Tag: Domar

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M.I.T. Teaching

M.I.T. Student survey regarding Domar’s core macro theory course, 1960

 

The previous post provided the course syllabus and reading list for the core graduate macroeconomics course taught at M.I.T. by Evsey Domar during the first term of the 1960-61 academic year. He took the job seriously enough to try surveying his students to gauge his pedagogic success. I post a transcription of the mimeographed survey questions that were distributed to the students and have inserted totals from a handwritten summary of results. The strongest signals to come out of this exercise were (i) that mixing graduate economics with graduate business students is probably unwise and (ii) that a heavy dose of national income and product accounting is bitter medicine to new graduate students.

An earlier post  presents the results of a survey of Domar’s course for several later cohorts (1967-69).

______________________

QUESTIONNAIRE ON THE THEORY OF NATIONAL INCOME AND EMPLOYMENT (14.451)
E. D. Domar
Fall term 1960-61

Because the course is given to students of widely different backgrounds I am not sure whether it is taught on the proper level and in the proper manner. The size of the class precludes personal interviews on the subject. You can do a great service to future students and to myself by filling out this questionnaire in the most thoughtful and honest manner.

  1. Do not write your name, but give the following information:
    1. Your major (such as Course XIV, XV, etc.)
    2. Concentration within your major, if you know it.
    3. Year of graduate work
    4. Was your undergraduate training in the U.S. or Canada? (Yes or No)
  2. The general level of the course was (check one):
too elementary about right too advanced
The course XIV: 1
XV: 0		 XIV: 17
XV: 7		 XIV: 0
XV: 1
I. National Income and Related Items XIV: 4
XV: 1		 XIV: 19
XV: 12		 XIV: 1
XV: 1
II. General Aggregative System XIV: 4
XV: 0		 XIV: 17
XV: 9		 XIV: 1
XV: 5
III. Theory of Interest XIV: 4
XV: 0		 XIV: 17
XV: 9		 XIV: 1
XV: 4
IV. Consumption Function XIV: 2
XV: 0		 XIV: 20
XV: 10		 XIV: 0
XV: 4
V. Multiplier and Accelerator XIV: 3
XV: 0		 XIV: 16
XV: 8		 XIV: 3
XV: 6
VI. Investment Decisions XIV: 3
XV: 0		 XIV: 17
XV: 12		 XIV: 2
XV: 2
VII. Price Flexibility XIV: 1
XV: 0		 XIV: 16
XV: 8		 XIV: 0
XV: 2
[column totals] XIV: 22
XV: 1		 XIV: 139
XV: 75		 XIV: 8
XV: 25
  1. Mathematics was used in the course (encircle one) not enough [XIV, 6; XV, 3], about right [XIV, 15; XV, 8], too much [XIV, 3; XV, 3].Specific examples, if any.[For course XIV the course is a bit too elementary (totals, 22:8). For course XV the course is too advanced (totals, 1:25). For all students, it is about right.
    Math should be used somewhat more.
    The scope is a bit too broad.
    So, the course should be made tighter, more advanced, and a bit more mathematical, particularly without course XV students.]
  2. The scope of the course was (encircle one) too narrow [XIV, 0; XV, 0], about right [XIV, 13; XV, 10], too broad [XIV, 3; XV, 3].Topics to be added are:
    Topics to be given greater attention are:
    Topics to be condensed are:
    Topics to be eliminated are:
    Other suggestions regarding the scope of the course
Expand Condense Eliminate
I. National Income and Related Items XIV: 1
XV: 1		 XIV: 13
XV: 3		 XIV: 1
XV: 0
II. General Aggregative System XIV: 8
XV: 5		 XIV: 0
XV: 0		 XIV: 0
XV: 0
III. Theory of Interest XIV: 10
XV: 1		 XIV: 3
XV: 0		 XIV: 0
XV: 0
IV. Consumption Function XIV: 2
XV: 0		 XIV: 1
XV: 1		 XIV: 0
XV: 0
V. Multiplier and Accelerator XIV: 2
XV: 1		 XIV: 4
XV: 2		 XIV: 0
XV: 0
VI. Investment Decisions XIV: 5
XV:2		 XIV: 2
XV: 1		 XIV: 0
XV: 0
VII. Price Flexibility XIV: 6
XV: 3		 XIV: 2
XV: 0		 XIV: 0
XV: 0
  1. Required reading material was (encircle one) too broad [XIV, 9; XV, 9], about right [XIV, 12; XV, 2], too concentrated [XIV, 0; XV, 1].
    Would you prefer a smaller number of required readings but with a more intensive study of each? [Yes: XIV, 13; XV, 10], [No: XIV, 5; XV, 1] Comment.Should the readings be discussed in class more thoroughly and often?
    [Yes: XIV, 7; XV, 6], [No: XIV, 7; XV, 5]How adequately did the Reserve shelf serve your needs? [Enough: XIV, 1; XV, 0], [Not enough: XIV, 3; XV, 2] Did you have difficulties in obtaining the readings?Suggestions for improvement[Course XIV would keep the breadth of the reading as now, possibly somewhat narrower. But XV definitely wants more narrow.
    Both would prefer a smaller number of readings, particularly XV
    Evenly divided on discussing readings in class.]
  2. Because of the size of the class, lectures usually took the place of discussions. Would you prefer more discussions? [Yes: XIV, 5; XV, 5], [No: XIV, 13; XV, 7]Would a smaller class materially improve the course? [Yes: XIV, 11; XV, 9], [No: XIV, 5; XV, 3]Any other suggestions?[No great demand for more discussion in the large class, but a clear demand for a smaller class.]
  3. Grade the instruction in the course (A, B, C and F) for the following qualities (as compared with other courses at M.I.T. and elsewhere).Clarity of exposition
    Intellectual stimulation
    Usefulness of information
    Enjoyment of the course
    General performance
Grades A+ A A/B B B/C C Below
C
Clarity XIV: 18
XV: 8		 XIV: 0
XV: 1		 XIV: 4
XV: 3		 XIV: 0
XV: 1		 XIV: 0
XV: 1
Stimulation XIV: 15
XV: 7		 XIV: 0
XV: 2		 XIV: 4
XV: 4		 XIV: 2
XV: 0		 XIV: 0
XV: 1
Usefulness XIV: 9
XV: 4		 XIV: 1
XV: 1		 XIV: 7
XV: 6		 XIV: 1
XV: 2		 XIV: 0
XV: 1
Enjoyment XIV: 1
XV: 0		 XIV: 16
XV: 5		 XIV: 0
XV: 1		 XIV: 3
XV: 6		 XIV: 2
XV: 1		 XIV: 0
XV: 1
General XIV: 12
XV: 7		 XIV: 3
XV: 2		 XIV: 5
XV: 2		 XIV: 0
XV: 2		 XIV: 0
XV: 1

[Course XIV feels much better about the course than does XV. Clarity, stimulation and enjoyment get high marks. Usefulness—much less.]

  1. As you know, a third of the final examination is devoted to a substitute for a term paper. Would you prefer a usual term paper instead? [Yes: XIV, 11; XV, 2], [No: XIV, 10; XV, 7] Neither?
    [Existing exam—Yes: XIV, 5; XV, 7], [No: XIV, 4; XV, 2]
    [More exams—Yes: XIV, 5; XV, 1], [No: XIV, 0; XV, 0]

Comment on this.

[Course XIV prefer (slightly) a term paper and a midterm exam. Course XV don’t want a term paper.]

  1. Any other comments, suggestions, complaints, wishes, etc.[Useful comments
    Require Patinkin. Course XV find it too hard.
    Suggest the more important readings.
    People in the back couldn’t hear well.
    No seating assignment
    A midterm exam is frequently asked, otherwise, they don’t work on this course hard enough.
    A time schedule of the course.
    Better reading list.]

 

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Evsey D. Domar, Box 17, Folder “Macroeconomics. Questionnaire on the Theory of national Income & Employment (14.451)”.

Image Source: The M.I.T. mascot beaver on the cover of its yearbook, Technique 1949.

Categories
Exam Questions M.I.T. Suggested Reading Syllabus

M.I.T. National Income and Employment Theory. Readings and Final Exam. Domar, 1960-61

 

 

For this post I have transcribed Evsey Domar’s graduate core macroeconomics course outline/reading list along with the questions for the final examination from the first term of the 1960-61 academic year at M.I.T. Students from both course XIV (economics) and XV (management) took this course.

Note: Evsey Domar distributed a questionnaire to the students to obtain feedback on his course.  The next post provides the results from that survey. It is fairly apparent that Domar did not cover the last topic on the course reading list (economic growth).

Final exam grade distribution (50 exams)

A 16%
A- 12%
B+ 10%
B 20%
B- 14%
C 18%
D 8%
F 2%

Fun Fact. Among the students enrolled in the course and who took the final examination: Michael D. Intriligator, Peter A. Diamond, Ann Fetter Friedlaender, and Stephen Goldfeld.

The much expanded course reading list/bibliography and  both the midterm and final examinations from the 1965-66 academic year have been posted earlier.

_________________________

MASSACHUSETTS INSTITUTE OF TECHNOLOGY

THEORY OF NATIONAL INCOME AND EMPLOYMENT
14.451 Reading List
E. D. Domar Fall Term 1960-61

The purpose of this list is to suggest to the student the sources in which the more important topics of the course are discussed from several points of view. His objectives should be the understanding of these topics and not the memorization of opinions and details.

Items marked with an * are strongly recommended. (I don’t like to use the expression “required” in a graduate reading list.)

No term paper will be required, but each student is expected, in addition to his general reading, to choose one of the eight major divisions of the course (except that Part VIII should not be taken without prior consultation with the instructor) as a field of concentration. A part of the final examination will be designed to test his broader knowledge of the chosen field.

