Unit Outline* ECON2234 Macroeconomics: Policy and Applications Semester 2, 2011 Campus: Crawley Unit Coordinator Associate Professor Sam Tang Business School www.business.uwa.edu.au * This Unit Outline should be read in conjunction with the Business School Unit Outline Supplement available on the Current Students web site http://www.business.uwa.edu.au/students
ECON2234/Crawley/ST/14.06.11 All material reproduced herein has been copied in accordance with and pursuant to a statutory licence administered by Copyright Agency Limited (CAL), granted to the University of Western Australia pursuant to Part VB of the Copyright Act 1968 (Cth). Copying of this material by students, except for fair dealing purposes under the Copyright Act, is prohibited. For the purposes of this fair dealing exception, students should be aware that the rule allowing copying, for fair dealing purposes, of 10% of the work, or one chapter/article, applies to the original work from which the excerpt in this course material was taken, and not to the course material itself. The University of Western Australia 2011 2
UNIT DESCRIPTION Introduction I welcome you to the second-year macroeconomics, Macroeconomics: Policy and Applications. Like the first-year macroeconomics, the second-year unit is fairly broad, covering topics from short-run economic fluctuations to long-run economic growth. Unlike the first-year macroeconomics, the second-year unit uses formal macroeconomic models to analyse macroeconomic issues such as unemployment, inflation, growth and open economy. Unit content Macroeconomics is the study of the performance of the national economy and the policies used to improve that performance. The study of macroeconomic issues is usually divided into short, medium and long run. The IS-LM model is widely used to study short-run movements in the goods and financial markets. The aggregate supply and aggregate demand (AS-AD) model allows us to understand the relation between output and inflation, and the role of monetary and fiscal policy both in the short and medium run. In the long run, macroeconomists are primarily interested in the question of how sustainable output growth can be achieved. We will cover the IS-LM model, AS-AD model and neoclassical model of growth in this unit. In addition, we will introduce open economy in the models if time permits at the end. The goal of the unit The aim of Macroeconomics: Policy and Applications (ECON2234) is to develop your knowledge of macroeconomics so that you can use that knowledge to analyse important macroeconomic issues affecting you. Learning outcomes On successful completion of this unit, students should be able to: Understand how equilibrium is determined in the goods and financial markets in a closed economy. Understand the mechanics of fiscal and monetary policy. Use the AS-AD model to analyse the effects of government policy on the movements of goods, financial and labour markets. Analyse the effects of openness on goods and financial markets. Understand the major forces of economic growth. TEACHING AND LEARNING RESPONSIBILITIES Teaching and learning evaluation You may be asked to complete two evaluations during this unit. The Student Perception of Teaching (SPOT) and the Students Unit Reflective Feedback (SURF). The SPOT is optional and is an evaluation of the lecturer and the unit. The SURF is completed online and is a university wide survey and deals only with the unit. You will receive an email from the SURF office inviting you to complete the SURF when it is activated. We encourage you to complete the forms as your feedback is extremely important and can be used to make changes to the unit or lecturing style when appropriate. 3
Attendance Participation in class, whether it be listening to a lecture or getting involved in other activities, is an important part of the learning process. It is therefore important that you attend classes. More formally, the University regulations state that to complete a course or unit students shall attend prescribed classes, lectures, seminars and tutorials. CONTACT DETAILS We strongly advise students to regularly access their student email accounts. Important information regarding the unit is often communicated by email and will not be automatically forwarded to private email addresses. Unit coordinator/lecturer Name: Email: Sam Tang sam.tang@uwa.edu.au Phone: 6488 2931 Consultation hours: Lecture times: Lecture venue: Tutorial times: Tutorial venue: 2:00pm 4:00pm, Tuesdays Please check: http://www.timetable.uwa.edu.au Please check: http://www.timetable.uwa.edu.au http://www.olcr.uwa.edu.au/ http://www.olcr.uwa.edu.au/ TEXTBOOK(S) AND RESOURCES Unit website http://www.webct.uwa.edu.au Recommended/required text(s) Almost all topics addressed in lectures are covered in the following text for this unit: Weil, Blanchard and Sheen, 2011, Macroeconomics: Theory & Applications The textbook is available in the bookstore. Note that this textbook is a combined version of two individual textbooks: Weil, David, Economic Growth: International Edition, Pearson/Prentice Hall, Sydney, 2008. (2 nd edition) Blanchard, Olivier, and Sheen (B&S), Macroeconomics: Australasian Edition, Pearson/Prentice Hall, Sydney, 2009. (3 rd edition) 4
