money
· Optional: Listen to “Why the Price of Lettuce in Brooklyn Matters,” a podcast from NPR’s Planet Money
3 / Tu, July 1
[PS #1 due in class] / Labor Markets, Productivity, and Inequality
· F&B Ch. 6, pp. 149-166
· Peter Coy, “Making the Economic Case for More Than the Minimum Wage,” Bloomberg Businessweek February 13, 2014
· Optional: Timothy Noah, “The Great Divergence,” Slate (2011)
4 / Th, July 3
[Quiz 1 in class] / Economic Growth: History, Facts, and Theory
· F&B Ch. 7
· Ricardo Hausman, "Prisoners of Geography," Foreign Policy (2001)
· Daron Acemoglu, “Root Causes,” Finance and Development (2003)
5 / Tu, July 8
[PS #2 due in class] / Savings and Investment: Households, Government, and Foreign Capital Flows