 

I. NATIONAL INCOME AND RELATED ITEMS

*Kuznets, S., National Income and Its Composition, (New York, 1941), particularly Vol. 1, Chapter 1

*Jaszi, G., “The Statistical Foundations of the GNP,” Review of Economics and Statistics, Vol. 38, 1956)
Ruggles, R. and N., National Income Accounts and Income Analysis (New York, 1956)

*U.S. Department of Commerce, U. S. Income and Output, A Supplement to the Survey of Current Business, 1958

*National Bureau of Economic Research, The National Economic Accounts of the United States, Review, Appraisal and Recommendations, General Series 64, Washington, 1958

Ruggles, “The U.S. National Accounts,” American Economic Review, March, 1959
Organization for European Economic Co-operation, A Standardised System of National Accounts, Paris, 1952

Gilbert, M. and I. B. Kravis, An International Comparison of National Products and the Purchasing Power of Currencies, A Study of the United States, the United Kingdom, France, Germany and Italy, Organization for European Economic Cooperation, Paris, 1954

Nove, A., “The United States National Income A La Russe,” Economica, Vol. 23, 1956

Gilbert, M., Comparative National Products and Price Levels, A Study of Western Europe and the United States, Organization of European Economic Cooperation, Paris, 1958

*Leontief, W. W., “Output, Employment, Consumption and Investment,” Quarterly Journal of Economics, Feb., 1944

Leontief, W. W. The Structure of American Economy (New York, 1951)

*Dorfman, R., “The Nature and Significance of Input-Output,” Review of Economics and Statistics, Vol. 36, 1954

Stewart, I. G., “The Practical Uses of Input-Output Analysis,” Scottish Journal of Political Economy, Vol. 5, (Feb. 1958)

Dosser, D. and A. T. Peacock, “Input-Output Analysis in an Under-Developed Country: A Case Study,” Review of Economic Studies, Vol. 25, Oct. 1957

*Sigel, S. J., “A Comparison of the Structures of Three Social Accounting Systems,” National Bureau of Economic Research, Input-Output Analysis: An Appraisal, The Conference on Research in Income and Wealth, Studies in Income and Wealth, Vol. 18, pp. 253-89

Board of Governors of the Federal Reserve System, Flow of Funds in the United States 1939-53 (Washington, D. C., 1955)

 

II. GENERAL AGGREGATIVE SYSTEM

Students without prior training in this field are advised to study D. Dillard, The Economics of John Maynard Keynes (New York, 1948), A. H. Hansen, A Guide to Keynes (New York, 1953), or K. Kurihara, Introduction to Keynesian Dynamics (New York, 1956).

*Keynes, J. M., The General Theory of Employment, Interest and Money (New York, 1936)

*American Economic Association, Readings in Business Cycle Theory (Philadelphia, 1944), Essays 5, 7

Harris, S. E., The New Economics (New York, 1947), essays 8-19, 31-33, 38-46.

*Lerner, A. P., Economics of Control (New York, 1944), chapters 21-23, 25

*Kurihara, K. K., Post Keynesian Economics (New Brunswick, N. J., 1954), essays 1, 11*

*American Economic Association, Readings in the Theory of Income Distribution (Philadelphia, 1946), essay 24

Klein, L. R., The Keynesian Revolution, (New York, 1947), chapters 3-5.

Ellis, H. S., A Survey of Contemporary Economics (Philadelphia, 1948), Vol. 1, chapter 2

*Income, Employment and Public Policy, Essays in Honor of Alvin H. Hansen (New York, 1948), essay I

*Burns, A. F., “Economic Research and the Keynesian Thinking of Our Times,” in his The Frontiers of Economic Knowledge, (Princeton, 1954), or in the Twenty-Sixth Annual Report of the National Bureau of Economic Research, Inc. (New York, 1946). See also the discussion by Hansen and Burns in the Review of Economic Statistics, November, 1947

Dillard, D., “The Influence of Keynesian Economics on Contemporary Thought,” American Economic Review, Papers and Proceedings, 1957

Patinkin, D., Money, Interest, and Prices (Evanston, Ill., 1956).

 

III. THEORY OF INTEREST

Readings in the Theory of Income Distribution, essays 22, 23, 26

*Hicks, J. R., Value and Capital (Oxford, 1957), Chapters 11-12

Readings in Monetary Theory, essays 6, 11, 15

*Gurley, J. G., and E. S. Shaw, “Financial Aspects of Economic Development,” American Economic Review, September, 1955)

Hart, A. G., Money, Debt and Economic Activity, Second Ed., (New York, 1953)

Patinkin, D., “Liquidity Preference and Loanable Funds: Stock and Flow Analysis,” Economica, Vol. 25, November, 1958

Patinkin, D., Money, Interest, and Prices (Evanston, Ill., 1956).

*Lydall, H., “Income, Assets, and the Demand for Money,” Review of Economics and Statistics, Vol. 40, Feb. 1958

Lutz, F. A., “The Interest Rate and Investment in a Dynamic Economy,” American Economic Review, Dec. 1945

See also Section VI — INVESTMENT DECISIONS

 

IV. CONSUMPTION FUNCTION

*Duesenberry, J. S., Income, Saving, and the Theory of Consumer Behavior (Cambridge, Massachusetts, 1949)

Haley, B. F., A Survey of Contemporary Economics (Homewood, Illinois, 1952), Vol. II, essay 2

Davis, T. E., “The Consumption Function as a Tool of Prediction,” The Review of Economics and Statistics, August 1952

Heller, W. W., Boddy, F. M., and C. L. Nelson, Savings in the Modern Economy, a Symposium (Minneapolis, 1953)

*Friend, I., and S. Schor, “Who Saves?,” The Review of Economics and Statistics, Vol. 41, May, 1959, Part 2

*Friend, I., and I. B. Kravis, “Entrepreneurial Income, Saving and Investment,”American Economic Review, June, 1957, pp. 269-301

Zellner, Arnold, “The Short-Run Consumption Function,” Econometrica, (Oct. 1957

*Ferber, R., “The Accuracy of Aggregate Savings Functions in the Post-War Years,” Review of Economics and Statistics, Vol. 37, May, 1955

*Tobin, J., “On the Predictive Value of Consumer Intentions and Attitudes,” The Review of Economics and Statistics, Vol. 41, Feb., 1959

Dennison, E. F., “A Note on Private Saving,” Review of Economics and Statistics, August, 1958
Post-Keynesian Economics, essay 15

Friedman, M., A Theory of the Consumption Function (Princeton, N. J., 1957)

Friedman, M., and G. Becker, “A Statistical Illusion in Judging Keynesian Models,” Journal of Political Economy, Vol. 65, Feb., 1957

Klein, L. R., “The Friedman-Becker Illusion,” Journal of Political Economy, Vol. 66, Dec., 1958

Morgan, J. N., Consumer Economics (New York, 1955)

Katona, G., and E. Mueller, Consumer Expectations 1953-56 (Ann Arbor, Michigan, 1956)

Klein, L. R., ed., Contributions of Survey Methods to Economics (New York, 1954)

 

V. MULTIPLIER AND ACCELERATOR

*Kahn, R. F., “The Relation of Home Investment to Unemployment,” Economic Journal, 1931. Republished in Hansen and Clemence, Readings in Business Cycles and National Income (New York, 1953), essay 15

*Readings in Business Cycle Theory, essays 11-12

*Haavelmo, T., “Multiplier Effects of a Balanced Budget,” Econometrica, 1945; reprinted in Readings in Fiscal Policy, pp. 335-343

*Salant, William A., “Taxes, Income Determination, and the Balanced Budget Theorem,” The Review of Economics and Statistics, May, 1957

Peston, M. H., “Generalizing the Balanced Budget Multiplier,” and “Comment” by W. A. Salant, The Review of Economics and Statistics, August, 1958

Bowen, W. G., “The Balanced-Budget Multiplier: A Suggestion for a More General Formulation,” The Review of Economics and Statistics, May, 1957

*Kuznets, S., “Relation Between Capital Goods and Finished Products in the Business Cycle,” in Economic Essays in Honor of Wesley Clair Mitchell, (New York, 1935)

*Knox, A. D. “The Acceleration Principle and the Theory of Investment: A Survey,” Economica, Vol. 19, 1952

*Tsiang, S. C., “Accelerator, Theory of the Firm, and the Business Cycle,” Quarterly Journal of Economics, Vol. 65, 1951

*Tinbergen, “Statistical Evidence on the Acceleration Principle,” Economica, Vol. 5, 1938

Harrod, R. F., Towards a Dynamic Economics (London, 1948)

Hicks, J. R., A Contribution to the Theory of the Trade Cycle (Oxford, 1950)

Goodwin, R. M., “Problems of Trend and Cycle,” Yorkshire Bulletin, Vol. 5, August, 1953

Ott, A. E., “The Relation Between the Accelerator and the Capital Output Ratio,” Review of Economic Studies, Vol. 25, June, 1958

Minsky, H., “Monetary Systems and Accelerator Models,” American Economic Review, Vol. 47, 1957

See also VI — INVESTMENT DECISIONS.

 

VI. INVESTMENT DECISIONS

Lutz, F. A., and V., The Theory of Investment of the Firm (Princeton, 1951)

*Heller, W. W., “The Anatomy of Investment Decisions,” Harvard Business Review, March, 1951, pp. 95-103

*Pitchford, J. D. and A. J. Hagger, “A Note on the Marginal Efficiency of Capital,” The Economic Journal, Vol. 48, 1958

*Meade, J. E., and P. W. S. Andrews, “Summary of Replies to Questions on Effects of Interest Rates,” and “Further Inquiry into the Effects of Rates of Interest,” Oxford Economic Papers, No. 1, 1938 and No. 3, 1940

*Ebersole, J. F., “The Influence of Interest Rates,” Harvard Business Review, Vol. 17, 1938, pp. 35-39

*Henderson, H. D., “The Significance of the Rate of Interest,” Oxford Economic Papers, October, 1938, pp. 1-13

Andrews, P. W. S., “Further Inquiry into the Effects of Rates of Interest,” Oxford Economic Papers, Feb., 1940, pp. 32-73

Sayers, R. S., “Business Men and the Terms of Borrowing,” Oxford Economic Papers, Feb., 1940, pp. 23-31

*White, W. H., “Interest Inelasticity of Investment Demand—The Case from Business Attitude Surveys Re-examined,” American Economic Review, Sept. 1956, pp. 565-587

Brockie, M. D., and A. L. Gray, “The Marginal Efficiency of Capital and Investment Programming,” Economic Journal, Vol. 46, December, 1956

White, W. H., “The Rate of Interest, the Marginal Efficiency of Capital, and Investment Programming,” Economic Journal, Vol. 48, March, 1958

Grey, A. L., and M. D. Brockie, “The Rate of Interest, Marginal Efficiency of Capital and Net Investment Programming: A Rejoinder,” Economic Journal, June, 1959

Spiro, A., “Empirical Research and the Rate of Interest,” Review of Economics and Statistics, Vol. 40 (February, 1958).

