Introduction
Principles of Macroeconomics is an undergraduate-level course that provides a broad overview of the major concepts, theories, and empirical evidence of macroeconomics. The course will cover key topics such as national income determination, inflation, unemployment, interest rates, fiscal and monetary policy, gains from trade, and economic growth. This course is intended for students with little or no prior knowledge of macroeconomics and is a prerequisite for more advanced study in economics and related fields. The course will also be useful for students considering careers in government, international organizations, consulting, and the private sector. Lectures will coordinate with chapters of the text, but will also modify and supplement what is found there. Success in the course will require a thorough understanding of both the text and the lectures. The course is presented in four units below.
The main course text is Modern Principles: Macroeconomics 6th edition, Cowen and Tabarrok, 2024 .
Useful Files
Unit 1: Foundations
In the grand theater of economics, microeconomics is the stage where the fundamental principles come to life. The big ideas of economics, from the power of incentives to the importance of institutions, are the actors in this drama. They show us that every decision is a trade-off, a dance on the margin, where self-interest and social interest can be aligned through good institutions. The principles of supply and demand, and the power of trade and comparative advantage, are not just theories, but the very mechanisms that make our economies tick. They remind us that wealth and economic growth matter, that booms and busts are part of the economic cycle, and that inflation is a monetary phenomenon. Above all, they teach us that economics is not just a dry science, but a fascinating exploration of human action.
Unit 2: Economic Growth
Economic growth is the engine that propels societies forward. It’s not just about numbers and GDP, but about progress and the wealth of nations. The process of growth involves capital accumulation, but it’s also about the economics of ideas, because innovation is the fuel that drives this engine. The financial system plays a crucial role in this process, channeling savings into productive investments. Understanding economic growth helps us appreciate why some nations prosper while others lag behind, and how we can harness the power of ideas and capital to create a better future.
Unit 3: Business Fluctuations
The economy is not a static entity, but a dynamic system that goes through cycles of booms and busts. Understanding business fluctuations involves examining unemployment and labor force participation, inflation and the quantity theory of money, and the interplay of aggregate supply and aggregate demand. It’s about identifying the transmission and amplification mechanisms that transform small shocks into large economic fluctuations. By studying these fluctuations, we can learn how to moderate the economic cycle and mitigate the adverse effects of economic downturns.
Unit 4: Macroeconomic Policy and Institutions
Macroeconomic policy and institutions are the levers and pulleys that guide the economic machine. The Federal Reserve System, with its open market operations and monetary policy, is a key player in this arena. Fiscal policy, involving the federal budget, is another important tool for influencing the economy. The field of political economy and public choice sheds light on how these policies and institutions are shaped by political processes and how they can be designed to promote economic stability and growth. Understanding these mechanisms is crucial for making informed decisions about economic policy and for holding our policymakers accountable.