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Government 615 Fall 2009

ECONOMIC POLICY: DESIGN AND ANALYSIS

Professor Douglas O. Walker

Robertson School of Government Regent University

ECONOMIC POLICY: DESIGN AND ANALYSIS

Economic Policy at the Robertson School of Government

Course Syllabus

Description and Purpose of Course Course Objectives Course Outline Course Competencies Course Requirements Student Assessment Text and Reference Materials Integration of Faith and Learning Academic Integrity Policy Student Feedback Office Hours and Meeting Availability

Course Themes

Economic Theory Economic Thought Economic Institutions Economic History Economic Policies and Issues

Course Assignments

General Requirements Examinations Questions and Problems Notes Dialogues Drafting Suggestions and Requirements Submission of Material

Course Summary Schedule

Economic Policy at the Robertson School of Government

Economic Policy (Government 615: Economic Policy: Design and Analysis) at Regent University provides emphasizes the importance of macroeconomic policy for the economic prosperity, political freedom, and the general welfare of American society and the wider world.

How society sets its economic goals and objectives and the means and alternatives available to attain them is one of the most important questions before any country. The Economic Policy course emphasizes the importance of a predictable macroeconomic environment for economic growth and a steady expansion of the economy, and of an environment of free enterprise, free markets and free men and women that encourages long-term prosperity and a national spirit of political freedom and personal liberty.

In the course, considerable attention is given to a survey of the views of economists on the economy and economic policy from the late eighteenth and nineteenth centuries to the present day. Among the economists considered from the Classical and Neo-Classical tradition are Adam Smith, James Buchanan, Milton Friedman and Robert Lucas; the Austrian school of neo-liberalism of Ludwig von Mises and Friedrich von Hayek is also covered. Marxist and socialist thinkers, from Karl Marx and Friedrich Engels through Paul Baran and Paul Sweezy to Michael Harrington and John Rawls, are seen as important is shaping modern views of economic policy. Finally, the rise of modern macroeconomics that began with John Maynard Keynes, and the prevailing policy orientation that followed and the more recent challenges to its orthodoxy by monetarists and others are evaluated. Differences among schools of thought on economic policy are seen as centering on a number of well-defined issues with profound implications for the organization and performance of the economy as well as the independence and well being of a free people.

Three types of macroeconomic policies for a market economy are presented and evaluated: 1. Measures for dealing with short-term policy problems such as fluctuations in the level of economic activity and employment and the maintenance internal and external balance; 2. Alternatives when addressing medium-term domestic policy questions such the need for structural adjustments in response to growth and development and to changes in budget priorities; and 3. Strategies for promoting long-term economic growth and development, and the implications of different policy approaches for dealing with fundamental problems such as deficit reduction, the need for Social Security reform, and problems of health care and income distribution. Policy prescriptions advocated by the different schools of economic thought are assessed in terms of theory, history and the ultimate objectives of a free society.

When evaluating the economic possibilities for the United States, each student uses a quantitative framework for studying macroeconomic trends and policies. The framework, called A LONG-TERM

MODEL OF THE UNITED STATES, enables the student to prepare scenarios of future trends and conditions corresponding to his or her assumptions about the influence of policies on fundamental determinants of growth, spending and saving, and the international economic environment. These scenarios, designed by the student and implemented with the model, elaborate a vision of how the U.S. economy is likely to evolve over the course of the next few decades and how it might deal with its long-term problems. Projections prepared by the student are key inputs into a final report on AThe Future of the U.S. Economy@ submitted as a course project. Economic Policy: Design and Analysis at the Robertson School of Government encourages each student to make their own judgment about the fundamental economic objectives of American society, how best to achieve them in a world of scarcity and inevitable tradeoffs, and how to reconcile Christian leadership for service to others with the demands of a free and open economy.

Government 615: Course Syllabus 4

Course Syllabus 1

Description and Purpose of Course

Government 615 reviews advanced economic topics and provides a survey of macroeconomic policy design and analysis for the United States and an assessment of its longer-term prospects for economic growth. The course focuses on five topics: An overview of the past performance of the world and U.S. economies; A survey of macroeconomic theory as it relates to macroeconomic policy; Short- and medium-term policy measures for achieving internal and external balance, and addressing problems of economic fluctuations, employment and inflation; Strategies for promoting long-term economic growth and development in the U.S. economy and the economic challenges the country will face over the longer-term; And the economic prospects of the United States and the policy issues before the country in the years ahead, such as the government budget, social security and health care, and income distribution and poverty. Policy approaches and macroeconomic theories studied include The Classical tradition, Marxism and socialism, The Keynesian synthesis, and more modern theories represented by the Austrian, Monetarist, Supply-side, and New Classical and New Keynesian schools. Policy assessments of the longer-term possibilities of growth in the United Sates are made by the student using quantitative modeling frameworks based on actual data for the U.S. These frameworks elaborate the student=s vision of the future direction of the economy in terms of scenarios of long-term U.S. demographic and economic growth. The students assessment of the future of the U.S. economy is presented in a final report.

