Amherst Collegedepartment of Economics

Amherst Collegedepartment of Economics

Amherst CollegeDepartment of Economics

Spring 2011Professor A. Honig

Economics 53: Macroeconomics

Office: Hours:

312 ConverseMonday3:30-5:00, or by appointment

Materials to Purchase from Amherst Books:

Frederic S. Mishkin, Macroeconomics: Policy and Practice, 1stedition.


There will be 10 quizzes, 8 problem sets, a mini-exam, 2 mid-term exams, and a final. In your final average, all of the quizzes will count 10 percent, all of the problem sets 15 percent; the mini-exam 5 percent, each mid-term exam 20 percent, and the final exam 30 percent.

No make-up exams will be given. Students with a valid excuse for missing an exam will have their averages based on the other graded assignments.

Quizzes will begin promptly at the start of class and last for no more than 5 minutes. The lowesttwo quiz scores will be dropped, and the only excuse for missing a quiz is a religious observance. Late problem sets will be penalized 25 percent, and must be handed in the day after they are due. After that, no credit will be given.If you cannot make class, problem sets must be left under my office door by the end of class time to get full credit. You can also give them to a friend to hand in. This, however, should be a rare event.

All course materials, except for the text, are available on the Economics 53 course page in CMS. If you pre-registered for the course you should already be “enrolled” on the course page. A copy of the workbook is on reserve at the Library.

Attendance policy: Class attendance is entirely optional. Your grade will be based solely on your graded assignments. Regular attendance, however, is strongly recommended. There is a significant amount of material that is not in the textbook, but will be covered in class and in the supplemental readings. Classes will start promptly at 2, and end promptly at 3:20. You should plan on arriving at class before 2PM. It is very distracting to have students wandering in to class 10 minutes late.

All readings, text, outside readings (OR – under e-reserves), supplemental readings (SR-under course documents), are required. Class will meet every Monday and Wednesday, whether or not there is an assignment listed for that date.

There will also be a help session run by Dang Trinh (’12). If the problem set is due on Monday, the help session will meet Sunday from 7:00 to 8:30. If the problem set is due Wednesday, the help session will meet Tuesday from 7:00 to 8:30. The help sessions will be held in Merrill 315.This session is not meant to reward last minute cramming. Rather, you should come with questions about problems that you have already attempted but are still confused by.

The Q-Center is located in Merrill 202. If you need any assistance or have any questions please contact the Q-center at ext.8331 and by email at .

All of the articles (OR) should be in the e-reserves section of the course website already. If they’re not for some reason, here are instructions for finding them.

Instructions for searching for the outside readings (OR): [E – Economist, NYT – New York Times, WSJ – Wall Street Journal]

Go to: and then go to the “Journal” tab and search for the journal

Select “exact match” instead of “begins with”

type in “the economist”or “the new york times” or “the wall street journal”

get the economist and the new York times from LexisNexis, get the wall street journal from proquest.

Type in the article title and search. For the Wall Street Journal, it’s probably easier to browse the specific issue.

Course Schedule

Week 1

Jan 24First class

Jan 26Readings: Chs. 1-2,

SR: “Macroeconomic Basics”

SR: “Some Simple Math Facts”

OR: “A Falling Speed Limit” E 10/28/2006

Week 2

Jan 31ReadingsCh. 3, Ch. 4 (ignore open economy)

OR: “A Ghost from the Past” E 6/19/2004

SR: Changes and Levels in Pictures

SR: Financial Markets and Economic Surplus

Quiz #1 on Chs. 1-2 and two SR’s for week 1. In general, quizzes cover new material taught during the week, not the previous week, so this is the one exception.

