1 / 16

HKAL Macroeconomics: The Syllabus, The Exam, and The Reality

HKAL Macroeconomics: The Syllabus, The Exam, and The Reality. Chi-Wa Yuen University of Hong Kong. Objective. The seminar will focus on the connections among The syllabus (what the teachers/students are supposed to teach/learn),

ghazi
Download Presentation

HKAL Macroeconomics: The Syllabus, The Exam, and The Reality

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. HKAL Macroeconomics: The Syllabus, The Exam, and The Reality Chi-Wa Yuen University of Hong Kong

  2. Objective • The seminar will focus on the connections among • The syllabus (what the teachers/students are supposed to teach/learn), • The exam (where the students are supposed to demonstrate what they have learned and understood), and • The macro reality (what it is about the real-world macroeconomy that economists would like to understand and predict).

  3. The HKAL macro syllabus (1) • Three major macro frameworks • 45°cross (partial equilibrium model). • IS-LM (general equilibrium model). • Quantity theory of money. • Plus a bunch of • definitions (e.g., GNP, the price level, M1, …); • concepts (e.g., paradox of thrift, natural unemployment, crowding out, liquidity trap, …); • laws/principles (e.g., comparative advantage, multiple deposit creation, …); and • And their interrelations.

  4. The HKAL macro syllabus (2) • Short-run Keynesian macro models of income (and interest) • 2 frameworks: 45°cross and IS-LM. • Static and deterministic. • Price rigidity  equilibrium is demand-determined  possible existence of output gaps => inefficiency in resource allocations & other kinds of imbalances. • Macro policies as aggregate-demand management tools to close the gaps.

  5. The HKAL macro syllabus (3) • Quantity-theoretic explanation of the price level and inflation • An identity (QEM) turned into a theory (QTM) to provide a causal link between money and prices. • More a classical (long-run) than a Keynesian (short-run) approach—inconsistent with complete price rigidity in the Keynesian frameworks—under the assumptions of constant output and velocity of money, hence, monetary neutrality. • The general version also allows for variability of output and velocity of money, hence, monetary non-neutrality.

  6. The HKAL macro syllabus (4) • Other sections of the syllabus (e.g., banking and financial intermediation, international finance) contain more descriptive material and require less rigorous theorizing. • What is required is a good understanding of basic definitions, concepts, principles, and their interrelations.

  7. The HKAL macro exam (1) • 3 sections • Section A: multiple choice. • Section B: concepts and theories. • Section C: applications. • 3 kinds of skills are tested • Verbal explanation. • Graphical analysis. • Numerical/algebraic computations.

  8. The HKAL macro exam (2) • Topic-wise, the exam is meant to be well-balanced. • Section A is mostly straightforward, but sometimes tricky. • Section B is generally OK for the well-prepared. • Section C usually presents the biggest problems.

  9. The HKAL macro exam (3) • A few examples to illustrate where students are found to be weakest. • Basicdefinitions—such as interest rate, price level. • Basicconcepts—such as saving and investment in closed and open economies, nominal vs. real objects (e.g., interest rates, money balances), unemployment.

  10. The HKAL macro exam (4) • More examples. • Connection between micro and macro concepts—such as relative prices and the general price level, utility and welfare. • Logic behind theoretical constructs—such as derivation of IS and LM curves. • Most importantly, applications of theories to analysis of current affairs, policy issues, and hypothetical cases.

  11. The HKAL macro exam (5) • The last point is most probably a reflection of their • unfamiliarity with this kind of questions; • lack of common sense; • weak analytical ability; and/or • poor English. • Their performance will hopefully improve over time if both the teachers and the students work hard enough to tackle the problems identified above (How?).

  12. The macro reality (1) • What we’d like to do with our macro theories is to explain (and predict) the (yet-to-be) observed time-series and cross-sectional behavior of macro aggregates. • Short-run fluctuations (business cycles: deviations from trend). • Long-run growth (trend). • Macro policies (remedial/stimulative tools or shocks?).

  13. The macro reality (2) • Growth and fluctuations can be viewed as equilibrium outcome from the real-world macroeconomy that operates as an • Optimization-based (solid microeconomic foundations) • Dynamic (the past, the present, and the future) • Stochastic (bombarded by shocks from time to time  importance of information processing and expectations formation) • General equilibrium (everything depends on everything else), where

  14. The macro reality (3) • the short and long runs are not two mutually exclusive entities; • the supply side is no less important than the demand side; and • government policies may or may not be able to stabilize the economy and stimulate growth.

  15. Gap between current syllabus and the reality • Can’t sensibly address such questions as • How will the cut in government spending on education affect productivity, investment, employment, and welfare in the short run and in the long run? • How much of the slowdown in HK’s productivity growth in recent years is due to structural changes? Cyclical fluctuations?

  16. Suggested references • Abel and Bernanke, “Macroeconomics,” 5/e, Addison-Wesley, 2004. (Intermediate level) • Bade and Parkin, “Foundations of Macroeconomics,” Addison-Wesley, 2002. (Introductory level)

More Related