ECO 6025: Economic Policy Analysis

Cem Karayalcin

Office Hours: TuTh: 1-2 pm and by appointment

Office Phone: 305-348-3285

E-Mail: cem.karayalcin@fiu.edu

This course covers the principles of economic policy analysis, with a particular emphasis on how these principles allow better design of governmental policy decisions. The focus of the course is on understanding and identifying market failures and potential governmental responses. Topics covered include: Introduction to consumer and producer theory; Market equilibrium in supply and demand; Welfare analysis; Tradeoffs between equity and efficiency; The theory of externalities; Measuring externalities; Public goods; Market power; Imperfect information.

After completing this course, you will be able to:

1) Be a producer of basic economic policy analysis;

2) Be an informed consumer of fairly sophisticated research on economic policy.

The textbook for the course is Issues in Economics Today, 7th Edition by Robert C. Guell.

Students are required to write ten one-page papers in class for the course. A randomly selected set of papers written in class would then be presented on the days they are assigned. The one-page papers and their presentation account for 85 (for all of the one-page ones) percent while class participation accounts for 15 percent of the final grade for the course.

Part I. Background

The first part of the course as well as that of the textbook is devoted to motivating the study of issues in economic policy, beginning in Chapter 1 with an introduction to contemporary approaches to economics and economic policy. The book then reviews background skills in Chapter 2 (supply and demand), Chapter 3 (consumer and producer surplus). Recognizing that students come to the course with highly varying levels of skill in economics, this course requires some familiarity with introductory economics, but no more: All other required skills are reviewed in these background chapters.

Chapters

1. Economics
2. Supply and Demand
3. Consumer and Producer Surplus

Part II. Macroeconomic Issues

The discussion of macroeconomic issues begins in Chapter 6 with an introduction to GDP, inflation, unemployment, and recession. Chapter 7 introduces two basic concepts crucial to economic policy: interest rates and present value. Aggregate demand and aggregate supply, two concepts that are indispensable in understanding macroeconomic policy are introduced in Chapter 8. These allow students to think critically about major fiscal (Chapter 9) and monetary (Chapter 10) policy discussions. Basic thinking about federal deficits and national debt is introduced in Chapter 12.

Chapters

6. GDP, Inflation, Unemployment, and Recession
7. Interest Rates And Present Value
8. Aggregate Demand and Aggregate Supply
9. Fiscal Policy

10. Monetary Policy

12. Deficits and Debt

PART III. Current Problems

Current problems, their origins, and potential remedies are the topics discussed in Part III. The housing bubble (Chapter 13), the recession of 2007-09 (Chapter 14) and problems faced by social security and medicare (Chapter 16) are examined here.

13. The Housing Bubble

14. The Recession of 2007-09

16. Social Security, Medicare, and More

PART IV. International Economics

This section examines issues in international economics, starting with the effects of trade (Chapter 17) and ending with an exploration of international finance and exchange rates (Chapter 18).

Chapters

17. International Trade

18. International Finance

PART V. Other Contemporary Issues

The environment and climate change (Chapter 22), issues related to the economics of crime (Chapter 27), and the causes and effects of income and wealth inequality are examined in this section.

Chapters

22. The Environment and Climate Change

27. The Economics of Crime

29. Income and Wealth Ineœquality

Useful links:

GDP

US inflation

Countries: nominal GDP

US growth

China growth

Countries: GDP per capita

Countries: GDP PPP