The University of Western Ontario Department of Economics Intermediate Macroeconomic Theory and Policy I Economics 2152b 002 MWF

F 12:30 -1:30

D. McKeon Office SSC 4052 Friday 2:30 -3:30 Email dmckeon@uwo.ca

Prerequisites: Economics 020 and MCB4U, OAC Calculus or Mathematics 012a/b. You are responsible for ensuring that you have successfully completed all course prerequisites, and that you have not taken an antirequisite course. Lack of prerequisites may not be used as basis of appeal. If you are found to be ineligible for a course, you may be removed from it at any time and you will receive no adjustment in your fees. This decision can not be appealed. If you do not have the course prerequisites, it is in your best interest to drop the course before the end of the add/drop period. Your prompt attention to this matter will not only help to protect your academic record, but will ensure that spaces become available for students who require this course for graduation. Course Description This is a course in macroeconomic theory at the intermediate level. The course is primarily concerned with building a workable model of the economy that will explain the major aggregate variables. Thus, the determination of national income, consumption, investment, economic growth and business cycles and economic policy will be discussed. The course will rely on a model that incorporates the main tenets of modern macroeconomics and emphasizes the current methodology in the field. The course is primarily a course in theory; however we will attempt to provide examples from the recent and current Canadian economy to illustrate the workings of the theory. Course Materials The textbook for this course is Williamson 3rd Canadian edition, Addison Wesley 2010.The text is based on a modern approach and uses techniques that are appropriate for the model. There will also be a course website at http://webct.uwo.ca/. This site is a supplemental tool and should not be regarded as a substitute for lectures. All class material is subject to examination regardless of whether it is referred to or not on the website. Students are reminded that some material done in class is NOT covered in the text. All material that is covered in class but not taken up in the text is subject to examination. Evaluation The course grade will be based on two midterm tests and a final exam. The midterms are modular and the final is comprehensive. The material for all tests and exams consists of the topics covered in the text (see

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below), the corresponding material in the study guide and the material covered in the lectures. Some of the topics covered in the lectures, including problems done in class, may not appear in the text. Students are reminded that they are responsible for this material. The distribution of the marks is as follows: Midterm I 25% Midterm II 25% Final 50% Dates

midterm 1 Saturday, February 11/12 10:00 am - 12:00 pm midterm 2 Saturday, March 17/12 10:00 am - 12:00 pm Attendance All class participants are required to attend class and comport themselves in a civil manner to all other members of the class. This includes not carrying on personal conversations during class time or leaving before the class is ended. When you leave a class that is in progress you are in effect insulting your colleagues and this will not be tolerated in any form. For the official regulation regarding attendance please refer to senate regulation S.04-097 section 2 in the section on attendance regulations for examinations. http://www.uwo.ca/univsec/handbook/exam/attend.pdf .
Course Outline Introduction This section will cover basic definitions and the calculation of national income/output. As well, the major variables and attributes of the business cycle are examined. Text chapters 2, 3. Consumer and Firm behavior. In this section the representative consumer and the representative firm is introduced. This topic makes up the starting point of our model. Text chapter 4. One period model of the economy In this section the government sector is added to the consumers and the firms decisions and equilibrium is obtained. Text chapter 5. Saving In this section the model extends the consumer to two periods and studies consumption allocation across time. Text chapter 8. Two period model of the Economy. Here the individual parts of the model are brought together and the basic model renders a macroeconomic equilibrium. Text chapter 9.

Money This section introduces money into the model and its relationship to economic activity. Text chapter 10. Economic Growth This section deals with the long run growth of the economy. Text chapter 6.

Search and Match theories

class notes (if time allows)