Macroeconomic Policy

Code:

2ECON01-EN

Acronym:

MP-EN

Keywords
Classification	Keyword
OFICIAL	Economics

Instance: 2014/2015 - 1S

Active?	Yes
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	7	Bologna Syllabus	1	-	7,5	56	202,5
		Syllabus - english track	1	-	7,5	56	202,5

Teaching language

English

Objectives

Macroeconomic Policy is a course in applied economic analysis, aiming at understanding current public debates on monetary and fiscal policies as well as on some structural policies, using a framework that is able to encompass different economic theories and perspectives.
By combining theoretical elements with the analysis of specific cases, the course covers mainly short term macroeconomic policies - the instruments and the effects of monetary and fiscal policies -, but also includes the long term analysis of structural policies. Particular emphasis is given 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

Pre-requirements (prior knowledge) and co-requirements (common knowledge)

Basic macroeconomic models in the line of IS/LM and AS/AD.

Program

1. Introduction

1.1 Positive and normative analysis

1.2 Liberalism vs interventionism

1.3 Objectives, institutions and instruments of macroeconomic policy

1.4 Limits to macroeconomic policymaking

2. Fiscal policy

2.1 Automatic stabilizers and discretionary fiscal policy

2.2 Government deficit bias and public debt dynamics

2.3 Fiscal consolidation and fiscal policy rules

2.4 Fiscal policy effectiveness in the short and the long run

2.5 Fiscal policy in the European Union

3. Monetary policy

3.1 Monetary policy instruments and transmission mechanisms

3.2 Inflation as a monetary policy objective

3.3 The time inconsistency and monetary policy rules

3.4 Monetary policy effectiveness in the short and the long run

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 Global macroeconomic imbalances

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

5. Supply-side policies and macro-prudential policies

5.1 Structural policies and supply shocks: labor and product markets

5.2 Maacro-prudential policy

5.3 Governance reforms in the Euro Area: macroeconomic and financial stability and Banking Union

6. Political economy

6.1 The political economy of economic policy

6.2 Models of political business cycle

Mandatory literature

Carlin, Wendy e Soskice, David ; Macroeconomics: Imperfections, Institutions and Policies, Oxford University Press, 2006
ECB; The Monetary Policy of the ECB, 2011

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
Burda, Michael e Wyplosz, Charles; Macroeconomics - a European Text, 6ª ed., Oxford University Press, 2012
Gordon, Robert; Macroeconomics, 11th ed., Pearson-Addison Wesley, 2009

Teaching methods and learning activities

The classes mix theory, exercices and case-sttudies, 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 the participation of students in the discussion of the proposed applications.

Evaluation Type

Distributed evaluation with final exam

Assessment Components

Designation	Weight (%)
Exame	50,00
Teste	20,00
Trabalho escrito	30,00
Total:	100,00

Eligibility for exams

Distributed evaluation:

(i) first test, multiple choice (chapters 1-3); second week of November.

(ii) final exam (all chapters); 13 January 2015, 9:00am.

(iii) written essay, by groups of three or four students, consisting of the analysis and discussion of scientific papers; the essays are due in the last week of classes in December and will be presented and discussed in class in the first working week of January.

Calculation formula of final grade

Distributed evaluation: one test, one final exam and one essay. Test - 20% + final exam - 50% + essay - 30%.

OR

Final Exam: Exam - 70% + essay - 30% (optional) or exam - 100%.