Marco Del Negro
Office: ITAM Sta. Teresa; CIE
Phone: 628 4197 ext. 2962
E-mail: delnegro@master.ster.itam.mx
Course Homepage: http://master.ster.itam.mx/~delnegro/Eco5/Eco5_s00.htm

Syllabus: Economia V, Spring 2000

Time and Place: Monday and Wednesday; 16:00-17:30; Room 307
Office Hours: For the time being, by appointment
Mechanics of the course:

• The class will be taught in English. If you do not have trouble understanding an economic text written in English, you will be able to follow this class. You can choose to write the answers to exams and problem sets in Spanish.
• There will be a final exam, a midterm, and biweekly problem sets. The final grades will be assigned as follows: final 60%, midterm 40%. Problem sets will be assigned and will have to be handed in on time. Handing in problem sets late, or not handing them in at all, will negatively affect your final grade. I will hand in answers to problem sets, which will be part of the material for the exam.
• Questions are very welcome. Feel free to interrupt me any time.
• The course will try to rely on both intuition and on formal models. The level of math required to take this class is not advanced at all, but be ready to use standard algebra quite often.
• The course will rely on the internet: on my home page (see above) you will find announcements, class notes, and other material.
• The course will mainly rely on the class notes. The textbook Andrew B. Abel and Ben S. Bernanke, Macroeconomics, Third Edition, Addison-Wesley is useful as a complement, but will not be followed too strictly. It is a good book, in my opinion, but it is not necessary to buy it in order to follow the class.
  

Course Outline

• INTRODUCTION

PART I: MEASURING THE ECONOMY

• MEASURING THE ECONOMY (Ch. 2)
• INFLATION, CONSUMER PRICE INDEX, AND RELATIVE PRICES (Ch 2)
• SAVINGS, WEALTH, AND THE CURRENT ACCOUNT (Ch 2)
  

PART II: CONSUMPTION AND SAVINGS IN CLOSED AND OPEN ECONOMIES

• CONSUMPTION: THE INTERTEMPORAL CHOICE (Ch. 4 and 8)
• TAXES IN THE INTERTEMPORAL MODEL: RICARDIAN EQUIVALENCE (Ch. 8)
• THE DETERMINANTS OF THE CURRENT ACCOUNT (ENDOWMENT ECONOMY) (Ch. 5)
  

PART III: PRODUCTION AND INVESTMENT IN CLOSED AND OPEN ECONOMIES

• THE PRODUCTION FUNCTION (Ch. 3)
• INVESTMENT IN A CLOSED ECONOMY (Ch. 4)
• THE INTEREST RATE IN A CLOSED ECONOMY WITH PRODUCTION (Ch. 8)
• INVESTMENT AND CAPITAL FLOWS IN AN OPEN ECONOMY (Ch. 5)
• GOVERNMENT SPENDING, INVESTMENT, AND THE CURRENT ACCOUNT (Optional)
• THE WORLD INTEREST RATE (Optional)
  

PART IV: THE LABOR MARKET

• LABOR DEMAND AND LABOR SUPPLY (Ch. 3)
• EQUILIBRIUM IN THE LABOR MARKET (Ch. 3)
  

PART V: GROWTH

• ECONOMIC GROWTH: SOME EMPIRICAL REGULARITIES (Ch. 6)
• THE SOLOW GROWTH MODEL (Ch. 6)
• THE GOLDEN RULE OF CAPITAL ACCUMULATION AND THE SOLOW GROWTH MODEL WITH EXOGENOUS TECHNOLOGICAL PROGRESS (Ch. 6)
• THE CONVERGENCE CONTROVERSY (Ch. 6)
• ENDOGENOUS GROWTH (Ch. 6)
  

PART VI: MONEY, MONETARY POLICY, AND EXCHANGE RATES

• MONEY (Notes only)
• MONEY SUPPLY AND MONEY DEMAND (Notes only)
• INFLATION AND SEIGNORAGE (Notes only)
• MONETARY POLICY AND THE UNEMPLOYMENT/INFLATION TRADE OFF (Ch. 13)
• MONETARY POLICY AND THE LENDER OF THE LAST RESORT (THE BANKING SYSTEM: FUNCTIONING AND REGULATION) (Ch. 15)
• EXCHANGE RATES (NOMINAL AND REAL) AND MONETARY POLICY IN THE OPEN ECONOMY (Ch. 14)