Econ 502: Macroeconomic Theory

Course Module Syllabus
Macroeconomic Coordination
(Masters-Level)

Last Updated: 13 May 2004
Latest Offering: Fall 2003 (Nov 11th-End of Semester), TR 11-12:50, Food Science 2319

Course Module Instructor:
Professor Leigh Tesfatsion
Department of Economics/Heady 375
Iowa State University
Ames, Iowa 50011-1070
(515) 294-0138
http://www.econ.iastate.edu/tesfatsi/
tesfatsi@iastate.edu

Office Hours: TR 1-2:30pm, and by appointment

Course Module Home Page

Course Module Objectives

From Keynes' General Theory (1936) through the mid-nineteen seventies, macroeconomic models primarily consisted of highly aggregated relationships for consumption, investment, and other key economic activities using some version of the IS-LM framework. Over the past twenty-five years, however, macroeconomic theorists have developed a variety of different macroeconomic models that are based more explicitly on microfoundations. These models include: (1) new classical macro models based on rational expectations and a Walrasian conception of continual market clearing; (2) post-Walrasian macro models based on bounded rationality, asymmetric information, and possible market disequilibrium; and (3) agent-based computational economic models in which macroeconomic regularities are viewed as evolving (by chance, necessity, and design) from the interactions over time of autonomous microeconomic agents with learning capabilities.

This course module will focus on macroeconomic coordination issues for decentralized market economies. After an introductory discussion of these issues, we will critically investigate the distinct ways in which these issues are addressed by each of the three modeling approaches outlined above. Each approach will be examined for logical coherence, empirical relevance, and practical policy implications.

Course Module Topic Outline

  1. Macroeconomic Coordination: Introduction
  2. Walrasian Equilibrium: Benchmark of Coordination Success?
  3. Post-Walrasian Macroeconomics
  4. A Constructive Approach to Macroeconomic Coordination
  5. Comparative Illustration: Labor Markets and Macroeconomic Performance

Required and Background Materials:

Detailed Outline of Topics, Discussion Questions, and Readings

Please Note: A double asterisk ** means that a reading contains basic required material for answering exercises and exam questions. All required readings under a particular topic area are listed in suggested reading order. A single asterisk * means that a reading contains recommended material of a more general contextual nature that may be useful for answering exercises and exam questions.

All required readings will be available to you either at an indicated on-line site, on closed reserve in the Econ/Soc Reading Room (Heady 368), or as a class hand-out. The form of availability for each required reading is indicated after its citation information. Suggested readings for more specialized study are also given for each topic area.

Updated or new materials (required or recommended readings, discussion questions, exercises, exam guides,...) might be added to the on-line syllabus at a later time. Such materials will be marked on the syllabus with an "updated" or "new" icon, respectively, for at least one week, and their inclusion will also be announced in class.

Finally, in the readings cited below, the expression op. cit. is an abbreviation for the Latin expression opere citato, which means "in the work cited (above)."

I. Macroeconomic Coordination: Introduction

Key Questions for In-Class Discussion:

Required and Recommended Readings:

II. Walrasian Equilibrium: Benchmark of Coordination Success?

Key Questions for In-Class Discussion:

Required and Recommended Readings:

Other Suggested Readings

III. Post-Walrasian Macroeconomics

Key Questions for In-Class Discussion:

Required and Recommended Readings:

Other Suggested Readings

IV. A Constructive Approach to Macroeconomic Coordination

Key Questions for In-Class Discussion:

Required and Recommended Readings:

Other Suggested Readings

V. Illustration: Labor Markets and Macroeconomic Performance

Key Questions for In-Class Discussion:

Required and Recommended Readings:

Other Suggested Readings

Copyright © 2004 Leigh Tesfatsion. All Rights Reserved.