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University of Alberta Department of Economics
Macroeconomic Policy (485-A1) Fall-2017
SYLLABUS AND TENTATIVE OUTLINE Instructor: Malik Shukayev
Office: Tory 9-12
Email:
[email protected]
Class Times: M,W,F 11:00 - 11:50 Classroom: Tory B 113
Office hours: Wed 1:30–2:30, Fri 12-1
Course Description
This is an advanced macroeconomics course for undergraduate students. The main focus will be on learning the data analysis and projection tools that are essential for any macroeconomic policy analyst. As a result of our focus on analytical tools we will spend more than half of the course time on learning how to find the national and international data relevant for macroeconomic analysis; how to create informative but brief reports on the state of the economy; how to plot nicely formatted and informative Excel charts with economic data; how to use MATLAB and IRIS software (with the software tutorials provided) to generate short-term forecasts of macroeconomic variables using VAR or ARIMA models; how to present your macroeconomic assessments and projections in order to make a well-supported economic policy recommendation. All of these tasks will be essential for completing the half-semester project with multiple reports and presentations. Teamwork and collaboration will be essential as you will be working in groups of 4-5 students. Five students from this class will represent the University of Alberta at the 2017 Governor’s Challenge competition, organized by the Bank of Canada. The competition is expected to take place in the second half of November, so the pace at which we will be learning the policy analysis tools will have to be rapid.
Once the competition is over, we will slow down somewhat and re-focus our attention on learning general equilibrium models used to analyze monetary and fiscal policies.
Monetary policy is used for short-run economic stabilization objectives. Fiscal policy can also be used for short-term stabilization goals; however its main focus is on longer term issues like old-age security, promotion of equitable and sustainable economic growth and environmental damage abatement. Policy analysis relies primarily on models in which the dynamics of the aggregate macroeconomic variables, such as employment and inflation are driven by the rational behavior of self-interested firms and households.
When government policies change, the optimizing firms and households rationally adjust their actions and expectations. These adjustments should be taken in account when designing sound economic policies. The models under consideration will help us understand and predict how macroeconomic variables would respond to government policies.
Course Objectives
Identify the goals, the constraints and the tools for monetary and fiscal policy.
Understand the transmission channels from policy actions to macroeconomic outcomes.
Discuss the experiences of various countries with monetary and fiscal policies.
Understand central bank’s decision-making process. Learn how central bank economists analyze and forecast economic developments.
2 Acknowledgemnts
In designing this course I benefited from the experience of my colleagues. I am grateful to Prof. Marketa Halova Wolfe from Skidmore College and to Dr. Georg Strasser from ECB for their willingness to share their innovative teaching technique described in Georg Strasser & Marketa Halova Wolfe, 2014. "Learning to Argue with Intermediate Macro Theory: A Semester-Long Team Writing Project," The Journal of Economic Education, vol. 45(3), p. 191-210.
I am also grateful to Prof. Christiane Baumeister from the University of Notre Dame who shared with me her syllabus, course guidelines, and her experience with innovative teaching techniques. Finally, I thank Prof. Stuart Landon from the University of Alberta who kindly shared with me his syllabus for past EC485 class.
Prerequisites
The prerequisite class, ECON 385, is strictly enforced by the department.
Some related textbooks
Selected chapters from the following textbooks may serve as introduction to monetary and fiscal policy issues, but I am unlikely to discuss these readings in class.
• F.S. Mishkin, Macroeconomics: Policy and Practice, Second Edition. First edition of Mishkin is also fine.
• Hubbard, O’Brien, Rafferty, Konieczny, Macroeconomics, Canadian Edition Communication outside the class
• I will use eClass to post announcements, answer keys, and review questions.
Detailed lecture notes will not be provided. eClass can be accessed via the https://eclass.srv.ualberta.ca/portal/
• You are welcome to come to my office hours listed at the top of this page. I am also available at other times by appointment, but would prefer to see you during my office hours, because I might be busy with other classes or responsibilities.
• I will try to respond to your e-mail messages within 24 hours. Typically, I may not be able to respond to your requests immediately.
• NOTE: Dr. Max Sties kindly volunteered to meet with students from Econ 485 and help with their forecasting models. Max is also an expert on US and
Canadian macroeconomic time-series data. If you would like to meet Max, please send a message to his e-mail address [email protected] with the subject line:
Econ 485 help. Since Max is not paid for this service I urge you to be extremely patient and considerate when requesting his help.
