API-120: Advanced Open-Economy Macroeconomics

API-120: Advanced Open-Economy Macroeconomics

API-120: Advanced Open-Economy Macroeconomics

Prof. Jeffrey Frankel, HKS, Aug. 27, 2012

Quiz for incoming MPA/ID students to gauge preparation in macroeconomics

If you took the test (without looking anything up in books), and scored:

  • 15 out of 22 questions, or higher, then you shouldn’t have anything to worry about. You are adequately prepared.
  • 12-14: You will find it helpful to do some reviewing, especially in those areas where you scored weakest
  • 5-11: You have a lot of studying cut out for you. Please try to do it before the semester starts, or you will quickly get lost.
  • 4 or below: You did no better than the random roll of a die, sorry to say.

If you did badly on questions 1-4, 8 & 10 of the quiz, please review topic (A) below.

(If questions 5-7: Chapter 16 in WTP)

If you did badly on questions 11-14, please review topic (B) below.

If you did badly on questions 15-22, please review topic (C) below.

If none of the above, congratulations!

Background material to review before course begins

(A)SOME MACROECONOMIC DEFINITIONS

National income accounting: Mankiw, Chapter 2.

Balance of Payments accounting: World Trade & Payments, Chapter 15.

(B) KEYNESIAN MODEL, IS-LM, MUNDELL-FLEMING MODEL

Mankiw: Chapters 11-13. [Also 16-17 if you have time]

WTP : Chapters 17.1-17.3, 18.1, 18.3. [If you have time: 18.2.]

Also Romer, Chapter 6.1 or Blanchard-Fischer, 10.4.

(C) AGGREGATE SUPPLY AND INFLATION

Mankiw: Chapters 3-7, 10, 14. [And 15 & 18-20, if you have time.]

WTP, Chapter 26. 1, 26. 3. [And 26.2, if you have time].

Romer’s Advanced Macroeconomics:Chapter 6.2-6.4

Textbooks

Most MPA/ID students will have already studied basic and intermediate macroeconomics. The necessary pre-requisite background in macroeconomics at a basic level (low mathematics) is represented by many textbooks, such as Greg Mankiw, Macroeconomics (8th edition, Worth: NY), 2013. This book would be good to read or review for those who need a lot of reinforcement of the material, especially before the semester starts.

Students will want to acquire World Trade and Payments, R. Caves, J. Frankel, and R. Jones (10th edition, Addison-Wesley Longman, 2007), especially those who have not previously taken a serious course in international economics. It is abbreviated WTP on the syllabus and will be referred to often in the course.

Also required is David Romer’s Advanced Macroeconomics,(McGraw Hill: New York, 4th edition, 2012. Just one chapter (10) is required for API120, but Romer is the text for Macro II, so most students will have to buy it anyway. Level of math is higher.

Also at a considerably more advanced level, the recommended text is Maurice Obstfeld and Kenneth Rogoff, Foundations of International Economics (MIT Press, 1996).

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