*Duesenberry, J., Business Cycles and Economic Growth (New York, 1958), Chapters 1-8

Meyer, John R., and Edwin Kuh, The Investment Decision (Cambridge, Mass., 1957)

Cunningham, N. J., “Business Investment and the Marginal Cost of Funds,” Metroeconomica, Vol. 10, August, 1958

Cunningham, N. J., “Business Investment and the Marginal Cost of Funds,” Part II, Metroeconomica, Dec., 1958

Wilson, T., “Cyclical and Autonomous Inducements to Invest,” Oxford Economic Papers, Vol. 5, 1953

Hirschleifer, J., “On the Theory of Optimal Investment Decision,” The Journal of Political Economy, Vol. 66, Aug., 1958

Lydall, H. F., “The Impact of the Credit Squeeze on Small and Medium Sized Manufacturing Firms,” Economic Journal, Vol. 47, Sept., 1957

*Penrose, E., “Limits to the Growth and Size of Firms,” American Economic Review Papers and Proceedings, May 1955, pp. 531-43

Friend, I., and J. Bronfenbrenner, “Business Investment Programs and Their Realization,” Survey of Current Business, December, 1950

*Foss, M. F., and V. Natrella, “Ten Years’ Experience with Business Investment Anticipations,” Survey of Current Business, January, 1957

*Foss, M. F., and V. Natrella, “Investment Plans and Realizations—Reasons for Differences in Individual Cases,” Survey of Current Business, June, 1957

See also III—THEORY OF INTEREST and V—MULTIPLIER AND ACCELERATOR

 

VII. PRICE FLEXIBILITY AND EMPLOYMENT

*Pigou, A. C., “The Classical Stationary State,” Economic Journal, Dec., 1943

*Lange, O., Price Flexibility and Employment (Bloomington, Indiana, 1944)

*Friedman, M., “Lange on Price Flexibility and Employment,” American Economic Review, Sept., 1946

Readings in Monetary Theory, Essay 13

Schelling, T. C., “The Dynamics of Price Flexibility,” American Economic Review, Sept. 1949

Patinkin, D., Money, Interest, and Prices (Evanston, Illinois, 1956)

Hicks, J. R., “A Rehabilitation of ‘Classical Economics’,” Economic Journal, Vol. 47, June, 1957

*Power, J. H., “Price Expectations, Money Illusion and the Real Balance Effect,” Journal of Political Economy, Vol. 67, April, 1959

*Mayer, T., “The Empirical Significance of the Real Balance Effect,” Quarterly Journal of Economics, Vol. 73, May, 1959

 

VIII. THEORY OF GROWTH

*Domar, E. D., Essays in the Theory of Economic Growth (New York, 1957), Foreword, Essays I, III-V

Fellner, W., Trends and Cycles I Economic Activity, (New York,1956)

Hansen, A. H., Fiscal Policy and Business Cycles (New York, 1941)

*Harrod, R. F., Towards a Dynamic Economics (London, 1948), Part III

Leontief, W. W., Studies in the Structure of the American Economy, (New York, 1953)

Robinson, J., The Accumulation of Capital, (London, 1956)

*Kuznets, Simon, “Towards a Theory of Economic Growth,” R. Leckachman, ed., National Policy for Economic Welfare at Home and Abroad, (New York, 1955)

*Solow, R. M., “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics, Feb. 1956, pp. 65-94

*Solow, R. M., “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics, August, 1957, pp. 312-320

 

Source:  Duke University, David M. Rubenstein Library. Economists’ Papers Archives. Papers of Evsey D. Domar, Box 15, Folder “Macroeconomics, Old Reading Lists”.

 

_________________________

Economics 14-451
E. D. Domar

FINAL EXAMINATION—Three Hours
January 24, 1961

Please use a separate book for each question.

 

Part I—One Hour

Write an essay in the field of your concentration as instructed in class. Please be specific.

 

Part II—Two Hours

Answer the THREE questions which are furthest removed from the topic discussed in Part I. They carry equal weights.

  1. “Thus the rate of interest is what it is because it is expected to become other than it is: if it is not expected to become other than it is, there is nothing left to tell us what it is…”
    1. Can you identify the author of this famous statement?
    2. Can you recognize whose interest theory he referred to?
    3. Explain and evaluate that theory critically.
    4. Present your own (original or otherwise) theory of interest.
  2. Write an essay on the subject of “The treatment of intermediate products in:
    1. National Income and Product Accounting
    2. Input-output method
    3. Flow-of Funds system
    4. Federal reserve Index of Industrial Production.” (Don’t panic if you can’t do (d), but if you can you’ll get a premium.
      Hint: there is more in this question, and particularly in part (a) than meets the eye. Consider the whole rationale of the methods.
  3. Write a comprehensive essay on the subject of “The Rationale of Investment Decisions.” Consider as many cases as you can, but in each case specify clearly the assumptions made. (Don’t forget to include an undeveloped country case.) Can you generalize?
  4. Write a comprehensive and critical essay on the subject of “Price Flexibility and Employment.” Survey the relevant literature beginning with Keynes’ General Theory, and indicate clearly the nature of the assumptions, the definition of the concepts (hint: money), and the essence of the conclusions. What practical recommendations follow from your discussion?

 

Source: Duke University, David M. Rubenstein Library. Economists’ Papers Archives. Papers of Evsey D. Domar, Box 16, Folder “Macroeconomics, Final Exams”.

Image Source: Evsey D. Domar photo at the M.I.T. Museum website.

Categories
Austria Economists Exam Questions Johns Hopkins Methodology

Johns Hopkins. Final exam for Fritz Machlup’s methodology course, 1956

 

 

Besides the questions for the final exam in Fritz Machlup’s course on the methodology of economics from the first semester of the 1955-56 academic year at Johns Hopkins University, I include the following photo from the 1956 yearbook Hullabaloo (p. 15) that identifies neither the speaker nor the seminar. While this is about as generic a seminar photo as one can imagine, I have something more than a mere suspicion that we are looking at Fritz Machlup in action. Perhaps some visitor with a keener forensic eye can confirm or reject my tentative identification in a comparison of the above portrait of Machlup reading himself with the speaker in the mystery seminar. The third man on the right, counting from the speaker, sure looks like a young Evsey Domar.

My hunch is based on the following picture of almost certainly the same seminar room in 1963 from the Carl Christ memorial website at Johns Hopkins.

 

______________

THE JOHNS HOPKINS UNIVERSITY
METHODOLOGY
18.601

Professor Fritz Machlup
January 27, 1956

Answer five questions, one from each group.
Write on loose sheets of paper; start a new sheet for each question.
Identify each sheet by the Question Number in the left corner and your Examination Number (which you draw before the examination) in the right corner; your name should appear nowhere.
You are on your honor not to use notes or to give or accept advice.

I.

  1. According to Poincaré, “a priori propositions are irrefutable because they are really firm resolutions to carry on the scientific game according to certain rules or stipulations.” Nevertheless, Morris Cohen considers a priori principles as “methodologic or regulative principles which enable us to organize our factual knowledge” and as “expressive of the fundamental nature of things,” What light does this view throw upon the methodological discussions of Hutchison, Kaufmann, Mises, and Knight?
  2. “While the deductive method might be applicable to a simple and stationary condition of industry, it becomes valueless in face of the increasing complexity of the modern economic world.” What was John Neville Keynes’ reaction to this point of view?
  3. “Just as the same proposition may express both a universal and a historical, or both a verbal and a real judgment, so it may express both a positive and a normative judgment.” (Fraser, Economic Thought and Language). First explain each of the three sets of antonyms and then explain and illustrate the statement.

II.

  1. Contrast and compare the logical nature of introspectionism and sensationalism as expounded by Felix Kaufmann or Morris Cohen.
  2. Give a reasoned explanation of Kaufmann’s distinction between three meanings of probability, one “relating to empirical knowledge as such”, another relating “to synthetic propositions undecided in a given scientific situation,” and a third referring to “the relative frequency of an attribute” within a certain collective.
  3. Felix Kaufmann, having made a distinction between empirical laws and theoretical laws, states: “Whereas we have both types of laws in natural science, there are, as I see it, no empirical laws established in social science, and even the tendency to establish such laws is not very strong. But if we consider the significance of theoretical laws in natural science, we cannot regard this as constituting a fundamental difference between the methods of natural science and those of social science.” Explain and discuss this statement in a way intelligible to someone who has not read Kaufmann’s writings.

III.

  1. Explain what Ludwig von Mises means by ”methodological apriorism”, “methodological individualism”, and “methodological singularism”.
  2. “In the history of applied Economics, the work of a Jevons, a Menger, a Bowley, has much more claim on our attention than the work of, say, a Schmoller, a Veblen, or a Hamilton.” What is Robbins driving at with this [last word cut off, “statement?” matches the spacing of the tips to the letter “t” that are still visible]
  3. Hutchison implies that pure theory may help the analyst to formulate questions to be answered by empirical studies: “The constant object of the scientist…is to compel the facts of experience to answer his questions definitely ‘yes’ or ‘no’…” Robbins appears to reverse the relationship: “Realistic studies may suggest the problem to be solved….But it is theory and theory alone which is capable of supplying the solution.” Discuss the paradox from the point of view of any of the other writers on methodology.

IV.

