Download Macroeconomics-Advanced Level

Saint Petersburg State University
Faculty of Economics
Module Specification
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Basic module information
MACROECONOMICS (ADVANCED LEVEL)
Module title
Module code
Credit points
45
Duration (hours)
World Economy
Department
Date
7. Overview and Aims
Overview: This course introduces the students to a number of areas in modern macroeconomics.
The relationship of basic macroeconomic variables expressed in mathematical models is
expected to give the understanding of macroeconomics’ dynamic change. Various extensions of
the basic neoclassical model: sticky price and wage models, models of imperfect competition,
and models with externalities, monetary models are to be examined. Much attention is given to
fundamental problems of macroeconomic dynamics - inflation cycle and growth. The
recommendations for current monetary and fiscal policies are to be discussed.
Aims: - to study concepts and models of advanced macroeconomics;
- to understand the main aggregate variables and their interrelationship in macroeconomics;
- to develop skills of choosing and using macroeconomic reasoning and model-solving
starting from assumptions and arriving at extensions;
- to analyze such areas as business cycles, inflation, unemployment, economic growth and
open economy;
- to discuss the political application of models and their extensions.
8. Module Content
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Topic 1. Business Cycles
Short and long run. Model of aggregate supply and demand. Stabilization policy. Price shocks.
Keynes and “Classics”. Keynesian cross. Government-purchaser and tax multiplier. Theory of
liquidity preference. IS-LM model. Short run economic fluctuations. Monetary transmission
mechanism. Pigou effect. Shocks and propagation mechanism. Real business cycle model.
Topic 2. Open Economy
Exchange rates. Capital Flows and trade balance. Deficit and surplus. Net export. Saving and
investment in a small economy. Fiscal and monetary expansion. The impact of protectionist trade
policy. The Mundell-Fleming model. Perfect capital mobility. Changes in money supply,
government spending and interest rate.
Topic 3. Inflation and Unemployment
Natural rate of unemployment. Models of wage rigidity. Structural and frictional unemployment.
Real wage rigidity and structural unemployment. Efficiency wage models of unemployment.
Labor market dynamics. Phillips curve. NAIRU and adaptive expectations. Investment and
inflation. Olivera-Tanzi effect. Inflation tax and Patinkin effect. Kydland and Prescott model.
Topic 4. Economic Growth
Gross Domestic Product. Harrod-Domar model. Solow growth model. Investment, depreciation
and the steady rate. Golden rule level of capital and saving. Sources of growth: capital
accumulation, resources, technology, entrepreneurship, institutions. Romer model.
Topic 5. Art of Macroeconomics
Monetary and fiscal policy. Difficult job of economic forecasting. Stabilization policy. Political
business cycle. Time inconsistency in policy. Policy in the Mundell-Fleming model. Central
Bank’s independence and macroeconomic performance. Macroeconomic policy debates.
9. Indicative Reading
Basic literature
1. Туманова Е. А. , Шагас Н. Л. Макроэкономика. Элементы продвинутого подхода:
Учебник.- М.: ИНФРА-М, 2004.-400 с.
2. Barro R. Macroeconomics. MIT Press: London. 1998.
3. Colander D. Macroeconomics. Seventh Edition. McGraw Hill. 2008.
4. Deepke M., Lehnert A., Sellgren A. Macroeconomics (after Barro). Chicago University.
1999.
5. Mankiw G. Macroeconomics. Fifth edition. 2003.
Additional literature
1. Keynes J. The state of long-term expectation // The general theory of
Employment, Interest and Money (1936)
2. Hicks J. Mr. Keynes and the “Classics”: a suggested interpretation /
Econometrica. Vol. 5. N 2. April 1937: 147-159.
3. Bernanke B. Nonmonetary Effects of the financial crisis in the propagation of
the Great Depression / American Economic review. N 3, 1983: 257-276.
4. Davis M., Hamilton J. Why are prices sticky? The dynamics of wholesale
gasoline prices. / Journal of Money, Credit, Banking. Vol. 36. N 1. 2004: 17-37.
5. Atkeson A., Ohanian L. Are Phillips Curves useful for forecasting inflation? /
Federal Reserve Bank of Minneapolis Quarterly Review. Vol. 25. N 1. 2001: 211.
6. Katz L. Efficiency wage theories: a partial evaluation. // NBER
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Macroeconomics Annual. Vol. 1. 1986: 235-276.
7. Di Tella R., MacCulloch, Oswald A. Preferences over inflation and
unemployment: evidence from surveys of happiness // American Economic
Review. Vol. 51. N 1. March 2001: 335-341.
8. Solow R. Contribution to the theory of economic growth / Quarterly Journal of
Economics. Vol. 70. N 1. 1956: 65-94.
9. Phelps E. The Golden rule of accumulation: a fable for growth men. / American
Economic Review. V. 51. September. 1961: 638-643.
10. Bofinger P., Mayer E., Wollmerschauser T. Teaching New Keynesian Open
Economy Macroeconomics at intermediate level // Journal of economic
education. Winter 2009: 80-101.
10. Learning outcomes
Knowledge and understanding. After studying this module students should be able to:
- understand main methodological principles, the inner logic and extensions of
macroeconomic models
- be aware of key concepts and tools of inquiry of macroeconomics: business cycles.
economic growth, causes of unemployment and inflation, monetary and fiscal policies.
- know nature, trends and factors of macroeconomics in short and long run.
Skills, qualities and attributes. After studying this module students should be able to:
- apply different macroeconomic models understanding assumptions, key variables and
possible extensions;
- study macroeconomic problems of inflation, GDP growth, economic and financial
fluctuations, recessions, unemployment etc.;
- discuss and explain macroeconomic policy debates.
11. Teaching and learning
Range of modes of direct contact
This indicates the range of direct contact teaching and learning methods used in this module, e.g.
lectures, seminars
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lectures,
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seminars,
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individual and group presentations,
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discussions,
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written assignments
Total contact hours
Range of other learning methods
This indicates the range of other teaching and learning methods used on this module, e.g.
directed reading, research
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intensive home reading,
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preparation of presentations,
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written assignments
Total non-contact hours
12. Assessment methods
This indicates the type and weighting of assessment elements of the module
Weighting Type
Description
30%
Essay/
Essay or presentation during classes
Presentation
30%
In-class
Participation in discussions, problem solving
work
40%
Test
Final written examination (test, open questions, problem solving)
4
Diagnostic/formative assessment
This indicates if there are any assessments that do not contribute directly to the final module
Further information on assessment
This section provides further information on the module’s assessment where appropriate