Course evaluation and important dates
Challenge Weight in the final grade Tentative due date
Quiz 1: July MPR 2% Monday, September 11
Global economic trends report, first draft (GETv1)
GETv1 = 3% Monday, September 18 Quiz 2: Governor’s
Challenge
2% Wed. September 22
3 Canadian economic outlook
(CEOv1) + GETv2
CEOv1 = 3%
+ GETv2 = 3%
Monday, October 2 Canadian macro forecasts
(CMFv1)+CEOv2+GETv3
CMFv1 = 3%
+ CEOv2 = 3%
+ GETv3 = 3%
Monday, October 16
Quiz 3: MP transmission 2% Friday, October 20
First round group presentations + Risk Assessment and
Recommendation (RAR)
GET + CEO + CMF = 9%
+ RAR 3%
Oct 23 (Mon), Oct 25 (Wed), Oct 27 (Fri), Oct 30
(Mon) Second round group
presentations
12% Nov 3 (Fri), Nov 6 (Mon), Nov 8 (Wed), Nov 10 (Fri)
Quiz 4: October MPR 2% Monday, November 6
Homework Assignment 8% Monday, Nov 27
Exam 1 15% Monday, Dec 4
Cumulative final exam 27% To be confirmed
Total 100%
Please note:
• 42 percent of your grade will depend on the half-semester project involving three reports and two presentations. This will be a group project. Ideally you will be working in groups of 4 people. All three reports will be used as inputs to your presentations and should be revised several times to incorporate my feedback about their content and communication aspects. The second round presentation will be your chance to address feedback received during and after the first round presentation. In the middle of November I will choose 5 persons (not necessarily from the same group) to represent the University of Alberta at the Bank of Canada’s Governor’s Challenge. The first round of this competition will take place sometime in the second half of November.
• The reports must be submitted to me by 11AM on the due date in a well formatted complete version contained in a Microsoft Word file. No late assignments will be accepted.
• Class attendance will not count toward your grade, but I encourage you to attend my lectures because some of the material covered in class may not be available otherwise.
• The final exam will be cumulative; that is, it will contain questions from the entire course. Exam 1 will take place shortly before the final exam.
• You will not have make-up exams, or extra credit essays. In case you miss the Exam 1 for health, or other exceptional reasons, its weight will be transferred to the final exam. The exceptional reasons for missing the midterm exam must be substantiated with a Request for Deferral of Examinations and/or Term Work by completing the Medical Declaration Form for Students from the Faculty of Arts Undergraduate Student Services forms cabinet. For students who miss Exam1, the final exam might be different than that written by the rest of the class.
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• I don’t usually give examples of past exams. I plan to give you a list of focus questions instead, which should help you prepare for exams.
The final scores will be translated into letter grades as shown below:
A, A+ 4.0 93-100 C+ 2.3 60-64
A- 3.7 86-92 C 2.0 55-59
B+ 3.3 79-85 C- 1.7 50-54
B 3.0 72-78 D+ 1.3 45-49
B- 2.7 65-71 D 1.0 40-44
F 0.0 0-39
University policy statements
• “Policy about course outlines can be found in the “Evaluation Procedures and Grading System section of the University Calendar.”
• “The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect. Students are particularly urged to familiarize themselves with the provisions of the Code of
Student Behaviour (online at www.governance.ualberta.ca) and avoid any behaviour that could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.”
• “Audio or video recording, digital or otherwise, of lectures, labs, seminars or any other teaching environment by students is allowed only with the prior written consent of the instructor or as a part of an approved accommodation plan. Student or instructor
content, digital or otherwise, created and/or used within the context of the course is to be used solely for personal study, and is not to be used or distributed for any other purpose without prior written consent from the content author(s).”
Tentative Outline
This course is a work in progress. The outline of the topics given below is tentative and subject to revision.
1. Introduction to class
2. Policy framework at the Bank of Canada, July 2017 MPR discussion 3. Data sources and tools for GET report
4. MATLAB tutorial
5. BoC Governor’s Challenge competition 6. Data sources for CEO report
7. Intro to VAR forecasting models 8. IRIS tutorial
9. VAR forecasting in IRIS tutorial 10. ARIMA forecasting
11. ARIMA forecasting in MATLAB tutorial (time permitting)
5 12. Effective policy presentation skills
13. Monetary Policy objectives and transmission channels 14. October 2017 MPR discussion
15. Theoretical foundations of conventional monetary policy 16. Canadian Fiscal Policy Outlook
17. Models for fiscal policy analysis
