Economic Studies 3

Economic Studies 3

Term 1: Topics in Macroeconomics - P Dunne

This part of the course will consider a number of topics in macroeconomics. The first few lectures will focus on the different schools of thought in macroeconomics and the debates over economic policy. The rest will then cover a number of macroeconomic topics, such as unemployment, inflation, productivity, structural change, and the growth of government. The emphasis will be on using economic theory to understand the problems of the UK economy and to discuss policy issues.

For the first term an understanding of the basic macroeconomic theory to the level of:

Paul Turner (1993) "Modern macroeconomic Analysis",

Chrystal A (19 ) "Controversies in Macroeconomics"

Cobham D (1987) "Macroeconomic Analysis", Longman.

will be assumed.

General recommended reading:

Arestis P (1992) The Post Keynesian Approach to Economics, Edward Elgar

Greenaway D (ed)(1989) "Current Issues in Macroeconomics", Macmillan.

Sawyer M (1984) "Macreconomics in Question", Wheatsheaf.

Levacic R and Rebmann A (1982) "Macroeconomics: An Introduction to Keynesian-Neoclassical Controversies", Macmillan.

Hillier B (1991)"The Macroeconomic Debate", Blackwell.

Further reading will be provided at the beginning of the term.

Economic Studies 3

Topics in Macroeconomics: Provisional Reading List

First Term 1993-4

Paul Dunne

An understanding of the basic macroeconomic theory is assumed to the level of:

Paul Turner (1993) "Modern macroeconomic Analysis",

Hall and Taylor (1986) "Macroeconomics", Norton.

Recommended texts for a brief overview of the theory are:

Chrystal A (19 ) "Controversies in Macroeconomics"

Cobham D (1987) "Macroeconomic Analysis", Longman.

Classes will be fortnightly starting in the third week.

General Texts

Sawyer JA (1989) "Macroeconomic Theory", Harvester Wheatsheaf.

-provides good overview of the models implied by the different macroeconomic schools of thought.

Leslie D (1993) "Advanced Maroeconomics", McGraw-Hill

-provides advanced coverage of New Classical and New Keynesian developments.

Lavoie M (1992) "Foundations of Post Keynesian Economic Analysis", Edward Elgar.

Background:

Levacic R and Rebmann A (1982) "Macroeconomics: An Introduction to Keynesian-Neoclassical Controversies", Macmillan.

Hillier B (1991)"The Macroeconomic Debate", Blackwell.

Eatwell J, Milgate M and Newman P (eds) "The New Palgrave: A Dictionary of Economics"

-Very useful reference work

1. Introduction to Schools of Thought in Macroeconomics:

Pheby J (1988) "Methodology and Economics", Macmillan

Bleaney and Greenaway (1989) "Recent developments in macroeconomics", Chapter 1 in Greenaway (1989) (ed) "Current Issues in Macroeconomics",

Hahn F (1982) "On the Notion of Equilibrium in Economics", Chapter in Hahn F (1982) "Money and Inflation",

Kaldor N (1972) "The Irrelevance of Equilibrium in Economics", Economic Journal, Vol 82, pp 1237-1255.

Sawyer M (1982) "Macreconomics in Question", Wheatsheaf. Ch 1. Croom Helm.

Vercelli A and Dimitri N (1992) " Macroeconomics: A Survey of Research Strategies", Oxford University Press.

2. The Grand Neoclassical Synthesis: A Critical Appraisal

Arestis P (1992) The Post Keynesian Approach to Economics, Edward Elgar Ch 1,2

Bleaney and Greenaway (1989) "Recent developments in macroeconomics", Chapter 1 in Greenaway (1989) (ed) "Current Issues in Macroeconomics",

Sawyer M (1984) "Macreconomics in Question", Wheatsheaf. Ch 1-3

Pilling G (1986) "The Crisis of Keynesian Economics: A Marxist View", Croom Helm.

Sawyer M (1991) Post-Keynesian Macroeconomics, Chapter 11 in Greenaway (ed) "Companion to Contemporary Economic Thought", Routledge.

Vircelli A and Dimitri N (eds) (1992) "Macroeconomics", Oxford University Press.

Wallis K (ed)"Models of the UK Economy", Macmillan. Vols 1-4

3. New Classical and New-Keynesian Economics

Bleaney and Greenaway (1989) "Recent developments in macroeconomics", Chapter 1 in Greenaway (1989) (ed) "Current Issues in Macroeconomics",

Weale et al (1989) "Macroeconomic Policy", Unwin Hyman. Ch 1.

Fischer S (1988) "Recent Developments in Macroeconomics", Economic Journal, 98, June, pp294-339.

Vircelli and Dimitri (1992) op cit

Lucas and Sargent (1981) "Rational Expectations and Econometric Practice", George Allen and Unwin. Esp Ch 1,16

Garrett JR (1987) "Macroeconomic Policy and History" Review article on Sargent TJ "Rational Expectations and Inflation". Cambridge Journal of Economics, 11, pp 375-392.

