08795 - Macroeconomics (M-Z)

Learning outcomes

The course is an introduction to the study of macroeconomics. It covers the main issues, methods, data, concepts and models. Students will be able and motivated to follow and understand the current debates on macroeconomic issues, as they are reported by the qualified press and media. A special focus will be on understanding and debating the appropriateness of the macroeconomic policies adopted in the Great Recession, and the roles of fiscal and monetary policies for the EU members that have adopted the euro. Students will also be prepared to follow more advanced courses on macroeconomic analysis and policies, should they want to do so in their graduate studies.

Course contents

Part I – Introduction 1.1 What Is Macroeconomics?

ACB, Chapters 1–2

1.2 Economics, Crises, Ideology, and Power

ACB, Chapter 3

1.3 Production, Technology, and Technological Innovation

MPEP, Chapter 6

1.4 Defining Some Key Concepts National Income Accounting and a Country's Output

• GDP: Output and Income. BAG, pp. 41–42.
• Nominal and Real GDP; Levels and Growth Rates. BAG, pp. 43–44.
• Measuring Quality of Life and International Comparisons: Purchasing Power Parity (PPP). BAG, pp. 263–268.

Unemployment

• The Unemployment Rate. BAG, pp. 46–48.
• Describing Relationships Between Variables: Okun's Law. BAG, pp. 54–55.
• Employment, Unemployment, and Labor Force Participation: A Tour of the Labor Market. BAG, pp. 184–186.

Prices, Price Indices, and Inflation

• The Inflation Rate. BAG, pp. 50–53.
• Relationships Between Variables:
  • Okun's Law. BAG, pp. 54–55.
  • The Phillips Curve. BAG, pp. 56–57.
• MPEP, Chapter 4.

Interest Rates

• Money. Nominal and Real Interest Rates. BAG, pp. 150–153.

Stocks and Flows

• Stock and Flow Variables.
• Levels and Growth Rates.
• Reading Graphs.

Preparing to Analyze Relationships Between Variables

• The Short, Medium, and Long Run. BAG, p. 58.
• What Is an Economic Model?

Part II – Short-Run Analysis: The IS–LM Model 2.1 The Goods Market

• The Components of GDP. BAG, pp. 73–74.
• The Demand for Goods: Consumption, Investment, and Government Spending. BAG, pp. 74–77.
• Equilibrium Output. BAG, pp. 78–83.
• How Fast Does Output Adjust? BAG, pp. 83–85.
• Investment = Saving: An Alternative Way of Thinking About Goods Market Equilibrium. BAG, pp. 86–88.
• Is Government Really Omnipotent? A Word of Caution. BAG, pp. 89–90.

2.2 Financial Markets

• The Demand for Money (including "Beware of Semantic Traps: Cash, Money, Income, and Wealth"). BAG, pp. 95–100.
• The Determination of the Interest Rate (the Supply Side). BAG, pp. 100–102.
• Monetary Policy and Open Market Operations: The Central Bank. Bond Prices and Bond Yields. BAG, pp. 103–105.
• Interest Rate Determination, Banks, and the Central Bank. BAG, pp. 105–109.
• The Liquidity Trap. BAG, pp. 114–115.

2.3 Goods and Financial Markets: The IS–LM Model

• The IS Curve: Derivation and Shifts. BAG, pp. 123–128.
• The LM Curve. BAG, pp. 129–130.
• Equilibrium in the IS–LM Model. BAG, p. 131.
• Fiscal Policy, Monetary Policy, and the Policy Mix. BAG, pp. 132–143.

2.4 Financial Markets II: The Extended IS–LM Model

• Nominal and Real Interest Rates. Risk and Risk Premium. BAG, pp. 149–157.
• Financial Intermediaries and Financial Leverage. BAG, pp. 158–161.
• The Extended IS–LM Model. BAG, pp. 162–164.
• The Financial Crisis of 2007–2009. BAG, pp. 165–175.

(Approximate end of the material covered by the first midterm examination.)

Part III – Medium-Run Analysis: The IS–LM–PC Model 3.1 The Labor Market

• Flows Into and Out of Unemployment. BAG, pp. 184–189.
• Wage Determination: Wage Bargaining and Efficiency Wages. BAG, pp. 190–192.
• Wages, Prices, and Unemployment. BAG, pp. 192–194.
• Price Determination. The Natural Rate of Unemployment. The Wage Equation. The Price Equation. Equilibrium Real Wages and Unemployment. BAG, pp. 195–200.

3.2 The Phillips Curve, the Natural Rate of Unemployment, and Inflation

• The Phillips Curve: First and Second Reformulations, and the Role of Expectations. BAG, pp. 209–218.
• High Inflation and the Phillips Curve. Deflation. BAG, pp. 223–226.

3.3 From the Short Run to the Medium Run: The IS–LM–PC Model

• The IS–LM–PC Model (excluding the box "Okun's Law Across Time and Space"). BAG, pp. 233–238.
• From the Short Run to the Medium Run. BAG, pp. 239–240.
• Complications: Why Things Can Go Wrong. BAG, pp. 240–250.

Part IV – The Open Economy and Economic Growth 4.1 The Open Economy

• Introduction. BAG, pp. 447–448.
• Exports and Imports. BAG, pp. 449–451.
• Nominal and Real Exchange Rates. BAG, pp. 452–457.
• Financial Markets in an Open Economy and the Balance of Payments. BAG, pp. 458–460.
• Choosing Between Domestic and Foreign Financial Assets. BAG, pp. 461–462.
• Interest Rates and Exchange Rates. BAG, pp. 463–464.
• The IS Curve in an Open Economy. BAG, pp. 469–473.
• Equilibrium Output and the Trade Balance. BAG, p. 474.
• Increases in Demand: Domestic or Foreign? BAG, pp. 475–479.
• Depreciation, the Trade Balance, and Output: The Marshall–Lerner Condition. BAG, pp. 481–486.
• Saving, Investment, and the Trade Balance. BAG, pp. 487–488.

4.2 Economic Growth: An Introduction

• Introduction and Measuring Quality of Life. BAG, pp. 261–267.
• Growth in Advanced Economies Since 1950. BAG, pp. 268–269.
• Convergence in GDP per Capita and the Slowdown of Growth in Advanced Economies. BAG, pp. 269–270.
• A Historical and Cross-Country Overview. BAG, pp. 271–273.
• A Framework for Thinking About Growth: The Aggregate Production Function and Technology. BAG, pp. 273–279.

 

Readings/Bibliography

Blanchard, O., Amighini, A., & Giavazzi, F. 2024. Macroeconomia: Una prospettiva europea. Bologna: Il Mulino. (Referred to in the syllabus as BAG; the relevant pages for each topic are indicated in the syllabus.)

 

Picci, L. 2026. Gli economisti hanno fatto anche cose buone. Milan: FrancoAngeli. (Referred to in the syllabus as ACB.)

Teaching methods

Lectures in class

Assessment methods

See the information available here.

Teaching tools

Virtual room

Office hours

See the website of Lucio Picci