Course Objectives

To understand basic macroeconomic concepts and theory, the setting of public policy goals

and objectives for the economy and the design of policies to achieve them, and the relationship of economic goals and objectives to Biblical principles;

To review the development of ideas about the macroeconomy and the alternative theoretical

approaches to the design of short-term and long-term economic policies intended to promote stable and rapid rates of economic advance;

To develop tools for analyzing macroeconomic trends and assessing alternative economic

policy options;

To identify contemporary economic trends and problems, appraise their significance, and

understand debates about current economic problems and policies;

To develop arguments to defend or oppose policy options in different economic circumstances

and conditions; and

1 Version 1.6 (August 2009). Subject to change.


To describe and critique underlying philosophical orientations guiding economic policy

formation and design.

Course Outline

Introduction

An Introduction to Economic Policy Design and Analysis

Reconciliation of the man=s innate sinful nature with the need for an harmonious social order

Macroeconomic thought and theory

Macroeconomic goals and policies

Key ideas and central questions of macroeconomics

Measures of macroeconomic activity and performance

The Debate Over Economic Policy

The central issues in the debate about economic policy

Schools of economic thought and economic policy

Main adherents and distinguishing ideas in the debate about economic policy

The World Economy and the U.S. Economy

World economic performance since the time of Christ

World economic and social progress and problems since World War II

U.S. economic performance over the longer-term

A Survey of Macroeconomic Theory

Classical and Neo-Classical Macroeconomics

The Classical tradition and modern conservativism

Key ideas regarding output and employment and money and prices

Classical economics, Marxism and Socialism

Keynesian Macroeconomics

The Keynesian synthesis and modern liberalism

Key ideas regarding the role of aggregate demand and aggregate supply

The Keynesian relationship between money, interest and income

The policy approach of Keynesian economics

Modern Macroeconomics

The Monetarist counterrevolution

New Classical Economics

New Keynesian Economics

Exchange rate regimes and the international monetary system

Monetary and fiscal policy in an open economy


Policies for Economic Stability

Money and Banking

Banking and the macroeconomy

Money and the macroeconomy

The monetary system and the Federal Reserve

The creation of money

Monetary and Fiscal Policy

The making of monetary policy

Tax and spending policies

The Performance of the U.S. Economy

The Long-Run Potential of the U.S. Economy

Long-run economic potential and performance

Strategies for long-term growth and development

A long-run model of the U.S. economy

Preparing projections of productivity and production

Consumption, Saving and the Internal Balance

Determinants of aggregate consumption and national saving

The consumption function, saving and the internal balance

Trends and patterns of world consumption and saving

Trends in U.S. consumption and saving

Scenarios of future U.S. consumption and saving

Exports, Imports and the External Balance

The theory of international trade

Determinants of export prospects and import demand

Export relationships, import functions and the external balance

Trends and patterns in world trade

Trends in U.S. exports and imports

Scenarios of future U.S. international trade and payments

Government Finances

The government current and capital account

Social Security

Medicare and Medicaid

The Public Sector and Public Policy

The economics of the public sector

Income distribution and poverty


Prospects for U.S. Growth and Development

The Current Economic Situation and the Short-term Outlook

The world economic situation and its immediate prospects

The U.S. economic situation and its immediate prospects

Assessments of Long-term Prospects

The Future of the U.S. Economy

Course Competencies

Students will be able to:

• Identify the main streams of economic thought from the past to the present and relate them to

the ongoing debates about public policy and the role of government in the economy; • Use basic economic concepts and theoretical ideas when analyzing current economic

problems and assessing the problems, prospects and possibilities for the economy; • Recognize how fundamental economic institutions such as property rights, a well developed

legal system, and market incentives affect the functioning of the economy, how institutional arrangements such as households, businesses, and governments affect the process of production and distribution of goods and services, and how particular government agencies, business establishments, and global economic institutions operate and affect the economy and the lives of individuals;

• Relate past economic events and trends to the present economic situation and the longer-

term direction the economy might take and the problems it might face in the decades to come; and

• Evaluate policy proposals using analytical tools and historical perspectives that allow for

assessing alternative courses of action and costs involved when addressing present and future economic problem and that consider not only of the economic goals and objectives policies are intended to achieve but their impact on the possibilities for freedom and liberty in an increasingly complex and interdependent world.

Course Requirements

This is a demanding course. Students are expected to read assigned materials, engage in classroom discussions, prepare written assignments, use a spreadsheet macroeconomic model tp prepare demographic and economic projections, and engage in Blackboard dialogues. A schedule of class meetings, reading assignments, homework assignments and activities for this course is maintained on Blackboard. Assigned readings listed in the Course Schedule must be read prior to attending class meetings so that you are prepared to discuss the topics presented that day. The readings form the foundation for all direct learning, participation, and written work in the course.


