SYLLABUS: ECON 501, ADVANCED ECONOMIC ANALYSIS
DEPARTMENT OF ECONOMICS



Professor:             Dr. Stephanie Kelton
Class Meets:         Thursdays from 5:30-8:15 p.m. in RH #311
Office Hours:        T/R 1:45-3:00 p.m. and by appointment
Office:                  Manheim 202F
Office Phone:        (816) 235-5700
GTA:                    Saboor Rashid
GTA Phone:          (816) 838-3913
E-mail:                  keltons@umkc.edu

Course Description: The primary objective of macroeconomic analysis is to explain the phenomena of aggregate movements in output, employment and the price level. In the course of the semester, we will examine the intellectual influences that have shaped the development of macroeconomic theory and policy during the past century. Attempts to reconcile the sub-disciplines of micro- and macroeconomics will be given special attention, and criticisms of these attempts will be carefully examined. By the end of the semester, the student should: (1) Be able to identify the main theoretical and methodological differences among competing models; (2) Be in a position to discuss the empirical evidence supporting each model; and (3) Be able to explain why particular policy instruments are considered appropriate (or inappropriate) to achieve macroeconomic stability.

Prerequisites: ECON 301 and ECON 302 or their equivalents.

Textbooks: The main text is Modern Macroeconomics: Its Origins, Development and Current State, by Brian Snowdon and Howard Vane (SV). You should also pick up a copy of John Maynard Keynes' The General Theory of Employment, Interest, and Money, since it is inexpensive and we will refer to it often. Additionally, you will need a copy of A Macroeconomics Reader, Brian Snowdon and Howard Vane (Eds). An intermediate-level text is also advisable (as a reference for material you should already know). The bookstore apparently failed to secure copies of the main text and the Reader. To avoid falling behind, you can order both books from www.Half.com (or any other discount seller). The former should cost about $57 and the Reader should cost roughly $22.  Note that both of these prices include expedited shipping. In the end, you will probably save money by avoiding bookstore mark-ups and buying the texts online.

Class Schedule:

Aug. 25      Introduction, Methodology, and Review of Classical Macroeconomics

            SV Text: Ch. 1 and Ch. 2 (2.1-2.5)

                Popper, Karl R.  The Logic of Scientific Discovery. Excerpt.

                Kuhn, Thomas S.  The Structure of Scientific Revolutions. 2nd  Ed.  Excerpt.
            Henry, J.F. “Say’s Economy” in Two Hundred Years of Say’s Law: Essays on Economic Theory’s Most

            Controversial Principle. Steven Kates (Ed), 2003, Cheltenham, UK: Edward Elgar

 

Sept. 1        Keynes' General Theory

            SV Text: Ch. 2 (2.6-2.17)
            GT Ch's 1, 2, 3, 11, 13, 15, 17, 18, 20, 24


Sept. 8        The Orthodox Keynesian School

            SV Text: Ch. 3 (3.1-3.7)

                 


Sept. 15      IS-LM (Continued)

 

            Student Presentations --  SV Reader, Chapters 2, 4, 6



Sept. 22      The Orthodox Monetarist School           

 

            SV Text: Ch. 4

 

            Phillips, A. W. “The Relation Between Unemployment and the  Rate of Change of Money Wage Rates in the

            United Kingdom, 1861-1957.”  Economica. 1958.

           
            Phelps, E.S. “Phillips Curves, Expectations of Inflation and Optimal Unemployment over Time.” Economica.

            1967.

 

            Student Presentations -- SV Reader, Chapters 9, 10


Sept. 29      The New Classical Model

            SV Text: Ch. 5

 

            Student Presentations -- SV Reader, Chapters 11, 14

 


Oct. 6        The Real Business Cycle School

            SV Text: Ch. Ch. 6

            Nobel Prize Article: http://www.channelnewsasia.com/stories/afp_world_business/view/111219/1/.html  

 

            Student Presentations  -- SV Reader, Chapters 16, 17

 


Oct. 13   The New Keynesian School

            SV Text: Ch. 7
            SV Reader: Ch's. 19, 20

            Student Presentations -- SV Reader, Chapters 5, 18, 22


Oct. 20       MIDTERM EXAMINATION #1
                    ** Note:  This midterm will not include material covered on Oct. 13. 


Oct. 27       The Post Keynesian School

            SV Text: Ch. 8

               

            Student Presentations --

 

                Lawson, “The Nature of Post Keynesianism and its links to other Traditions: a realist perspective”, JPKE
                16(4), 1994

           
                Minsky, H.P. “Finance and Stability: The Limits of Capitalism.” Working Paper #93, The Levy Economics
                Institute

           
                Minsky, H.P.  “The Financial Instability Hypothesis”, Working Paper #74, The Levy Economics Institute

                  

                Lerner, Abba. “Functional Finance and the Federal Debt”, in Selected Economic Writings of Abba P.
                Lerner, David Colander (Ed)

 


Nov. 3        The Austrian School

 

            SV Text: Ch. 9

 

            Student Presentations --

 

                Garrison, R.  1989.  “The Austrian Theory of Business Cycles  in the Light of Modern Macroeconomics”,
                Review of Austrian  Economics, Vol. 3, No. 2.

 

                Bryan Caplan. "Why I am not an Austrian."
                http://www.gmu.edu/departments/economics/bcaplan/whyaust.htm

 

                Batemarco, Robert J. 1994. "Austrian Business Cycle Theory." in in The Elgar Companion to Austrian
                Economics, Peter J. Boettke (Ed.), Edward Elgar.

 

                Ikeda, Sanford. 1994. "Interventionism." in The Elgar Companion to Austrian Economics, Peter J.
                Boettke (Ed.), Edward Elgar.


Nov. 10      Open Economy, Exchange Rates, and Optimum Currency Areas

           

            Student Presentations --

 

                Mundell, “A Theory of Optimum Currency Areas”, American Economic Review. 1961.
                Royal Swedish Academy of Sciences, announcement of Nobel  to Mundell, 1999

               
                Goodhart, “The Two Concepts of Money: implications for the analysis of optimal currency areas.”        

                Reprinted in The State, The Market, and The Euro. Stephanie A. Bell and Edward J. Nell (Eds) 2003.

                London: Edward Elgar.
 

                Bell, S.  “Common Currency Lessons from Europe: Have Member States Forsaken Their Economic        
                Steering Wheels?” in Dollarization: Lessons from Europe and the Americas. Edited by L.P. Rochon and M.
                Seccareccia. 2003. London: Routledge.
 

                 Wray, L. Randall.  “Seigniorage vs. Sovereignty.” Unpublished.

 

                Mosler, Warren. "Exchange Rate Policy and Full Employment."

 


Nov. 17     MIDTERM EXAMINATION #2
                    ** Note: This exam will include material covered on Oct. 13.


Dec. 1       PAPER DUE 
                         *A hardcopy of your paper must be in the department office (HH-211) by 4:00 p.m. on Dec. 1.
                          You will lose 10 points for each day your paper is late.  Absolutely no exceptions!
                          Papers must be at least 2500 words in length (excluding footnotes and references). Maximum 3000 words.


Course Evaluation:       

        Midterm Exams – 100 points each
        Presentation -- 25 points

        Participation -- 25 points

        Paper – 100 points