IR603: Economics for Global Policy Frederick S. Pardee School of Global Studies Fall 2017 Course Syllabus

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1 IR603: Economics for Global Policy Frederick S. Pardee School of Global Studies Fall 017 Course Syllabus The Formalities: Course Instructor: Mahesh Karra Instructor Office Hours (at 15 Bay State Road, Room G04C): Tuesdays and Thursdays, :30 PM 3:30 PM Fridays, 11:00 AM 1:00 PM Teaching Assistant: TBD Course Website: Log into Blackboard Learn website at learn.bu.edu Class Times and Location: Tuesdays and Thursdays: 3:30 PM 4:45 PM Room B5A, CAS Building The Course: Course Summary: This course provides a comprehensive overview of the principles of economics to masters and upperlevel undergraduate students at the Pardee School. The first part of this course focuses on microeconomic analysis and covers concepts and tools pertaining to demand and supply, consumer behavior, production theory, market structures and income distribution theories. Topics in microeconomics include: consumer demand theory (without uncertainty); utility theory and preferences; the budget constraint; price effects; intertemporal choices; cost analysis; profit maximization; consumer and producer surplus; production theory; oligopoly and monopoly within factor markets, market failure, and information economics. The second part of this course focuses on macroeconomic analysis and covers concepts and tools pertaining to markets and market properties, equilibrium conditions under certainty, unemployment, and policy adjustments and responses to fluctuations in the global economy. Some topics in macroeconomics include: unemployment and inflation, national income accounting, factor markets in the macroeconomy, aggregate supply and demand models, fiscal and monetary policy, foreign exchange markets and international finance, and economic growth theory. The main areas of concentration include basic economic concepts; the nature and functions of the macroeconomy from the labor, aggregate supply/demand, and money markets; concepts such as inflation and interest rates and their role in domestic and foreign economies; and the role of government in implementing macroeconomic policy. Students are expected not only to know the material but also to apply critical thinking skills to the units covered. 1

2 Prerequisites and Corequisites: Graduate standing in the Pardee School or permission of instructor. A math background, particularly in probability, statistics, and the fundamentals of calculus, is encouraged. In the first week of class, I will hold an extra (optional) lecture that covers some of these mathematical topics for students who seek to refresh their skills. Although the topics covered in the class are of a more conceptual than mathematically explicit nature, I encourage students to brush up on algebraic and calculus methods throughout the course so as to better grasp some of the less intuitive subtleties. From time to time, I will show the theoretical proofs of various economic notions, and thus I expect the students to be able to follow any mathematical steps that are being utilized. Primary Textbook: Goodwin, Neva, et al. Principles of Economics in Context. Taylor and Francis, 014. The textbook also has provided a website for students where there are chapter review sections, sample problems, and other course material. The main website is: Secondary Textbooks (I sometimes use these for lectures): Stiglitz, Joseph and Walsh, Carl. Economics, 4th Edition. W.W. Norton & Co., 005. Gwartney, James et al. Economics: Private and Public Choice, 11 th Edition. Thomson South-Western, 006. Proposed References: Rasmussen, Scott. Games and Information, 4th Edition. Blackwell Publishers, 006. Varian, Hal. Intermediate Microeconomics: A Modern Approach. 7 th Edition. W.W. Norton & Co., 005. Abel, Andrew and Ben Bernanke, Macroeconomics 4th Ed, Addison, Wesley, 001. Note: These references are more mathematically challenging, and knowledge of mathematical, set theoretical, and calculus based notation is often required. Evaluation: Your grade in the class will be derived from the following components: Evaluation Amount in the Semester Problem Sets, p 8 Microeconomics Exam, M 1 1 Macroeconomics Exam, M 1 Your final grade, G, will be determined as follows: G = max ( M 1 + M M 1 + M, + P ) where P is the composite (average) grade of the 8 problem sets, i.e. P = 1 8 p 8 i=1 i. This derivation implies that you cannot do worse in terms of your grade for the entire term than what you get on your averaged exam score. All assignments are to be handed in on the due date in the beginning of class (3:30 PM). Unless otherwise instructed, assignments are to be individually completed. No late work will be accepted.

