• Explain basic macroeconomic terminology (e.g. "growth", "recession", "natural unemployment", "trade balance deficit", etc.) in a comprehensive way.
• Describe and explain the assumptions and mechanisms of the main macroeconomic models (e.g. the Keynesian model, the IS/LM model, the AD/AS model, the Solow growth model, etc.). Illustrate these models graphically and solve them algebraically.
• Describe how GDP is determined in the short run, the medium run and the long run. Explain how GDP is affected by shocks.
• Describe the main determinants of other important macroeconomic variables such as inflation, unemployment, real wage, interest rate, exchange rate, etc. Explain how these macroeconomic variables are affected by shocks.
• Perform policy experiments (e.g., changes in government spendings or changes in money supply). Interpret the mechanisms verbally and graphically, and solve algebraically.

The aim of this course is to provide students with an introduction to macroeconomics. The course focuses on the behavior of the economy in the short-run, middle-run, and long-run, specifically looking at the goods market, the financial market and the labor market. The course is designed to help students understand how these markets operate, how they interact with each other, and how they are impacted by shocks and macroeconomic policies. The key mechanisms will first be explained in a context of closed economy and the analysis will then be extended to include trade and financial openness.

Why do economies expand sometimes, raising employment and living standards, and shrink at other times? What is a recession? What happened in 2008–09 when the world economy was hit by the worst recession since the Great Depression of the 1930s? How did government policy respond to the crisis and was this response effective?

More generally, which shocks affect macroeconomic activity? How do these shocks affect output, employment, investment, or consumption? Can government policies make economies grow or stop them from shrinking? Why do we have inflation? Is inflation a bad thing? Is there anything we can do to reduce inflation? Why do we have unemployment? Do policies to reduce unemployment work? Why do countries borrow from abroad? How are exchange rates determined and why are they so volatile? What drives economic growth in the long run? What explains the large differences in economic performance across different countries in different times?

These are some of the central questions that fascinate macroeconomists. If you are curious about how macroeconomists look at the world around them, how they model it, and how this helps answering the questions you just read, then this is the course for you. 

Blanchard, O. and Johnson, D., Macroeconomics (6th Edition), 2013, Pearson Prentice Hall.

Please note, minor changes may occur. The teacher will uploade the final reading list to Learn two weeks before the course starts.