UNIT SCHEDULE Week # Week commencing Topic Required Text Reading 1 1 August Introduction Economic Growth 2 8 August Physical Capital and the Solow Model Section 1: Chapter 1, 2 Section 1: Chapter 3 3 15 August Population and Economic Growth Section 1: Chapter 4 4 22 August Measuring Productivity and Incorporating Technology in the Solow Model Section 1: Chapter 7 & 8 Appendix 5 29 August The Goods Market Section 2: Chapter 3 6 5 September Financial Markets Section 2: Chapter 4 7 12 September The IS-LM Model Section 2: Chapter 5 8 19 September The Labour Market Section 2: Chapter 6 26 September 1 Week Non-Contact Study Break 9 3 October 10 10 October Putting All Markets Together: The AS- AD Model Openness in Goods and Financial Markets Section 2: Chapter 7 Section 2: Chapter 18 11 17 October The Goods Market in an Open Economy Section 2: Chapter 19 12 24 October Output, the Interest Rate and the Exchange Rate Section 2: Chapter 20 13 31 October Catch Up and Revision 5
UNIT STRUCTURE Tutorials There are 13 teaching weeks in the semester in total. Tutorials will start from Monday, 15 August 2011 (Week 3). Students should attend a 45-minute tutorial session for each week between Week 3 and Week 13. It should be noted that tutorials require class discussion and participation, which will be assessed and recorded. Students who fail to attend a tutorial class will receive a mark of zero for that class. Tutorial allocations can be made on-line at http://olcr.uwa.edu.au/. Students are required to submit 5 tutorial assignments to the Reception at UWA Business School Building by 12.00 noon on the due dates. The written assignments are worth 2.5 per cent each and they will be graded and returned to students in tutorials. The 45-minute tutorial sessions following the assignment due dates will be used to work through the tutorial assignments. Class discussion and participation in these 5 tutorial classes are worth 5 per cent of the total assessment. In addition to the written assignments, there are 5 required tutorial readings for the Unit. It should be noted that both the midterm test and final exam will include questions relating to these 5 required tutorial readings. Students can download the required readings online from UWA s library website or from the Unit s WebCT. Also, for each required reading, students will sit for a quiz (15 minutes) in the tutorial which consists of multiple-choice and short questions. Each of the 5 quizzes is worth 2.5 per cent of the total assessment. Failure to submit an assignment or to sit for a quiz will result in getting a mark of zero for the assignment/quiz. Due dates for tutorial assignments Assignment number Date due on Mark (%) 1 19 August 2.5 2 2 September 2.5 3 16 September 2.5 4 7 October 2.5 5 28 October 2.5 Tutorial assignments are posted on the Unit s WebCT one week prior to the due dates and they must be submitted by 12.00 noon on the due dates. Students should keep a copy of the submitted assignment. Tutorial dates and contents Teaching week Starting Monday Tutorial Discussion Contents 1 1 August No tutorial 2 8 August No tutorial 3 15 August Required reading 1 4 22 August Assignment 1 (due 19 Aug.) 5 29 August Required reading 2 6
6 5 September Assignment 2 (due 2 Sep.) 7 12 September Required reading 3 8 19 September Assignment 3 (due 16 Sep.) 9 3 October Required reading 4 10 10 October Assignment 4 (due 7 Oct.) 11 17 October Mid-term test result 12 24 October Required reading 5 13 31 October Assignment 5 (due 28 Oct.) Required tutorial readings Required reading 1: Lucas, Robert, The Industrial Revolution: Past and Future, FRB, Minneapolis, http://minneapolisfed.org/pubs/region/04-05/essay.cfm. Required reading 2: Weil, David, Economic Growth: International Edition, Pearson/Prentice Hall, Sydney, 2008, 2nd edn), Chapter 12: Government. pp. 338-366. Required reading 3: Lane, Philip, The Cyclical Behaviour of Fiscal Policy: Evidence from the OECD, Journal of Public Economics, Vol. 87, pp. 2661-75, 2003. Required reading 4: Stevens, Glenn, Monetary Policy and Inflation: How Does It Work? http://www.rba.gov.au/speeches/2008/sp_gov_140308.html. Required reading 5: Walsh, Carl, The Future of Inflation Targeting, Economic Record, online version doi: 10.1111/j.1475-4932.2011.00735.x Late assignments As