InterMEDIATE MACROEconomics

PREREQUISITES: PRINCIPLES of MACROECONOMICS

OBJECTIVES

This course aims to familiarize students with standard macroeconomic theory to gain insights into the behavior of the macro-economy. In particular, this module presents students with models explaining both economic growth and economic fluctuations. The latter mainly focuses on studying the dominant macroeconomics paradigm in history, namely the neo-classical synthesis framework which combines Keynesian and Classical approaches. These analyses are then extended in a small open economy framework. This module is then followed by an analysis of macroeconomic policy. The final part of the module provides some micro-foundations for macroeconomics. These include the analyses of consumption and investment behavior and the new developments in business cycle theory toward DSGE models. Some additional lectures can be given depending on time constraints on the financial system and the attempts for explaining the recent Financial Crisis.

PROGRESSIVE ASSESSMENT

Coursework assignment (30%)

2 hour examination (70%)

RECOMMENDED TEXTS

Main textbooks:

1. Mankiw, 2012,‘Macroeconomics’, 8th ed., Worth publishers

2. Textbook on Financial Crisis additional to Ch20:

Mankiw, N. Gregory and Ball, Laurence M. (2012),Macroeconomics and the Financial System(2012), 1st ed., Chapter 15-19, Worth.

Alternatives:

Blanchard, Olivier (2009)Macroeconomics(5th ed.)

Advanced reading:

Romer, David (2006, 2011), Advanced Macroeconomics, 3rd, 4th ed.,McGraw-Hill.

Other Supplementary readings:

supplements, papers and web links will be provided after class.

TOPICS TO BE COVERED IN THE LECTURES/ CLASS SCHEDULE

Part I: The economy in the long run (6 hours, Mankiw Ch.8-9)

Week 1: Exogenous growth theory

Main sources: Mankiw,Macroeconomics(Ch.8)

Week 2: Endogenous growth theory and more

Main sources: Mankiw,Macroeconomics(Ch.9)

Part II: Short run business cycle theory (15 hours, Mankiw Ch.10-14)

Week 3: Introduction to aggregate fluctuations

Main sources: Mankiw,Macroeconomics(Ch.10)

Week 4: Aggregate demand I: Building the IS-LM model

Main sources: Mankiw,Macroeconomics(Ch.11)

Week 5: Aggregate demand II: Applying the IS-LM model

Main sources: Mankiw,Macroeconomics(Ch.12)

Week 6: The open economy resisited: The Mundell-Fleming model and the exchange-rate regime

Main sources: Mankiw,Macroeconomics(Ch.13)

Week 7: Aggregate supply and the short-run trade-off between inflation and unemployment

Main sources: Mankiw,Macroeconomics(Ch.14)

Part III: Recent advances in dynamic macroeconomic theory (9 hours, Mankiw Ch15-17)

Week 8: A dynamic model of aggregate demand and aggregate supply

Main sources: Mankiw,Macroeconomics(Ch.15)

Week 9: Understanding consumer behavior

Main sources: Mankiw,Macroeconomics(Ch.16)

Week 10: The theory of investment

Main sources: Mankiw,Macroeconomics(Ch.17)

Part IV: Topics in Macroeconomic Policy (6 hours)

Week 11: Alternative perspectives on stabilization policy

Main sources: Mankiw,Macroeconomics(Ch.18)

Week 12: Government debt and budget deficits

Main sources: Mankiw,Macroeconomics(Ch.19)

Part V: The financial system and the Financial Crisis (15 hours)

Week 13: Asset prices and interest rates

Main sources: Mankiw, N. Gregory and Ball, Laurence M. (2012),Macroeconomics and the Financial System(2012), 1st ed., Chapter 16, Worth

Week 14: Securities markets

Main sources: Mankiw, N. Gregory and Ball, Laurence M. (2012),Macroeconomics and the Financial System(2012), 1st ed., Chapter 17, Worth

Week 15: Banking system

Main sources: Mankiw, N. Gregory and Ball, Laurence M. (2012),Macroeconomics and the Financial System(2012), 1st ed., Chapter 18, Worth

Week 16: Financial Crises

Main sources: Mankiw, N. Gregory and Ball, Laurence M. (2012),Macroeconomics and the Financial System(2012), 1st ed., Chapter 19, Worth

Week 17: Review and Discussion Prepared for Examination