ECON 320 - Macroconomic Theory II

Fall 2009

2. Measuring Economic Activity

Please read Chapter 1, pp. 1-23.

3. Employment and the Labour Market

Chapter 2, pp. 38-52 and pp. 58-61.

4. Productivity Shocks and Business Cycles

Chapter 2, pp. 53-57.

5. The Roles of Uncertainty and Expectations

a. Rational Expectations and the Business Cycle
- Incorporating Uncertainty in to the Static Model
- Equilibrium
- Generating Business Cycles
- Policy Implications
b. Irrational Expectations and the Business Cycle
- Defining Irrational Expectations
- Policy Implications
c. Self-Fulfilling Prophesies

Chapter 3, pp. 63-75.

6. Incorporating Unemployment

Chapter 4, pp. 77-93.

7. Incorporating Government

a. Government Spending
- Lump-sum Taxation
- Income Taxation
- Comparison of Financing Options
b. Government Transfers

Chapter 6, pp. 129-141.

8. A Dynamic Model of Consumption and Savings

a. A Two-Period Model
- An Economy in Autarky
- A `Small Open' Economy
- The Trade Balance and Current Account
b. Incorporating Shocks
- Productivity Shocks
- Real Interest Rate Shocks
c. The Savings Demand Function

Chapter 5, pp. 99-128.

9. Government in the Dynamic Model without Leisure

Chapter 6, pp. 142-147.

10. Government in the Dynamic Model withLeisure

Chapter 6, pp. 147-152.

11. Investment and Capital Accumulation

Chapter 7, pp. 155-171.

12. Money and Inflation

Chapter 8, pp. 172-185.