ECO406 Business Cycles & Growth Topics include analysis of economic fluctuations and their impact on corporations and consumers; different explanations for business cycles; monetary and fiscal policy for stabilizing economic fluctuations; effects of public debt, investment, employment and trade policy on economic growth. ECO406: Business Cycles & Growth Online Table of Contents COURSE AT A GLANCE ...................................................................................................................................................................... 4 COURSE DESCRIPTION ............................................................................................................................................................................ 4 COURSE DESIGN ..................................................................................................................................................................................... 4 COURSE PREREQUISITES......................................................................................................................................................................... 5 LEARNING OUTCOMES ........................................................................................................................................................................... 5 LEARNING RESOURCES .......................................................................................................................................................................... 5 Required Text .................................................................................................................................................................................... 5 Required Articles ............................................................................................................................................................................... 5 Required Websites ............................................................................................................................................................................. 6 COMPONENTS OF COURSE EVALUATION ................................................................................................................................... 7 DISCUSSIONS .......................................................................................................................................................................................... 7 ASSIGNMENTS ........................................................................................................................................................................................ 7 Written Assignments .......................................................................................................................................................................... 7 FINAL PAPER .......................................................................................................................................................................................... 7 COURSE GRADING .................................................................................................................................................................................. 9 Course Grading Breakdown.............................................................................................................................................................. 9 Grading Percent Breakdown............................................................................................................................................................. 9 WEEK ONE ........................................................................................................................................................................................... 10 COURSE CONTENT ................................................................................................................................................................................ 10 Overview ......................................................................................................................................................................................... 10 Learning Outcomes ......................................................................................................................................................................... 10 Required Readings .......................................................................................................................................................................... 10 Recommended Reading ................................................................................................................................................................... 11 Required Website ............................................................................................................................................................................ 11 Discussions...................................................................................................................................................................................... 11 Assignments ..................................................................................................................................................................................... 11 WEEK TWO .......................................................................................................................................................................................... 12 COURSE CONTENT ................................................................................................................................................................................ 12 Overview ......................................................................................................................................................................................... 12 Learning Outcomes ......................................................................................................................................................................... 12 2 ECO406: Business Cycles & Growth Online Required Readings .......................................................................................................................................................................... 13 Recommended Reading ................................................................................................................................................................... 13 Discussions...................................................................................................................................................................................... 