  1. If the description or institutional part of economics is viewed by Professor Knight as lying in the domain of cultural anthropology rather than economics proper, does this mean that in institutional inquiries sense observation assumes greater emphasis than intercommunication and interpretation? If not, why does Knight distinguish institutional from theoretical economics?
  2. “There are no better terms available to describe the difference between the approach of the natural and the social sciences than to call the former objective and the latter subjective.” (Hayek, “Scientism and the Study of Society”.) Explain the meaning of the essential terms employed and the statement as a whole.
  3. Hayek said: “It is only in so far as some sort of order arises as a result of individual action but without being designed by any individual that a problem is raised which demands a theoretical explanation.” Explain.

V.

  1. “Economics is in fact the only science which enjoys the advantage of an automatic quantification of its subject matter.” (Parsons, “Sociological Elements in Economic Thought”). Explain and discuss.
  2. Parsons distinguishes the following ideal types of criticism of abstract economic theory: (1) supplementary positivistic empiricism: (2) radical positivistic empiricism; (3) romantic empiricism; (4) supplementary non-economic sociology. Characterize each in a brief statement illustrated by examples.
  3. Discuss Veblen’s principal categories of human action—especially the “pragmatic” versus the “workmanlike” type—and compare them with the general “rational” type and the narrower “economic” type used in the abstract theories of traditional economics.
  4. On what grounds do Professors Herskovits and Knight reject and defend, respectively, the concept of the “economic man” as a useful tool of economic analysis?

 

Source:  Johns Hopkins University. The Ferdinand Hamburger, Jr. Archives. Department of Political Economy, Series 6. Box 3/1. Folder: “Department of Political Economy, Graduate Exams, 1933-1965”.

Image Source:  Johns Hopkins University yearbook, Hullabaloo, 1957, p. 28.

Categories
Exam Questions M.I.T.

M.I.T. Midterm and Final exams. Income and Employment Theory. Domar, 1968-69

 

Previously posted are the outlines, readings, and exams for Domar’s national income and employment courses taught at the University of Chicago in 1948 and at M.I.T. in 1965. Also of interest here are the MIT student evaluations for this and other core theory courses in the late 1960s.

There is little doubt in my mind that MIT economics graduate students during the first term of the 1968-69 academic year responded to Evsey Domar’s attempts to get them interested in the details of national income and product accounting and productivity indexes with an enthusiasm to rival the high-school kids’ reaction to the Hawley-Smoot lesson attempted by a high-school teacher in the cult-film Ferris Bueller’s Day Off.

Fun-fact: the boring teacher in the movie was played by Ben Stein, son of economist, Herbert Stein. One more piece of fun: watch an older Ben Stein talk about getting that role.

In Domar’s defense, national accounting and index numbers have never been the stuff of a great TED talk. Anyone? … Anyone?

__________________

THE THEORY OF INCOME AND EMPLOYMENT
14.451
E. D. Domar

MIDTERM EXAMINATION
November 27, 1968

Seventy-five minutes

Please answer all questions. Note their weights. Use a separate book for each question.

  1. [30%] “One of the basic defects of the American economic system lies in the presence of a large number of persons who receive legal incomes and yet perform no useful services. The inclusion of their incomes in the national income total (according to accepted methods) undoubtedly exaggerates this total.”
    Discuss this statement carefully. Distinguish different kinds of income and different sources. In each case indicate how national income (or product) will be affected if these persons were employed productively. (What does “productively” mean in this context?)
  2. [30%] In national income comparisons between the Soviet Union and the U.S. (or other pairs of less developed and advanced countries) it is usually thought that existing methods of social accounting understate the ratio of Russian to American income, particularly if official rates of exchange are used for conversion.
    1. Evaluate this statement critically and indicate whether or not you agree with it and why.
    2. Suppose the comparison was made first in Russian prices (for both countries) and then in American prices (again for both countries). Which one should give the Russians a more favorable ratio and why? (Hint: consider comparisons over time in the same country.)Note: Disregard the complexities of the Russian price system: remember that the Russian ruble is not freely convertible into other currencies.
  3. [25%] a. What role or roles does the so-called “Money Illusion” play in the Classical and Keynesian systems?

b. If a country is suffering from inflation, will an increase in output brought about by the reduction in unemployment (assuming that it existed) intensify or reduce the inflation? Why? (Hint: this is not an easy question; consider carefully the nature of output to be produced.)

  1. [15%] If you wanted to measure labor or other factor productivity would you or would you not use the Federal Reserve Index of Industrial Production? Why or why not?

 

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archives. Evsey D. Domar Papers. Box 17, Folder “Macroeconomics Examinations (1 of 3)”.

__________________

THE THEORY OF INCOME AND EMPLOYMENT
14.451
E. D. Domar

FINAL EXAMINATION
Jan. 28, 1969

Three hours

Please answer Question 1 and any FOUR out of the five remaining questions. Use a separate book for each question.

  1. [24%] An overheard argument among students in 14.451 about measures required to increase investment:

Student A: Increase the quantity of money in order to reduce the rate of interest.

Student B: No, an increase in the quantity of money will merely raise prices.

Student C: A fall in the rate of interest will not have any appreciable effect on investment in any case.

Student D: A fall in the rate of interest will reduce savings, and thus reduce rather than increase investment.

Student E: To increase investment we should increase savings by increasing income inequality.

Student F: On the contrary, greater income equality will increase savings.

Student G: You are both (That is, E and F) wrong: the fraction of income saved is independent of income distribution and of the size of a person’s income.

Student H: To increase investment we should increase demand by increasing consumption and thus reducing saving.

Student I: Nothing will help unless you reduce the prices of machinery and construction.

Student J: You (that is, Student I) are wrong: your suggestion will merely reduce the amount of investment.

Please set this poor, confused group straight (if you can). In so doing, explain clearly the assumptions and conditions implied in each statement and evaluate it critically. Try to identify the opera (and its author) from which each aria is taken. How would you go about increasing investment?

  1. [19%] “Thus the rate of interest is what it is because it is expected to become other than it is; if it is not expected to become other than it is, there is nothing left to tell us what it is…”
    1. Can you identify the author of this famous statement?
    2. Can you recognize whose interest theory he referred to?
    3. Explain and evaluate that theory critically.
    4. Present your own (original or otherwise) theory of interest.
  2. [19%] a. Assume that all expenditures on education and training, both private and public, are to be treated as investment. Explain the modifications that you would make in existing methods of national income, (and product) and wealth accounting and the reasons for these changes.

b. In computing national product, each commodity (or service) is multiplied by its price in order to compute the total. What is the rationale for this method? What assumptions is it based on? Are these assumptions realistic?

  1. [19%] Suppose Project I has a higher internal rate of return, while Project II has a larger discounted value. Assume that the projects are mutually exclusive, and that both are being considered by a private firm.
    1. Explain the rationale of each method and the assumptions it is based on.
    2. Which method (that is, the internal rate vs. present value) would you use under what conditions and why?
    3. How will your calculations be changed if the projects are undertaken by a government of some underdeveloped country?
  2. [19%] a. “A high ratio of depreciation to investment is a sign of old age.”

b. “If the measured distribution of income remained the same in the U.S. over the last fifty years, the distribution of permanent income has become less equal.”
Comment. Explain your conclusion thoroughly.
c. “If the Balanced-Budget Theorem is correct, is Say’s Law also correct?”
Comment. Explain what is meant by each part of this statement.

  1. [19%] a. “What is the proper definition of money required in the Price-Flexibility (Patinkin-like) problems? Why and how does it differ from the usual definition?
    Explain what elements of American money supply and of other relevant assets you would include or exclude in the proper (for this purpose) definition of money.

b. Explain how Patinkin’s conclusions regarding the effects of an increase (say, of doubling) in the quantity of money “by magic” on the price level and on the rate of interest are modified by the existence of the money illusion in the labor market.
c. Assume the absence of money illusion and explain why the effects of creating money by open market operations differ from those when money is created “by magic.”

 

Source:Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archives. Evsey D. Domar Papers. Box 17, Folder “Macroeconomics Examinations (2 of 3)”.

Image Source: Evsey D. Domar at the MIT Museum.

Categories
Funny Business M.I.T.

M.I.T. Economics Christmas skit with basketball theme, 1961

Boston, MA - 1/1/1960: From left, Boston Celtics players Tom Heinsohn, Bill Russell, Capt. Bob Cousy, Bill Sharman and Frank Ramsey pose together at the Boston Garden in Boston circa 1960. (Boston Globe Archive/) --- BGPA Reference: 170504_BS_001

 

Spoiler alert: you are about to encounter one of the least funny economics skits in the history of the genre, so this artifact is regrettably low on entertainment value.  Still the six acts have a certain seven-acts-of-man structure: Act I (the department recruits), Act II ( advising the first-year student), Act III (graduate student complaints), Act IV (choosing guest speakers), Act V (general examinations), Act VI (job market). 

After reading the skit, you might need a palate cleansing or better: for that purpose here are a few links to the key word “Funny Business” at Economics in the Rear-view Mirror that take you to some of the greatest hits of economics skits.

____________________

ANOTHER TWO POINTS FOR THE FACULTY,
ANOTHER FOUL ON THE STUDENTS

A Christmas Drama (with suggestions for a cast), December 15, 1961

ACT I

(The curtain rises on a scene of [Edgar Cary] Brown, [Franklin Marvin] Fisher, [Charles Poor] Kindleberger and [Abraham J.] Siegel seated around a table reading applications.

SIEGEL: Here’s a guy who may be OK…No…the place is no good. A cow college. They average only 50 points a game.

BROWN:  Here’s a good one.

FISHER: What’s his record?

BROWN: Pretty darn good. Worth at least tuition plus $500. Maybe $750.

FISHER: What’s his record?

BROWN: Pretty darn good. He’s from Podunk. And they’re pretty good. He was the best they had.

FISHER: How did he score, for crying out loud?

BROWN: He’s six-feet-five, weighs 195 pounds, and fast; he averaged 23.7 points a game. He has a great set shot, never misses from the foul line, and superb off the backboard. He’s just what we need in Graduate Economics at M.I.T.