A set of Homework assignments will be given weekly. Two types of assignments are given: Weekly short answer Question Sets; and Analysis and Projection exercises based on an Excel spreadsheet data base and economic model. These assignments are important both because they enter directly into the grade received with a weight of 25 per cent. They are due the week after assignment. Two notes due at times indicated in the Course Schedule. The topics of these notes are: A statement of between 1250 and 1500 words expressing your economic philosophy and its relevance when addressing problems before the U.S. economy; and An Op Ed of no more than 800 words that expresses your view on policies needed to address a major U.S. economic problem. A research paper of 10-15 pages documents the scenarios and projections prepared by the student for the class, and presents an assessment of policy issues before the United States. A number of Blackboard Dialogues will be conducted during the semester where students will interact among themselves and with the professor on key policy questions. With regard to Attendance, excessive, unjustified absences are strongly discouraged. Excessive

tardiness and early departures will be treated as partial absences. Attendance will be taken regularly and will be included as part of the class participation grade. Please check the Blackboard >Announcements= and >Course Documents= sections for this course several times each week for information about assignments and dialogue sessions.

Student Assessment This is a highly interactive, heavy reading course with minimal lecture. Unless otherwise indicated, students will be expected to read all assigned materials and be prepared to discuss them in-depth during both in class and in the dialogues. It is important that you prepare for and show up for all classes, and that you enthuastically participate. You will receive marks for both quality and quantity of your participation. Grades are based on:

1. Class participation, including attendance and on-line dialogue entries (20%); 2. The homework assignments (25%); 3. The two notes (15% each); and 4. The research paper (25%).

Grading follows standard University policy with regard to the grading system and Incomplete, In progress, and Withdrawal-from-course grades.

Government 615: Course Themes 9

Text and Reference Materials

Required Texts:

The Holy Bible

Richard T. Froyen, Macroeconomics: Theories and Policies, Ninth edition (Pearson Prentice Hall, 2002) ISBN 0-13-143582-5

D. O. Walker, A Long-Term Model of the United States, Preliminary draft 2 (2005, posted on Blackboard).

Recommended Texts:

Jacqueline Murray Brux and Janna L. Cowen, Economic Issues and Policies, Second edition (South-Western 2001) ISBN 0324108567

Recommended Resources:

Daniel Gaske, Understanding U.S. and Global Economic Trends: A Guide for the Non-Economist, Second edition (Kendall/Hunt Publishing Corporation, 1999) ISBN 0787256161

Thomas Sowell, Basic Economics: A Citizen's Guide to the Economy (Basic Books, 2000)

ISBN 046508138X

Henry Hazlitt, Economics in One Lesson (Three Rivers Press, 1988) ISBN 0517548232

New York Times, Wall Street Journal, Financial Times, The Economist of London, and a weekly business publication such as Business Week.

Web sites: www.dismal.com is an important web site with articles and data on current economic issues and controversies. www.econlinks.com contains many links to other economic sites.

Style Manual

The style manual required for this course is Kate L. Turabian, A Manual for Writers of Term Papers, Theses, and Dissertations, 6th ed. (University of Chicago Press, 1996) ISBN: 0226816273.

Integration of Faith and Learning:

The Robertson School of Government seeks to restore our nation's Judeo-Christian heritage, to renew the traditional values of citizenship in the public affairs of the United States, and to promote these ideals in all the nations of the world. To that end, leadership and policy issues are rigorously analyzed from various academic perspectives in a broad, multidisciplinary endeavor, emphasizing the application of Judeo-Christian principles to theoretical and practical problems. The program is designed to produce principled graduates who are morally, spiritually, and intellectually well-grounded and who are also equipped with the practical and technological skills needed to meet today's


challenges of leadership in government, policy-making, and politics.

Academic Integrity Policy

At a Christian University dishonesty and rudeness in any form can not be tolerated. The professor has an obligation to be certain that each student=s work is his/her own. Dishonesty in such academic practices as assignments, examinations, presentations or other academic work cannot be condoned. Failure to report any cheating by other students that you may witness is an Honor Code violation. It is University policy to record Honor Code violations permanently on the student's transcript, where they can be seen by prospective employers and graduate schools. Similarly, everyone is to be treated with full respect for who they are as a person and their views and ideas on policy issues and approaches are to be given a full hearing in a respectful manner, no matter what they are. Finally, your responsibility as a student is to contribute to the education of every other student and to strengthen them intellectually and morally and in the faith. If you cannot carry out your responsibilities in an honest, courteous, and helpful way you do not belong at Regent.

Office Hours and Meeting Availability

Location: Robertson Hall 318F

Scheduled office hours: Tuesdays, Wednesdays and Thursdays, 2-4 pm. No appointment is

necessary. Meetings are in 20 minute blocks but can go longer if no other student is waiting.

Appointments: I am here to serve you. If meetings during regular office hours are not

possible, please call or stop by my office. Be aware, however, I may have other commitments but will find a mutually convenient time to meet.

Student Feedback

At the end of the course, students will be given the opportunity to evaluate the course and make suggestions for improvements.


