Bernanke Talks About Economy

A nice brief article on what Ben Bernanke is thinking about the economy right now. At this point, it should be relatively easy to frame his comments in terms of our IS/LM model.

Homework #2 Answers

These are now posted in the class column on the right.

Slides for 2/21/08

Slides for the class on the housing bubble and current downturn (recession?) in the U.S.

Subprime Mortgages Explained

This is informative, funny, and can be kind of offensive.

China and the U.S.

This link is to a longer article by James Fallows on how China is subsidizing American consumption. He gives a great explanation of how this works in practice, and then considers the ramifications. It is long, but well worth the read. I'd suggest that people might want to use this as the basis for their longer paper that is due at the end of the semester.

Monetary vs. Fiscal Policy

This article looks at what ability monetary policy has to influence output in the U.S.. If you're thinking about this, remember when we talked about the slopes of the IS curve and how that affects monetary policy. Steep IS curves mean monetary policy is less effective, and flat IS curves imply monetary policy is more effective. So what might be happening in the loanable funds market to make the IS curve get steeper?

Bailing out Banks

This article has relevance to our next class, on the current state of the U.S. economy and the sub-prime mortgage mess. It's pretty dense, but think about it in terms of the model of money creation we went over.

Homework #1 Answers

The answer key to the first problem set is posted on the right-hand column of this site.

New Homework

The latest homework is posted in the right hand column of this site. It's due February 26th.

Brazilian Macroeconomics

This article is a nice summary of Brazil's current economic position. If you're interested in reviewing it, hold off until we go through the material on open economy IS/LM models - they are more relevant that what we've learned so far.

By the way, this article is also a nice target to shoot for in terms of style and quality. It is well written and explains several economic concepts rather cleanly.

Recession?

This article reports that the administration is claiming the U.S. will not enter a recession in 2008. The rationale would be that the Fed lowering interest rates (meaning that money stocks are increasing), combined with the fiscal stimulus (the tax rebates, or T falling) will be sufficient to keep output from falling.

If you review this article, think of it in terms of our IS/LM model. How does the combination of increasing M and lower T shift around the curves and keep output up? What will actually happen to interest rates? Can we know for sure?

Old Midterms and Finals

If you go to this site, on my personal webpage, you will find links to old midterms and finals I have given. In some cases, there are answer keys posted as well.

One warning, there may be a little more math involved this semester, but not much.

Slides for 2/12/08

A few graphs used in the class on fluctuations.

The Purpose of Tax Policy

This post from Greg Mankiw doesn't necessarily related directly to our material in class, but it's an interesting analysis of what matters when we set taxes. One question is which of his four goals of tax policy you find most important? Which is the least important to you?

Alternative Trade Deficit Explanations

This editorial looks at the decline in the U.S. current account (basically, NX) and wonders whether Alan Greenspan's explanation is correct. The author describes Greenspan's theory, and then offers his own counter-theory. If you read through this, think about describing the two theories in terms of the loanable funds market. In particular, changes in the world interest rate versus changes in our savings rates.