Monetary and Fiscal Policy
Fall 2019
Jeffrey Parker
Course Information
Course Content
Class Format
Prerequisites
Office Hours
Exams and Other Assignments
Grading
Texts and Readings
Course Content
This course presents a broad examination of the economic literature on monetary, budget, and financial regulatory policies that governments can use to pursue macroeconomic goals such as steady growth, high employment, low inflation, and a stable financial system. The fields of monetary theory, macroeconomics, public finance, and political economy/public choice all contribute significantly to its content. Attention is given to theoretical models, empirical tests, and relevant institutional details of the U.S. and world economies. Among the specific issues discussed are alternative structures of monetary systems; banking, central banks, and regulation of the financial system; causes and effects of financial and banking crises; the effects of monetary and fiscal policy on output, employment, and inflation; inflation and disinflation; the macroeconomic implications of government budget deficits; evidence on the effects of fiscal policy; and theories of how political and economic considerations affect the formation of economic policies.
Expected Learning Outcomes: (because the accreditors insist that they be here): Understand and be able to use the above in applied analysis.
Class Format
Much of the course is structured as a student-participation conference. The instructor will lecture when the material demands it. Students are expected to participate actively in class. The class will meet from 9:00 to 9:50 each Monday, Wednesday, and Friday throughout the semester.
Prerequisites
The formal prerequisite for this course is Economics 201: Introduction to Economic Analysis. Those who have taken Economics 304 or 314 (macroeconomics) or Econ 342 (international macro) will find that preparation useful, though it is not essential. Students will be expected to have some basic understanding of macroeconomic principles; supplementary readings will be available for those whose preparation may be inadequate. There is no mathematics prerequisite. Most of the analysis will be performed graphically though fundamental methods of calculus, statistics, and econometrics will appear from time to time, especially in the readings. A few readings are quite mathematical in nature, but students should be able to "read between the equations" to get a basic understanding of these models.
Office Hours
The instructor will hold office hours in Vollum 229 on Mondays and Wednesdays from 10:30 to 11:30pm and Thursdays from 10:00 to 11:00am.
Students for whom these hours are inconvenient may make appointments at other times by contacting the instructor at extension 7308 or by email to parker@reed.edu.Exams and Other Assignments
Daily Class Preparation and Responses: To help focus your reading and the ensuing conference discussion, a set of discussion questions for each class session is shown on the reading list. The class Moodle site also shows these questions and gives you an opportunity to write brief responses. Your responses must be entered in the class Moodle page before the beginning of the class in which the material is discussed. I will review at least some of your submissions before class and may try to steer the class discussion toward points of common interest or confusion. As the discussion proceeds, I may ask students from the class to raise points for discussion from their comments.
In an ideal world, every student would read all of the readings for every class. While Reed approaches this ideal world more closely than most colleges and universities, I recognize that there will be times when some students are unable to complete all of the reading and/or do the Moodle responses. The responses will be "graded" very simply: There are three points for each class day. You get none if you don't submit responses. You get two if your responses are satisfactory and substantial (and one if they fall short of that). You get the third point if your responses are outstandingly complete or insightful. I expect that you should complete most of the response assignments at the "two" level but I understand that few will complete all. However, missing as many as one per week is not acceptable (one-third of the total).
In preparing for class, I suggest that you follow the recommendations in the instructor's guide to reading economics papers. This will help you focus on what is important in your reading and preparation. You may also find this brief introduction to econometrics useful.
Exams. There will be a mid-term exam roughly halfway through the course and a final exam at the end. Part or all of these exams may be take-home.
Policy Project. We will undertake an extended project in which groups of students will each research the macroeconomic situation and make monetary and fiscal policy recommendations for one country. More information about the project will be available in October. Groups will be assigned after fall break.
Grading
Grades will be based on all information the instructor has about your level of understanding of monetary and fiscal policy. This includes evidence from exams, assignments, projects, class participation, and individual discussions.