Lahore University of Management Sciences

Econ 221 Intermediate Macroeconomics

Instructor
Room No.
Office Hours
Email
Telephone
TA
TA Office Hours
Course URL (if any)

Spring 2015

Antonio Marasco
258
TBA
Antonio@lums.edu.pk
042 3560 8093
TBA
TBA
-

Course Basics
Credit Hours
Lecture(s)
Recitation/Lab (per week)
Tutorial (per week)

4
Nbr of Lec(s) Per Week
Nbr of Lec(s) Per Week
Nbr of Lec(s) Per Week

Course Distribution
Core
Elective
Open for Student Category
Close for Student Category

Core
All
None

2
TBA

Duration
Duration
Duration

110
TBA

COURSE DESCRIPTION
This is a second year course in macroeconomics and extends the discussion covered in the introductory course Principles of Macroeconomics.
The course will open with the study of business cycles, and will offer both the classical and Keynesian points of view. The relationship between
inflation and unemployment will also be covered. Another important part of the course will cover exchange rates and macroeconomic policies in
open economy, and the analysis of the monetary and fiscal policies. Then, after devoting some time to the study of the strengths and weaknesses
of the IS-LM model we study an alternative theory and redo the analysis according to it. A final module looks at economic growth in the long run.

COURSE PREREQUISITE(S)

Principles of Macroeconomics (Econ 121)

COURSE OBJECTIVES

This course is an intermediate macroeconomics course. We will cover most topics by means of a graphical analysis, and
integrate that with algebraic treatments whenever such integration is possible and useful.

Learning Outcomes
Understand how to develop theoretical models that help to understand the workings of the macro economy;

Study by means of such models how key economic variables in the economy are determined;

Understand how different types of government policies work;

Distinguish between the classical and the Keynesian approaches to the study of macroeconomics;

Understand strengths and weaknesses of the baseline S-LM model and consider possible alternatives. Then, redo the analysis

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on the basis of these alternative theories;

Introduce the macroeconomics of the long run.

Grading Breakup and Course Policies

Class participation:
5%
Quizzes (4 out of 5, drop 1): 20%
Midterm Examination:
35%
Final Examination:
40%
Attendance policy:
Students are expected to attend classes. Absenteeism is not conducive to fruitful learning and you will have to put in a lot more effort to be
successful in this course if you skip a large number of classes. Attendance enters your assessment directly (5%), as well as through increasing the
likelihood of a better grade in the remaining instruments. In extreme cases, absenteeism may lead to an F grade. It is also highly recommended
that you come to class on time (it is very disruptive when students enter class late). Leaving the lecture early is allowed only if previously agreed
with the instructor. To keep matters simple, when calculating the total 5%, all missed classes will be treated in the same way, whatever the
reason for missing the class.
Course structure:
The course is split into two parts and will have two exams. The midterm Exam will include topics covered in the first half of the semester. The
final exam will be comprehensive and will be held during the examination week at the end of the semester. There will also be five quizzes, out of
which you can drop one. The remaining four quizzes will be worth 5 marks each (total: 20).
If one quiz beyond the one you can drop is missed due to illness or other valid reasons (such as wedding, death or serious illness of a close family
member) a medical certificate or other valid document must be submitted within one week of the missed quiz. The grade for the missed quiz will
be the average from the remaining quizzes taken. If no documentation is forthcoming the quiz will receive a mark of zero. There are no make-up
quizzes.
Missed midterm and final exams are handled centrally by the Office of Student Affais (OSA) to which you have to submit required documentation.
If the OSA approves your case, make-ups may be provided or an average grade from the remaining instruments may be given for missed midterm
and final exams, depending on circumstances.
Cheating:
Cheating and plagiarism will not be tolerated. Attempts to cheat in any way, shape, or form will result in an F for the course and will be
reported to the Disciplinary Committee.
Examination Detail
Midterm
Exam

Yes/No: Yes
Combine Separate: Combine
Duration: 100 minutes
Exam Specifications: Closed books and notes, help sheet not allowed, calculator usage allowed

Final Exam

Yes/No: Yes
Combine Separate: Combine
Duration: 100 minutes
Exam Specifications: Closed books and notes, help sheet not allowed, calculator usage allowed

Textbook(s)/Supplementary Readings
Required Texts:
Abel, Andrew B., Bernanke, Ben S., and Dean Croushore (2008): Macroeconomics, 6th edition, Addison Wesley, 2008 (AB)
Gregory N. Mankiw: Macroeconomics, 7th edition, Worth Publishers, 2010 (Ma)
David Romer: Keynesian Macroeconomics without the LM curve, 2000 (Ro1)
David Romer: Short-run fluctuations, 2013 (Ro2)

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Suggested supplementary readings:
Oliver Blanchard (2006): Macroeconomics 4th edition, Prentice Hall, 2006 (Bl)
Other readings that may be added later would be made available either online or during lectures

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COURSE OVERVIEW
Module
1

3
4
5

Topics

Recommended
Readings

Review of IS-LM/AD-AS model, macroeconomic analysis in the Classical model,

Keynesianism, price and wage rigidity. The relation between unemployment and
inflation, the expectations-augmented Phillips curve.
Open economy macroeconomics. Exchange rates, basic concepts and determination;
various exchange rate regimes.The IS-LM model in an open economy. Macroeconomic
policy in an open economy with flexible exchange rates, and with fixed exchange rates.

required: AB: Ch. 9,10,11,12;Ma: Ch.

9,10,11,13; additional: Bl: Ch. 8,9;

A closer look at monetary policy; principles of money supply determination, channels

of monetary policy; the conduct of monetary policy: rules versus discretion.
Government spending and its financing; government deficits and debt, Ricardian
equivalence; Deficits and inflation.

required: AB: Ch.,14,15; Ma: Ch.

14,15; additional: Bl: Ch. 24,25,26;

The IS-MP model. The liquidity trap.

Facts of growth; capital accumulation and growth; technological progress and
growth.

(Ro1; Ro2: I-IV)

required: AB: Ch. 6; Ma: Ch.7,8; additional:
Bl: Ch. 10,11,12;

required: AB: Ch.13; Ma: Ch. 12; additional:

Bl: Ch.18