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| The 1960s was the golden age for macroeconomists. There existed an almost universal consensus on how the macroeconomy worked, government policymakers and academics saw the world in the same way, and when governments put the academic theories into practice it seemed to work. There were differences about how governments should conduct economic policy, but they arose largely over differences about the relative importance of different components of a single model. Since 1970, this consensus began to fall apart. Mathematical advances opened new methodological avenues, and some of these avenues led down markedly divergent paths. After thirty years of innovation, no new consensus has emerged. To the contrary, distinct schools think very differently about the right way to do macroeconomic theory and conduct policy. |
| For today's student of macroeconomics, life is much more difficult than it was forty years ago. Today, multiple models of the economy are in simultaneous use: each has provided valuable insights for policymakers, but none is useful for understanding all important policy questions. To make sense of this competing frameworks, this course takes a historical approach to the development of theory. Doing so allows us to examine the practical contributions of each development in academia, while making clear the limitations of each. New theories are clearly seen to arise in response to the limitations of existing ideas, as well as to the economic events that preceded them. |
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| There is no required text for this course. However, many students (especially those with money to burn) like to have a text to accompany the course. For them, I recommend |
| Froyen, Richard T. (2002): Macroeconomics: Theories and Policies. New York: Macmillan, 7th edition, |
| which follows the structure of the course quite well. Note that a significant quantity of material has been collected together on this website. You will be expected to be familiar with the additional online readings provided. |
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| Tuesdays and Thursdays, 3:00 - 4:20pm |
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| There will be seven homeworks. Each homework assignment will be made available on this site, at least 10 days before the due date. You may either work alone on these homeworks, or in pairs. If two people work jointly on an assigment, they must hand in just one copy of the assignment with both names on it. Please note: |
| No more than two people may work jointly on an assignment: working in pairs facilitates learning; working in groups of three or more facilitates free-riding. Rest assured that the grading standards are NOT lower for students working alone. Put another way, there is no handicap to working in pairs. There IS a penalty for working in pairs and handing in assignments separately. |
| There will be two exams, a mid-term taken during class; and a final taken during regular examination time. Prototype questions will be made available at an early stage on the review page. |
| Please note
that the final exam will be held in two parts, both during class on 27
April and 29 April. Please disregard the date given for the final exam
during exam week. |
| The grade distribution will be as follows: Problem sets: 30%, Mid-term exam: 30%, Final exam: 40%. |
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| As with all Carnegie Mellon faculty, I can pretend to be busy all the time. But it is my preference to be available to you as much as possible. You may therefore attempt to see me about the course or other academic matters at any time. If you won't object to the occasional times when I really have to postpone meeting with you (e.g. when I really do have an imminent deadline, a meeting, or my grandmother has died again), drop by the office. If you are going out of your way to see me, you may prefer to call first to check that I am there. | ||
| Want to understand where your TAs are coming from? Read the talk by Jeffrey Zax. It's over 20 years old, but not much has changed. |