SØK 1366 Macroeconomics II

SØK 1366 Macroeconomics II

Course code: 
SØK 1366
Department: 
Economics
Credits: 
7.5
Course coordinator: 
Jørgen Juel Andersen
Product category: 
Bachelor
Portfolio: 
Bachelor of Business and Economics - Programme Courses
Semester: 
2018 Spring
Active status: 
Active
Teaching language: 
Norwegian
Course type: 
One semester
Introduction

The main focus of the course is short term macro economics and understanding the business cycle. The main aim of the course is to provide a deeper understanding of monetary and fiscal policy in a small open economy like the Norwegian. Participants will also learn about the macroeconomic development of the Norwegian economy, economic effects of spending government petroleum revenues, and the flexible inflation targeting framework of monetary policy.
Other related themes which are important in this course are financial instability and government debt crises.

Learning outcomes - Knowledge

After completed course students shall know:

  • How foreign exchange rates are formed under full international capital mobility and how monetary policy affects exchange rates.
  • How monetary policy affects the demand for private consumption, gross fixed investment and net exports in the short run.
  • Short and long-run Phillips curves and the effects of demand and supply shocks on the rate of inflation.
  • Nominal anchors, monetary unions such as EMU, as well as advantages and disadvantages of joining EMU compared to retaining a national currency.
  • Monetary policy trade-offs when inflation-targeting Central Banks set policy interest rates, based on theories of optimal monetary policy rules derived from minimization of loss functions.
  • Fiscal policy goals and instruments. Effects of spending of government petroleum revenues on the real exchange rate and industrial structure.
Learning outcomes - Skills

After completing the course, students will:

  • Understand macroeconomic contexts in mathematical form and to analyze policy effects in mathematical models in addition to the graphical shape considerations.
  • Be able to analyze how exchange rates are determined under uncovered interest parity. They will master the so-called IS-MP model for a small open economy with a flexible exchange rate. Be able to analyze how different factors affect inflation by means of short-term and long-term macro offers functions and logic of so-called inflationary and deflationary spirals.
  • Understand the difference between inflation and price level for monetary policy.
  • Have an insight into the logic behind the optimal monetary policy based on the minimization of a loss function.
  • Be able to see the link between objectives and instruments of fiscal policy and conflict of goals between wealth creation and income distribution. It is also required that the students put into the model-based analysis of how the state's use of petroleum revenue will impact on the real exchange rate and to some extent ont the industry structure.
  • Have an overview of the historical macroeconomic developments in the Norwegian economy, and be able to explain the challenges of and the some of the main mechanisms behind the financial crisis and debt crisis in Europe in the period 2007-2011.
Learning Outcome - Reflection

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

Course content
  • Model based analysis of short-term effects of monetary and fiscal policy on aggregate employment and output.
  • Monetary and fiscal policy under fixed and flexible exchange rates.
  • Short and long run macro supply functions and Phillips curves.
  • Nominal anchoring of an economy.
  • The European Monetary Union.
  • Monetary policy under flexible inflation targeting.
  • Fiscal policy: Goals and policy instruments.
  • Spending of petroleum revenues and the real exchange rate.
  • Macroeconomic development of the Norwegian economy. Asset bubbles, financial and government debt crises
Learning process and requirements to students

The course consists of 36 hours of lectures and 6 hours of plenary exercises. 

Software tools
No specified computer-based tools are required.
Qualifications

Higher Education Entrance Qualification

Required prerequisite knowledge

This course builds on SØK 1201 Macroeconomics I, and consequently knowledge of mathematics, statistics, microeconomics and business administration as Macroeconomics I requires.

Exam categoryWeightInvigilationDurationSupport materialsGroupingComment exam
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
SØK13661
Grading scale:
ECTS
Grading rules:
Internal and external examiner
Resit:
Examination every semester
100Yes5 Hour(s)
  • BI-approved exam calculator
  • Simple calculator
Individual
Exams:
Exam category:Submission
Form of assessment:Written submission
Weight:100
Invigilation:Yes
Grouping (size):Individual
Support materials:
  • BI-approved exam calculator
  • Simple calculator
Duration:5 Hour(s)
Comment:
Exam code:SØK13661
Grading scale:ECTS
Resit:Examination every semester
Exam organisation: 
Ordinary examination
Total weight: 
100
Workload activityDurationType of durationComment student effort
Teaching36Hour(s)
Review of assignments in plenary6Hour(s)
Self study130Hour(s)
Group work / Assignments23Hour(s)
Examination5Hour(s)
Expected student effort:
Workload activity:Teaching
Duration:36 Hour(s)
Comment:
Workload activity:Review of assignments in plenary
Duration:6 Hour(s)
Comment:
Workload activity:Self study
Duration:130 Hour(s)
Comment:
Workload activity:Group work / Assignments
Duration:23 Hour(s)
Comment:
Workload activity:Examination
Duration:5 Hour(s)
Comment:
Sum workload: 
200

A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 7,5 ECTS credit corresponds to a workload of at least 200 hours.

Talis literature

Obligatorisk/Compulsory

Book
Authors/Editors År Tittel Edition Publisher StudentNote
Steigum, Erling 2004 Moderne makroøkonomi Gyldendal akademisk Kapittel 7-13, til og med avsnitt 13.3, unntatt avsnitt 9.3 (294 sider). Kapittel 7 er overført fra Makroøkonomi I til Makroøkonomi II; Kapittel 14 er overført fra Makroøkonomi II til Makroøkonomi I.
Chapter
Authors/Editors År Tittel Journal Edition Publisher StudentNote
Steigum, Erling 2009 The boom and bust cycle in Norway The boom and bust cycle in Norway From: Jonung, L., J. Kiander og P. Vartia, red.: The Great financial crisis in Finland and Sweden. Pages 202-244.
Article
Authors/Editors År Tittel Edition Publisher StudentNote
Røisland, Ø.; Sveen, T. 2005 Pengepolitikk under et inflasjonsmål
Steigum, Erling 2006 Aktivabobler : kan og bør myndighetene gjøre noe? Magma
Document
Authors/Editors År Tittel Edition Publisher StudentNote
Steigum, Erling 2006 Den keynesianske revolusjonen 70 år etter: Et tilbakeblikk Handelshøyskolen BI, Centre for Monetary Economics (CME)
Steigum, Erling 2010 Norsk økonomi etter 1980 – fra krise til suksess
Book
Authors/Editors År Tittel Edition Publisher StudentNote
Ferguson, Niall 2008 The ascent of money: a financial history of the world The Penguin Press
Krugman, Paul R. cop. 2012 End this depression now! W. W. Norton & Company
Document
Authors/Editors År Tittel Edition Publisher StudentNote
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