Blinder (1987) Credit rationing , Economic JournalJ 97 pp327-52

Greenwald and Stiglitz(1987) Keynesian, New Keynesian and New Classical, OEP, 39, pp119-32

Sawyer M (1989) "The Challenge of Radical Political Economy", Harvester Wheatsheaf. Chapter 8 on the measurement of capital and reswitching.

4. Post Keynesian Economics

Arestis P (1992) The Post Keynesian Approach to Economics, Edward Elgar

Sawyer M (1991) Post-Keynesian Macroeconomics, Chapter 11 in Greenaway (ed) "Companion to Contemporary Economic Thought", Routledge.

Sawyer M (1984) "Macreconomics in Question", Wheatsheaf. Ch 1-3

Lavoie M (1992) "Foundations of Post Keynesian Economic Analysis", Edward Elgar.

Arestis P and Skouras T (1985) "Post-Keynesian Economic Theory: A challenge to Neo-Classical Economics",Whetsheaf.

Eichner AS (ed)(1979) "A Guide to Post Keynesian Economics", Macmillan.

The rest of the lecture series will cover the tutorial topics.

JPD

Economic Studies 3

Topics in Macroeconomics

Readings on Policy and Performance:

To keep up to date on the development of policy debate you should read the Financial Times and browse through the policy journals:

National Institute Economic Review

London Business School Centre for Economic Forecasting Review

Bank of England Quarterly Bulletin

Provide analysis of economic performance and macroeconomic forecasts. They also contain more detailed articles on specific topics:

Oxford Review of Economic Policy

Economic Policy, Centre for Economic Policy research

-have articles on economic policy

Also see the Economic Journal policy section, the Journal of Economic Perspectives and the Journal of Economic Literature.

General readings on what happened to the UK economy are:

Michie J (ed) (1992) "The Economic Legacy 1979-92", Academic Press.

-very useful collection

Allsop C, Jenkinson T, and Morris D (1991) "The Assessment: Macroeconomic Policy in the 1980's", Oxford Review of Economic Policy, Autumn.

Artis M (ed)(1992) "Prest and Coppock's: The UK Economy" 13th Edition, Weidenfeld and Nicolson.

-useful for up to information on the economy and consistent data series.

Green F (ed)(1989) "The Restructuring of the UK Economy", Harvester Wheatsheaf.

Barker T and Dunne P (eds)(1988) "The British Economy After Oil: Manufacturing or Services", Croom Helm.

Dornbusch and Layard (eds) (1987) "The Performance of the British Economy", Oxford University Press.

Artis M and Cobham D (eds)(1991) "Labour's Economic Policies", Manchester University Press.

Evaluations of monetarism are:

Desai M (1981) "Testing Monetarism", Frances Pinter.

Kaldor N (1980) "Monetarism and UK Policy", Cambridge Journal of Economics, Vol 4, pp 293-318.

Kaldor N (1982) "The Scourge of Monetarism", Oxford University Press. (The Radcliffe Lectures)

Maynard G (1988) "The Economy Under Mrs Thatcher", Blackwell

-a supportive evaluation (the others above are critical)

Also of interest is: HMSO (1980) "Memorandum on Monetary Policy" House of Commons Treasury and Civil Service Committee, Session 1979-80, HMSO. Which contains contributions from various economists, for and against.

US views:

Lawrence RZ, Schultze CL (eds)(1987) "Barriers to European Growth: A Transatlantic View", The Brookings Institution

Caves RE and Krause LB (eds)(1980)"Britain's Economic Performance", The Brookings Institution

-The Brookings Institution also produce a regular series of papers .

Session 1: Inflation and the Monetarist Experiment

Explain what inflation is, why it is a problem, and how well the available theories help us understand the UK's experience.

See basic texts and:

King J (1990) "Labour Economics", Macmillan, Chapter 11

Artis M (1989) "Wage Inflation", Chapter 5 in Greenaway (ed) (1989)

Oxford Review of Economic Policy (1990) Special Issue on Inflation: various articles, Vol 6, no. 4.

Michie J and Wilkinson F (1992) "Inflation Policy and the Restructuring of Labour Markets", Chapter 9 in Michie J (ed) (1992) "The Economic Legacy 1979-1992", Academic Press.

Jackman Mulvey and Trevithick (1981) "The Economics of Inflation", Martin Robertson, Oxford.

Arestis P (1992) "The Post-Keynesian Approach to Economics", Edward Elgar. Chapter 6.

Armstrong P, Glyn A and Harrison J (1991)"Capitalism Since 1945", Blackwell.

Carline W and Soskice D (1990)"Macroeconomics and the Wage Bargain", Oxford University Press.

Beckerman and Jenkinson (1986) "What Stopped the Inflation: Unemployment or commodity Prices?", Economic Journal.

