Macroeconomic Policy

Code:

2ECON01

Acronym:

PMACR

Keywords
Classification	Keyword
CNAEF	Economics

Instance: 2013/2014 - 1S (of 09-09-2013 to 20-12-2013)

Active?	Yes
Responsible unit:	Agrupamento Científico de Economia
Course/CS Responsible:	Master in Economics

Cycles of Study/Courses

Acronym	No. of Students	Study Plan	Curricular Years	Credits UCN	Credits ECTS	Contact hours	Total Time
ME	68	Bologna Syllabus	1	-	7,5	56	202,5

Teaching language

Portuguese

Objectives

Macroeconomic policies is the understanding of current public debates on monetary and fiscal policies as well as on some structural policiesin the framework of a unifying model that is able to encompass different economic theories and perspectives.
By combining theoretical elements with the analysis of specific cases, the course covers mainly the short term, noting particularly the instruments and the effects of monetary and fiscal policies, but also includes the long term by analyzing the measures and effects of structural policies. Particular emphasis is given to Portugal, to the Euro Area and to the current economic crisis.

Learning outcomes and competences

At the end of the semester students should be able to analyze and discuss the design and implementation of different macroeconomic policy alternatives and their effects on key macroeconomic variables.

Working method

Presencial

Program

1. Introduction

1.1 Liberalism vs interventionism

1.2 Positive and normative analysis

1.3 Objectives, institutions and macroeconomic policy instruments

2. Fiscal policy

2.1 Concepts and facts

2.2 Automatic stabilizers and discretionary fiscal policy

2.3 Government deficit bias

2.4 Debt dynamics and fiscal consolidation

2.5 Fiscal policy rules

2.6 The European case: the Stability and Growth Pact of the European Union

3. Monetary policy

3.1 Framework: money and financial markets

3.2 Monetary policy instruments and transmission mechanisms

3.3 Inflation as a monetary policy objective

3.4 The time inconsistency of monetary policy and Monetary policy rules

3.5 The European case: the role of the ECB

4. Shocks and policy responses in the open economy and interdependent economies

4.1 Macroeconomic policies and interdependence in the short run

4.2 Macroeconomic policies and interdependence in the long run

4.3 Policy responses to shocks

4.4 Macroeconomic policies in exceptional times: the current financial and economic crisis

5. Supply-side policies and macro-prudential policies

5.1 Structural policies: why and for what?

5.2 Structural policy measures and their effects

5.3 Structural policies in the European Union

5.4 The portuguese case: Memorandum of Understanding and structural policies

6. Political economy

6.1 The political economy of economic policy

6.2 Models of political cycles

6.3 Empirical evidence: political cycles in the Euro Area

Mandatory literature

Burda, Michael e Wyplosz, Charles; Macroeconomics - a European Text, 5ª ed., Oxford University Press, 2009
Carlin, Wendy e Soskice, David ; Macroeconomics: Imperfections, Institutions and Policies, Oxford University Press, 2006
ECB; The Monetary Policy of the ECB, 2011
Gordon, Robert; Macroeconomics, 11ª ed., Pearson-Addison Wesley, 2009
Loureiro, João; Política Orçamental na Área Euro, Vida Económica, 2008
Artigos a recomendar no decorrer das aulas

Complementary Bibliography

Peter Sorensen e Hans Whitta-Jacobsen; Introducing Advanced Macroeconomics: Growth & Business Cycles, 2ª ed., McGraw-Hill, 2011
Agnès Bénassy-Quéré, Benoit Coeuré, Pierre Jacquet e Jean Pisani-Ferry; Economic Policy: Theory and Practice, Oxford University Press, 2010

Teaching methods and learning activities

The classes mix theory and practice, with the presentation of concepts, theories and models being followed by examples of their application to real macroeconomic policy cases. The classes will be interactive, with a strong participation of students in the discussion of the proposed applications.

Evaluation Type

Distributed evaluation without final exam

Assessment Components

Designation	Weight (%)
Teste	70,00
Trabalho escrito	30,00
Total:	100,00

Calculation formula of final grade

Distribution assessment: Two tests and one essay. 1st test - 40% + 2nd test - 30% + essay - 30%. OR Final Exam: Exam - 70% + essay - 30% (optional) or exam - 100%.