Macroeconomic Policies

Course aims

The aim of this course is to motivate the student with the use of simple analytical tools to discuss macroeconomic problems and the scope for government intervention.

Course content

Introduction (BW 1) (ppt)

The course is divided in three main blocks:

Part I- Long-run growth and its determinants (MK 7, 8)

Symbols used

  • The fundamentals of economic growth
    • The malthus theory
      • Presentation: ppt1
      • Problem set: PS1
      • Lecture notes here (except 1.3.5, 1.5)
    • Solow model
      • Presentation: ppt2
      • Problem set: PS2
      • Lecture notes: LN2, (except 2.6)
    • Exogenous Growth
      • Presentation: (ppt3)
      • Problem set: PS3
      • Lecture notes: LN3(except 3.6)
  • Technology and its diffusion
    • Presentation: pptech
    • Problem set: PStech
    • Lecture notes:
      • The Usawa model here.
      • Technology adoption: Lecture notes here .
      • Creative destruction:  here (7.1-7.6.2, 7.7.1, 7.7.2)
  • Government:
    • PPT: pptcorr.
    • Resources:
    • Government: LN10 : 10.1-10.4.1, 10.4.5
    • Corruption: (LN13): 13.1, 13.2, Box 13.4

Part II- Financial programming

  • National accounts, budget constraints, and consistency (MK2) (ppt); Handout  (HO)
  • Macroeconomic Indicators, Debt stability, etc
  • The following paper explains how the European Commission calculates potential output and output gaps: ECFIN Economic Paper No. 247 (2006) “Calculating potential growth rates & output gaps“
  • The following paper explains the Euro-Area macro-fical model: Fagan, Gabriel, Jerome Henry, and Ricardo Mestre (2005) “An area-wide model for the euro
    area    ,” Economic Modelling, Vol. 22, pp. 39–59 (WP here, dataset).

Part III – Business cycles, inflation and macroeconomic stabilization

  • Macroeconomic equilibrium in the short-run (MK 9-11) (PPT) (Handout here) (PS Keynes here)
  • Inflation and unemployment (MK13, MK15) (ppt here) (PS Phillips here)
  • Monetary policy  and Aggregate Demand (MK14)  (ppt here)
  • Aggregate Supply and Aggregate Demand (MK14, 15) (ppt here) (Psadas)

LEARNING OBJECTIVES

On completion of this course a student should be able to: A. Knowledge and Understanding: Learn to use macroeconomic data to analyse facts and discuss policy options. Discuss the role of policy in promoting long run growth; Understand the role of government in macroeconomic stabilization. Acknowledge the need of rules and institutions to frame macroeconomic policymaking B. Subject-Specific Skills: Analysis of macroeconomic data Models of endogenous growth with distortions, public goods and government failures; Aggregate demand and supply The operation of monetary and fiscal policies C. General Skills: Develop analytical thinking to discuss stabilization policies Identify the main controversies concerning the role of policies and institutions in promoting macroeconomic stability and long run growth.

TEACHING AND LEARNING METHODS

The course will be delivered through two lectures (1.5 hours each) and one tutorial session (1.5 hours) each week. The theoretical arguments and analytical tools will be presented in the lectures. Exercises and the analysis of the case study will be tackled in the tutorials.

Office hours:

Miguel Lebre de Freitas, mlf@novasbe.pt, Tuesday 17h00 (on request)

Assessment

Standard:

The evaluation is composed of three blocks: (i) Team work assignment:  analysis of a case study, discussion in class and delivery of a written report (35%); (ii) mid-term written assignment (30%); (iii) Final exam (35%). 

  • Group assignment: 35% 
  • Mid-term written assessment (10/04/2024, 14h00):  35% . (sample: 2021)
  • Final exam (27/5/2024): 30% (sample: 2021; 2022) Resit 2022
Resit
  • Team assignment: 35%
  • Exam (17/6/2024): 65%
Grade improvement
  • For any student that retakes the final examination in order to improve the final grade, the course grade will be the best of: A: 100% exam. B. Team assignment (35%)+ Exam (65%) Same for resit exam.

BIBLIOGRAPHY

The course does not follow one single book. For the growth theory, students are invited to read teh handouts. For the second part of the course, the main reference will be:

  • [MK] Mankiw, G., 2010. Macroeconomics, Worth, 10th edition.

Other readings include:

  • [BW] Burda, M. and C. Wyplosz, 2013. Macroeconomics: a European text, Oxford University Press, 6th edition
  • [FM] Mishkin, F., 2013. The economics of money, Banking, and Financial Markets, 10th ed. Pearson.

 Further reading:

In the list below, I will add articles of general interest on current macroeconomic issues and polices .