Feb. 2Problem Set #1

OR “Aiming for a Happy Medium” E 12/18/2004

Week 3

Feb. 7Readings: Ch. 6 (just sources of economic growth)

SR: “A Beginner's Guide to Growth Accounting”

OR: “A Productivity Primer”E 11/6/2004

Quiz #2

Feb. 7MINI-EXAM(in class)

Feb. 9Problem Set #2

Week 4

Feb. 14Ch. 5 (skip section on the federal reserve system and the control of the money supply, skip appendix),

Ch. 10 (just section on money market and interest rates),

Ch. 16 (just section on budget deficits and inflation), Ch. 20

OR: “Messing with Money” E 7/25/1998

Quiz #3

Feb 16OR: “As Inflation Soars, Zimbabwe Economy Plunges” NYT 2/07/2007

OR: “Europe’s Scrap Heap” E 8/18/2001

OR: “A Stickier Problem” E 8/28/2010

Week 5

Feb. 21Readings: Ch. 9

SR: IS curve

SR: Money Market and Monetary Policy

SR: Monetary and Fiscal Policy in the short run

SR: IS curve in the long run and Summary

Quiz #4

Feb. 23Problem Set #3

Week 6

Feb. 28Readings:

SR: Power of Monetary and Fiscal Policy and the IS curve

SR: “Automatic Stabilizers: How They Work”

SR: “Expected Inflation: The ‘Wedge’ Approach”


OR: “A Refresher on the 1930s” E 9/19/1998

OR: “Restoring the Fiscal Option”E 1/19/2002

OR: “Fiscal Flexibility” E 11/27/1999

Week 7

Mar. 7Readings: Ch. 18 (don’t worry about indifference curves)

SR: “Consumption Theories”

Quiz #5

Problem Set #4

Mar. 9OR: “A Future Meltdown?” E 9/4/2004


Week 8

Mar. 21Problem Set #5

Readings: Ch. 17 (skip section on AD-AS analysis of exchange rate effects)

OR: “Finance: Trick or Treat?” E 10/23/1999

Quiz #6

Mar. 23OR: “Figures to Fret About” E 7/11/1998

OR: “Sustaining the Unsustainable” E 3/17/2007

I recommend you start working on problem set 6 early.

Week 9

March 28Problem Set #6

OR: “Fix or Float: E 9/13/2003

OR: “Managing the World economy” E 8/3/2002

OR: “The Zimbabwean Model” E 11/30/2002

March 30Readings:Ch. 10 (skip section on money market and interest rates), Ch. 11-12. 12

OR: “Why Wages Do Not Fall in Recessions” E 2/26/2000

OR: “A Natural Choice” E 10/14/2006

Quiz #7

Week 10

Apr. 4Readings: Ch. 13 and Ch. 15 (up to POLICY AND PRACTICE: JAPAN’S LOST DECADE,1992-2002)

Apr. 6Readings: Ch. 21

OR: R. Barro “A Matter of Demeanor” WSJ 5/20/1994

OR: “Cycles and Commitments” E 10/16/2004

OR: Ben Bernanke, “The Logic of Monetary Policy”

OR: R. Barro, “A Rational Choice” WSJ 10/11/1995

Week 11


April 13Readings: Ch. 16 (skip section on fiscal policy and the economy in the short run and skip section on budget deficits and inflation)

OR: “School Brief: The Burdensome National Debt” E 2/10/1996

OR: “After the recession, the deluge” E 1/8/2009


Week 12

Apr. 18Readings:Ch. 5 (just read section on the federal reserve system and the control of the money supply, and read appendix)

SR: “The Term Structure of Interest Rates”

SR: “Early Warning Signals from the Money Market”

OR: “The Long and the Short of It” E 1/7/2006

Quiz # 9

April 20

Week 13

April 25 Problem Set # 7

SR: “The Slope of the LM Curve and Automatic Stabilization – the Pool Problem”

OR: M. Friedman, “End the Fed's Fine Tuning” WSJ 9/15/1993

OR: Ben Bernanke, “Central Bank Talk and Monetary Policy”

(Read up to: Do FOMC Statements Affect Policy Expectations? Some Evidence)

April 27Readings: Ch. 6 (starting with Solow model), Ch. 7 (up to institutions and property rights)

SR: “Solow Anomalies”

OR: “How Does Your Economy Grow” E 9/30/1995

OR: “Counting Heads”E 8/28/2004

Quiz #10

Week 14

May 2

May 4Problem Set #8

Readings: Mishkin, “Epilogue”

OR: “The Growth of Growth Theory” E 05/20/2006

********** Comprehensive Final Exam **********

(as scheduled by Registrar, May 9-13)