Course Themes

Economics is a subject with few boundaries. It encroaches on other disciplines and shares

concepts, theories, analytical tools and even practitioners with them. At times, it draws on, and requires knowledge of, politics, philosophy, sociology, history, business, anthropology, statistics, mathematics, psychology and demography, among other subjects. Economics has its own list of heros (or in some cases villains), who in one way or another contributed to (or set back) our understanding of the world around us. And economics encompasses normative as well as positive questions, that is, moral propositions as well as explanatory suppositions, what is right as well as what is factual, what the situation might be as well as what the situation is.

Economic policy draws on the entire range of subjects covered by the discipline to help set goals and objectives for society as a whole, analyze alternative programs to achieve them, and assess success and failure in efforts to improve the performance of the economy. Given the nature of the subject, it is inevitable there will be disagreements as well as important areas of agreement regarding the best policy prescription for dealing with problems before the country. An attempt is made in this course to present a balanced review of controversies now underway regarding economic policy.

In a course such as Economic Policy it is not possible to cover economics in all its aspects. Five broad themes, however, are of particular importance for students of government, and are emphasized in Regent=s courses on economics: Economic theory and the reasoning behind explanations of economic phenomena; Economic thought and the ideas of the great economists that shape debates about economic policy; Economic institutions and the importance of the rules, regulations and organizations that influence economic events; Economic history and the accomplishments and failures of the past; and Economic Policy and Issues and the alternative programs and strategies that could be implemented to overcome current and long-term difficulties. A sketch of the main themes is given below.

Economic Theory

Economic theory attempts to distill from the infinitely complex and varied activities of human beings general models of behavior and simplified patterns of trends that help in understanding economic phenomena. Economic theories should do four things: Describe the phenomena under study, explain the forces at work and how they led to the economic situation being described, suggest how policies might affect the situation, and predict the outcome of policy measures and exogenous events on the current state of affairs. Although Government 615 does not delve deeply into the technical basis of economic theory, it is important to gain an appreciation of the roots of our understanding of how an economy operates and the key assumptions made when evaluating economic policies.

The Economic Policy course focuses macroeconomic theory and policy. Macroeconomic theory

looks at the economy as a whole, and provides a picture of how aggregate groups in society B all consumers, all producers, and all levels of government taken together B affect the economy as a whole. Emphasis is given to the theory of aggregate income and employment determination, that is, to what factors and forces determine the level of national income, the unemployment rate, the fiscal deficit and the balance of payments. Attention is also given to the theory of international trade, monetary theory and the theory of inflation, and theories of economic growth and development.


Economic Thought

The alternative philosophies that underlie contemporary debates on how to manage the economy, co-ordinate economic affairs and control private and public economic power are rooted in the views and ideas of the great economists. One simply cannot evaluate current economic controversies without reference to these thinkers and the contributions they made to our understanding of the economy and economic policy.

The Economic Policy course at Regent focuses on 12 economists that are frequently mentioned in current discussions of policy alternatives:

Adam Smith (1723-1790), the founding father of the study of economics and the architect of the

classical liberal philosophy of economic individualism.

Karl Marx (1818-1883), economist and revolutionary, theorist and pamphleteer, admirer and loather of capitalism, and intellectual framer of modern socialism and father of communism.

Alfred Marshall (1842-1924), founder of neo-classical economics, developer of the tools of supply and demand, and promoter of economics as a practical science and a policy tool

Irving Fisher (1867-1947), Yale economist of unusual mathematical sophistication, promoter of the quantity theory of money, and originator of the loanable funds theory of interest rates.

Arthur Cecil Pigou (1877-1959), Cambridge neo-classical economist, introducer of social welfare

into economic analysis, and object of Keynes= attack on prevailing macroeconomic thought.

John Maynard Keynes (1883-1946), father of macroeconomics, prolific economic theorist and commentator on economic affairs, and head of the British delegation at Bretton Woods.

Joseph Schumpeter (1883-1950), visionary of capitalism and long-term economic advance, student of cycles, critic of Keynesian economics, and extoller of the entrepreneurial spirit.

Friedrich Hayek (1899-1992), defender of liberty and opponent of socialism, economic and

political theorist for individualism, and adversary of government interference in the economy.

Milton Friedman (1912- ), proponent of free markets, critic of Keynes and Afine-tuning@, and one of the most influential economists, commentators and essayists of the 20th century.

James Buchanan (1919- ), developer of the field of public choice and advocate of the contractual and constitutional bases for economic and political decision-making.

Robert Lucas, Jr. (1937- ), developer of the New Classical Economics and the rational

expectations approach to macroeconomics, and advocate of fixed rules for economic policy.

Robert Barro (1944-), Harvard economist of the New Classical Economics school, author of the Ricardian Equivalence Hypothesis, and developer of Real Business Cycle theory.


Economic Institutions

Efficient economic organization is perhaps the most important factor in generating long-term economic growth and attaining a high level of living for a country=s population.

The Economic Policy course stresses that the affluence of the United States and a few other countries is a new development in world history and very much a blessing of God rather than a product of Man. Its continuation is predicated on the acknowledgment of His favor and an appreciation of the unique nature of His gift and its requirements in terms of how society must organize its economy and carry out economic activity.

