Economics 102: Macroeconomic Theory
Time of Class:
TR, 1:30 pm-2:50 pm.
Room:
COHN 402.
Instructor:
Professor Jesœs FernÆndez-Villaverde.
O¢ ce:
McNeil 440.
Phone:
(215) 898-1504.
Email:
jesusfv@econ.upenn.edu.
O¢ ce Hours:
Wednesdays 10:15-11:15 am, and by appointment.
Recommended Text:
Charles I. Jones:
Introduction to Economic Growth,
2nd edition
.
1. Course Outline and Overview
Economics 102 is the basic course in macroeconomic theory for undergraduate economics
majors. In contrast to the focus of Economics 2 on policy, Economics 102 is a
mathematical
class and is centered on constructing and understanding macroeconomic models.
We will cover models at an abstract and advanced level. You
MUST
have the degree of
mathematical maturity associated with the concepts of sets, functions, derivatives, integrals,
Taylor series, optimization, ordinary di/erential equations, and other material covered in
Math 104 and Math 114±115.
STRICT
prerequisites for the class is Economics 1, 2, 101,
and one year of calculus. If you do not meet these requirements, you cannot take this class.
asked to drop this class.
This course will be taught from an
equilibrium perspective
. This means we will work
with economic agents that optimize and with aggregate consistency conditions. Understand-
ing the concept of equilibrium will then be the single most important task of the course.
We will apply equilibrium theory to discuss the theory of long-run economic growth and
short-run economic ²uctuations. Growth theory describes and explains how the main eco-
nomic aggregates (such as output, employment, in²ation, interest rates) evolve
on average
over longer periods of time, whereas theories of short-run ²uctuations (business cycle theories)
analyze the short-run movements of economic aggregates. Once we have understood how the
macroeconomy works, we can start to analyze macroeconomic policy, in particular &scal pol-
or surpluses) and monetary policy (what happens if the Federal Reserve Bank increases or
lowers the Federal Funds Rate). It is my objective that, by the end of the course, everybody
1