APPLIES TO ACADEMIC YEAR 2014/2015

SØK 3525 Macroeconomics

Responsible for the course
Terje Synnestvedt, Erling Steigum

Department
Department of Economics

Term
According to study plan

ECTS Credits
7,5

Language of instruction
Norwegian

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 economy through fiscal and monetary policy are particularly important in macroeconomics.

This course differs from the course SØK 3432 Macroeconomics in several areas. Here we go in depth into the foundation for economic growth and the causes of structural unemployment. Furthermore, we go deeper into the monetary and fiscal policy and among others look at long-term, dynamic effects of fiscal policy. This course also analyzes economic mechanisms both by mathematical and graphical models.

Learning outcome
The main goal of this course is to provide an introduction to the macroeconomics field to provide the students with a good basis for keeping up with what's happening in the Norwegian economy and the background of the economic policies of the Government and Norges Bank (the Central Bank of Norway). You will also learn how the Norwegian economy is influenced by international factors and what kinds of economic indicators contain the latest information about the current economic situation. In order to acquire this foundation, students must be familiar with the concepts, relationships and facts that will enable them to understand the basic causes of phenomena such as business cycles, economic growth and stagnation, unemployment and inflation, as well as how economic policies affect the economic development in both the short and the long term.

Acquired knowledge
After completing this course students should be able to explain macroeconomic concepts, indicators and key objectives and instruments of Norwegian economic policy, including understanding the relationship between objectives and means. The students should be able to explain the fundamental distinction between the real economy on the one hand and money and financial issues on the other. They should have gained knowledge about key driving forces behind economic growth, and on the basis of data, be able decide whether a country's economic growth is balanced or not. Monetary policy has a key role in economic policy and students should be able to explain various aspects of having an inflation target. They must have a good overview of economic relationships and established macro-economic theories and empirical knowledge and be able to analyze the functioning of the economy and the effects of economic policy in a small open economy with flexible exchange rates. The students should be able to conduct such discussions using both mathematical and graphical models. They should also have developed a critical sense that enables them to distinguish between correct and incorrect statements about macroeconomics.

Acquired skills
After taking this course the students 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. Students should also be able to decide which macroeconomic theory or model is most relevant for a particular policy issue, and be able to present macroeconomic models both mathematically and graphically. They should also be able to describe economic policy, as well as distinguish between descriptive and normative statements.

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.

• National accounts and economic indicators
• Population development and the wealth of nations
• Economic growth
• Structural unemployment
• Money neutrality: The distinction between real and nominal variables
• Money, prices and exchange rates
• Business cycles and the short-run effects of monetary and fiscal policy
• Asset bubbles and financial crisis
• Inflation, expected inflation and output gap
• Monetary policy: Inflation targeting, interest rate sand inflation, policy dilemmas
• Fiscal policy: Taxes, welfare, public assets and debts, pension obligations