In the first instance, this necessitates an awareness of how the creation of fundamental institutional arrangements B such as property rights, a well-developed legal system and market incentives B promotes an expansion in economic activity by channeling individual efforts toward socially productive purposes in a manner that reconciles each person=s self-interest with that of society as a whole.

In the second instance, it involves an understanding of how different institutional structures B corporations, partnerships and proprietorships in the business sector, alternative family formations in the household sector, different arrangements of the government sector B affect the process of production and the pattern of consumption in a way that promotes or hinders economic progress, social development and political freedom.

And in the third instance, it requires specific knowledge of how particular establishments and markets - for example, the Federal Reserve and the world market for oil -- operate and affect the performance of the economy in the short-term and over the long-run.

Economic History

Economic history is the application of economic theory to economic events and trends in the past,

and it attempts to analyze man=s efforts through the centuries to organize his production and satisfy his material wants. For purposes of this course, in the first instance, economic history involves identifying the evolving structure of the U.S. economy as it developed after the Revolution from a dual economy with an industrial North and agricultural South, through Reconstruction and Industrialization of the late 19th century and the maturing economy and national crises of the first half of the 20th century, to the post-World War II prosperity and challenges of the 21st century. The focus is on the progress and problems encountered in the long-term development of the U.S. economy.

In the second instance, economic history involves learning about the specific past economic events that continue to affect the U.S. economy. Attention here is on significant economic developments that have shaped American history, including the factors involved and the legacies left in their train: Building the foundations of a national economy; the problem of slavery; periodic downturns leaving the farm economy and workers in crisis; the Great Crime of 1873 and the Great Depression of 1929; and the rise and decline of the Welfare State following the Second World War. An awareness of landmark economic events of the past and their influence on the present is an important part of the study of government.


Economic Policies and Issues

America has always been seized by a wide range of economic disagreements and controversies and always will be. From the early acrimonious debates about economic policy between Alexander

Hamilton B a staunch friend of mercantile, financial and manufacturing interests B and James Madison B a strong supporter of agrarian and labor groups B to today=s often bitter debates between advocates of greater government involvement in the economy and those championing less government in the marketplace, little has changed. The importance of these debates is reflected in the fact they are at the top of the national agenda, and can have a profound impact on the professional and social relationships of those involved in the debates.

Regent=s course in Economic Policy provides a systematic survey of the theoretical underpinnings of macroeconomic policy debates and an assessment of contemporary policymaking alternatives as they relate to fundamental problems before the American economy. It looks at not simply the goals and objectives to be attained through governmental policies but also the efficacy of alternative approaches for dealing with the economic issues of the day and, more significantly, problems that are likely to seize our attention over the longer-term. In making this review, no one policy strategy should be seen as necessarily the best approach to addressing all economic issues and problems. This is not to say that Regent and the professor do not have a point of view on how to approach many policy questions (they most certainly do). However, it is important that each student she gain an understanding of policy alternatives and develop proficiency in the use of analytical tools for policy analysis, and in doing so develop their own view on the priorities, problems and alternatives before the country. In this regard, there is no right and certain answer and by God=s grace each comes to his or her own views, whatever they may be. The objective is to learn about the controversies inherent in economic policy formulation and contribute constructively to the national debate on the future of the country.

The purpose of the Economic Policy course at Regent, then, is to study the ideas and history that

have shaped our understanding of the economic problems before society, survey the policy approaches to dealing with these problems, learn the different viewpoints that inform debates about economic policies, and assess alternative policies and policy instruments in terms not only of the economic goals and objectives they are intended to achieve, but their impact on the possibilities for freedom and liberty in an increasingly complex and interdependent world.

Economic Policy: Course Assignments

Course Assignments

General Requirements

Class involvement, reading and written assignments, and participation in dialogues and blog postings are all essential parts of this course.

In-class students are expected to come to class prepared, having read the required reading and ready to contribute actively to discussions on the topic of the day. Distance students are expected to be actively involved in all aspects of the course, and to submit material weekly to the Economic Forum discussion board and on the professor’s blog. Class attendance will be considered in determining the final grade. Attendance will be taken each class session and unexcused absences can affect your grade. Students taking the class as a distance course are expected to maintain at least weekly contact with the professor, informing him of any difficulties they may have with the assigned material and asking for any clarification they may need. Weekly text chapter and supplementary reading assignments are given in the Course Schedule. In addition to the required readings, students will be expected to read daily coverage on economic developments and issues that appear in the mainstream press and on Internet blogs, and to be prepared to draw on this material in class discussions and Dialogues. A number of written assignments are due regularly during the semester. It is important to keep up-to-date in completing these assignments. Note that many of these assignments provide input to other assignments, and for this reason it is important to prepare them on time. It is important to monitor developments in the U.S. and world economies and the problems and policies currently under debate at home and abroad. Newspapers and other resources are given in the Course Resources paper. In addition to articles on current developments, you should review the editorials and opinion pieces that appear daily. Submission dates for the various assignments are given below and in the Course Schedule. Note that assignments submitted late will be downgraded significantly.

