Economics
341: Monetary and Fiscal Policy
Jeffrey Parker, Reed College
Fall 2006
Course Information
Instructor
Information and Office Hours
Course Outline and
Reading List
Course News
This course presents a broad examination of the economic literature on monetary, budget, and financial regulatory policies that governments can use to pursue macroeconomic goals such as steady growth, high employment, low inflation, and a stable financial system. The fields of monetary theory, macroeconomics, public finance, and political economy/public choice all contribute significantly to its content. Attention is given to theoretical models, empirical tests, and relevant institutional details of the U.S. and world economies. Among the specific issues discussed are alternative structures of monetary systems; banking, central banks, and regulation of the financial system; the effects of monetary and fiscal policy on output, employment, and inflation; inflation and disinflation; the macroeconomic implications of government budget deficits; and modern theories; evidence on the effects of fiscal policy; and theories of how political and economic considerations affect the formation of economic policies.
COURSE FORMAT
Most of the course is structured as a student-participation conference. The instructor will lecture occasionally where the material demands it. Students are expected to participate actively in class.
PREREQUISITES
The formal prerequisite for this course is Economics 201: Introduction to Economic Analysis. Those who have taken Economics 314: Macroeconomic Theory will find that preparation useful, though it is not essential. Students will be expected to have some basic understanding of macroeconomic principles; supplementary readings will be available for those whose preparation may be inadequate. There is no mathematics prerequisite. Most of the analysis will be performed graphically though fundamental methods of calculus, statistics, and econometrics will appear from time to time, especially in the readings. A few readings are quite mathematical in nature, but students should be able to "read between the equations" to get a basic understanding of these models.
PRINCIPAL TEXTS
Most of the readings for this class will be journal articles and chapters from books. To the extent that there is a "textbook," we will use Lawrence H. White's The Theory of Monetary Institutions, which provides a comprehensive and contemporary, if somewhat idiosyncratic, view of monetary theory. We will read most of this book. All readings will be on reserve in the Reed Library. Most are available over the Internet. Use the online reading list to access these readings.
REQUIRED WORK AND EVALUATION
Reading and Conference Participation. Students are responsible for the required reading on the attached list. In order to achieve a successful conference, reading must be done in a timely manner. For most class sessions, the instructor will post a short set of discussion questions a few days before the class. No written answers to these questions are required, but all class members should be prepared to discuss the issues raised by each question. As we begin consideration of each question in class, an individual student will be asked to provide a brief analysis to launch the discussion.
Exams. There will be a mid-term exam roughly halfway through the course and a final exam at the end. Part or all of these exams may be take-home.
Term Paper. A term paper related to some aspect of monetary or fiscal policy is due at 3pm on Monday, December 11. There is no fixed length for the paper; the proper length is guided by your subject matter and methodology. However, it seems unlikely that a paper of less than about 8 double-spaced pages would cover a substantive topic excellently. A 1-3 page proposal of a topic for the paper is due by the end of the day on Friday, October 6. I hope to schedule a brief paper conference for each student to discuss your proposed topics and make suggestions for continuing your research. I would be happy to read preliminary paper drafts and provide comments. However, because of the end-of-semester workload, I would have to receive a draft before Thanksgiving in order to assure that I could get comments back to you before the end of classes.
There are many directions that you might go with the paper. The only requirement is that the subject be related to the materials of this course and that you use sound economic reasoning in developing an argument or analysis. Case studies are one highly accessible model for course papers. You could choose a country and time period, discuss the situation that policymakers faced, analyze the monetary and/or fiscal policy options that the country might have chosen in its situation, and evaluate the policy chosen and its outcome. Empirical studies involving econometric work are unusually ambitious for course papers, but those with econometric skills may wish to explore extending or updating one of the empirical papers discussed in class or a related paper.
Whatever your inclination, you should confer with the instructor in person or by email about the feasibility of topics that interest you. He may be able to help you refine your topic to make it both doable and interesting, or to guide you toward literature, data, or other useful resources.
Professor Jeffrey Parker
Office: Vollum 229
Phone: Extension 7308 (503-517-7308 from off campus)
Email: parker@reed.edu.
Office Hours: Mondays, Tuesdays, and Thursdays, 1:30 to 2:30. If these hours are not convenient for you, I am available at other times, though my schedule varies from week to week. You can usually catch me before or after class. During the first half of the semester, my late-afternoon schedule is particularly variable, but there are days on which I could meet with students.