Macroeconomics II

Code:

LEC206

Acronym:

MAC II

Keywords
Classification	Keyword
OFICIAL	Economics

Instance: 2005/2006 - 2S

Active?	Yes
Web Page:	http://www.fep.up.pt/disciplinas/LEC206/
Responsible unit:	Grupo de Economia
Course/CS Responsible:	ECONOMICS

Cycles of Study/Courses

Acronym	No. of Students	Study Plan	Curricular Years	Credits UCN	Credits ECTS	Contact hours	Total Time
ECO	505	Official Curricular Structure since 2004	2	3		-

Objectives

The aim of the Macroeconomics II course (LEC206) is to deepen the skills and knowledge acquired in Macroeconomics I regarding the understanding of aggregate movements in market economies, both in the long- and in the short-run.
The main scientific and pedagogical goals are (i) to broaden the study of the long-run behavior of the main macroeconomic variables; and (ii) to improve the understanding of the basic macroeconomic models (developed in Macroeconomics I), through the discussion of their behavioral foundations, their limitations, and their interpretation under divergent macroeconomic theories.

Program

1. Economic Growth
1.1. The importance of economic growth
1.2. Growth and productivity
1.3. Solow’s theory of economic growth
1.4. Endogenous growth theory
1.5. Structural policy

2. Labour Markets and Unemployment
2.1. Demand and supply in the labour market
2.2. Stylized facts on unemployment
2.3. Structural unemployment
2.4. Frictional unemployment

3. Consumption and saving
3.1. Stylised facts on consumption and saving
3.2. Intertemporal optimisation
3.3. The permanent-income hypothesis
3.4. The life-cycle hypothesis
3.5. The consumption function revisited

4. Investment
4.1. Stylised facts on investment
4.2. The accelerator hypothesis of net investment
4.3. The neoclassical theory of investment behaviour
4.4. Business confidence and speculation: Tobin’s q
4.5. The investment function revisited

5. Money and financial markets
5.1. Financial institutions, markets and instruments
5.2. Demand for money
5.3. Money supply
5.4. Money and inflation
5.5. Interest rates

6. The Government budget and public debt
6.1. The Government budget and public debt: recent trends
6.2. The government budget constraint
6.3. The inflation tax
6.4. Long-run effects of fiscal policy on economic growth and welfare
6.5. Ricardian equivalence

7. Exchange rates and external equilibrium
7.1. The national intertemporal budget constraint
7.2. The equilibrium real exchange rate
7.3. Nominal exchange rate determination

8. Macroeconomic equilibrium
8.1. Macroeconomic equilibrium under flexible prices
8.2. Macroeconomic equilibrium under price rigidity
8.3. The transition from the “short-run” to the “long-run”
8.4. Business cycles
8.5. Conclusion: where we stand

Main Bibliography

Gordon, Robert J. (2003): Macroeconomics, 9th Edition, Addisson-Wesley.
Burda, Michael, and Charles Wyplosz (2005): Macroeconomics – a European text, 4th Edition, Oxford University Press.

Complementary Bibliography

Dornbusch, Rudiger, Stanley Fischer and Richard Startz (2004): Macroeconomics, 9th Edition, McGraw-Hill.
DeLong, J. Bradford (2002): Macroeconomics, McGraw-Hill.

Teaching methods and learning activities

Mixed lectures and tutorials. The teacher will present the topics - concepts, theory, models - and will solve practical exercises and/or discuss real world macroeconomic statistics that may illustrate the topics.

Evaluation Type