 

ACT II

(An office: Siegel is advising a student.)

SIEGEL: For the first year I would take pretty standard fare: theory, history, statistics, finance, and international, plus of course the workshop. There’s no use trying to take too much. Pace yourself.

STUDENT (perhaps [Stephen Herbert] Hymer?): I don’t have much math. Why do I need to take statistics?

SIEGEL: Ando is very good. He doesn’t always make things completely clear, but you have to take statistics if you want to be able to handle averages, to work out the point per game and point per shot records; and you need probability to help compute odds on all the league games. Statistics is a must.

STUDENT: Why the history, finance and international?

SIEGEL: International is important. You ought to know how to schedule the Harlem Globetrotters, and who has the best chance in the Olympics. One of our best graduates played on the Oxford team against Poland and Czechoslovakia. That was Chuck Cooper, and it got him a job as Walter Heller’s assistant at the Council. Finance is important. When the gamblers start bribing players you need to know how to invest the funds. And history is vital. On the general exams they always ask who was James Naismith, the man who invented basketball. That’s for every student. The good students they ask when it was invented…of course 1891. And the very best students they ask where…past, Springfield, Mass. Remember, it’s not Springfield, Illinois. That’s Abe Lincoln.

STUDENT: OK. But tell me about the last one.

SIEGEL: Theory isn’t much. [Paul Anthony] Samuelson teaches about how to make inputs for two points, and when to dribble.

STUDENT: Samuelson teaches drivel?

 

ACT III

(A group of students, griping.)

STUDENT 1 (Francis Michel Bator?): This place is no good. It’s theory, theory, theory all the way. Anyone knows that the way to win at basketball is to practice. Practice makes perfect. Theory makes perfect fools. All you do is study and take exams. “Who was James Naismith? Who was Adam Yea-Smith? When do you chop down the tree?” Bah! I say we ought to study policy. With a two-point lead and three minutes to go, should you freeze the ball or plop in an input for an output of two points?

STUDENT 2 ([Paul Narcyz] Rosenstein-Rodan?): They tell me [Robert Merton] Solow has been converted from theory to policy. He is no longer interested in questions like whether the best set shot is an inverted rectangular parabola, but real issues, like the queuing problem: how many substitutes does a team need to field five men for an hour, with one personal foul every six minutes and four personal fouls per man disqualifying. If you have too many players on the bench you get unemployment. The team needs growth. Maybe you ought to add a man and play six.

STUDENT 3 ([Robert] Evans?): What’s bad is to have to play far away from the Sloan building. Those workshops on top on Walker and over in the Armory are OK, but they are too far away. We need the Ford Foundation to give us a workshop right here.

STUDENT 1: Haven’t you heard? The talk is that the new building to go up in the back lot is a library. But as I see its dimensions unfold- 90 feet by 50 – and transparent backboards and netting and grandstands, I can’t believe it’s a library. It must be a basketball court.

 

ACT IV

(A meeting of the G.E.A.)

RALPH BULL (played by [Robert Lyle] Bishop?): Do any of you fellows have suggestions for speakers besides Cousy, Russell, Jungle Jim Lusketoff, and that 6.8 outstanding economist, [John Kenneth] Galbraith, who can stand with his head coming up through the basket?

STUDENT B: What about Milton Friedman? He is under the five feet which some say is the minimum allowable in a monetary theorist, but he sure is good at the far-fetched shot.

STUDENT B: Why not get Clifford Odets?

RALPH BULL: Clifford Odets? Why him?

STUDENT B: Don’t you remember the famous line in “Awake and Sing”? “My brother Sam joined the Navy. He don’t know from nothin’, that dumb basketball player.” I want to know whether the emphasis is “that dumb basketball player” or “the [sic] dumb basketball player”. Are there any smart basketball players?

 

ACT V

KINDLEBERGER: As chairman of this exam, let me tell you that you have the right to pick the order of your exam. Do you want to start with Theory, or Statistics?

STUDENT (Samuelson?): I think I’ll start by jumping against Fisher, your professorship, sir. Ando’s the smaller, so I’ll take him last when I’m tired.

KINDLEBERGER: All right. (Student and Fisher face each other. Kindleberger blows whistle and throws imaginary ball. Cheers of amazement from faculty.)

FISHER: Very well. I have decided to let you combine Theory and Economic History.

STUDENT: Hey, Ref, your Ph.D.ship, sir, I’m not responsible for History. Isn’t that a foul?

KINDLEBERGER: I didn’t see nuthin’.

FISHER: Consider the population explosion of the last 150 years. Discuss the relative roles of (a) men and (b) women in this affair.

ANDO [Albert Keinosuke] : Good shot. That’s two points for our side.

STUDENT: I don’t know that, your cap-and-gownship, sir, but I know the roles are neither reflexive, symmetric, or transitive.

KINDLEBERGER: (blows whistle) Foul. You used big words in a generals. That’s only permitted the faculty.

FISHER: I’ll give Albert my free throw.

ANDO: (taking the foul shot) Please discuss the role of the nearly decomposable take-off in the application of a priori oligopoly theory to the A&P case.

STUDENT: Hey! You guys are ganging up on me.

ANDO: Well, you outnumber us in class.

STUDENT: (driving hard for basket) It can be set up as a nine-dimensional matrix problem and the latent roots dispensed with. I think the take-off is fine if done along the turnpike, watching out for model changes in passing cars.

ANDO: Fantastic! (Faculty huddle.)

KINDLEBERGER: That was a good answer. We’ve decided to give you an Excellent minus for being a good scorer, but to ask you to leave the Institute for fouling out on personals.

KINDLEBERGER, ANDO, FISHER: Rah, team!

 

ACT VI

DOMAR [Evsey David]: Well, you have the degree wrapped up, and now want a job. Not bad. You got a good grade on the orals, and would have gotten a top grade if you hadn’t thought that Stilt Chamberlain played for the Celtics and failed to distinguish Slippery Sam Jones from Casey Jones. Your thesis was entirely satisfactory, on a good topic: How to Get to the Boston Garden from Madison Square Garden: An Application of the Turnpike Theorem. And you even did languages: basketball communication in the Ivy League, or basketball with a broad A. Now the job. What do you think? Big Ten? Ivy League? Small liberal arts? Girls’ rules like Wellesley or Vassar? Or maybe the real big time: Kentucky, Long Island University, St. Joseph’s in Brooklyn, Notre Dame. L.I.U. is to economics like M.I.T. was to economics.

STUDENT (perhaps [Max Franklin] Millikan?): I don’t now if I’m ready for the Big Time.

DOMAR: What about applying some of your basketballmetrics for the government? They need our graduates. Or for an oil company. Maybe you would like to take a ball and a whistle and go abroad, demonstrating technical assistance to underdeveloped countries. There are jobs like that.

STUDENT: No. I guess I’m fussy. What I’d like is just what all the gang would like, to stay here at Cambridge with Harvard and the Celtics, and to referee like you and [Robert Lyle] Bishop and Samuelson, always blowing off your whistle and shouting foul, going first class to conferences, and shouting foul, foul, foul at the students.

 

Source:  M.I.T. Archives. MIT Department of Economics records, Box 2, Folder “GEA 1961-67”.

Image Source:  Boston Celtics players Tom Heinsohn, Bill Russell, Bob Cousy, Bill Sharman and Frank Ramsey in 1960. “Twelve of the greatest Celtics players of all time”  from Boston.com website (March 18, 2018)

 

Categories
M.I.T. Regulations

M.I.T. No general foreign language requirement in MIT Economics PhD program, 1969

 

While the general foreign language requirement for an economics PhD was officially abolished at M.I.T. in 1969, at least Charles Kindleberger (European Economic History) and Evsey Domar (Communist Economies) were free to require their thesis writers to demonstrate competency in a foreign language as needed for research.

________________

Carbon copy of letter from E. Cary Brown to William F. Bottiglia

May 14, 1969

Professor William F. Bottiglia
Head of Department
Modern Language
14N-207

Dear Bill:

The following statement describes our new language requirement. As you see, we hope that your Department will police it when it is needed.

*   *  *   *   *  *   *   *

“The Department has no general foreign language requirements. When a foreign language is essential for full access to the literature in the field of the student’s major interest (e.g., European Economic History, Communist Economies) or to his thesis research, a language requirement will be imposed by the Department upon the recommendation of the Thesis Superviosr or the Graduate Registration Officer. Such a requirement will be administered by the Department of Foreign Literatures and Linguistics, and can be met by satisfactory course work at M.I.T., at other schools, or by examination.”

Sincerely yours,

E. Cary Brown, Head
Professor of Economics

ECB/mr

Source:  M.I.T. Archives. Department of Economics Records, Box 2, Folder “Grad Curriculum”.

Image Source: Technology Review, February 1914.

Categories
Exam Questions Johns Hopkins

Johns Hopkins. Exams for graduate course on business cycles. Domar, 1951-54

 

Below are three final exams for the Johns Hopkins University graduate course on business cycles taught by Evsey Domar. The examination for 1948-49 has been posted earlier, we see that a few of those questions were recycled below.

_______________

Economics 617
BUSINESS CYCLES

Three hours —January 25, 1951—E.D. Domar

  1. How does the U.S. Department of Commerce treat the following items in the computation of gross national product, national income and consumers disposable income:
    1. Interest on the Federal debt paid to consumers.
    2. Dividends received by American consumers from abroad.
    3. Personal income taxes.
    4. Sales taxes.
    5. Social security payments made by the government to individuals.
    6. Undistributed profits of corporations. If you disagree with the Commerce Department methods, present and justify the methods you would recommend.
  2. Set up a simple model of the Keynesian system including its interest theory and explain its essential differences from the so-called classical system.
  1. 1. Construct a model according to the following conditions:

a) Consumption of a given period is a linear function of the income of the same period.
b) Investment of a given period is a linear function of the difference between incomes of two immediately preceding periods.
c) Income is the sum of consumption, investment and an export balance (constant), all of the same period.

