The Wharton School

University of Pennsylvania
Finance Department

Finance 1018 Honors Fall 2024

Monetary Economics & the Global Economy Prof. Martin Asher
________________________________________________________________________________

Required Text and Materials:

Andrew B. Abel, Ben S. Bernanke, and Dean Croushore, Macroeconomics, Eleventh Edition, Pearson
Addison-Wesley Publishing Co., 2023.
The Wall Street Journal, including online version. Student subscriptions are available at:
https://store.wsj.com/shop/us/us/wsjstudentbts21

Optional Materials:

Other periodicals (e.g., Financial Times, Bloomberg BusinessWeek, The Economist, NY Times,
Washington Post)
MyLabTM Economics (accompanies Abel-Bernanke-Croushore text; not required, but may be helpful)

Objectives:

Finance 1018 is designed to introduce the student to competing theories regarding the functioning of the
macroeconomy in a global environment and the effects of government policy. In doing so, it covers

• the measurement of macroeconomic activity (production, employment, interest rates, prices,

national saving, investment, and international transactions),
• Classical macroeconomic analysis (the functioning of the macroeconomy assuming efficient
markets), identifying the sources of long-run economic growth,
• business cycles and theories of cyclical fluctuations,
• the use of government policies to stabilize economic activity and promote long-term growth.

The principal text (Abel-Bernanke-Croushore [“ABC”]) presents a cohesive model for studying
macroeconomic performance and for identifying the sources of controversy among economists and policy
makers. Additional supplementary readings, to be made available through the course, reinforce
conclusions found in Abel-Bernanke-Croushore regarding long-run economic growth and stabilization
policy shared by both moderate liberals and moderate conservatives. Other perspectives will also be
presented.

Lectures:

Though lectures will closely follow the material in the ABC text, they will also include many additional
examples and may skip or modify the treatment of some topics (the ABC text is comprehensive, and not
all of it will be covered and tested). You may take your cue from what is covered in class lectures.
Technology such as computers, iPads or other devices are allowed only if they are being actively
used to take notes; no other use is permitted during class time. The course is highly graphical,
mathematical, and tabular, for which computer usage is generally unhelpful unless used with an app and
stylus. Moreover, lecture outlines are provided online through Canvas – which you may print out in
advance.

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 Examinations:

There will be two midterm examinations and a final examination. Because the course continually builds
on previous knowledge, the final examination will be cumulative over the material from the entire
course, though it will stress material covered since the second midterm examination. The exams are
scheduled as follows:

Midterm I: Monday, October 7, 2024, 7:00-9:00 p.m.

Midterm II: Wednesday, November 6, 2024, 7:00-9:00 p.m.
Final Exam: TBA

It is anticipated that all exams will be in-person on campus at the above times. The exams will be closed-
book, except that you may bring along a single 8.5”x11” two-sided sheet of notes to midterm #1; 2 sheets
to midterm #2 (a new one plus the previous one); and 3 sheets to the final (a new one plus the previous
two). These notes may not include reproductions of large sections of the text or class notes. You may use
a calculator, but only if it cannot communicate with other devices (e.g., no cellphone calculators).

Should health conditions change causing the University to move to remote testing, students will be
required to agree to course testing conditions, which will include at least the following:
1. No more time taken than allotted on the exam.
2. No communication with anyone about the exam before, during, or after taking it.
3. No copying, reproducing, or transmitting the exam or answers in any form, to anyone, at any time.

The final exam can be rescheduled only if required by University policy, and only during the official
make-up period during the first week of the following semester.

Any request for a required make-up exam or for disability accommodations must be made at least one
week before the exam. In case of serious illness on the final exam day, you must notify the professor
before the exam begins, and provide official documentation from a medical professional as soon as
possible afterwards, maintaining appropriate confidentiality.

Regrade requests must be submitted using the official Regrade Request form (in Canvas) along with your
entire exam. For the midterms, requests must be made within one week from the date the exam is returned.
For the final exam, requests must be made within one week from the first day of classes the following
semester. We retain the right to regrade the entire exam. Any alteration of the exam is strictly forbidden
and will be considered a violation of the Code of Academic Integrity.

Practice Questions and Problem Sets:

You will be provided with a substantial number of practice questions in multiple forms to aid and check
your understanding as you proceed through the course. Because you will also be provided with answers,
these will not be graded. Nonetheless, exam questions may be motivated by the practice questions.
The forms include End-of-Chapter questions from the ABC text and additional multiple-choice practice
questions posted in Canvas.

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Paper/Memo Assignment:

Later in the semester, you will be given a short paper assignment on a timely macroeconomic issue. The
assignment will provide you with articles to read and summarize in a manner that will provide
understanding of that issue. No additional research or articles will be required, though you are welcome to
provide additional support should you wish to do so. It will be due by the end of the day on Monday,
December 9, 2024 (earlier is fine).

Macroeconomic Modeling - FAIRMODEL Simulations and Guest Speakers:

One of the distinctives of the Fall 2024 honors sections of FNCE 1018 will be an introduction to
macroeconomic modeling, also known as macroeconometric modeling. This will be accomplished by
1. The study and use of FAIRMODEL – an empirical macro model made available by Prof. Ray
Fair of Yale University. Exercises and model simulations provided in FAIRMODEL will add
considerable understanding to the functioning of the US economy (students are welcome, on their
own, to explore Prof. Fair’s international model).
2. Guest lectures by noted economists experienced in macro modeling for public and private sector
clients. It is anticipated that a number of speakers, some trained under the late Prof. Lawrence R.
Klein – the University of Pennsylvania’s Nobel Laureate for his contributions to econometrics
generally and macro modeling specifically – will address the class regarding the relevance of
macro modeling for decision-making in the public and private sectors.