Homework Assignments Two types of homework assignments are due at times indicated in the Course Schedule.

Question Sets. Eights sets of questions related to the text and Powerpoint presentations are posted on Blackboard under ACourse Assignments@. A Question Set is assigned weekly as shown in the Course Schedule. Each QSet has ten short-answer questions. QSets are posted on Blackboard in Microsoft Word format, and answers may be entered directly into a copy of the posted assignment and then submitted by e-mail attachment for grading.

It is to be emphasized that when answering QSets short and direct responses are expected. There is no need to submit elaborate answers, as the point of QSets is to ensure students are reading the assigned material, know the essential points, and are keeping up-to-date.


Question Sets are 10% of the final grade. Analytical and Projections Exercises are also assigned weekly. The Exercises are based on two Excel workbooks containing a spreadsheet data base for the United States and pre-defined analytical tables and projection templates. The first Excel workbook, named “Regent Fall 2009 Historical review workbook”, contains the first four Exercises, which focus on U.S.

macroeconomic data and provide a summary review of historical trends in the U.S. The second Excel workbook, named “Regent Fall 2009 Policy model workbook”, contains a set of projection templates based on a simple economic model to be used by the student when elaborating a scenario of long-term growth in the American economy. Both workbooks should be downloaded from Blackboard onto the student’s computer. In the first set of exercises, the spreadsheet data base has been used to calculate key historical and projection indicators such as past and prospective levels of U.S. population and labor force, rates of economic growth, levels and patterns of international trade, and government receipts and expenditures. These results are presented in tables appearing in the Historical review assignments. Here the student is asked to review these results and answer questions about the data and trends and developments in the U.S. economy.

In the second set of exercises, each student defines their own scenario of prospective trends and developments and uses a set of projection templates to specify key projection parameters determining future trends in U.S. population, economic activity, and government income and outlays. The scenario specifies the conditions the student believes might prevail over the course of the next five decades and the parameter values translate these assumed conditions into quantitative projections. Step-by-step, week-by-week, a series of simple projections are elaborated that provide the key inputs into the Research Paper discussed below.

Each weekly Workbook Exercise explains the homework assignment to be submitted while readings from the Policy Model Workbook, available on Blackboard, describe the long-term economic model and data used to prepare the assignments. Assignments are due at times indicated in the Course Schedule. Workbook Exercises are 25% of the final grade. Submission information for assignments is given below.

Notes During the course of the semester each student should submit two short Notes on topics related to economics. Subject of the first note. The first note should provide a statement of your economic

philosophy and its relevance when addressing problems before the U.S. economy.

In setting forth your views, the statement should summarize how the intellectual structure of your thought relates to the key ideas in one or more of the main schools of economic thought reviewed in class. Are you Classical in your orientation? Marxist or socialist? Keynesian?


Schumpeterian? Or an adherent to some other school of thought. Do your views encompass more than one school of thought? What is it you agree with in the different schools and what do you disagree with?

You should also briefly explain your views on key policy questions such as the role of government in the economy, the contribution of (or problems created by) free trade, the tradeoff between efficiency and equity, and the important economic issues of the day.

In the note, it is important to mention some of the main adherents of the school with which you most identify and the contribution they have made to your understanding of economic policy.

The statement should be between 1000 and 1250 words. Subject of the second note. The second note should be a briefing note or position “talking

points” for the President of the United States on an issue or policy of current national economic importance.

A Presidential Briefing Note is a background paper written to inform the President about the

policy position the Administration has taken or could take on a key policy question. For purposes of this class, the note should take the form of an internal, confidential advocacy document that says “This is what we think of this topic and this is what we recommend”. It should quickly and efficiently inform the President about the issue, summarize key facts relevant to the problem, review the issues at stake, and outline the response recommended by his advisors. Both economic and political considerations should be included. It should be short and concise, no more than 1000 words, simple and reliable, and readable using plain but strong language and short paragraphs. Because it is an internal advocacy document, it should conclude with a set of clear policy recommendations that represent realistic actions the President might consider taking when formulating policy on this question.

A Presidential Position Note is a formal written opinion of the Administration’s position on a

particular issue to be read by an external target audience. For purposes of this class, the note should be prepared as a set of “talking points” for the President’s use when addressing audiences outside the Administration, for example, small groups of political supporters he will see while on a trip. Because it represents a statement to outsiders about a policy question under debate in the country, care should be used to ensure that only the Administration’s position is seen in a positive light and other alternatives as inferior. At the same time, nothing damaging to the President’s image as someone who respects all points of view and is willing to compromise. A position note should provide background information on the issue, describe the current situation and why policy action must be taken, summarize key policy questions to be addressed, outline the Administration’s policy position, and provide responses to the main points political opponents are likely to raise. Because the President intends to use this note as talking points to be consulted before chats with small groups, much of the note can take the form of bullet points, with key terms highlighted. It should be no more than 1000 words.

