5114 - MACROECONOMICS

The fundamental goals of the course are to provide an integrated view of Macroeconomics and to equip the student with tools that allow him/her to understand and analyse past and current macroeconomic events. To this end, the course focuses on the functioning of the macroeconomy in both a closed and open-economy setting. The course will start from a static setting and extend to a dynamic view of the economy that sheds light on the workings of the real and the monetary sides of the economy.

PART I: From National Accounts to Macroeconomic Equilibrium

• What are GDP, GNP and national income? 

• Static theories determining Consumption, Investment etc  

• Equilibrium in the Solow model

• Short-run equilibrium in the Keynesian model (IS-LM) 

• Medium-run equilibrium in the Keynesian model (AS-AD) and policy implications

• Introducing a labour market

• Long-run equilibrium

PART II: Flaws of a static model: going dynamic

•  The Fischer Model of a simple economy

• Ricardian Equivalence and policy implications

•  Introducing several generations (OLG)

• Effect of pensions 

• Rationales for pension reforms

• Infinite horizons (the Ramsey model)

PART III: Monetary Economics and Central Banking

• The role of money in the IS-LM model and the "neoclassical revolution" 

• Expectations: the basic tools 

• The real effects of monetary surprises: the Lucas´ model 

• The inflationary bias: the Barro-Gordon model

• Expectations, output and optimal monetary policy

PART IV: The Open Economy

• The balance of payments and aggregate demand

• The goods market in an open economy 

• Openness in goods and financial markets

• Output, the interest rate and the exchange rate

Selected chapters from:

• O. BLANCHARD, Macroeconomics, Prentice-Hall, 2000.

• P. WEIL, Macroeconomic Theory: A Primer, MIT Press, forthcoming.

• P.R. KRUGMAN, M. OBSTFELD, International Economics (Theory and Policy), Addison-Wesley, 1997.

For further and continuously updated information consult the IEP web site or contact S.I.D. - Servizio Informazioni Didattica - Via Gobbi, 5 - 3rd floor.  

The exam will be in written form.