Economics S-10b: Principles of Macroeconomics Syllabus DRAFT

Harvard University Summer School, 2020

T Th 3:15-6:15pm, June 23 – August 6

Professor: Tanseli Savaser Office hours: Tuesdays after class

Assistant Professor of Economics, Vassar College or by appointment
E-mail: tanseli.savaser@gmail.com
Web: sites.google.com/site/tanselisavaser
Classroom: TBA

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 do central banks 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.

Other Course Readings

Besides the textbook, additional readings/materials will be made available online at the Canvas course
website. 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 after a lecture, I will post any slides that I present on our Canvas 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. These will help in studying, but they will NOT substitute for class attendance.

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 assistant for this course 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 and provide guidance on how to prepare for exams and quizzes.
They will also hold additional office hours, help manage the grading process for assignments, quizzes, and
exams. You may submit problem sets early to them.

TA Sessions, Office Hours, and Contact Information

TA Sessions: TBA
Office Hours: TBA
TA: TBA

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. 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 Canvas 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. 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. 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).
The quizzes 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.

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
16th. Please let me know as soon as possible if you require special arrangements for exams. Our final exam is
scheduled for Thursday, August 6th. 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.

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.

Accessibility Services
I encourage students who may need accessibility-related classroom or exam accommodations for this course
to contact the Accessibility Services Office to make the necessary arrangements. You can find the relevant
information from the following link: http://www.summer.harvard.edu/resources-policies/accessibility-services

Office hours
My office hours are after class on Tuesdays. 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,
specifically the Student Responsibilities section (http://www.summer.harvard.edu/resources-policies/student-
responsibilities) and the Resources to Support Academic Integrity (http://www.summer.harvard.edu/resources-
policies/resources-support-academic-integrity) 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
(Subject to revision)

F&B is the textbook (by Frank and Bernanke). Other required and optional readings may be found on the
course’s Canvas website. 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 Concepts

1 JUNE 23 Background: Comparative Advantage and Trade; Supply, Demand, and Market
Equilibrium; and Market Failures
In-class  F&B Ch. 1-3
diagnostic quiz

Part 2: Macroeconomics in the Long Run

2 JUNE 25 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 JUNE 30 Labor Markets, Productivity, and Inequality
 F&B Ch. 6, pp. 149-166
[PS #1 due in  Peter Coy, “Making the Economic Case for More Than the Minimum Wage,”
class] Bloomberg Businessweek February 13, 2014
 Optional: Timothy Noah, “The Great Divergence,” Slate (2011)
4 JULY 2 Economic Growth: History, Facts, and Theory
 F&B Ch. 7
[Quiz 1 in  Ricardo Hausman, "Prisoners of Geography," Foreign Policy (2001)
class]  Daron Acemoglu, “Root Causes,” Finance and Development (2003)
5 JULY 7
GUEST SPEAKER: Mr. Claus Tigges, President of the Berlin Branch of the
[PS #2 due in Bundesbank
class]
Savings and Investment: Households, Government, and Foreign Capital Flows
 F&B, Chap. 8 and Ch. 15, pp. 433-442
 Vanessa Sumo, “Ricardian Equivalence,” Region Focus (2008)
 Optional: Douglas Besharov and Douglas Call, "The Global Budget Race," The
Wilson Quarterly (2010)
6 JULY 9 The Financial System 1: Money and Banking
 F&B, Ch 9
[Quiz 2 in  Andrew Jobst, “What is Securitization?” Finance & Development (2008)
class]  Optional: Listen to the podcasts "The Invention of Money" (2011) and “Bad
Bank" (2009) from This American Life
 Optional: Explore the crisis through the coverage of the New York Times at
http://topics.nytimes.com/top/news/business/series/the_reckoning/index.html
 Optional: Listen to the May and/or October, 2008 episodes of This American
Life on the mortgage and economic crises. These are classic radio programs
and are highly recommended!
 Optional: Watch Frontline’s “Inside the Meltdown” here:
http://www.pbs.org/wgbh/pages/frontline/meltdown/
Part 3: Macroeconomic Theory and Policy in the Short Run
7 JULY 14 Short-Run Macroeconomic Fluctuations and the Keynesian View of Recessions
and Booms
[PS #3 due in  F&B Chp. 6, pp. 166-174 AND Chps. 10-11
class]  James Surowiecki, “Nice Work if you Can Get It” The New Yorker (March 2011)
 James Surowiecki, “The Jobs Crisis,” The New Yorker (Jan. 2011)
 “Much Ado About Multipliers: Why do Economists Disagree so much on whether
Fiscal Stimulus Works?” The Economist (2009)
 Optional: Christina Romer, "The Fiscal Stimulus, Flawed but Valuable," The
New York Times (2012)
 Optional (but valuable for problem sets/exams): Appendices of Chp. 11.
 Optional AND Funny: Watch two rap battles - "Fear the Boom and Bust" and
"Fight of the Century: Keynes vs. Hayek Round 2" on YouTube
8 JULY 16 Midterm Exam: in class
The exam will last approximately 1.25 hours.
The remainder of the class period will be spent in further study of the crisis of 2007-9
9 JULY 21 Central Banking, the Federal Reserve System, and Monetary Policy
 F&B, Ch. 9, pp. 262-264 & Chp. 12
 Renee Haltom and Alexander Wolman, "A Citizen's Guide to Unconventional
[Quiz 3 in Monetary Policy," Economic Brief 12-12, Federal Reserve Bank of Richmond
class] (2012)
 Optional: Watch the maestro at work in a series of four lectures by Ben
Bernanke at GWU from March 2012 explaining the Fed's role in addressing the
financial crisis (http://www.federalreserve.gov/newsevents/lectures/about.htm).
10 JULY 23 Aggregate Demand and Supply: Inflation, Interest Rates, Output, and Policies
 F&B, Chps. 13-14
 Christina Romer, “Lessons from the Great Depression for Policy Today,”
Lecture, University of Oklahoma, March 11, 2013.
Part 4: Open Economy Macroeconomics
11 JULY 28 Trade, Factor Flows, Exchange Rates, and the Open Economy Trilemma
[PS #4 due in  F&B, Ch. 15
class]  Daniel Harari, “Causes of the Eurozone Crisis: A Summary,” UK House of
Commons Library Standard Note SN06831. February 2014.
 Optional: Atish Ghosh and Jonathan Ostry, “Choosing an Exchange Rate
Regime,” Finance & Development December, 2009.
12 JULY 30 Review for Final Exam

AUGUST 6 Final Exam @ 3:15pm (Room TBA)