The note should focus on an economic policy issue in the news or, better, under debate in the Congress (for example, reform of Social Security, the debate over health care, the stimulus package, the budget deficit or the trade deficit and proposals made to deal with it). Further information and templates for preparation of the second note will be posted on Blackboard.


Due dates of notes: First note: 9 October 2009. Second note: 11 December 2009. Each note is 15% of the final grade. Submission information for assignments is given below.

Research Paper

A research paper of 10-15 pages on historical trends and prospective developments in the U.S. economy should be submitted at the end of the course. The paper documents the policy scenarios and projection results the student has prepared from the Workbook Exercises. It provides a summary statement of the student=s view on the long-term outlook for the U.S. economy. The Research Paper consists of at least three parts: 1. A review of the past performance of the U.S. economy; 2. The student’s assessment of the factors now at work that will change the future and some speculations of other things that could affect our future, framed as a scenario; and 3. A statement of what the future will look like if the student’s scenario comes true (the results of the projections exercise). With a paragraph or two of introduction and a one or two paragraph conclusion and the Research Paper is a comprehensive review of the economic prospects of the U.S. to mid-century The paper is not limited to the material developed in this class but may work in relevant material and ideas from other sources. You want to develop a theme that somehow gives a focus to your work. It might be, for example, "Great demographic changes will affect our future", "Big changes are needed to keep the U.S. economy on track", or even "Our economic future is bright (or a disaster) if we adjust (or fail to adjust)". Keep in mind that you should try and justify the values of the various projection parameters you use to the various projections. Due date of research paper: 18 December 2009. The research paper is 25% of the final grade. Submission information for assignments is given below.

Dialogues

Blackboard Dialogue sessions will be posted every two or three weeks during the semester.

These dialogues are intended to allow students to interact among themselves and with the professor on topics relevant to economics and key policy questions currently under debate. Dialogues are not graded in terms of opinion, so students should express their views freely. Indeed, challenging the views of others B historical figures, contemporary commentators, and


especially other students and the professor B is strongly encouraged. Courtesy and respect for the views of others, however, must be maintained at all times. For classroom students attendance at all class sessions and active participation in class and on the discussion board is expected. For distance students, at least three posts in Blackboard per each assigned dialogue question is required. Each post should be approximately 250 words. Rules for the Dialogues:

1. All students should participate actively and comment of each dialogue topic. Distance students are required to post at least 3 times on each topic; each of these posts should be around 250 words. Feel free to post as often as you like and go beyond the suggested text length. The more, the merrier, the higher the dialogue grade.

2. It is strongly recommended to think before posting. Dialogue topics are based on articles posted under AAssignments@ on the Economics Forum (Spring 2008 Economic Discussion Forum) on Blackboard. These should be read before posting on the topic but are only a starting point. Add your own comments or comment on those of others, as you feel incline. But think before you write.

3. Brevity is beautiful.

4. English matters: No sentences without verbs, subjects and verbs should agree, no run-on sentences, spelling is important.

5. Dialogue entries that cite sources and quote The Great Economists will be praised. If you have taken the time to do research on the topic, work it into the discussion.

6. There is nothing wrong with being outrageous in your comments and ideas. There is nothing wrong with challenging the ideas of others. You can even put forward and suggest ideas with which you privately disagree. This is often fun to do, just to see the reaction in others. You are not graded on what you say, so say anything you want.

7. Do not be afraid to change your mind or concede the weakness of your argument. It is a sign of strength to admit you learned something from someone else. Having said that, never change your mind to simply agree with someone. Rather, concede your weaknesses for the moment and take the time to think about how you can better defend your opinions. Then come back and post anew.

8. You must always be courteous to others, especially those with whom you disagree. Calling somebody an "idiot" is a no-no. Saying someone has not fully thought out the implications of the weak and inadequate ideas they advocate, which in your view need substantial revision and strengthening along the lines of your ideas, is perfectly OK. Most importantly, do not yell and scream. The other person may well be an idiot in your mind, but even idiots deserve respect.

9. Each dialogue topic will be up for only a couple of weeks. Do not wait to the end of this period to join the dialogue.

10. Have fun with the topic. Although they are serious, let us not lose our perspective on life.


The Dialogue grade, included in an overall Class Participation grade weighted 10%, is based on extent of participation and conformity with English writing standards.

Drafting Suggestions and Requirements The Microsoft Word documents containing the Question Assignments and Workbook Exercises may be used as a template into which answers and responses may be given and submissions made. Note that the some of these documents contain Microsoft Graph pre-formatted charts. Notes and the Research Paper are considered formal submissions. Formal material (those other than the QSs) submitted for grading should include a cover or title page with the following information: The name of the school and university, that is, The Robertson School of Government, Regent University; the exact title of the paper or submission; the full course name, that is, Government 615: Economic Policy: Design and Analysis; the student=s name; and the date. This information should be suitably capitalized, centered and spaced upon the page. With regard to the notes, the Introductory paragraph(s) and Concluding paragraph(s) should be identified with headings. Heading separating sections and subsections are not required but if in your view helpful, you may include them. A Bibliography of at least one book or article is necessary, the more, the better, listed as a separate page at the end. Footnotes, etc., follow Turabian. Style manual: Kate L. Turabian, A Manual for Writers of Term Papers, Theses, and Dissertations, 6th ed. (University of Chicago Press, 1996) ISBN: 0226816273.