13 Assignments ..................................................................................................................................................................................... 13 WEEK THREE ...................................................................................................................................................................................... 15 COURSE CONTENT ................................................................................................................................................................................ 15 Overview ......................................................................................................................................................................................... 15 Learning Outcomes ......................................................................................................................................................................... 15 Required Readings .......................................................................................................................................................................... 15 Discussions...................................................................................................................................................................................... 15 Assignments ..................................................................................................................................................................................... 16 WEEK FOUR ......................................................................................................................................................................................... 17 COURSE CONTENT ................................................................................................................................................................................ 17 Overview ......................................................................................................................................................................................... 17 Learning Outcomes ......................................................................................................................................................................... 17 Required Readings .......................................................................................................................................................................... 17 Recommended Website .................................................................................................................................................................... 17 Discussions...................................................................................................................................................................................... 17 WEEK FIVE .......................................................................................................................................................................................... 19 COURSE CONTENT ................................................................................................................................................................................ 19 Overview ......................................................................................................................................................................................... 19 Learning Outcomes ......................................................................................................................................................................... 19 Required Readings .......................................................................................................................................................................... 19 Recommended Reading ................................................................................................................................................................... 19 Discussions...................................................................................................................................................................................... 20 Assignments ..................................................................................................................................................................................... 20 COURSE MAP ....................................................................................................................................................................................... 21 3 ECO406: Business Cycles & Growth Online Course at a Glance Course Description Topics include analysis of economic fluctuations and their impact on corporations and consumers; different explanations for business cycles; monetary and fiscal policy for stabilizing economic fluctuations; effects of public debt, investment, employment and trade policy on economic growth. Course Design This course has been designed for the individual student. That does not mean that students cannot collaborate and work on assignments as teams or groups. Indeed, collaborative efforts should raise the level of learning synergy as one student’s instructional efforts reinforce that individuals learning experience. However, the final measure of learning will be conducted on an individual basis and by the performance of that individual in addressing classroom activity, course assignments, and the Final Paper. The Final Paper should demonstrate understanding of the readings as well as the implications of new knowledge. The learning experience will consist of the following efforts: reading of the text and articles that may be assigned, discussion of text material and article content, a weekly written assignment, and a Final Paper. The Final Paper should demonstrate understanding of the readings as well as the implications of new knowledge. Reading the text will be the primary source of formal knowledge for each student. A student will be expected to read each chapter as sequenced through the course. In doing so that student will be measured on how well the subject matter is understood, how adept that student is at recognizing situations in which the subject matter is at hand, translating the recognition into a useful application of the knowledge, and use the knowledge application to solve a problem or find a solution. The student will also be expected to defend the chosen approach towards problem solving by referencing text and classroom materials and to defend the rejection of alternatives that may have warranted consideration. Homework assignments will be the routine measuring of a student’s ability to apply specific learned knowledge to a formal and structure situation with the end result being an answer that is measurable in a quantitative manner. Each assignment will have the objective of testing the student on the composite knowledge presented in the respective chapter. 