  1. Derive the equation describing the movement of income over time.
  2. Analyze this equation for convergence, divergence and fluctuations and derive the critical values of the parameters.
  3. Make a graph of your results.Give a careful explanation of each step.
  1. Now that we are entering an inflationary period, increased production is suggested as an excellent anti-inflation measure. But larger production means larger incomes which intensify inflation. What then is the actual effect of increased production on inflation?
    Indicate clearly each step in your reasoning.

_______________

ECONOMICS 618
BUSINESS CYCLES

E. D. Domar—Three Hours—May 21, 1952

Answer any four questions. They carry equal weights. Your reasoning is more important than your answers.

I.

“So far as capitalism is concerned we are undoubtedly justified in calling underconsumption a disease of old age.” (Paul Sweezy, The Theory of Capitalist Development,” p. 189.)
Comment.

II.

“Technological progress is alleged to create new investment opportunities by making existing capital assets obsolete. But to the extent that such obsolescence was foreseen, the assets were depreciated over a shorter period and thus gave rise to larger gross savings. Therefore expectedtechnological progress fails to stimulate the economy.”

III.

Hansen emphasizes the positive effect of the growth of population on investment, national income and employment. Yet during the depression many countries suffering from unemployment tried to reduce immigration.
Can you explain this contradiction?

IV.

About 1945 or 1946 when a large loan to Britain was discussed in Washington, the New York Times tried to justify it on the grounds that the British were sure to spend all this money in the United States. On the other hand, the Russians (who also might have asked for a loan) could not be so trusted.
Comment on this and develop your answer into an essay.

V.

Write an essay on any subject related to the course but not covered in your term papers. Take something interesting if possible.

_______________

THE JOHNS HOPKINS UNIVERSITY
E. D. Domar              May 21, 1954

ECONOMICS 617-618
(Business Cycles)

Three Hours

Answer all questions. They carry equal weights.

I.

Present and analyze some (respectable) business cycle theory not discussed in your own term paper.

II.

The following statement appeared in the National City Bank Monthly Letter (Jan. 1944) regarding government spending as a means of raising the level of income and employment:

“Government spending tends to be like a drug, in that it takes larger and larger doses to get results, and all the time debt and taxes get higher and higher.”

Comment. What could be said regarding private investment directed to the same purpose?

III.

“In spite of his claim to the contrary, Keynes did not succeed in proving the possibility of underemployment equilibrium if wages and prices were assumed to be flexible. That a long period of unemployment could persist as a result of wage and price rigidity we had known long before Keynes.”

Comment on this statement and show what effects flexible prices and wages would have on elimination of unemployment (in a depression) and a bottleneck (during inflation). Indicate clearly every step in your analysis. What practical recommendations follow from your discussion?

IV.

The following comment was made by Mr. Ayzenshtadt, a Soviet economist, in 1947:

“Even the greatest admirers of Keynes and of his theory that loan capital is the main propeller of the industrial cycle, do not see anything new in it…Keynes himself thinks that the ‘novelty’ of his system lies in the equilibrium formula of the economic process, in which the independent and dependent variables are arranged as follows:

Independent variables:

1. Propensity to consume
2. Marginal efficiency of capital
3.Rate of interest
4. Liquidity preference.

Dependent variables:

1. Saving
2. Investment
3. Level of employment.”

Comment. Be specific.

Source:  Duke University. David M. Rubenstein Library of Rare Books and Manuscripts. Economists’ Papers Archives. The Evsey D. Domar Papers, Box 16, Folder “Final Examination, Business Cycles”.

Image source: Domar, Evsey D.“” Webpage at the MIT Museum Website.

Categories
Courses Curriculum M.I.T.

M.I.T. Student evaluations of first term core macroeconomics. Domar, 1967-69

 

The economic theory core courses at M.I.T. during the four academic years 1966/67 through 1969/70 consisted of two terms of microeconomic theory (“Economic Analysis”, 14.121 and 14.122) and two terms of macroeconomic theory (“Theory of Income and Employment”, 14.451, and “Economic Growth and Fluctuations”, 14.452). The instructors for the course by academic year were: 

 14.121 (Term 1) 14.122 (Term 2) 14.451 (Term 1) 14.452 (Term 2)
1966/67 Bishop Samuelson Eckaus

Solow

1967/68

 Bishop Samuelson Domar Solow
1968/69 Bishop Samuelson Domar

Foley

1969/70

 Bishop Samuelson Domar

Foley

A retrospective evaluation survey of these four courses was conducted (probably) sometime in late-1970. The original student responses wound up in Evsey Domar’s files and can be found today in his papers in the Economists’ Papers Archive at Duke University.

In other posts we have the responses for Robert Bishop’s Economic Analysis (14.121), Paul Samuelson’s term of Economic Analysis (14.122), and Robert Solow’s/Duncan Foley’s Economic Growth and Fluctuations (14.452).

In this post we’ll look at Evsey Domar’s course, Theory of Income and Employment (14.451),  that covered the topics:

national income,
general aggregative systems,
price flexibility and employment,
theory of interest and demand for money,
consumption and savings,
investment,
multiplier and accelerator,
employment and inflation.

First I provide the information about the course found in the announcement in the MIT course catalogues that essentially remained unchanged for the years from which the evaluations were solicited. The official course staffing and enrollment data that follow the course announcement confirm that Evsey Domar taught 14.122 in the last three years surveyed. We also learn the names of the two instructors who taught the recitation sections for Richard Eckaus and Evsey Domar.

Next I include the cover letter for the questionnaire sent out along with a tabulation of responses to the qualitative questions regarding the amount of economics presumed, the amount of mathematics and the balance of the course among the topics nominally covered.

Finally, and very much worth reading!, the interested visitor will find transcriptions of the written student comments concerning Domar’s course.

____________________

Announcement in the Course Catalogues

14.451T Theory of Income and Employment(A)

[Eckaus]
Prereq.:14.05
Year:G (1) 4-0-8

Examination of principal determinants of aggregate levels of income and employment.

Source: MIT. Catalogue 1966-67: p. 291.

page 219:

“ ‘T’ at the end of a subject number indicates that (1) a change has been made in the content or units of the subject or (2) the number was previously assigned to a different subject.
(A)’ following the name of a subject indicates that it is an approved subject for a graduate degree…
‘G’ is a graduate subject.
The time distribution of the subject, showing in sequence the units allotted to: recitation and lecture; laboratory, design, or field work; and preparation. Each unit represents 15 hours of work. The total unit credit for a subject is obtained by adding together all the units shown. One unit of recitation or lecture credit, and two units of laboratory or design credit, are each equivalent to one semester hour.”

Catalogue 1967-68: Course number drops T; Domar is the instructor, p. 307

Catalogue 1968-69:  Prerequisite for 14.451 changed to 14.06T, p. 312

Catalogue 1969-70:  no change, p. 294.

____________________

Course staffing and enrollments 14.451
First term of 1966-1969

1966: Term I. 3 hours/week. 44 regular students, 2 Listeners.

Professor Eckaus with Instructor J. R. Harris

1967: Term I. 3 hours/week 55 regular students, 4 Listeners.

Professor Domar with Instructor J. R. Harris

1968: Term I.  3 hours/week, 55 regular students, 3 Listeners

Professor Domar with Assistant S. Lewis  (1 hour per week recitation)

1969: Term I. 3 Hours/week. 51 regular students, 2 Listeners.

Professor Domar with Assistant Professor J.R. Harris (1 hour per week recitation)

Source:M.I.T. Archives. Department of Economics Records. Box 3, Folder “Teaching Assignments”

____________________

THEORY QUESTIONNAIRE

There are two problems that the theory sequence must continually face if it is going to be as useful as possible. The first of these is adjusting to the changing background of the incoming students. The second is adjusting to the changing needs of students who will use the theory course as background for other courses and research. This questionnaire is an attempt to gather information of the current state of the theory sequence relative to these two questions. The enclosed forms contain an outline of each of the theory courses and asks three questions.

These pertain to each heading in the course outline:

Does the course assume too much or too little economics background in this area?
Does the course use too much or too little mathematics in this area?
Given the overall constraint of time, is this area gone into too deeply or not deeply enough?

For each of the questions there is room to check too much or too little, no check at all to be given if the course is about right. Please put the year in which you took the theory courses at the top of each page. There is also room in each area for more detailed comment. Use this space to be specific on the changes in the given areas which you feel would be improvements—particularly in answer to question 3. Use the space at the bottom of each page to comment on topics that are not on the list, but should appear in the course; or to make other comments we haven’t thought to ask for.

Please return to 52-380 (Miss Pope) before Tuesday, October 21.

 

[Summary from 20 student responses:
of which 8 from 1967-68; 10 from 1968-69; 2 from 1969-70]

Ec 451:

 Economic background Math

Coverage
National Income Too little: 4

Too much: 0

 Too little: 1

Too much: 1

 Too deep: 10

Not deep enough: 2
General Aggregative systems Too little: 3

Too much: 1

 Too little: 2

Too much: 0

 Too deep: 1

Not deep enough: 4
Price Flexibility and employment Too little: 2

Too much: 1

 Too little: 1

Too much: 0

 Too deep: 3

Not deep enough: 4
Theory of interest and demand for money Too little: 2

Too much: 1

 Too little: 1

Too much: 0

 Too deep: 1

Not deep enough: 7
Consumption and savings Too little: 3

Too much: 0

 Too little: 1

Too much: 0

 Too deep: 2

Not deep enough: 5
Investment Too little: 2

Too much: 0

 Too little: 1

Too much: 0

 Too deep: 0

Not deep enough: 9
Multiplier and accelerator Too little: 2

Too much: 0

 Too little: 2

Too much: 0

 Too deep: 0

Not deep enough: 5
Employment and inflation Too little: 2

Too much: 1

 Too little: 1

Too much: 0

 Too deep: 0

Not deep enough: 13

 

Note: the responses from Richard Eckaus’ time (first term, 1966-67) have been excluded from this table, so the above are solely for the three years Evsey Domar taught the theory of national income and employment.

