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Regular version of the site
Bachelor 2020/2021

Macroeconomics (Economic Theory)

Type: Elective course (Asian and African Studies)
Area of studies: Asian and African Studies
When: 3 year, 1 module
Mode of studies: offline
Open to: students of one campus
Instructors: Ivan V. Rozmainsky
Language: English
ECTS credits: 3

Course Syllabus

Abstract

Macroeconomics as the part of economics is the study of human choice in the conditions of the deep interdependency of people; and the most part of economics is about interactions of people under the regime of market capitalism. In the beginning of the course we will spend time for analyzing this one and some other economic systems, and consider demand and supply analysis. Furthermore, we will discuss both advantages of the market system and its defects: we will speak about various types of market failures. The government can play the important role by dealing with market failures but its activities can generate different kinds of government failure. After discussing micro level problems we will turn to macro dimension of economics, and it will be the essential part of the course. This dimension is about economic variables like GDP, consumption, investment, inflation, and the rate of unemployment. Another major objective of macroeconomics is to explain the determinants of economic growth and development in the long run. In the short run en economy experiences nominal rigidities (sticky prices and wages) and expectational errors (differences between actual and expected prices). ). Rigidities and expectations make nominal aggregate demand, which could fluctuate because of some shock, affect real economic activity such as output and unemployment. Therefore, it is necessary to engage in aggregate demand management in order to stabilize the economy. We will study such stabilization policies (fiscal and monetary) and the most efficient ways of performing them. In the long run, economy’s output is a function of productive capacity (capital and labor inputs) as well as technologies (methods of transforming these resources into output) and institutions (laws and informal rules). We will discuss opportunities and limitations of economic growth. And finally we will make an introduction to the international macroeconomics.
Learning Objectives

Learning Objectives

  • study of human choice in the conditions of the deep interdependency of people; and the most part of economics is about interactions of people under the regime of market capitalism.
Expected Learning Outcomes

Expected Learning Outcomes

  • Understand main features of the capitalism and other economic systems
  • Understand building blocks of the demand and supply model
  • Know the main forms of market failures and government failures
  • Understand the building blocks of the aggregate demand and aggregate supply model
  • Understand causes of inflation and effects of anti-inflationary policy
  • Understand the reason for short-run stabilization policy being welfare-improving
  • Know main forms of stabilization policies (fiscal and monetary), and be able to describe their effects graphically
  • Understand the main driving forces of the economy in the long run: Factor accumulation and technical progress
  • Know main properties of the labor market functioning and causes of unemployment.
  • Understand causes of exchange rate fluctuations
Course Contents

Course Contents

  • Money, Banking and Monetary Policy
    He we will discuss money, banking and monetary policy. We will talk about the nature of contemporary money; we will analyze how commercial banks create money, and how the central bank can make regulations. We solve the exercises
  • IS-LM Model and Determination of GDP with Fixed Price Level
    Here we discuss Keynesian cross model with the government then move to the IS curve and – using the previous theme – talk about LM curve. We solve the exercises to derive both IS and LM curve and illustrate effectiveness of both fiscal and monetary policy.
  • AD-AS Model and Determination of GDP with Flexible Price Level
    We derive AD curve from IS-LM model and consider situations with different slopes of AS curves. Then we discuss contemporary version of this model with dynamic functions of both AD and AS curves.
  • Short-Run Macro Dynamics: Business Cycles
    We deal with three models – the multiplier-accelerator model, Kaldor model and the financial fragility hypothesis
  • Long-Run Macro Dynamics: Solow Model and Endogenous Growth Theory
    Here we talk a lot about the hockey stick of economic progress, then about Solow model and engodenous growth theory including AK model, R&D model and Galor – Zeira model.
  • Short-Run Macro Dynamics: Unemployment
    We talk about the links between unemployment and business cycles and then discuss in details Efficiency Wage theory in general and Shapiro – Stigliz model in particular
Assessment Elements

Assessment Elements

  • non-blocking activity in class
  • non-blocking in-class test
  • non-blocking final exam
Interim Assessment

Interim Assessment

  • Interim assessment (1 module)
    0.4 * final exam + 0.3 * in-class test + 0.3 * activity in class
Bibliography

Bibliography

Recommended Core Bibliography

  • Jones, P. M., & Enders, W. (2016). The Asymmetric Effects Of Uncertainty On Macroeconomic Activity. Macroeconomic Dynamics, (05), 1219. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.a.cup.macdyn.v20y2016i05p1219.1246.00

Recommended Additional Bibliography

  • Julio Davila, Julio Dávila, & Core Uclouvain. (2009). Issn: 1955-611Xthe Taxation of Savings in Overlapping Generations Economies with Unbacked Risky Assets. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.7C110562