Introductory Macroeconomics, Hilary Term 2026
Note
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Tutor
Tutorials
Tutorials take place in my room at the top of Staircase 1.
| Th. 11:15 - De Nonneville, Murray, Zhang |
| Th. 2:00 - Doepke, Lee, Sulaiman |
| Th. 3:15 - Gupta, Li |
| F. 11:00 - Holland-Kaye, Whichello, Dias |
| F. 2:00 - Easton, Jones, Nicholl |
| F. 3:15 - Tucker, Nakatani, Garner |
Schedule overview
| Week | Topic | ||
| 1 | GDP | ||
| 2 | Economic Growth | ||
| 3 | Growth and technical progress | ||
| 4 | Building blocks: money & inflation, the labour market | ||
| 5 | Building blocks of aggregate demand: consumption and investment | ||
| 6 | A model for the short run: IS-LM | ||
| 7 | The supply side: the Phillips Curve | ||
| 8 | The open economy |
Teaching
Assignments
Preparing - by completing the assignments in advance - is a requirement for attending the
tutorial. If you think you will not be able to complete an assignment on time, contact me
in advance to discuss the possibility of an extension.
Essays
Essays should be about 1500 words, should have a bibliography listing any sources
used, and should be submitted by 12:00 on the day before your tutorial.
Please submit your essays in pdf format by e-mail.
Essays are about both substance and style - style in the sense of crafting a persuasive argument,
not in the sense of ornament. A good essay will display lucid economic reasoning, will make
use of tools like diagrams as appropriate, and will bring relevant evidence to bear.
Feel free to start your research with websites and journalistic sources,
but try to consult a few sources authored by professional researchers
and published in academic journals (or working papers) or policy reports.
Problem sets
Some weeks you will be set some mathematical or diagrammatic problems to solve. Unlike the essays,
problem sets do not need to be submitted in advance. Bring your problem sets to the tutorial.
Please attach a cover sheet on which you indicate and briefly describe
any difficulties you have had. This helps me know where to focus my attention when I look
over your work, what feedback you most want. You are a large group of students this term,
so I will not be able to review in detail every answer to every question.
Textbooks
As in the microeconomics course, there is not one unique textbook. There are lots of good options and they all present basically the same material. I will rely on, and refer you to, three main texts:
N. Gregory Mankiw & Mark P. Taylor, Macroeconomics. 2nd European Edition.
I will give chapter numbers and titles from the above, but there are several
functionally-equivalent versions of this book in the College library.
Olivier Blanchard, Alessia Amighini, and Francesco Giavazzi, Macroeconomics. A European Perspective.
We will rely on this one for developing aggregate supply and the Phillips curve based on a model of the
labour market. There are again several versions of this text that are essentially equivalent. We have
2 copies of the 2010 1st edition in the College library. Other editions are available at various
Oxford libraries (e.g. Social Sciences). The core of the book is the same as what you will find in
Olivier Blanchard & David Johnson, Macroeconomics, global edition. We have 5 copies of the 6th global
edition in the College library. You will find single-authored (Blanchard only) macro textbooks that
develop the labour market, Phillips curve, and aggregate supply in the same way; they are equally good.
The CORE Econ Team, The Economy 2.0: Macroeconomics (2023). Open access e-text available online
here. Print version available soon.
A note on Jones. The lectures will be closely based on Charles Jones' textbook. I do not use that book because I don't like the way it mixes a model of how the economy works with a model of how policy responds to the economy; it becomes hard to tell which is which. I also prefer other expositions of aggregate supply. Finally, I am not (yet) persuaded that it's better to define variables in terms of deviations from long-run values rather than in absolute terms. There are no contradictions between what we will do in tutorials and what will be presented in lectures (and in the Jones book). There are differences in notation and exposition, but you will be learning the same models.
Week by week schedule
Week 1: GDP
This week we consider gross domestic product, the measure of output and income that
macroeconomists typically focus on. We will also look at a simple model of how incomes
are determined and how it comes to be that aggregate expenditure equals aggregate
output in a model with flexible prices and market-clearing.
Textbook readings:
Mankiw & Taylor, Chs. 1-3 ('The Science of Macroeconomics', 'The Data of Macroeconomics',
'National Income: Where It Comes From and Where It goes').
