COURSE AIMS AND OBJECTIVES:
Macroeconomics provides analytical tools and formal models to explain the behaviour of output, inflation, employment, interest rates, exchange rates and other aggregate economic quantities. This set of tools is used to understand current economic issues, forecast the behaviour of the economy, assess the impact of policy choices.
COURSE DESCRIPTION AND SYLLABUS:
1. Expectations. Nominal vs Real Interest Rates. Expected Present Discounted Values. Nominal and Real Interest Rates, and the IS-LM Model. Money Growth, Inflation, and Nominal and Real Interest Rates.
2. Financial Markets and Expectations. Bond Prices, the Bond Yields and Economic Activity. The Stock Market and Economic Activity.
3. Expectations, Consumption, and Investment. Consumption. Investment. The Volatility of Consumption and Investment.
4. Expectations, Output and Policy. Expectations and the IS Relation. Expectations and the LM Relation. Monetary Policy, Expectations, and Output. Deficit Reduction,Expectations and Output.
5. The Open Economy. Exports and Imports. Nominal and Real Exchange Rates. The Balance of Payments. Interest Rates and Exchange Rates.
6. The Goods Market in an Open Economy. The IS Relation in the Open Economy. Equilibrium Output and the Trade Balance.
7. Depreciation, the Trade Balance, and Output. The J-Curve. Saving, Investment and Trade Balance.
8. Output,the Interest Rate,and the Exchange Rate. Equilibrium in the Goods Market. Equilibrium in Finanacial Markets. The Effects of Fiscal and Monetary Policy. Fixed Exchange Rates.
9. Exchange Rate Regimes. Fixed Exchange Rates and the Adjustment of the Real Exchange Rate in the Medium Run. Exchange Rate Crises Under Fixed Exchange Rates.
10. Exchange Rate Movements under Flexible Exchange Rates. Choosing Between Exchange Rate Regimes.
11. Depressions and Slumps. Disinflation, Deflation,and the Liquidity Trap.
12. High Inflation. Budget Deficits and Money Creation. Inflation and Real Money Balances. Deficits, Seignorage, and Inflation.
13. Should Policy Makers Be Restrained? Uncertainty and Policy. Expectations and Policy. Hijacking and Negotiations.
14. Monetary Policy: A Summing Up. The Optimal Inflation Rate. The Design of Monetary Policy.
15. Fiscal Policy: A Summing Up. The Government Budget Constraint. Ricardian Equivalence. Deficits, Output Stabilization,and the Cyclically Adjusted Deficit. Wars and Deficits. The Dangers of Very High Debt.
- O. Blanchard: Macroeconomics, 3rd edition
- D.W. Findlay: Macroeconomics-Study Guide, 3rd edition
- N. G, Mankiw: Macroeconomics, 5th edition
- R. J. Barro, V. Grilli: European Macroeconomics
- M. Burda, C. Wyplosz: Macroeconomics: A European Text, 3rd edition
- D. Romer: Advanced Macroeconomics, 2nd edition