Learning objectives
At the end of the course you are able to:
· Describe the macroeconomic principles that drive the economy in the short- medium and long run.
· Describe the key concepts of macroeconomic theories.
· Work with some basic models: the wage and price setting, the Phillips curve, the IS/LM, and the AD/AS and apply the effects of demand and supply shocks in the models.
· Describe how economies fluctuate between booms and recessions.
· Describe how governments and central banks can moderate costly fluctuations on employment and income.
· Describe how the rate of unemployment and the level of output in the economy affect inflation.
· Describe how long-term trends and differences in living standards and unemployment between countries are the result of technological progress, institutions, and policies.
· Describe the economic lessons learned from the period of the great recession.
· Think in terms of abstract models when discussing questions about the national and international economy.
· Take a well-reasoned position regarding macroeconomic problems in general and in matters relating to economic policy in particular.
· Handle simple macroeconomic models and the matching quantitative data (essential skill academic research).
· Research and present topical economic subjects to an informed audience (essential skill effective oral presentation).
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Other economic elective. Cannot be followed by U.S.E. students. Cannot be combined with EC1FOE, ECB1MACR and EC2MAP.
In this introductory course in macroeconomics we will teach you the insights of macroeconomic theory from a real-world perspective. We will apply units from the The Economy text book to present a picture of contemporary macroeconomic problems and theories. Within the lecture and the tutorials we will structure the various units and sections of The Economy into a coherent analysis.
The course will start with an introduction into key macroeconomic concepts, the use of models, the general equilibrium and emerging properties. The second session focuses om economic fluctuations and the importance of multiplier effects. The next step is to analyse the importance and effects of fiscal policy. To provide a tool for analysing the effects of policies we introduce the wage and price setting model and the Phillips curve. Special attention will be given to the origins of inflation and the difference between supply and demand shocks. Next to fiscal policy, we will give attention to monetary policy, after we’ve defined the role of the banking system in the economy. In order to understand the structure and functioning of a more traditional model, we will discuss the IS/LM and the AD/AS models and analyse the effects of fiscal and monetary policy in these models. In the long run the strength of institutions, the effects of creative destruction and inequality are essential elements to analyse. In the final session we will focus on the specific problems that are related to the Eurozone countries; fixed exchange rates, the (non)optimal currency area, sovereign debt problems and structural imbalances.
Format
Lectures, tutorials and an empirical project.
Assessment method
- Mid Term Exam (30% of final grade)
- End Term Exam (70% of final grade)
Effort requirements
Attend and participate in at least 80% of the tutorial sessions.
Students are expected to have basic knowledge of Mathematics, Statistics and Microeconomics. Basic skills regarding Microsoft Excel or Stata are helpful for data management and the creation of tables and diagrams.
In case online access is required for this course and you are not in the position to buy the access code, you are advised to contact the course coordinator for an alternative solution. Please note that access codes are not re-usable meaning that codes from second hand books do not work, as well as access codes from books with a different ISBN. Separate or spare codes are usually not available.
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