Introduction. Objectives
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1 Introduction Master of Sciences in Environmental and Natural Resource Economics Faculty of Economics Chulalongkorn University Course outline, Semester 1/ August 17 September Advanced Economics Theory II (Macroeconomics) Associate Professor Dr. Paitoon Kraipornsak Office: Room 419, 501/1 Macroeconomics Theory is a compulsory core course in Economics Programmes at Faculty of Economics, Chulalongkorn University. The course is designed to provide students a comprehensive view of Macroeconomics Theory adequately to understand the Thai economy and the world economy. Although, in the light of the fact, Macroeconomics has quite little thing to do much with the environmental issues, by no doubt, as an economist, we have to understand our current economic situation. Nevertheless, the course also provides some applications related to environmental issues, when applicable. The most important point, we should be able to anticipate consequences of any government policy actions taken place so that we can manage strategies and plan our environmental policy and management appropriately. The learning tool of Macroeconomics Theory, naturally, involves mathematics and graphs as the important tools for analysis and discussion. Many students in the programme are from various academic disciplines, they often face difficulty in learning using mathematical approach. This course therefore tries to avoid using mathematical tools and techniques unless they are quite critical parts for the discussion and analysis. Moreover, all students have done necessary pre-session core courses for economists. Everyone is equal to the teaching at the time being regardless of his or her previous background. Objectives 1. To learn to know the measurement of the macroeconomic activities 2. To be able to address and explain key fundamental macroeconomic issues emerged recent years 3. To have adequate knowledge of macroeconomic theory to help analyse the economic conditions either in the past or the coming future
2 Class Schedule and Content 1. The measurement of income -Circular flow of income, consumption, investment and saving -Environmental applications. Conceptual framework of well-being. Accounting for renewable and environmental resources: The US Method DFS, CH 1-2 NESDB, Conceptual of Well being. BEA, Accounting for renewable and environmental resources Monday 23 August 2004, hours 2. Income and spending -Simple Keynesian Theory of income determination Aggregate demand and equilibrium output Consumption Government budget Multiplier -Money, interest and income Goods market and the IS curve Money market and the LM curve Equilibrium in the goods market and money market Deriving the AD curve -IS-LM framework and policy analysis Monetary policy and liquidity trap Fiscal policy and the crowding out Policy mix Quizz 1 (15%) DFS, CH Blanchard, CH 3 2
3 Wednesday 25 August 2004, hours Thursday 26 August 2004, hours Saturday 28 August 2004, hours, hours 3. Aggregate demand and aggregate supply -AD curve -AS surve -AD policy under alternative supplies assumptions -Supply side economics -Application. Thai labour market: overview. Change in price of oil DFS, CH 5 Blanchard, CH 6-7 Monday 30 August 2004, hours Wednesday 1 September 2004, hours 4. Wage, prices, and unemployment: the AS -AS and price adjustment mechanism -Inflation and unemployment -Stagflation, expected inflation and Augmented Phillips curve -Supply shock -Labour market -Unemployment/full employment -Output, unemployment and inflation: Okun law Quizz 2 (15%) DFS, CH 6-7 Blanchard, CH 8 Wednesday 1 September 2004, hours (Cont d) Thursday 2 Septembet 2004, hours 3
4 5. Open economy: international linkage -Balance of payment and exchange rates -Exchange rate in the long run -Trade in goods and balance of trade -Capital mobility -Perfect capital mobility and flexible exchange rates -Mundell-Flemming model DFS, CH 12 Blanchard, CH Saturday 4 September 2004, hours 6. International adjustment and interdependence -Adjustment to the balance of payment Adjustment under fixed exchange rates Exchange rate changes and trade adjustment -Monetary approach to the balance of payments -Flexible exchange rates, money and prices -Environmental Application DFS, CH 19. Does international trade harm the environment? Policy Debate: Does international trade harm the environment?, Human Society of the United State ( Monday 6 September 2004, hours Wednesday 8 September 2004, hours 7. Growth and accumulation -Growth accounting -Growth estimation: empirical -Neoclassical growth -Endogenous growth model -Growth policy 4
5 - Application: Reconciling growth and environment DFS, CH 3-4 Blanchard, CH Harris, J.M., and N.R. Goodwin, Reconciling Growth and Environment, Global Development and Environment Institute, WP No Thursday 9 September 2004, hours Saturday 11 September 2004, hours 8. Technical progress and growth -Technological progress and growth rate -Determinants of technological progress -Capital accumulation vs technical progress -Technological progress, wages and unemployment -Environment and the economy: an application Protected Landscapes and Economic Prosperity Blanchard, CH 13 Power, T.M., Protected Landscapes and Economic Prosperity Monday 13 September 2004, hours Wednesday 15 September 2004, hours 9. New Macroeconomics: four ideas of revolutionized macroeconomics -Rational expectation -Random walk theory of GDP -Real business cycle theory -New Keynesian models of price stickiness: microfoundations DFS, CH 20 Thursday 16 September 2004, hours 5
6 Final Examination (70%) Saturday 18 September 2004, hours Course evaluation There will be three written examinations: 2 quizzes (30%) and a final examination (70%). Main texts There are few textbooks for the teaching course. All of them are available in the faculty library. To be consistent throughout the course lecture, the Dornbusch s Macroeconomics textbook is however recommended. Blanchard s Macroeconomics textbooks can also be used simultaneously in class. Any additional articles will be provided in class. 1. Dornbusch, R., S. Fischer, and R. Startz, Macroeconomics. 8 th edition, McGraw- Hill. (DFS) 2. Blanchard, O Macroeconomics. 2 nd edition, New Jersey: Prentice-Hall. Articles 1. Power, T.M., Protected Landscapes and Economic Prosperity: A 21st Century Economic Vision for North Dakota, a study prepared for the Sierra Club and National Wildlife Federation, Montana, University of Montana, January Accounting for Renewable and Environmental Resources 3. National Economic and Social Development Board, Indicators of Well-Being and Policy Analysis, a newsletter, Development Evaluation Division, periodically disseminated information on research of indicators of the Thailand's 8th National Economic and Social Development Plan. 4. Policy Debate: Does international trade harm the environment?, Human Society of the United State ( 5. Thailand Leading Indicators. 6
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