discussion of the correct answers to assignment questions commence in tutorial classes from the first working day after the due date, assignments submitted after 12:00 noon on the due date will not contribute to student assessment. Tutors have been instructed to enforce this rule strictly: late assignments are corrected by tutors but no grade is awarded for assessment purposes. However, if a student is unable to complete an assignment on time because of verifiable exceptional circumstances, such as when a medical practitioner has certified that he or she is too ill to complete a particular assignment by the due date, a notional mark for a late assignment will be determined as the mean mark from the Student s graded tutorial assignments. Tutors refer all cases of this kind to the Unit Coordinator for final approval. 7
ASSESSMENT MECHANISM The purpose of assessment There are a number of reasons for having assessable tasks as part of an academic program. The assessable tasks are designed to encourage you to explore and understand the subject more fully. The fact that we grade your work provides you an indication of how much you have achieved. Providing feedback on your work also serves as part of the learning process. Assessment mechanism summary The assessment for ECON2234 contains three components: i. a mid-semester test [To be held in-class on Tuesday, 4 Oct. 2011]. ii. iii. tutorial assignments (5 sets) and 5 required readings for tutorial discussion. a final examination. The final grade for all students will be determined using the following weighting: Item Weight Date Mid-semester test 20% 4.00pm 4.45pm, Tuesday, 4 October 2011 5 written assignments and 5 required readings 25% (10 x 2.5%) See due dates for tutorial assignments below under Tutorials. Tutorial participation 5% Attendance and participation in tutorial classes Final exam 50% TBA on Student Connect Note 1: Note 2: Results may be subject to scaling and standardisation under faculty policy and are not necessarily the sum of the component parts. Your assessed work may also be used for quality assurance purposes, such as to assess the level of achievement of learning outcomes as required for accreditation and audit purposes. The findings may be used to inform changes aimed at improving the quality of Business School programs. All material used for such processes will be treated as confidential, and the outcome will not affect your grade for the unit. Assessment components Mid-semester test The mid-semester test will be held in class on Tuesday, 4 October from 4.00pm to 4.45pm. There are two venues for the test as follows: Venue Surname starting TBA on WebCT TBA on WebCT A O P Z Students should go to the assigned venue for the test. The test will take approximately 45 minutes and will be comprised of multi-choice and short-answer questions. Students should note this date and be available for the test. Since most students are doing four subjects, it is more than likely that 8
other tests/assignments will be placed around about the same time. Students should take care and organise their study schedule. Tutorial assignments There will be 5 sets of tutorial assignments in total. The majority of the questions in the tutorial assignments are selected from the end-of-chapter questions in the textbooks. Students can download the tutorial assignments from the Unit s WebCT. Tutorial assignments are designed to enhance students understanding of material covered in lectures as well as assist in developing students' technical skills and problem-solving ability. Final examination A two-hour exam held in the normal examination period. Material covered in the mid-semester test may be re-examined. More information will be provided in Week 12 and 13. Submission of assignments Students are required to submit 5 tutorial assignments in hard copy to the Business School Undergraduate Students Centre. Please remember to attach an Assignment Cover sheet to the front of your assignment. You can download the relevant Assignment Cover sheet from the Business School Current Students web page http://www.business.uwa.edu.au/students/assessments. Student Guild Phone: (+61 8) 6488 2295 Facsimile: (+61 8) 6488 1041 E-mail: enquiries@guild.uwa.edu.au Website: http://www.guild.uwa.edu.au Charter of Student Rights and Responsibilities The Charter of Student Rights and Responsibilities outlines the fundamental rights and responsibilities of students who undertake their education at UWA (refer http://handbooks.uwa.edu.au/undergraduate/poliproc/policies/studentrights). Appeals against academic assessment The University provides the opportunity for students to lodge an appeal against assessment results and/or progress status (refer http://www.secretariat.uwa.edu.au/home/policies/appeals). 9