4 ECO406: Business Cycles & Growth Online It is expected that this routine will instill a sense of process discipline in each student that will guide the problem solving process. Course Prerequisites There are no prerequisites for ECO406. Learning Outcomes Upon successful completion of this course, students will be able to: 1. Evaluate the economic forces underlying the US postwar business cycles. 2. Examine supply shocks and their influence on business cycles. 3. Analyze alternative models of business cycle fluctuations and to compare and contrast the government policy recommendations and responses to past cycles. 4. Assess basic economic indices. 5. Assess contagion or multiple shock effects in an economic system due to government intervention. Learning Resources Required Text Knoop, T.A. (2008). Modern Financial Macroeconomics: Panics, Crashes, and Crises. Malden, MA: Blackwell Publishing. ISBN: 9781405161817 Required Articles Hakkio, C., & Keeton, W. (2009). Financial stress: What is it, how can it be measured, and why does it matter? Economic Review - Federal Reserve Bank of Kansas City, 94(2), 5-50. Retrieved from ABI/INFORM Global. Merkl, C. (2008). Galí J: Monetary policy, inflation, and the business cycle: An introduction to the new Keynesian framework: XI, 203pp., Princeton University Press, Journal of Economics, 95(2), 179-181. Retrieved from ABI/INFORM Global. 5 ECO406: Business Cycles & Growth Online Patton, M. (2014, February 11). Why the next financial crisis could be worse than 2008. Forbes. Retrieved from http://www.forbes.com/sites/mikepatton/2014/02/11/why-the-next-financial-crisis-could-be-worse-than-2008/ Stiglitz, J. (2009). The global crisis, social protection and jobs. International Labour Review, 148(1/2), 1-13. Retrieved from ABI/INFORM Global. Required Websites Gelber, D., & Bach, J. (2008, December 14). The mortgage meltdown [video]. Retrieved from http://www.cbs.com/primetime/60_minutes/video/index.php?pid=xX_w4fe5L8vlPItBL4oMI9zp_3o6tHR7 Schuster, H. (Producer). (2009, June 7). Ben Bernanke: What caused the financial crisis? [video]. Retrieved from http://moneywatch.bnet.com/economic-news/video/ben-bernanke-what-caused-the-financial-crisis/309586/ 6 ECO406: Business Cycles & Growth Online Components of Course Evaluation Multiple measures of evaluation are used in the course, allowing students opportunities to demonstrate their learning in more than one way, and giving consideration to individual learning styles. Course components that will be evaluated include: Discussions Each week students will participate in online discussions with classmates, which are related to the week’s readings. These discussions replace the interactive dialogue that occurs in the traditional classroom setting. Each week, students’ initial discussion posts are due by 11:59 p.m. (of the time zone in which each student resides) on Day 3 (Thursday). Students will have until 11:59 p.m. on Day 7 (the following Monday) to make the required minimum number of response posts to classmates. Discussions represent 40% of the overall course grade. Assignments Written Assignments There is a written assignment due in Weeks One through Three of this course. These assignments must reflect collegelevel writing and critical thinking. Assignments represent 30% of the overall course grade. Final Paper The final assignment for this course is a Final Paper. The purpose of the Final Paper is for you to culminate the learning achieved in the course by describing your understanding and application of knowledge in the field of business cycles through the analysis of a financial case. The Final Project represents 30% of the overall course grade. Focus of the Final Paper Finance The financial sector has a profound influence on important macroeconomic variables like GDP growth, employment and inflation. The evolution of financial institutions has made the world’s economies more interconnected than ever, allowing financial “contagion” to spread out of control. In an eight- to ten-page paper (not including title and references pages), address the following: 7 ECO406: Business Cycles & Growth Online • Describe recent financial crises and describe the effect that destabilized credit, mortgage, derivative, and insurance markets have had on national economies and assess the stabilization policies implemented to address them. • Compare and contrast two different countries during a time period when they experienced financial crises. • Explain the role and action that central banks took to stabilizing the business cycle. Be sure your answer includes appropriate data, graphs, terms, macroeconomic indicators and theories used. • Indicate which country you believe implemented the best stabilization policy during the crises, supporting your selection with scholarly resources. Writing the Final Paper The Final Paper: 1. Must be eight to ten double-spaced pages in length, and formatted according to APA style as outlined in the Ashford Writing Center. 2. Must include a title page with the following: a. Title of paper b. Student’s name c. Course name and number d. Instructor’s name e. Date submitted 3. Must begin with an introductory paragraph that has a succinct thesis statement. 4. Must address the topic of the paper with critical thought. 5. Must end with a conclusion that reaffirms your thesis. 6. Must use at least four scholarly sources, not including the text 7. Must document all sources in APA style, as outlined in the Ashford Writing Center. 8. Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing Center. 8 ECO406: Business Cycles & Growth Online Course Grading Course Grading Breakdown Letter Grade A AB+ B BC+ C CD+ D D- Percent 0.933 0.900 0.866 0.833 0.800 0.766 0.733 0.700 0.666 0.633 0.600 = Lower Level of Grade 93 90 86 83 80 76 73 70 66 63 60 Grading Percent Breakdown Discussions Assignments Final Paper Total: 9 40% 30% 30% 100% ECO406: Business Cycles & Growth Online Week One Course Content To be completed during the first week of class Overview Assignment Post Your Introduction Financial Institutions Financial Crisis Central Banks Day 1 Discussion Grading Percent 1 Day 3 st (1 post) Day 3 st (1 post) Day 7 Discussion 3 Discussion 4 Assignment 10 Due Date Format Learning Outcomes This week students will: 1. Examine the basics of financial markets and financial institutions. 2. Assess the impact of hedge funds on the U.S. economy. 