Rowthorn (1977) "Capitalism, Conflict and Inflation", Lawrence and Wishart. Esp Ch 5,6.

Session 2: Unemployment

Consider the different theoretical analyses of unemployment and assess how well they explain the UK's experience.

See basic texts and:

King J (1990) "Labour Economics", Macmillan, Chapter 10

Nickell S (1990)"Unemployment: A Survey", Economic Journal, Vol 100, No 401, pp 391-439

Dornbusch and Layard (eds) (1987) "The Performance of the British Economy", Oxford University Press.

Michie J (ed) (1992) "The Economic Legacy 1979-1992", Academic Press. Part III.

Layard R, Nickell S and Jackman R (1991) "Unemployment: Macroeconomic Performance and the Labour Market", OUP. Also Phelps ES (1992) "A review of unemployment", Journal of Economic Literature, Vol XXX. Review of Layard et al (1991)

Knight KG (1987) "Unemployment: An Economic Analysis", Croom Helm.

Cross R (ed) (1988) "Unemployment, Hysteresis, and the Natural Rate Hypothesis", Blackwell.

Green F (1991) "The Reserve Army Hypothesis": A Survey of Empirical Applications", Chapter 7 in Dunne P (ed)(1991) "Quantitative Marxism", Polity Press.

Armstrong P, Glyn A and Harrison J (1991)"Capitalism Since 1945", Blackwell.

Oxford Review of Economic Policy (1985) Vol 1 No 2. Esp papers by Morris and Sinclair, Walker and Davies, Nickell.

Minford P (19 ) "Unemployment Cause and Cure". See Nickell's review in Economic Journal (1984) and Minford's reply.

Jenkinson T (1987) "The Natural rate of Unemployment: Does it exist?", Oxford Review of Economic Policy, Vol 3.

Sawyer M (1992) "Unemployment and the Dismal Science" Discussion Paper G92/15, School of Business and Economic Studies, University of Leeds.

Session 3: Productivity and Economic Growth

Consider whether or not there has been a productivity miracle and what the causes of productivity growth are.

Crafts N (1992) "Productivity Growth Reconsidered", Economic Policy, October, CEPR, pp387-426 (with discussion).

Armstrong P, Glyn A and Harrison J (1991) "Capitalism Since 1945", Blackwell.

Glyn A (1992) "The 'Productivity Miracle', Profits and Investment", in Michie (ed) (1992).

Davies R and Cave RE (1987) Britain's Productivity Gap. CUP.

Muellbauer J (1986) The assessment: productivity and competitiveness in British manufacturing. Oxford Review of Economic Policy. Vol2, No 3.

Nolan P (1989) The productivity miracle? Chapter 5 in Green F (ed) (1989) The restructuring of the UK economy. Harvester Wheatsheaf.

Oulton N (1987) Plant closures and the productivity 'miracle' in manufacturing. NIER, August, No 121.

Oulton N (1989) Productivity growth in manufacturing 1963-85: The roles of new investment and scrapping. National Institute Economic Review, February, No 127. Also NIER: 1/92 Article by O'Mahony. 4/92 Article by Bart van Ark.

Weisskopf T (1987) "The Effect of Unemployment on Labour Productivity", International Review of Applied Economics, Vol 1, no 2, pp 127-151.

Session 4: Structural Change

Consider whether or not deindustrialisation is taking place in the UK and whether the growth in the importance of services is something we should worry about.

Singh A (1977) "UK Industry and the World Economy: A Case of Deindustrialisation?", Cambridge Journal of Economics, Vol 1, pp113-136.

Blackaby F (ed) (1979) "Deindustrialisation", Heinemann,London.

Petit P (1985) "Slow Growth and the Service Economy", Macmillan.

Driver C and Dunne P (1992) "Structural Change in the UK Economy", Cambridge University Press.

Barker T and Dunne P (eds)(1988) "The British Economy after Oil: Manufacturing or Services?", Croom Helm.

Green F (1989)"The Restructuring of the UK Economy, Harvester/Wheatsheaf.

Rowthorn R and Wells J (1987) "Deindustrialisation and Foreign Trade", Macmillan.

Stafford B (1989) "Deindustrialisation in advanced Eonomies", Cambridge Journal of Economics, 13, pp 541-54. Review of Rowthorn and Wells.

Armstrong P, Glyn A and Harrison J (1991) "Capitalism Since 1945", Blackwell.

Economic Studies 3

Topics in Macroeconomics: Essay Titles

1. The UK governments anti-inflationary policy has worked because it has created a recession. It has not influenced the underlying processes that cause inflation. Discuss.

2. Government policy towards unemployment is based upon a misunderstanding. It is not the supply side that they should be concerned about but the demand side. Discuss.

3. Any productivity improvement in the UK has been the result of the recession rather than a positive effect of government policies. Discuss

4. Deindustrialisation in the UK is the outcome of long run economic processes of structural change and not something we should be concerned about. Discuss.