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)
•  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
• The Mundell - Fleming model
  

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.  Students may take the exam in two written parts: a mid-term and a final exam, or they may take one general exam.