APPLIES TO ACADEMIC YEAR 2014/2015

EXC 3525 Macroeconomics

Responsible for the course
Anders Tveit

Department
Department of Economics

Term
According to study plan

ECTS Credits
7,5

Language of instruction
English

Introduction
Macroeconomics is the study of the economy as a whole. It deals with phenomena such as long-run economic growth, business cycles, unemployment, inflation, and deficits on the balance of payments. Analyses on how governments and central banks can influence the macroeconomy through fiscal and monetary policy are particularly important in macroeconomics.

Learning outcome
An important goal of this course is to familiarize students with important macroeconomic concepts, indicators, and relations, and to give students insights into macroeconomic theories (with corresponding empirical knowledge) of long-run economic growth processes, structural unemployment, inflation and other nominal variables, and business cycles. Another goal is to equip students with sufficient knowledge to understand theories and macroeconomic models that explain how fiscal and monetary policy, such as inflation targeting, can be used to influence the macroeconomy.

Acquired knowledge
After taking this course you should be able to understand and explain important macroeconomic concepts, indicators and the most common policy targets and instruments of fiscal and monetary policy in advanced economies. You are expected to understand the crucial distinction between real and nominal variables and concepts. You should also be able to distinguish wrong statements in macroeconomics from correct ones, as well as descriptive statements from normative ones. You should also have acquired a good overview of macroeconomic relations and empirical knowledge. Finally, you should understand the logical structure of basic macroeconomic growth models and elementary models of business cycles and inflation.

Acquired skills
After taking this course you should be able to find relevant economic data and indicators from respectable data sources in order to describe the macroeconomic situation and recent history of a particular country. You should also be able to decide which macroeconomic theory or model that is most relevant for a particular policy issue. Finally, you should be able to apply basic models of long-run growth, business cycles and inflation to draw logical conclusions about the effects of changes in crucial parameters and policy instruments.

Reflection
After taking this course you should be ethically conscious about the conficts of interest and inherent goal conflicts and trade-offs in macroeconomic policy. You should be able to look at a macroeconomic policy issue from different perspectives in regard to the interests of different groups in society. You should also have developed a critical attitude making you conscious of the difference between political ambitions behind announcements of goals and the real effects of macroeconomic policies in practice.

Prerequisites
None.

Compulsory reading
Books:
Burda, Michael and Charles Wyplosz. 2013. Macroeconomics : a European text. 6th ed. Oxford University Press. Ch. 1-15,17 (403 pages in all).

Recommended reading

Journals:
OECD. 2011. "General assessment of the macroeconomic situation". OECD Economic Literature. 2. OECD. 9-67/ Ch.1. Recommended reading

Course outline

1. National accounts and economic indicators
2. Economic growth and the wealth of nations
3. The labour market and structural unemployment
4. Money, prices and exchange rates in the long run
5. Consumption and investment
6. Aggregate demand, business cycles and the short-run effects of monetary and fiscal policy
7. Asset bubbles and financial instability
8. Nominal and real exchange rates
9. Long-run effects of fiscal policy.