Macroeconomics for Economic Policy

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Level: 
Master's
Course Status: 
Core
CEU credits: 
4
ECTS credits: 
8
Academic year: 
2010/2011
Semester: 
Fall
Start and end dates: 
10 Mar 2010
Host Unit: 
Department of Economics
Academic Program: 
Master of Arts in Economic Policy in Global Markets
CEU Instructor(s): 
Attila Rátfai
Required Readings Link: 
Blanchard, Olivier, Macroeconomics, Prentice Hall 2009
Learning Outcomes: 
The syllabus covers wide ranging areas. In this course students are able to understand some important articles and concepts of the political economy of the world economy. They acquire a broad understanding of the evolution of the world economy during the last millennium. Also this class provides general overview of understanding of the historical development of the world economy. In addition, students are introduced to growth theory, and the theory of international money. The emphasis is on relevant policy matters.
Assessment : 
Presence 10%, Activity in class 10%, Midterm exam 25%, Final exam 55%
Full description: 

This course presents systematic understanding and critical evaluation of key concepts and theoretical approaches in political economy with emphasis on world economy.
The main goal of this course is to provide students with understanding of historical evolution of the world economy as well current driving forces of the world economy.  In other words, this course tries to explain how the world economy got to be where it is today, focusing on the disparities between the rich and the poor nations. In addition students are also led to formulate their own research question in the topic of their interest.

Preliminary Syllabus:

 

The Goods Market

Financial Markets

Goods and Financial Markets: the IS-LM Model

The Labor Market

The AS-AD Model

The Natural Rate of Unemployment and the Phillips Curve

Inflation,

Growth, Saving, Capital Accumulation

Technological Progress, Wages and Unemployment

Expectations: Financial Markets,

Expectations: Consumption and Investment

Expectations: Output and Policy

The Open Economy

Exchange Rate Regimes

Pathologies: Depressions, Hyperinflation

Introduction to Policy Issues

 

Weekly Breakdown:

 

Week 1

Keynes, Neo-Classical Synthesis, The Rational Expectations, Current Development

Consumption, the Demand for Goods, Determination of Equilibrium, Investment Equals Savings,

Blanchard (2003), Chapter 27: The Story of Macroeconomics

Blanchard (2003), pp. 45-64, Chapter 3: The Goods Market

 

Week 2

The Demand for Money, The Determination of Interest Rate, How to Thing about the Equilibrium

The Goods Market and the IS Relation, The Financial Markets and the LM Relation, IS-LM

Blanchard (2003), pp. 65- 86, Chapter 4: Financial Markets

Blanchard (2003), pp. 87-112 Chapter 5: The Goods and Financial Markets, the IS-LM Model,

 

Week 3

Unemployment, Wage Determination, Price Determination, The Natural Rate of Unemployment,

Aggregate Supply, Equilibrium in the Short Run and in the Medium Run, AS-AD Model

Blanchard (2003), pp. 113-134 Chapter 6: The Labor Market

Blanchard (2003), pp. 135-160 Chapter 7: The AS-AD Model

 

Week 4

Inflation, Expected Inflation, Unemployment, Phillips Curve,

Output, Unemployment and Inflation in the Medium Run, Credibility, Nominal Contracts

Blanchard (2003), pp. 161-180 Chapter 8: The Natural Rate of Unemployment and the Phillips Curve

Blanchard (2003), pp. 181-202 Chapter 9: Inflation

 

Week 5

Growth in Rich Countries since 1950, Thinking about Growth

Blanchard (2003), pp. 203-218 Chapter 10: The Facts of Growth

Midterm

 

Week 6

Output and Capital, Saving Rates, Physical versus Human Capital,

Technological Progress and the Rate of Growth, The Determinants of Technological Progress

Blanchard (2003), pp. 219-242 Chapter 11: Saving, Capital Accumulation and Output

Blanchard (2003), pp. 243-266 Chapter12: Technological Progress and Growth

 

Week 7

Productivity, Output and Unemployment in the Short Run, Technological Progress

Nominal versus Real Interest Rates, Expected Present Discounted Values, Money Growth, Inflation

Blanchard (2003), pp. 267-288 Chapter13: Technological Progress, Wages and Unemployment

Blanchard (2003), pp. 289-310 Chapter14: Expectations: the Basic Tools

 

Week 8

Bond Prices and Bond Yields, The Stock Markets, Bubbles, Fads and Stock Prices

Consumption and Investment Volatility, Expectations and Output

Blanchard (2003), pp. 311-334 Chapter15: Financial Markets and Expectations

Blanchard (2003), pp. 335-354 Chapter16: Expectations: Consumption and Investment

Blanchard (2003), pp. 355-372 Chapter17: Expectations: Output and Policy

 

Week 9

Openness in Goods Market, Openness in Financial Markets,

IS Relation in the Open Economy, Depreciation, Trade Balance, J-Curve

Blanchard (2003), pp. 373-394 Chapter18: Openness in Goods and Financial Markets

Blanchard (2003), pp. 395-416 Chapter19: The Goods Market in an Open Economy

 

Week 10

Goods and Financial Markets in Open Economy, Fixed Exchange Rates

Choosing between Exchange Rate Regimes

Blanchard (2003), pp. 417-436 Chapter 20: Output, the Interest Rate and the Exchange Rate

Blanchard (2003), pp. 437-462 Chapter 21: Exchange Rate Regimes

 

Week 11

Disinflation, Deflation, Liquidity Trap, Money Creation, Seignorage

Introduction to Economic Policy

Blanchard (2003), pp. 463-488 Chapter 22: Depressions and Slums

Blanchard (2003), pp. 489-508 Chapter 23: High Inflation

Blanchard (2003), pp. 509-528 Chapter 24: Should Policy Makers be Restrained

 

Week 12

Blanchard (2003), pp. 529-548 Chapter 25: Monetary Policy: A Summing Up

Blanchard (2003), pp. 549-570 Chapter 26: Fiscal Policy: A Summing Up

Final Exam