 

From the student comments
[each bullet point from a different student]

YEAR TAKEN: 1967-68

  • The Worst Course of the sequence, especially the section’s instructor. Applies to all these points. Tries to cover too much; being an authority in (almost) nothing. Applies to both instructors.
  • I don’t remember 451 very well—it was an awfully unstructured course (+ remains so in my mind), mybe because of the variety and profuseness of the subject matter. Too little guidance from Professor Domar + Harris—i.e., their considered opinion should be given more often.
    National income: Too much on statistics, tho I agree some is needed. That problem in class was a pile of crap—I can’t add anyway.
    General aggregative systems: more tournaments needed.
    Theory of interest and demand for money: more needed, and more guidance from profs.
    Investment: more needed and more guidance from profs.
  • Price flexibility and employment: I thought the section of the course on Patinkin was extremely interesting and well done.
    Consumption and saving: A unified treatment of the competing theories would be preferred to the n-th repetition of Duesenbery, Friedman, Modigliani.
    [for both 451 and 452]: As these courses were taught two years ago there was too little integration of the two terms. Partly this reflects a real gap in macro theory itself; I would like to see an integration of the Patinkin-type of analysis into growth theory.

 

YEAR TAKEN: 1968-69

  • National income: good that this is done, even if not very pleasant at the time
    Price Flexibility and employment: Too much on Patinkin.
    Employment and inflation: More important to cover this Phil curve., monet v. fiscal pol debate etc. than Patinkin
    Perhaps 451 could have assumed more backgrd as it tended to be slow going sometimes. But that’s a minor point. And better that way than to blur over the material too fast. 14.451 exam questions tended to be well-set + testing e.g. the opera + arias.
  • National Income: The index no. prob. was discussed at too great length and too little depth.
    General Aggregative systems/Price flexibility and employment: These two topics were covered fairly well.
    Theory of interest and demand for money: coverage sketchy
    Consumption and savings: very well discussed
    Investment: All I know about investment I learned in other courses—14.452, monetary, econometrics.
    Multiplier and accelerator: The Samuelson multiplier-accelerator article is read in 14.452; all of the items covered in 14.451 under this heading are silly.
    Employment and inflation: no coherent coverage at all.
  • Multiplier and accelerator: Difference equations ought to be specifically covered, with some applications.
  • National Income “+index numbers”: Time should have been more carefully allocated in order to include appropriately the last part of the course.
  • National Income and General aggregative systems: too much, need new, simpler national income.
    Pretty good presentation of money topics.
    No coverage of Investment/Multiplier+Accelerator/employment and inflation at the end.
  • National income: Although this certainly should be covered—too much time is spent on this topic.
    General aggregative systems: Nothing is done in the course on modern macro-static models & e.g.—the Correspondence Principle. The course must assume a complete background in standard macro—because this is hardly covered.
    Much too much time is spent on Patinkin—which could be sued for covering Modern Macro-Static models.
  • Price flexibility and employment: the basics of Keynes should be discussed more.
    Employment and inflation: inflation models of newer sort should be included.
  • I don’t want N.I. removed from 451, just reduced!
    [comment for all topics besides national income]: I realize that this is an impossible preference [to have more depth in all the other topics of 451], maybe the answer is another course in macro theory! or less of other things in 452.
  • [For both 451 and 452]: I do not like the Socratic method, especially when applied to solving differential equations. All courses tend to move too slowly at the beginning.
  • National income: It was a mistake to spend so much time on this + none on inflation—change priorities.
    Investment: Treated a little superficially
    Multiplier and accelerator: Use difference equation techniques.
    Employment and inflation: This was not covered at all unfortunately.
    In general 452 was good, 451 seemed weak.

 

Source:  Duke University. David M. Rubenstein Rare Book and Manuscript Library, Economists’ Papers Archive. Evsey D. Domar Papers.Box 16, Folder “Student Evaluations (1 of 2)”.

Image Source: MIT Museum website

Categories
Courses M.I.T.

M.I.T. Student evaluations for core microeconomics course taught by Samuelson, 1970

 

The economic theory core courses at M.I.T. during the four academic years 1966/67 through 1969/70 consisted of two terms of microeconomic theory (“Economic Analysis”, 14.121 and 14.122) and two terms of macroeconomic theory (“Theory of Income and Employment”, 14.451, and “Economic Growth and Fluctuations”, 14.452). The instructors for the course by academic year were: 

 14.121 (Term 1) 14.122 (Term 2) 14.451 (Term 1) 14.452 (Term 2)
1966/67 Bishop Samuelson Eckaus

Solow

1967/68

 Bishop Samuelson Domar Solow
1968/69 Bishop Samuelson Domar

Foley

1969/70

 Bishop Samuelson Domar

Foley

A retrospective evaluation survey of these four courses was conducted (probably) sometime in late-1970. The original student responses wound up in Evsey Domar’s files and can be found today in his papers in the Economists’ Papers Archive at Duke University.

In other posts we have the responses for Robert Bishop’s Economic Analysis (14.121), Evsey Domar’s National Income and Employment (14.451) and Robert Solow’s/Duncan Foley’s Economic Growth and Fluctuations (14.452).

In this post I’ll limit attention to the term in the core taught by Paul Samuelson, namely, course 14.122 that covered the topics of consumer theory, general equilibrium, capital theory and welfare economics.

First I provide the information about the course found in the announcement in the MIT course catalogues that essentially remained unchanged for the years from which the evaluations were solicited. The official course staffing and enrollment data that follow the course announcement confirm that Paul Samuelson taught 14.122 in the four consecutive years surveyed. We also learn the names of the four instructors who taught the recitation sections for Samuelson’s course.

Next I include the cover letter for the questionnaire sent out along with a tabulation of responses to the qualitative questions regarding the amount of economics presumed, the amount of mathematics and the balance of the course among the topics nominally covered.

Finally, and very much worth reading!, the interested visitor will find transcriptions of the written student comments concerning Samuelson’s course. These reports of Samuelson’s teaching from the last half of the 1960s are consistent with my memory from the spring of 1975. The general laments about economic theory seen in some of the evaluations are not unfamiliar to those who have cared to listen to their students over the intervening decades.

____________________

Announcement in the Course Catalogues

14.121T Economic Analysis (A)

[Bishop]
Prereq.: 14.03
Year: G (1) 4-0-8

14.122T Economic Analysis (A)

[Samuelson]
Prereq.: 14.121
Year: G (2) 4-0-8

General theory of equilibrium under competition and monopoly. Theory of consumer choice, of demand, of the firm, of production and distribution, of welfare economics.

Source:  MIT. Catalogue 1966-67, p. 289.

“ ‘T’ at the end of a subject number indicates that (1) a change has been made in the content or units of the subject or (2) the number was previously assigned to a different subject.

‘(A)’ following the name of a subject indicates that it is an approved subject for a graduate degree…

‘G’ is a graduate subject.

The time distribution of the subject, showing in sequence the units allotted to: recitation and lecture; laboratory, design, or field work; and preparation. Each unit represents 15 hours of work. The total unit credit for a subject is obtained by adding together all the units shown. One unit of recitation or lecture credit, and two units of laboratory or design credit, are each equivalent to one semester hour.”
Source:  MIT. Catalogue 1966-67, p. 219.

MIT. Catalogue 1967-68: Same without T, p. 305. 
MIT. Catalogue 1968-69: Prerequisite for 14.121 changed to 14.04T, p. 310.
MIT. Catalogue 1969-70:  p. 293.

____________________

Course staffing and enrollments 14.122
Second term of 1967-1970

1967: Term II. 3 hours/week. 40 regular students, 0 Listeners.

Samuelson with Assistant Professor C. D. MacRae

1968: Term II. 3 hours/week. 53 regular students, 3 Listeners.

Samuelson with Instructor D. Jaffee [2 sections]

1969: Term II.  4 ½ hours/week. 49 regular students, 1 Listener

Samuelson with visiting Assistant Professor H.J.B. Rees.

1970: Term II. 3 Hours/week. 40 regular students, 0 Listeners.

Samuelson with Assistant Professor  R. E. Grieson (1 hour per week recitation)

Source: M.I.T. Archives. Department of Economics Records. Box 3, Folder “Teaching Assignments”

____________________

THEORY QUESTIONNAIRE

There are two problems that the theory sequence must continually face if it is going to be as useful as possible. The first of these is adjusting to the changing background of the incoming students. The second is adjusting to the changing needs of students who will use the theory course as background for other courses and research. This questionnaire is an attempt to gather information of the current state of the theory sequence relative to these two questions. The enclosed forms contain an outline of each of the theory courses and asks three questions.

These pertain to each heading in the course outline:

Does the course assume too much or too little economics background in this area?
Does the course use too much or too little mathematics in this area?
Given the overall constraint of time, is this area gone into too deeply or not deeply enough?

For each of the questions there is room to check too much or too little, no check at all to be given if the course is about right. Please put the year in which you took the theory courses at the top of each page. There is also room in each area for more detailed comment. Use this space to be specific on the changes in the given areas which you feel would be improvements—particularly in answer to question 3. Use the space at the bottom of each page to comment on topics that are not on the list, but should appear in the course; or to make other comments we haven’t thought to ask for.

Please return to 52-380 (Miss Pope) before Tuesday, October 21.

[Summary from all 22 student responses:
of which 2 from 1966-67; 8 from 1967-68; 10 from 1968-69; 2 from 1969-70]

Ec 122:

 Economic background Math

Coverage

Consumer theory

 Too little: 0

Too much: 1

 Too little: 1

Too much: 1

 Too deep: 3

Not deep enough: 1

General equilibrium

 Too little: 0

Too much: 1

 Too little: 2

Too much: 0

 Too deep: 0

Not deep enough: 8

Capital theory

 Too little: 2

Too much: 2

 Too little: 1

Too much: 0

 Too deep: 0

Not deep enough: 12

Welfare economics

 Too little: 1

Too much: 1

 Too little: 0

Too much: 0

 Too deep: 0

Not deep enough: 7

 

From the student comments,
Each bullet point from a different student.

