Monetary and Fiscal Policy
Fall 2012
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; the effects of monetary and fiscal policy on output, employment, and inflation; inflation and disinflation; the macroeconomic implications of government budget deficits; and modern theories; evidence on the effects of fiscal policy; and theories of how political and economic considerations affect the formation of economic policies.
Class Format
Most of the course is structured as a student-participation conference. The instructor will lecture occasionally where the material demands it. Students are expected to participate actively in class.
Prerequisites
The formal prerequisite for this course is Economics 201: Introduction to Economic Analysis. Those who have taken Economics 304 or 314 (macroeconomics) 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 Thursdays from 1:30 to 3:00pm.
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
Reading and Conference Participation. Students are responsible for the required reading on the reading list. In order to achieve a successful conference, reading must be done in a timely manner. While some classes may be more lecture-oriented, most will include periods of class discussion. All students should participate in the class discussion every day. If oral participation is not natural for you, it might help to think of a few questions or comments ahead of time as you do the reading. Then inject them at the appropriate moment in class.
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.
Euro Crisis Project. We will undertake an extended project involving policies for stabilization and reform of fiscal, monetary, and banking policies to cope with the ongoing crisis in the Euro Zone. Student teams will be assigned to represent countries or organizations, formulating, refining, presenting, and defending policy proposals. The activity will culminate with a "conference" that will attempt to enact a consensus policy action.
Writing Assignments. In addition to the crisis project, there will be several (3 or so) policy-related writing assignments during the semester. Each of these will require a short policy memo on an assigned topic.
Evaluation. All evidence of knowledge of the subject matter will be weighed in determining student grades. This includes exams and written assignments, but also contributions to class discussion both in class and on Moodle, performance in the Fed symposium exercise, conversations with the instructor outside of class, etc. Evidence of productive engagement with the issues of the course in whatever form will be rewarded.
Grading
Grades will be based on all information the instructor has about your level of understanding of econometrics. This includes evidence from exams, homework, projects, class participation, and individual discussions.