Rules for Collaboration

Students are responsible for preparing by themselves all material submitted for grading in strict accordance with Regent University policies on academic integrity. Students may, however, form study groups and otherwise discuss with one another the material presented in the text, the Workbook, and in class and may discuss in general terms the ideas and concepts appearing on the QSets and in their individual notes, but not specific answers. If they regard it as useful, they may also discuss questions and projections exercises with individuals outside the Regent community, again in general terms and with the understanding that any material submitted comes entirely from their own hand.

Submission of Material Documents should be submitted in Microsoft Word and Microsoft Excel formats. Completed copies of the Question sets can be simply be sent as attachments to a covering e-mail. In the case of the Workbook exercises, in order to avoid the transfer of large amounts of unnecessary information, only the results portion of documents should be submitted, not the text and data bases. Further information on the transfer of exercise results is given in the assignments. Material to be submitted may be sent as a file attachment to an e-mail or may be submitted in hard copy form in class. Make sure you name has been entered into the Word and Excel flies. The subject


line of any e-mail should contain the course number (AGovt 615") and the student=s name. Similarly, any attachment should contain the course number, student name, and assignment ID (AAssignment 1", AQ1", etc.). Keep a copy of everything submitted for grading.

Government 615: Economic Policy: Design and Analysis Fall 2009

List of Lecture Topics, Assignments and Readings Version 1.0

Date Topic Text chapters

Notes

and

Q sets

Workbook

readings

Analysis and Projections

Exercises Supplementary reading

Introduction

1 26-Aug Introduction to Economic Policy Chapter 1 QS 1 Chapters 1-2 HR 1: Principal measures M. Friedman, The Role of Government in a Free Society

Measures of Macroeconomic Activity Chapter 2 Joseph Schumpeter, Can Capitalism Survive

The Debate Over Economic Policy

2 02-Sep The World Economy Chapter 20 QS 2 HR 2: Basic transformations

The U.S. Economy

A Survey of Macroeconomic Theory

3 09-Sep Classical Macroeconomics: Output and Employment Chapter 3 QS 3 HR 3: Analytical parameters Adam Smith, On the Division of Labour

Classical Macroeconomics: Money, Prices & Interest Rates Chapter 4

4 16-Sep Keynesian Macroeconomics: Aggregate Demand & Supply Chapter 5 QS 4 HR 4: The Government Budget John Kenneth Galbraith, How Keynes Came to America

Keynesian Macroeconomics: Money. Interest and Income Chapters 6-8 Buchanan & Wagner, The Consequences of Mr. Keynes

5 23-Sep Modern Macroeconomics: On-going Debates Chapters 9-13 QS 5 Franco Modigliani, The Monetarist Controversy

Modern Macroeconomics: The International Economy Chapter 14 & 15 Frederic Bastiat, Petition of the Candlemakers

Policies for Economic Stability and Public Services

6 30-Sep Money and Banking Chapter 16 QS 6 Chapter 3 PE 1: Scenarios of long-term growth Thomas R. Malthus, The Theory of Population

Monetary and Fiscal Policy Chapters 17 & 18

7 07-Oct Macroeconomic Policies and Economic Growth Chapter 19 QS 7 Chapter 4 PE 2: Population & labor force Milton Friedman, Fiscal Policy

Macroeconomic Policies and the Potential for Growth Note 1 Robert E. Lucas, Jr., Unemployment Policy

The Performance of the U.S. Economy

8 14-Oct A Long-Run Model of the U.S. Economy QS 8 PE 3: GDP and Investment

Long-Run Production Potential

21-Oct Fall Break

9 28-Oct Consumption, Saving and the Internal Balance PE 4: Consumption & saving

A Model of Consumption and Saving

10 04-Nov Exports, Imports and the External Balance PE 5: Exports & imports

A Model of Exports and Imports

11 11-Nov The Internal and External Balances PE 6: Macroeconomic balances

Reconciliation of the Macroeconomic Balances

12 18-Nov Social Security and Health Care PE 7: Social Security and Health Care Thomas Sowell, Universal Health Care Excuses

A Model of Social Security and Health Care

13 25-Nov The Government Budget PE 8: Government Income and Outlay

A Model of Government Income and Outlay

Prospects for the U.S. Economy

14 02-Dec The Current Economic Situation and Short-term Outlook

The Problems Now Before the U.S. Economy

15 09-Dec Assessments of Possibilities for Global and U.S. Growth Note 2

Student Assessment of Prospects for the U.S. Economy

16 16-Dec The Future of the U.S. Economy

HR 5: Comparative costs

& Terms of trade