|Semester 2 Credit Value:||20|
To equip the student with intermediate-level macroeconomic concepts, and develop students' problem-solving abilities in the context of macroeconomics.
This is the core second-year module in macroeconomic analysis. It is a pre-requisite for several final-year modules in Economics. At a broad level, it is the study of the economy as a whole; and the module focuses on developing skills in macroeconomic analysis that could be applied to any economy in the world. A key emphasis is placed on understanding the relevance of different frameworks for different contexts. The concepts of short run, medium run and long run are central to this process; as is the distinction between open and closed economy modelling. There is also an emphasis on helping students understand contemporary policy-making issues. For example, students have the opportunity to develop knowledge and understanding of a (medium run) macroeconomic framework typical of that used in central banks to support contemporary monetary policy design; and attention is given to frameworks for thinking about fiscal policy and the sustainability of a fiscal stance. The material builds on principles of macroeconomics typically covered in Stage 1 studies and Term1 material in the co-requisite module Economic Modelling, but it is conducted at greater depth and with a much greater reliance on analysis, mainly diagrammatic, but with some mathematics. It is a core module, as it covers the economic techniques that are essential to modern economic analysis at Stage 3 of economics programmes.
1. MONETARY POLICY
• Integrating the banking sector with IS-PC-MR.
• Monetary Policy paradigms: LM and MR.
• Deriving rules for setting interest rates.
• Taylor rules; inflation bias; time inconsistency
2. FISCAL POLICY
• Automatic stabilisers.
• Discretionary policy.
• Debt dynamics.
• Fiscal policy rules.
3. CONSUMPTION, INVESTMENT AND MONEY
• Wealth effects; permanent income hypothesis; life cycle hypothesis; the role of expectations in investment; Tobin’s Q.
• Information problems and innovations in financial markets; chosen monetary policy stance.
4. THE OPEN ECONOMY IN THE SHORT RUN
• Goods market equilibrium in the open economy ISXM – adapted IS
• Real and nominal exchange rates; competitiveness; Marshall-Lerner condition
• Uncovered interest parity (UIP); foreign exchange market; interaction with central bank
• Mundell-Fleming model: assumptions and analysis
• Small open economy; large open economy; fixed exchange rate regime; flexible exchange rate regime; imperfect capital mobility (BP)); perfect capital mobility (i=i*)
5. THE OPEN ECONOMY IN THE MEDIUM RUN
• Inflation and unemployment in the open economy
• The labour market in the open economy (equilibrium not unique)
• The distinction between prices of home and imported goods
• The role of terms of trade
• Medium run equilibrium: AD-ERU-BT (all in the (y, ?) frame).
• ‘Long-run’ equilibrium
• Shocks and policy responses in the open economy.
|Category||Activity||Number||Length||Student Hours||Academic Staff Contact Hours||Comment|
|Guided Independent Study||Assessment preparation and completion||1||64:00||64:00||0:00||N/A|
|Scheduled Learning And Teaching Activities||Lecture||24||1:00||24:00||24:00||N/A|
|Guided Independent Study||Directed research and reading||1||50:00||50:00||0:00||N/A|
|Scheduled Learning And Teaching Activities||Small group teaching||8||1:00||8:00||8:00||N/A|
|Scheduled Learning And Teaching Activities||Drop-in/surgery||4||1:00||4:00||4:00||N/A|
|Guided Independent Study||Independent study||1||50:00||50:00||0:00||N/A|
Lectures provide an exhaustive and in-depth treatment of the core course material; and incorporate student engagement with guided analysis. They will provide the structure through which learners develop familiarity with and understanding of a range of macroeconomic frameworks.
Seminars facilitate small group interaction with peers and the seminar leader to reinforce learning: seminar worksheets structure the student learning activity prior, during and after each seminar. The seminars will support learners to identify appropriate frameworks for the analysis of particular contexts and undertake macroeconomic analysis.
Drop-in/Surgery to deal with specific problems experienced by students and provide a forum for consolidation of understanding.
Private study facilitates review and understanding of lecture material and problem sets.
The format of resits will be determined by the Board of Examiners
|Written Examination||180||2||A||100||Candidates will be required to answer 3 questions from a choice of 6 with unrestricted choice|
The unseen examination is designed to encourage study and test understanding across a range of macroeconomic topics. Student learning and development of analytical skills tends to build and mature over time. End of session summative assessment should give learners maximum opportunity to develop their analytical skills before being formally assessed – and will test their understanding on exit from the programme of learning.
Disclaimer: The University will use all reasonable endeavours to deliver modules in accordance with the descriptions set out in this catalogue. Every effort has been made to ensure the accuracy of the information, however, the University reserves the right to introduce changes to the information given including the addition, withdrawal or restructuring of modules if it considers such action to be necessary.