3. Analyze the history of banking, financial markets, and central banking. Required Readings 1. Read the following chapters in Modern Financial Macroeconomics: Panics, Crashes, and Crises: a. Chapter 1: The Basics of Financial Markets and Financial Institutions b. Chapter 2: A Brief History of Financial Development 2. Patton, M. (2014, February 11). Why the next financial crisis could be worse than 2008. Forbes. Retrieved from http://www.forbes.com/sites/mikepatton/2014/02/11/why-the-next-financial-crisis-could-be-worse-than-2008/ 10 ECO406: Business Cycles & Growth Online Recommended Reading 1. Read the following ProQuest article: Hakkio, C., & Keeton, W. (2009). Financial stress: What is it, how can it be measured, and why does it matter? Economic Review - Federal Reserve Bank of Kansas City, 94(2), 5-50. Retrieved from ABI/INFORM Global. This article supports the text reading for the week. Required Website 1. View the video, Ben Bernanke: What caused the financial crisis?. This video supports the Central Banks assignment for the week. Discussions Participate in the following discussions: 1. 1st Posting Due by Day 1. Post Your Introduction. Post your introduction on the discussion forum titled, “Introductions” found in Week One. Respond to at least three of your classmates’ postings. 2. 1st Posting Due by Day 3. Financial Institutions. What are the characteristics of a financial institution, and why does it lead to economic development? Be sure your answer includes an example of a developing country and the impact of financial institutions on their economic growth. Respond to at least two of your classmates’ postings. 3. 1st Posting Due by Day 3. Financial Crisis. Read Mike Patton’s article, “Why the Next Financial Crisis Could Be Worse Than 2008.” Based on the information presented in the article, discuss the following: a. What caused the 2007-2009 financial crisis? b. What could possibly cause the next financial crisis? c. Do you agree with the author? Why or why not? Respond to at least two of your classmates’ posts. Assignments 1. Due by Day 7. Central Banks. One important aspect of modern finance that separates it from past eras is the pervasiveness and power of central banks. Central banks play a vital role in ensuring the stability and efficiency of banking systems as well as influencing interest rates, bank lending, asset prices, inflation, output, unemployment and other crucial aspects of macroeconomics. 11 ECO406: Business Cycles & Growth Online In a two- to three-page paper (not including title and references pages), describe the current state of the U.S. economy using the two monetary aggregates (M1 and M2) currently published by the Federal Reserve. In your description, illustrate the trends of the two monetary aggregates. Evaluate what the Federal Reserve Bank is trying to accomplish by implementing these policies to stabilize the business cycle. Support your work with at least two scholarly resources in addition to the textbook. You are required to format your paper according to APA style guidelines. Week Two Course Content To be completed during the second week of class Overview Assignment The Business Cycle Economic Theory Applying Theory to the U.S. Economy Discussion Grading Percent 4 Discussion 4 Assignment 10 Due Date Day 3 st (1 post) Day 3 st (1 post) Day 7 Format Learning Outcomes This week students will: 1. Evaluate the roles of business cycles and the financial indicators associated with them. 2. Analyze monetarist and classical macroeconomic theories and how they may affect the economy. 3. Compare and contrast the influences of Keynesian, Monetarist, and Neoclassical Theories in an economic system. 12 ECO406: Business Cycles & Growth Online Required Readings 1. Read the following chapters in Modern Financial Macroeconomics: Panics, Crashes, and Crises: a. Chapter 3: Business Cycles and Early Macroeconomic Theories of Finance b. Chapter 4: Keynesian, Monetarist, and Neoclassical Theories Recommended Reading 1. Read the following ProQuest article: Merkl, C. (2008). Galí J: Monetary policy, inflation, and the business cycle: An introduction to the new Keynesian framework: XI, 203 pp., Princeton University Press, Journal of Economics, 95(2), 179-181. Retrieved from ABI/INFORM Global. Discussions Participate in the following discussions: 1. 1st Posting Due by Day 3. The Business Cycle. What part of the business cycle is the U.S. economy currently in? Evaluate your answer by using three financial indicators. Analyze the trends and forecast the direction of the business cycle in the next six months using your economic indicators. Respond to at least two of your classmates’ postings. 2. 1st Posting Due by Day 3. Economic Theory. Economists have always disputed about the appropriate action to take to stimulate an economy out of a recession. Compare and contrast the recommendations for appropriate action of the monetarist theory and the classical model. Be sure your response is stated in terms of the relevant principles of both theories. Assignments 1. Due by Day 7. Applying Theory to the U.S. Economy. In a two- to three-page paper (not including title and references pages), evaluate the current state of the U.S. economy. Using your evaluation of the U.S. economy’s current state, explain how a Keynesian, Monetarist, and Neoclassical Theorist would each propose promoting economic growth. Discuss the cause and effect variables that each theory uses to explain business cycles. Support your work with at least two scholarly resources in addition to the textbook. 13 ECO406: Business Cycles & Growth Online You are required to format your paper according to APA style guidelines. 14 ECO406: Business Cycles & Growth Online Week Three Course Content To be completed during the third week of class Overview Assignment Role of Credit Credit Rationing Monetary Policy and Macroeconomy Discussion Grading Percent 4 Discussion 4 Assignment 10 Due Date Day 3 st (1 post) Day 3 st (1 post) Day 7 Format Learning Outcomes This week students will: 1. Evaluate the financial accelerator model and the role of credit in business cycles. 2. Analyze the effects of two models of credit rationing on economic growth. 3. Assess the contagion effects of monetary policy in the macroeconomy. Required Readings 1. Read the following chapters in Modern Financial Macroeconomics: Panics, Crashes, and Crises: a. Chapter 5: New Institutional Theories of Finance: Models of Risk and the costs of Credit Intermediation b. Chapter 6: New Institutional Theories of Finance: Models of Credit Rationing Discussions Participate in the following discussions: 15 ECO406: Business Cycles & Growth Online 1. 1st Posting Due by Day 3. Role of Credit. Analyze the role of credit in our economy and how it influences the business cycle. In your answer, explain how the role of credit leads to the stability of our economy. Respond to at least two of your classmates’ postings. 