Intermediate Macroeconomics

ECON A312 Intermediate Macroeconomics is one of several higher level courses that make up the Bachelor of Social Sciences and Bachelor of Social Sciences (Honours) in Economics degree. Although there is no prerequisite, students are strongly encouraged to take ECON A231 Introduction to Microeconomics and ECON A232 Introduction to Macroeconomics before taking this course.

This course provides you with a comprehensive and vigorous coverage of the mainstream economic theories. Since most of you likely do not have a background in advanced mathematics such as calculus, which is believed to be essential to appreciate the vigour of modern economics, I have deliberately omitted the more difficult mathematical treatments in the development of the course content. The fact that advanced mathematics is not required for this course is reflected in the selected text books which cover, in depth, the major economic theories without using calculus.

This does not mean, however, that this course is less rigorous than a comparable advanced economics course. I believe that mathematics is only a language, and in most circumstances a precise language, to describe economic theories and to make predictions. If a student in economics cannot describe a theory in plain words other than using mathematics, he or she does not understand economics at all. Having said that, I do encourage you to go through the footnotes of the texts which contain the calculus treatments of the economic concepts in the main text. However, I want to emphasize that by no means is calculus required in writing your assignments or examination.

This course is developed on the basis of ECON A231 Introduction to Microeconomics and ECON A232 Introduction to Macroeconomics. You are expected to use a lot of graphs and equations to delineate economic models and to analyse economics problems. Moreover, more advanced topics such as the neoclassical growth model and real business cycles are included. Those who have a solid foundation in ECON A231 and ECON A232 will find these advanced topics interesting and useful for analysing real world economic problems.

This course is composed of four units, which are based on the selected textbook: Macroeconomics (9th edn) by Gregory Mankiw. It will take you 20 weeks to complete the course, and you should spend at least 10 hours per week on working through the course materials. Each unit in your study guide contains at least two elements. You will be guided to read your textbooks topic by topic, and in moving from one topic to another you will be asked to do a series of self-test questions to check your progress.

This course is about macroeconomic theories and their applications. From a modern economics perspective, all economic agents are rational, in the sense that they seek to maximize their own welfare. All macroeconomic phenomena are actually the result of the aggregation of individual economic agents. After completing the course, you will learn about the major macroeconomic theories from different schools of thought.

More specifically, this course allows you — equipped with economics theories — to effectively analyse and develop business strategies. From a broader perspective, this course provides you with the economic framework needed to analyse and evaluate government policies.

After completing the course, you should be able to:

1. Illustrate how major macroeconomic variables are measured.
2. Analyse the factors which contribute to economic growth.
3. Appraise the factors which affect economic stability.
4. Examine the factors which influence the economic performance of a small open economy.
5. Apply economic theories to evaluate the effectiveness of government policies.

Materials

In addition to this Course Guide, the course has the following important components. Please ensure that you have all of these materials available.

Study units

The course is composed of four study units. Each study unit requires about 30 hours of study time. This includes reading the study unit and the textbook, and working on the self-tests.

Unit 1 National income, long-run model and growth
Unit 2 Unemployment, inflation and short-run economic fluctuation
Unit 3 The open economy
Unit 4 Economic theory and policy debates

Set textbook

There is one compulsory textbook for ECON A312 Intermediate Macroeconomics:

Mankiw, G N (2019) Macroeconomics, 10th edn, New York: Worth.

Assignment File

There are two assignments for this course. You can find them in your Assignment File. More information is provided under the heading 'Assignments' later in this Course Guide. Please refer to the Assignment File itself for more specific information.

Presentation Schedule

A Presentation Schedule is included in the course materials. It lists the dates for completing assignments, attending tutorials and day schools, etc.

Assessment

The self-tests in the study units provide a means for self-assessment. They help you to better understand the key concepts in the units and check your progress. The assignment in the Assignment File will be assessed by your tutor. Most of the questions in the self-tests and assignments are quantitative and have closed-form solutions, while others are questions for discussion. Regardless the question type, your answer will based on economic theories. Answers generated from intuition or based on daily life will generally bear very low marks.

Assignments

There are two assessment exercises for the course. They will cover the following broad topic areas:

1. the measurement of national income and growth
2. neoclassical growth theory
3. short-run economic fluctuation
4. the open economy
5. macroeconomic policy debate.

The assignment questions are generally of two types. Most questions require you to solve hypothetical economic problems based on given assumptions. These problems typically come with closed-form solutions. There will also be questions which require you to analyse real world economic issues.

Each assignment consists of a problem set and/or some short questions. Both two assignments will be counted for your final grade.

Final examination and grading

The final examination carries the weight of 50% of the final grade, and will be of two hours' duration. The questions will be set in the form of short answer questions and/or essay questions; computation and graphical analysis will typically be involved.

Course marking scheme

This table clearly lays out how the actual marking is broken down.

Course overview

This table brings together the units, the time taken to complete them, and the assignments that follow them.

This course provides you with a broad coverage of modern macroeconomic theories. Although advanced mathematics knowledge such as calculus is not required, the course's rigour is maintained at a high level.

You will find most of the arguments in this course come with graphical analysis. We strongly encourage you to reproduce, on your own, all the graphs which are related to the units. This is a good way to check how well you understand the course content. You should never try to memorize the mathematical definition of a concept without being able to lay out the definition in your own plain English. If you cannot put a concept or explain a theory in plain English (or Chinese, or any language other than mathematics) mathematics will give you the illusion you have already mastered the theory. As the Nobel laureate Paul A. Samuelson put it, 'A rose is a rose is a rose' — what matters most is the substance, not the form.

However, it is not to say that mathematics is not important. Mathematics (including graphical analysis) helps us to formulate and to find solutions for complex economic problems, which may otherwise be difficult to achieve by simply using plain English. However, you should always have the clear intention of not getting lost in the big forest of mathematical details. Always ask yourself — where? Where am I up to? Where do these concepts fit in the big picture? Where are the concepts leading to? By asking where, you will have a better idea of the links between concepts, and between theories.

One good way to check your economic analysis proficiency is to pay attention to policy issues such as the linked exchange rate policy in Hong Kong, and the policies to stabilize the economy in China. Media commentators and columnists frequently discuss these issues. Try to use the economic theories you learn about in this course to judge the validity of their arguments. You will find this will help you a lot in understanding the course material.

Tutors and tutorials

Your tutor will closely follow your progress. He or she will read, make comment on and mark your assignments. He or she will answer your questions during the tutorial sessions, through telephone tutoring, which is typically arranged in evenings, and on the OLE, HKMU's online learning system.

To make the most of your contact with your tutor and the tutorials, you should finish each assignment on time, and read the comments on your assignments before coming to the tutorials, especially when you have difficulty doing the problems in the assignments. It is always a good idea to write down your questions before approaching the tutor for an answer. By doing so, you have the chance to go through the points you missed and you will have a better idea of what you understand and what you don't. This will help you ask to-the-point questions and receive helpful answers from your tutor.

Your course developer, Professor Lo Wai Chung, is a fomer professor at the School of Arts and Social Sciences, Hong Kong Metropolitan University.