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Econ520 - Term Paper

Fall 2022 - Prof. Lutz Hendricks

The term paper picks a topic, critically reviews the literature, and clearly lays out arguments on both sides of the debate.

The final version of the paper is due by the last class meeting.

Learning objectives:

  1. Find, select, and organize a literature.
  2. Summarize arguments concisely, but in such a way that the reader understands how each argument is supported.
  3. Practice scientific writing.


We will devote part of a class to questions such as: 1. What makes a good topic? 2. How to find literature? 3. How to summarize opposing arguments so that the reader can understand how each argument is supported.


  1. By week 4, each student picks a topic.
  2. By week 6, each student has collected at least 5 references that represent both sides of the debate at an appropriate level.
  3. By the week after the midterm, each student submits an outline of the main arguments.

As you write / develop your argument, you should get in touch with me periodically to make sure everything is on track (and to clarify questions).

Please provide all files in pdf format (not MS Word). I do not need hardcopies.


The paper should

  • demonstrate understanding of the literature
  • lay out arguments on both sides of a debate.
  • give the reader an idea about how the cited studies reached their conclusions
  • give an idea of magnitudes. Macro questions are often about quantifying tradeoffs. For example, it is obvious that more progressive taxes reduce inequality. But is this a big or small effect?

I do not expect

  • innovation, modeling, theory, or original data work.
  • that you read academic journal articles (though you should try).
  • that you reach a conclusion. If the experts disagree, I don't expect you to figure it out.

There is no prescribed length. Obviously, you don't want to hand in 2 pages.

Examples of well-written term papers: Negative interest rates, Racial inequality. These were done during a semester when the students spent less time on their papers. I expect more depth than these.

Notes on Writing

Cite your sources.

When you make a claim, back it up.

Use scientific citation styles.

In the text: "Smith (2020) says Blah."

In the bibliography: "Smith, Martin (2020). The Title. Journal of Economic Perspectives 3(4): 15-20".

Nice words come last.

First decide what you want to write. Outline that. When you are happy with the substance, fill in the words.

Visual structure.

There should be (sub-)headings that let the reader see at a glance how the document is structured.

Explain how conclusions are reached.

Saying "A study by X showed that increasing top marginal taxes reduce income inequality by Y" is not all that informative by itself. How was that conclusion reached? Why do other studies disagree?

Weave a narrative.

You don't want a laundry list of "A says X, B says Y, ...". Instead, it is better to have:

"The main disagreements are about X and Y. On X, A says XA and backs it up as follows ... But B says XB and supports it as follows ..."

Related: Rather than separately summarizing the arguments pro and con, it is usually better to summarize how both sides view each argument.

Example: Do minimum wages cost a lot of jobs?

  • A con argument (no pun intended) may be: we don't see evidence in cities that have increased minimum wages.
  • Those who hold the pro view may counter: there is a selection problem. Only cities where employment effects are small raise minimum wages.

What Makes a Good Topic?

We are looking for a question that is under active debate.

The topic needs to be fairly narrow.


  • Too broad: Why did income inequality rise over time?
  • Better: Focus on one cause, such as international trade. Perhaps even narrow it to trade with China.
  • Too broad: What are the implications of a flat tax?
  • Better: Would a flat tax substantially increase income inequality?


  • Think about a potential topic that interests you (not listed here).
  • We will debate its merits and look for literature.

Possible Topics (but You May Choose Your Own)

Below I list potential topics. They are generally phrased more broadly than what you would choose for a term paper.


  • Do we need patent protection for innovation to occur?
  • Why has manufacturing declined in the U.S. (international trade, technical change, ...)?
  • Do certain policies stimulate long-run growth? Examples include tax cuts, deregulation, free trade agreements.

Business cycles:

  • Why was wage growth so slow during the recovery after the Great Recession?

Fiscal policy:

  • What are the limits to government debt (especially in a time of low interest rates)?
  • Will interest rates remain low for a long time?
  • Do tax cuts pay for themselves?
  • Are taxes the reason that Europeans work so much less than Americans?

Monetary policy:

  • Should the Fed target asset prices?
  • Can the Fed pursue unconventional monetary policies (QE, asset purchases) forever? What are the limits?
  • What will happen when the Fed starts to unwind its QE asset positions?
  • Does QE generate inflation?


  • Effects of taxing the rich. Need to focus on specific policies (e.g. progressive income taxes) and specific outcomes (e.g. income distribution).
  • Causes of rising income inequality. Potential policy responses.
  • Labor market polarization: what will happen when more and more jobs get mechanized?
  • Why has the labor share declined over time?
  • What would happen if we taxed bequests? Or wealth? Focus on specific outcomes.
  • Does income support to poor households discourage employment?
  • Implications of government job guarantees

Open economy:

  • Are exchange rate devaluations expansionary?
  • Why are we running a trade deficit with China?


  • Why did the U.S. saving rate decline over time?

Finding Source Material

Academic journal articles are generally hard to read. Feel free to look, though, and you will get an idea what professional economists actually do.

More accessible references include:

  • World Bank or IMF publications
  • The Journal of Economic Perspectives
  • Brookings Institution
  • Federal Reserve Banks publish articles aimed at explaining research to the general public. Examples are the Economic Letters of the San Francisco Fed.
  • the Economist, NY Times, or Wall Street Journal are fine, but you also want to dig deeper

I maintain a short list.

I would generally avoid political sources (Heritage Foundation; Congress; Cato Institute).