YEAR TAKEN: 1967-68

  • Neither of the courses [121/122] give any mention to the modern treatments (esp., set-theoretic approach) of this material.
  • Needs much more [capital theory]
  • For 121 and 122: Both these courses are excellent for covering the technical aspects of price theory—but both fail to provide a “total picture” of what price theory is about”.
  • General equilibrium: some of the new formulations should be discussed.
    Capital theory: less classical, more current theory would be better.
  • OK [for assumed economics background, math, coverage].
    Capital theory: need more and careful lectures—this hard to comprehend
    Welfare economics: good.
  • Math in this part was not too much if it had been presented without assuming we already knew it all—could have had more careful explanation of mathematical concepts used without decreasing the amount or level of math used. [secretary wrote at top of page: not in tabulation—she just gave it to me]
  • For 121 and 122:In general, I thought both terms, despite their widely differing methods, were quite good. I would like to see more problem sets in 122, however, if necessary, just simplified examples of the theorems proved in class. Specifically, there are too few problems in general equil, of 2 person, 2 good sort. Such problems could usefully illustrate gen. equil. and welfare econ. and the differences between the two types of analysis.

 

YEAR TAKEN: 1968-69

  • Consumer theory: would have been better to start with the simplest case rather than with that rather horrific 1st lecture, which was not al all clear.
    Capital theory: coverage was not clear
    Welfare economics: would have liked more.
    GENERAL exam questions in 14.122 re discrimination etc were very interesting + tested absorption of material much more than the standard “regurgitate” question.
  • While the noted professor who offers this course is a student of economic history [history of economics is what is clearly meant] par excellence, gifted with a dashing wit and a marvelous grasp of the anecdotal style, his comparative advantage most certainly lies in economic theory. His students have, no doubt, considered the stage as a possible career, and have universally rejected it in favor of Economics. It logically follow then that in any 90 minute period the teaching of Economics should occupy at least the majority of the time. Theatrics has its place, no doubt, to add flavor and wit to the otherwise Dismal Science, but balance is of the essence. In retrospect, we seem to have covered several major topics during the course of the term. The mind boggles at the thought of what we might have done with an hour and fifteen minutes of economics per period instead of the usual 20 minutes! (A little more care in the preparation of handouts would also have been highly appreciated).
    On a more serious note, I would personal have appreciated a more thorough analysis of the normative branch of Economics. I feel that much more time should have been allotted to Welfare Economics, in particular, to the implications of economic theory to actually policy questions. I don’t believe, as Samuelson implied in his Chomsky “debate”, that normative considerations come only after the scientist has completed his appropriate (positive) tasks. The economist has a very definite social responsibility, to which all the theorizing in the world, taken by itself, contributes not in the least.
    Comment on the Basic Theory (and, in fact, most of the courses taught at M.I.T.) The basic trend that Economics appears to be following, at least at the Ph.D. level, distresses me more and more with each consideration. High powered theory, while undoubtedly a great mental exercise, becomes merely a game when it seeks to find justification solely within itself. As young economists in an increasingly troubled world, we have a distinct obligation and a unique opportunity to aid society. Economics prides itself at its supposed superiority over its sister Social Sciences, yet it is letting its advantages, an in fact its raison d’être, slip away. Our students are far too complacent, and the course material we are taught helps perpetrate this disease. A far greater stress must be place on realism, applications and normative goals. A discipline that exists merely or mostly in professional journals and material that has as its only object the employment of economics professors is an anachronism and a decided mis-allocation of resources.
  • The topics are well chosen and worthwhile and the readings are valuable. But Prof. Samuelson should spend more time organizing his lectures and guiding his students through these unfamiliar fields and less time telling his fascinating, charming, and irrelevant stories. The lectures are the weakest part of the course.
  • Samuelson wastes the opportunity. Too many anecdotes, not enough time on the actual material. Needs to be much more systematic and organized.
  • Capital theory and welfare economics, particulary the former should have been gone over in more detail-excessive speed obscures the fact that the overall coverage may be good and satisfactorily deep.
  • General equilibrium: The 2-factor, 2-good example would be helpful here as an illustration.
    Capital theory: The treatment in this area seemed superficial. 122 would have been more enjoyable if I had had a prior course in the mathematical theory of optimizing with constraints.
  • 121-122-451-452 All four courses well taught: main difficulty with the theory sequence is the poor integration of the four parts. Less isolation, more cross-references would help.
  • [on math] Hicks reading is too mathematical or too old (Hicks…).
    [on coverage] reasonably good allocation [across topics]
    Welfare economics. Repetitive. Need typed notes. The notes are good should be typed.
    [In red marker:] Samuelson does not appear to want to teach 122.
    Find some new victim.

 

Source:  Duke University. David M. Rubenstein Rare Book and Manuscript Library, Economists’ Papers Archive. Evsey D. Domar Papers.Box 16, Folder “Student Evaluations (1 of 2)”.

Image Source:  Samuelson Memorial Information Page/Photos from Memorial Service.  Accessed via the Internet Archive Wayback Machine.

 

Categories
Exam Questions Johns Hopkins

Johns Hopkins. Mid-year and End-year final exams for business cycles. Domar, 1948-49

 

Copies of the examinations for Evsey Domar’s business cycles course at Johns Hopkins University offered during the 1948-49 academic year can be found in his papers at the Economists’ Papers Archives at Duke University but also in the archived collection of economics exams in the departmental papers at the Johns Hopkins archive. While Domar was fairly reliable in keeping copies of his course outlines and exams, I have yet to discover a course outline for any year. Perhaps he lent his sole copy to a colleague once?

Three sets of examination questions for 1951, 1952, and 1954 are also posted.

____________________

Course Announcement

Business Cycles 617-618. Associate Professor Domar. Two hours weekly through the year.

Statistical descriptions of fluctuations in economic activities and a systematic survey of past and present cycle theory.

 

Source: Catalogue Number of The College of Arts and Sciences; The School of Engineering; The School of Business in Johns Hopkins University Circular. New Series 1948, Number 3. Whole Number 579 (March, 1948) p. 85.

____________________

THE JOHNS HOPKINS UNIVERSITY
FINAL EXAMINATION

Economics 617
Dr. Domar

Wednesday, January 26, 1949—9 a.m. Three hours

ANSWER ALL QUESTIONS. THEY CARRY EQUAL WEIGHTS. I AM MOST INTERESTED IN YOUR REASONING.

I.

In the last days of the OPA, it was emphatically asserted by various quarters that the best cure against inflation lay in increased production. Assume than an increase in output was actually possible. Would not increased production, however, result in larger money incomes and thus produce an inflationary effect, or at least counteract the deflationary effect of the increase in output?
Analyse this problem. The quality and depth of your analysis will count more than its quantity.

 

II.

Mr. Ayzenshtadt, whose paper was read in class, has this to say about Keynes’ system:

“Even the greatest admirers of Keynes and of this theory that loan capital is the main propeller of the industrial cycle, do not see anything new in it….Keynes himself thinks that the ‘novelty’ of his system lies in the equilibrium formula of the economic process, in which the independent and dependent variables are arranged as follows:

Independent variables

  1. Propensity to consume
  2. Marginal efficiency of capital
  3. Rate of interest
  4. Liquidity preference

Dependent variables

  1. Saving
  2. Investment
  3. Level of employment.”

Comment. Be specific.

 

III.

“In spite of his claims to the contrary, Keynes did not succeed in proving the possibility of underemployment equilibrium if wages and prices were assumed to be flexible. That a long period of unemployment could persist as a result of wage and price rigidity we had known long before Keynes.”

Comment on this statement and show what effects would flexible prices and wages have on elimination of unemployment (in a depression) and stabilization of the price level (in an inflation). Indicate clearly every step in your analysis. What practical recommendations follow from your discussion?

 

IV.

Write for thirty – forty minutes on any subject covered in the course which is of interest to you, but is not included in the preceding questions and not studied in your term paper. Make sure you have something worthwhile to say.

*  * *  *  *

The Johns Hopkins University
Final Examination

Economics 618
Dr. E. D. Domar

May 25, 1949. Three hours

Answer all questions. They carry equal weight.

I.

The following statement appeared in the National City Bank Monthly Letter (Jan. 1944) regarding government spending as a means of raising the level of income and employment:

“Government spending tends to be like a drug, in that it takes larger and larger doses to get result, and all the time debt and taxes get higher and higher.”

            Can a somewhat similar statement be made regarding private investment as an instrument for achieving and maintaining a high level of employment? Discuss the problem thoroughly.

 

II.

Examine the monetary equations (Nos. 3.10, 3.11, 3.12 in Klein’s Model III. (You should have his paper with you.)

[Klein, Lawrence R. “The Use of Econometric Models as a Guide to Economic Policy.” Econometrica 15, no. 2 (1947): 111-51. ]

  1. Give a thorough analysis of their meaning and structure.
  2. Explain the function which they perform or are supposed to perform in the system taken as a whole.
  3. State your criticism of them and present your positive suggestions.

 

III.

A Congressional Committee is holding hearing to determine (a) the causes of depressions and, (b) the methods for their elimination. Mr. Hayek and Mr. Marx are testifying. (You may use Mr. Paul Sweezy instead of Mr. Marx if you don’t want to get involved with ghosts).

Present:

  1. A brief statement of each witness’ views on points (a) and (b).
  2. Your criticism and evaluation of these statemtns.
  3. Your own statements on points (a) and (b).

Make sure that your position is well taken because both the witnesses and the members of the Committee (not to say anything about your instructor) can attack you on any point. Be precise and specific.

 

IV.

Evaluate critically the present day business cycles theory and research. Present your positive suggestions for their improvement. In what direction should the study of business cycles, in your opinion, develop? Be specific.

 

Source:     Duke University. David M. Rubinstein Rare Book and Manuscript Library, Economists’ Papers Archive. Evsey Domar papers, Box 16, Folder “Final Exams: Johns Hopkins, Stanford, U of Michigan”.

Image Source: College yearbook portrait of Evsey [Domashevitsky] Domar from the 1939 UCLA yearbook.