2. 1st Posting Due by Day 3. Credit Rationing. Analyze the role of credit rationing in both a developed country and a less-developed country. How does the role of credit rationing influence economic growth and employment in these two countries? Respond to at least two of your classmates’ postings. Assignments 1. Due by Day 7. Monetary Policy and Macroeconomy. In a two- to three-page paper (not including title and references pages), answer the question “How does monetary policy affect the macroeconomy?” In your answer, include the following: • Explain the fundamentals behind why changes in the money supply have real effects on the economy and the monetary transmission mechanism. • Explain how monetary policy can be used to effectively stabilize output and smooth business cycles. • Evaluate the role of monetary policy and how it affects the macroeconomy given the implications of the financial accelerator. Support your work with at least two scholarly resources in addition to the textbook. You are required to format your paper according to APA style guidelines. 16 ECO406: Business Cycles & Growth Online Week Four Course Content To be completed during the fourth week of class Overview Assignment Effective Policy? Stabilizing Asset Prices Discussion Grading Percent 4 Discussion 4 Due Date Day 3 st (1 post) Day 3 st (1 post) Format Learning Outcomes This week students will: 1. Evaluate the effectiveness of stabilization policy. 2. Analyze the causes and prevention of asset bubbles and banking crises. Required Readings 1. Read the following chapters in Modern Financial Macroeconomics: Panics, Crashes, and Crises: a. Chapter 7: The Role of Financial Systems in Monetary and Stabilization Policy b. Chapter 8: Banking Crises and Asset Bubbles Recommended Website 1. View the video: The mortgage meltdown. This video supports the text readings for the week. Discussions Participate in the following discussions: 17 ECO406: Business Cycles & Growth Online 1. 1st Posting Due by Day 3. Effective Policy? Evaluate the effectiveness of monetary policy during the 2008 recession in the United States. Does the role of monetary policy increase the volatility of growth in the monetary base and Real GDP in the U.S? Respond to at least two of your classmates’ postings. 2. 1st Posting Due by Day 3. Stabilizing Asset Prices. Economists have been grappling with a debate regarding the extent to which stabilizing asset prices should be a goal of monetary policy. The three goals of the Federal Reserve Board are to have economic growth, full employment, and price stability. In your opinion, should monetary policy be used to stabilize asset prices given the volatility of the market in the past couple of years? Respond to at least two of your classmates’ postings. 18 ECO406: Business Cycles & Growth Online Week Five Course Content To be completed during the fifth week of class Overview Assignment Capital Flow and Currency Crises Financial Deregulation Final Paper Discussion Grading Percent 4 Discussion 4 Assignment 30 Due Date Day 3 st (1 post) Day 3 st (1 post) Day 7 Format Learning Outcomes This week students will: 1. Examine the causes of capital flight and currency crises. 2. Evaluate approaches to domestic financial regulation and deregulation and their effects on the economy. 3. Evaluate historical currency and banking crises in multiple countries. Required Readings 1. Read the following chapters in Modern Financial Macroeconomics: Panics, Crashes, and Crises: a. Chapter 9: Capital Flight and the Causes of International Financial Crises b. Chapter 10: International Financial Crises: Policies and Prevention c. Chapter 11: What We Have Learned, What We Still Need to Learn About Financial Macroeconomics Recommended Reading 1. Read the following ProQuest article: Stiglitz, J. (2009). The global crisis, social protection and jobs. International Labour Review, 148(1/2), 1-13. Retrieved from ABI/INFORM Global. This article supports the discussions for the week. 19 ECO406: Business Cycles & Growth Online Discussions Participate in the following discussions: 1. 1st Posting Due by Day 3. Capital Flow and Currency Crises. One of the distinguishing features of currency crises and capital flight episodes that have occurred since the 1980’s is that they have often linked across countries. Do you believe a contagion effect of capital flow and currency crises can lead to greater volatility and deep stabilization in markets? In your answer, include one example where this has occurred. Respond to at least two of your classmates’ postings. 2. 1st Posting Due by Day 3. Financial Deregulation. The last two decades have taught us that when it comes to financial deregulation, it is possible to have too much of a good thing too quickly. Financial deregulation has often taken place indiscriminately without proper consideration of risks associated with the unfettered actions of borrowers and lenders. Compare and contrast less government intervention in the financial market and more intervention. Does deregulation lead to more economic growth and stability? Respond to at least two of your classmates’ postings. Assignments 1. Due by Day 7. Final Paper. The complete instructions for the Final Paper can be found in Week Five of your online course or in the “Components of Course Evaluation” section of this guide. 20 ECO406: Business Cycles & Growth Online Course Map The course map illustrates the careful design of the course through which each learning objective is supported by one or more specific learning activities in order to create integrity and pedagogical depth in the learning experience. Learning Outcome Week Assignment 1. Evaluate the economic forces underlying the 1  Financial Institutions US postwar business cycles. 1  Financial Crisis 1  Central Banks 3  Role of Credit 3  Credit Rationing 4  Effective Policy? 5  Capital Flow and Currency Crises 3  Monetary Policy and Macroeconomy 4  Stabilizing Asset Prices 5  Capital Flow and Currency Crises 5  Final Paper 3. Analyze alternative models of business cycle 2  The Business Cycle fluctuations and to compare and contrast the 2  Economic Theory government policy recommendations and 2  Applying Theory to the U.S. Economy responses to past cycles. 3  Monetary Policy and Macroeconomy 4  Effective Policy? 4  Stabilizing Asset Prices 5  Financial Deregulation 5  Final Paper 1  Central Banks 2  The Business Cycle 3  Monetary Policy and Macroeconomy 5  Final Paper 2. Examine supply shocks and their influence on business cycles. 4. Assess basic economic indices. 21 ECO406: Business Cycles & Growth Online 22
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