3 Grading Policy: The following grading system will be utilized: 85 to 100 = A 80 to 84 = A- 75 to 79 = B+ 70 to 74 = B 65 to 69 = B- 60 to 64 = C+ 55 to 59 = C 50 to 54 = C- 40 to 50 = D Less than 40 = F In the event of decimals, I shall truncate the decimal to the tenth place, round up if the decimal is greater than or equal to 0.5, and round down if the decimal is less than or equal to 0.4. NO EXCEPTIONS! BU Academic Code of Conduct and Policies: All Boston University students are expected to maintain the highest standards of academic honesty and integrity. It is the responsibility of every student to be aware of the university s Academic Conduct Code s contents and to abide by its provisions. Plagiarism and academic dishonesty of any kind will not be tolerated. For additional information, please refer to the complete Academic Conduct Code and the BU CAS Policies and Procedures using the links below. Course Outline: The speed at which each section will be completed depends on each class. Week numbers are merely approximations and may vary considerably depending on the time constraint. However, all material is expected to be covered by the end of the course. Chapters, unless otherwise mentioned, refer to the required text. PART 1: MICROECONOMICS I. INTRODUCTION TO MICROECONOMICS: Weeks 1- a. The Economic Way of Thinking: Week 1 i. Economics and Well-Being, Economic Activity in Context: Chapters 0 and 1 ii. Useful Tools and Concepts, Markets and Society: Chapters and 3 iii. Opportunity Costs and International Trade: Chapter 7 iv. Economic Rationality (Preferences, Utility, and Choice): Chapter 8 b. Demand, Supply, and the Government: Week i. Consumption and the Consumer Society: Chapter 9 ii. Demand, Supply, and Price: Chapter 4 ASSIGNMENT 1 DUE 3

4 II. PERFECT MARKETS: Weeks 3-4 a. Consumers: Week 3 i. Elasticity: Chapter 5 ii. Welfare Analysis: Chapter 6 iii. Production Costs: Chapter 16 ASSIGNMENT DUE b. Markets and Producers: Weeks 3-4 i. Markets without Power: Chapter 17 ii. Labor Markets: Chapter 10 iii. The Efficiency of Competitive Markets: Chapter 17 ASSIGNMENT 3 DUE III. IMPERFECT MARKETS AND PUBLIC ECONOMICS: Weeks 5-6 i. Markets with Market Power: Chapter 18 ii. Taxes and Tax Policy: Chapter 1 iii. Externalities and Public Goods: Chapters 13 and 14 PART : MACROECONOMICS ASSIGNMENT 4 DUE MICROECONOMICS EXAM IV. INTRODUCTION TO MACROECONOMICS: Week 7 a. Macroeconomics Overview: Week 7 i. Introduction to Macroeconomics: Chapter 19 ii. Macroeconomic Measurement 1: Chapter 0 iii. Macroeconomic Measurement : Chapter 1 ASSIGNMENT 5 DUE V. FULL-EMPLOYMENT MACROECONOMICS: Weeks 8-9 a. Dynamics of Full Employment: Week 8 i. Employment, Unemployment, and Wages: Chapter 3 ii. Aggregate Demand: Chapter 4 iii. Fiscal Policy: Chapter 5 ASSIGNMENT 6 DUE VI. THE MONEY MARKET: Week 9-10 i. Money, Banking, and Finance: Chapter 6 ii. The Federal Reserve and Monetary Policy: Chapter 7 iii. AS, AD, and Inflation: Chapter 8 iv. Global Economy and Policy, Trade, Open Economy: Chapter 7, Chapter 9 ASSIGNMENT 7 DUE 4

5 VII. SHOCKS, GROWTH, AND TRADE: Weeks 11-1 i. Financial Crisis and Great Recession: Chapter 30 ii. Capital Stocks and Resource Maintenance: Chapter 15 iii. Economic Growth: Chapter 3 ASSIGNMENT 8 DUE MACROECONOMICS EXAM 5