CORE, Unit 3 ('Aggregate Demand and the Multiplier Model'), sections 1-4.
No problems for this week - be prepared to discuss equilibrium in a classical (flexible price, market clearing) economy
Essay topic:
Is GDP an imperfect but workable measure of welfare, or fundamentally flawed?
This is a big topic, with issues ranging from the nitty-gritty of calculations to
important philosophical considerations, from the home to the environment, the internet,
and the financial sector. While you should show an awareness of this range of
issues, you cannot develop more than a couple of ideas in any depth in a short essay.
That is fine.
A nice starting point could be Diane Coyle's GDP: A Brief But Affectionate History
(Princeton: Princeton UP, 2014), esp. Chs. 1, 2, 5, and 6. This is a short volume that
you could read in an afternoon. It is discursive and a little short of detail, but
motivates the topic very well. One review is
here. Coyle has other, shorter pieces, and a recently published new book, The Measure
of Progres. Counting What Really Matters.
Another route into the topic could be the articles in the Journal of Economic Perspectives
"Symposium: Are Measures of Economic Growth Biased?" (vol. 31 no. 2, 2017),
accessible here.
Further, accessible overviews are an Economist article of 2016, "The Trouble with GDP",
here, and a 2010
New York Times article, "The Rise and Fall of the G.D.P."
here.
A quick search should yield more recent, similar articles.
Piketty and coauthors have worked on 'distributional national accounts'. Brynjolfsson is the
name most associated with valuing digital goods.
2018 Nobel Prize winner William Nordhaus made a number of important contributions to the
measurement of output and welfare. One of these was Nordhaus, William and James Tobin,
"Is Growth Obsolete?" in Economic Research: Retrospect and Prospect, vol. 5:
Economic Growth, NBER, 1972.
This week we study the Solow model of economic growth. When I say 'the Solow model'
I mean a model with the following elements: a constant returns to scale aggregate
production function with inputs capital, labour, and a technology parameter; capital accumulation;
an exogenous investment rate; exogenous population growth; and exogenous technical progress. It is
common to first present a simplified version where technology, and sometimes the labour force, are held constant.
That is not the full Solow model.
Textbook readings:
Mankiw & Taylor Chs. 8-9.
Blanchard, Amighini & Giavazzi, Chs. 11-13.
Jones, Chs. 4-6.
Burda & Wyplosz, Macroeconomics. A European Text (7th ed.), Ch. 3.
CORE, Unit 9. (Good but less useful for the pure mechanics of the Solow model.)
Problems for this week: here.
No essay this week.
This week we continue to discuss economic growth, now considering technical change in
greater detail.
Textbook readings: as last week. Consider also C. Jones, Introduction to Economic Growth
2e (London: Norton, 2002). Some of it is too technical for our purposes, but it does have
a chapter on natural resources, for example.
A recent, interesting-looking growth accounting exercise is Fernald,
Inklaar, and Ruzic, "The Productivity Slowdown in Advanced Economies: Common Shocks or
Common Trends?" Federal Reserve Bank of San Francisco Working Paper 2023-07
(Feb. 2023).
Problems for this week: here.
Essay topic: pick one of the following.
a. How successfully does the Solow model with exogenous population growth and technical change explain why some countries are rich and others poor? Does it predict the poor will catch up with the rich?
b. Population growth is considered a major threat to prosperity in poorer countries. China famously adopted a one-child policy to reduce population growth. Does the Solow model with technological progress justify such worries?
c. In his much-discussed Capital in the Twenty-First Century,Thomas Piketty predicted
that inequality in the advanced economies will get worse in decades to come: the capital/income
ratio will rise, and capital's share of income will grow bigger and bigger. According
to the Solow model with exogenous population growth and technical change,
is this a likely prospect?
This topic is potentially difficult. You will quickly find many reviews of Piketty's
book, which could be good starting places, for example Robert Solow's "Thomas Piketty
Is Right. Everything You Need to Know About Capital in the Twenty-First Century,"
New Republic, 23 April 2014. Or (then) MIT graduate student M. Rognlie's critique
"A note on Piketty and diminishing returns to capital". Piketty has an article in the
Journal of Economic Perspectives, vol. 29 no. 1 (Winter 2015).