59691 - Macroeconomics

Learning outcomes

The aim of the course is to introduce students to the basic methods and topics of macroeconomic analysis and to ensure their understanding of macroeconomic equilibrium in closed and open economies. At the end of the course students are able to: (a) define the main macroeconomic variables; (b) understand the determinants of aggregate demand and aggregate supply, and of macroeconomic equilibrium in the short and in the long run; (c) understand the motivation of fiscal and monetary policy and the role of expectations in influencing their impact on the economic system.

Course contents

PART 1: Macroeconomics in the long run and economic growth

Introduction

Introduction to Macroeconomics

Data and models

GDP

Classic theory: the economy in the long run

The long run

Income production, distribution and expenditure

Equilibrium in the goods market and in the financial market

The monetary system

Inflation

Costs of inflation

Open economy: trade balance and net capital outflows

Open economy: real and nominal exchange rate

Unemployment

Labor market reforms in Europe and in Italy

Growth theory: the economy in the very long run

Economic growth and the Solow model: capital accumulation, steady state, policy, golden rule, population dynamics, technological progress, empirics, growth enhancing policies

Endogenous growth

 

3 Exercise lessons: 

(1) Introduction, Long run

(2) Money, inflation, open economy

(3) Unemployment, growth

 

PART 2: Macroeconomics in the short run and economic policy

Business cycle theory: the economy in the short run

Introduction to short run fluctuations: AD-SRAS-LRAS IS-LM model

Economic policy, shocks, IS-LM and AD

Great depression, Japanese stagnation, Great recession, and European sovereign debt crisis

Fiscal and monetary policy in the EU since the Great recession

Mundell-Fleming model

International financial crises

Aggregate supply and Phillips curve

Adaptive and rational expectations

The debate on macroeconomic policy

Stabilization policy

Debt and deficit

Financial system: opportunities and dangers

 

3 Exercise lessons:

(4) The closed economy in the short run

(5) The open economy in the short run, dynamic macroeconomics

(6) Economic policy

 

The two parts will be assessed separately as partial exams.  The full exam covers both parts.

Readings/Bibliography

The main textbook for the course (necessary material) is

N. Gregory Mankiw, Macroeconomics - International Edition, 10th edition, Macmillan, 2019.

Recent editions (e.g. the 9th edition, 2016) of the same text are similar and should be fine.

 

A few short articles may be included and will be indicated by the first lecture.

Teaching methods

Lectures and exercise classes.

Students are encouraged to prepare for the lectures beforehand, by:

• watching short-prerecorded video lectures, and/or reading the textbook chapter;
• possibly reading a short article prior to the lecture.

An online quiz tests the students' understanding of the pre-lecture material.

Assessment methods

Examination (Partial or Full). The examination consists of two essays and on oral examination. The first partial consists of a short essay. The second partial consists of a longer essay and an oral examination (on the essays and on other material otherwise. A final examination consists of two essays and an oral examination.

The grade is determined as the weighted sum of the grades for the two partials, or as the grade of the total exam. The short essay has a weight of 20%; the long essay 50%; and the oral exam 30%.

Short exercises will be assigned during the course; completing and returning these on time yield additional marks. If you are completing the module without attending, please get in touch by email for an alternative means of getting the additional marks.

Grading:

18-21: The student has a basic understanding of many macroeconomic concepts and is mostly able to explain their relations and how they are determined.

22-24: The student understands the macroeconomic concepts covered and is able to explain their relations and how they are determined. The student is partly able to use the methods and material to understand macroeconomic events and policies.

25-27: The student has a solid understanding of macroeconomic concepts. The student can mostly use the theoretical methods to analyse macroeconomic events and policies, and is mostly able to relate the material to empirical evidence.

28-30: The student has an excellent command of the material and is able to analyse macroeconomic events and policies using the methods of the course, and can relate the theoretical material to empirical evidence.

30 with lode: The student masters both the analytical framework and how it connects to empirical evidence. The student is able to apply the methods of analysis to novel settings.

Teaching tools

Lectures slides, short videos and additional reading will be made available in advance on the e-learning web platform.

Office hours

See the website of Niko Samuli Jaakkola