Lecture and Exam Attendance:

By applying to and accepting an invitation to join one of the honors sections of FNCE 1018, you are
agreeing to attend regular and guest lectures and to enrich class discussions with your classmates –
i.e., the establishment of smaller sizes for honors sections is made to facilitate a richer exchange of ideas
and the ability to ask questions for both clarification and extension of course material.
• This is not a remote-learning course. There will be no video recordings of lectures posted to
Canvas.
• Though lecture outlines are routinely available in Canvas for lectures on textbook material,
considerable use will be made of the whiteboards to provide a deeper understanding, present
additional examples, and to respond to class questions. Should illness or other event cause you
to miss class, please submit an official absence notice and obtain the additional notes for that
day’s lecture from a classmate.

Other than official reasons identified in University policy, there will be no rescheduling of exams. As
posted above, there will be a final exam during the University’s final exam period, which is now typically
announced midway through the semester. If you cannot be present for the entire final exam period,
then please drop this course in favor of a course whose schedule matches your own. Having booked
early departure plans that can only be rescheduled at greater cost will not serve as a reason for arranging an
alternative time to take the final exam.

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Grading:

The overall course grade will be based on the following:

Exams: 80%
• Method 1: For students showing consistent performance: Exam 1 - 25%; Exam 2 - 25%; Final - 30%
• Method 2: For students showing improvement: Exam 1 - 20%; Exam 2 - 25%; Final - 35%
• Both scores will be computed for each student, who will automatically receive the highest of the two scores.
Macroeconomic forecasting exercises (FAIRMODEL): 10%,
Macroeconomics Memo/Paper assignment: 10%.

Violations of the course or University rules may be referred to appropriate authorities for disciplinary
action. Please review the Code of Academic Integrity at:
http://www.upenn.edu/academicintegrity/ai_codeofacademicintegrity.html.

Office Hours:

Office hours with the Professor and TAs may be in-person and/or via Zoom. More information will be
provided in class.

Professor Asher:
Office Hours: Mondays and Wednesdays, 3:45 - 4:45 PM and by appointment (SHDH 2429)
Email address: asherm@wharton.upenn.edu
Phone: 215-898-2323

Teaching Assistants:

Jessica Riedman
Office Hours: TBA
Email address: jriedman@wharton.upenn.edu

TBA
Office Hours: TBA
Email address: TBA

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 Schedule of Lectures and Examinations
Details of the outline are subject to change, as announced in lectures and posted on Canvas

Class Day Date Topic (Abel-Bernanke-Croushore Macroeconomics Chapter)

1 Weds. 8/28/2024 Introduction and Overview (Ch. 1)
Mon. 9/2/2024 LABOR DAY - No Class
2 Weds. 9/4/2024 National Income Accounting, Part I (Ch. 2)
3 Mon. 9/9/2024 National Income Accounting, Part II (Ch. 2)
4 Weds. 9/11/2024 Production and Employment, Part I (Ch. 3, Secs. 1 - 4)
5 Mon. 9/16/2024 Production and Employment, Part II (Same reading as previous lecture)
6 Weds. 9/18/2024 Employment and Unemployment (Ch. 3, Secs. 5-6)
7 Mon. 9/23/2024 Consumption and Saving: Part I (Ch. 4, Sec. 1; and Appendix 4.A)
8 Weds. 9/25/2024 Consumption and Saving: Part II (Same reading as previous lecture)
9 Mon. 9/30/2024 Investment and Goods Market Equilibrium (Ch. 4, Secs 2 and 3)
10 Weds. 10/2/2024 A Framework for the Open Economy (Ch. 5, Secs. 1 - 2)
11 Mon. 10/7/2024 Midterm Review
10/7/2024 MIDTERM EXAM I - 7:00-9:00 p.m. (location TBA)
12 Weds. 10/9/2024 Saving, Investment, and the Current Account (Ch. 5, Secs. 3 - 5)
13 Mon. 10/14/2024 Long-Run Economic Growth, Part I (Ch. 6)
14 Weds. 10/16/2024 Long-Run Economic Growth, Part II (Ch. 6)
15 Mon. 10/21/2024 Money and Inflation (Ch. 7)
16 Weds. 10/23/2024 Business Cycle Facts (Ch. 8)
17 Mon. 10/28/2024 Aggregate Demand and Aggregate Supply (Ch. 8)
18 Weds. 10/30/2024 The IS-LM Model, Part I (Ch. 9)
19 Mon. 11/4/2024 The IS-LM Model, Part II (Ch. 9)
20 Weds. 11/6/2024 Midterm Review
Weds. 11/6/2024 MIDTERM EXAM II - 7:00-9:00 p.m. (location TBA)
21 Mon. 11/11/2024 The IS-LM Model, Part III (Ch. 9)
22 Weds. 11/13/2024 Policy Analysis (Chs. 9 & 11)
23 Mon. 11/18/2024 Policy Analysis (Chs. 9 & 11)
Weds. 11/20/2024 Policy Analysis (Chs. 9 & 11)
24 Mon. 11/25/2024 The Classical Model (Ch. 10)
25 Weds. 11/27/2024 NO CLASS - WEDNESDAY IS A FRIDAY CLASS SCHEDULE
26 Mon. 12/2/2024 The Phillips Curve: Unemployment and Inflation (Ch. 12)
27 Weds. 12/4/2024 International Revisited -- (Selected topics from Ch. 13)
28 Mon. 12/9/2024 Course Review

FINAL EXAM - TBA BY REGISTRAR