Intermediate Macroeconomics [Econ 402 SP2012]

This site contains relevant guidelines for Econ 402, Spring 2012. Students are asked to regularly check this course website for updates and most recent information. This site will grow with the semester and it will contain a section with a brief description of what we have learned in previous classes and what we will cover in the next one.

We meet Tuesdays and Thursdays 13:00-14:30 in Seigle L006. My office hours are Thursdays 14:30-16:00 in Seigle Hall 339. TA: Dongya Koh (dkoh[at] Tue 15:00-16:30, and Wung Lik Ng ( Fri 10:30-12:00.

Course Description:

This is an intermediate course in Macroeconomics which focuses on understanding development processes, economic growth, aggregate fluctuations, and several dimensions of inequality. The object of interest in Macroeconomics is the entire economy: we will be particularly interested in some of the debates about the performance of the economy and in its associated policy questions. In this course we will take care of the aggregate economy building on solid microfoundations which means that i) we use models populated by agents (households, firms, and government) that optimize their own behavior, and ii) the implied equilibrium allocations that result from the behavior of agents satisfy aggregate consistency conditions (essentially market clearing). Understanding the concept of equilibrium will then be the single most important theoretical tool of the course. The prerequisites are Econ 104B, and Econ 4011. This course demands the degree of mathematical maturity associated with the concepts of sets, functions, derivatives, integrals, Taylor series, optimization, ordinary differential equations, and other material covered in Math 131.

Your feedback is extremely valuable and your suggestions on how to improve the course are very welcome. Remember that we are all in the same team and you can help improve the quality of the course by sharing your thoughts and suggestions---the higher the quality of the course the better for all of us.

We will use many parts of a textbook: 'Macroeconomics' by Stephen D. Williamson (2011), 4th edition. The book is available from the Wash U Bookstore and, I am sure, from many other places.

Grades and Requirements:

The requirements of the course are 4 equally valued quizzes and one final exam:

Quiz 1, Thu Feb 9th: 20%
Quiz 2, Thu March 1st: 20%
Quiz 3, Thu March 29th: 20%
Quiz 4, Thu April 19th: 20%
Final Exam, Tue May 8th, 1-3pm: 40%

To compute your grade I will drop the quiz with the lowest score after normalization [Example]. This implies students must at least take three of the four quizzes. The quizzes are cumulative, that is, they include all the material that we have covered in class until the day of the quiz unless the course website specifies otherwise. Students will know their grade in a timely fashion. There will be no make-up quizzes.

The final letter grade distribution for the class will be as is standard in Economics Department courses.


  1. Introduction.
  2. Growth and Development:
    • Stylized Growth and Development Facts.
    • Exogenous Growth Theory: The Malthus Model (Chapter 6 in W) and the Solow Model.
    • Endogenous Growth Theory: Human Capital, Externalities, and Economics of Ideas.
  3. A One-Period Model of the Macroeconomy: Household Behavior, Firm Behavior, and Market Clearing (Chapter 4 and Chapter 5 in W).
  4. A Two-Period Model: Intertemporal Substitution Effects and Credit Market Imperfections (Chapter 8 and Chapter 9 in W).
  5. A Model of Overlapping Generations (OLG) to understand Social Security: Intergenerational Effects (Chapter 9 in W).
  6. An Intertemporal Model with Investment (Chapter 10 in W).
  7. An Intertemporal Model with Money (Chapter 11 in W) [EXCLUDED FROM FINAL EXAM].
  8. Aggregate Fluctuations:
    • Business Cycle Facts (Chapter 3 in W).
    • Business Cycle Theory: Sources and Propagation Mechanisms (Chapter 12 and 13 in W) [EXCLUDED FROM FINAL EXAM].
    • Unemployment: Search and Efficiency Wages (Chapter 17 in W).
  9. Money, Inflation and Banking (Chapter 16 in W).
  10. Inflation, the Phillips Curve and Central Bank Commitment (Chapter 18 in W) [EXCLUDED FROM FINAL EXAM].
  11. Understanding Inequality: Data and Theory [EXCLUDED FROM FINAL EXAM].

Class Diary:

Quizzes and Solutions

Previous Exams and Quizzes