Macroeconomic Policy

Code:

2ECON01

Acronym:

PMACR

Keywords
Classification	Keyword
CNAEF	Economics

Instance: 2015/2016 - 1S

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	57	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

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

Basic macroeconomic models like IS/LM and AS/AD.

Program

1. Introduction

1.1 Positive and normative analysis

1.2 Objectives, institutions and macroeconomic policy instruments

1.3 Limits to the use of macroeconomic policies

2. Fiscal policy

2.1 Automatic stabilizers and discretionary fiscal policy

2.2 Government deficit bias and debt dynamics

2.3 Fiscal consolidation and fiscal policy rules

2.4 Fiscal policy effects 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 of monetary policy and Monetary policy rules

3.4 Monetary policy effects 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 products markets

5.2 The macro-prudential policies

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 cycles

Mandatory literature

Carlin, Wendy e Soskice, David ; Macroeconomics: Imperfections, Institutions and Policies, Oxford University Press, 2006
ECB; The Monetary Policy of the ECB, 2011
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
Burda, Michael e Wyplosz, Charles; Macroeconomics - a European Text, 6ª ed., Oxford University Press, 2012
Gordon, Robert; Macroeconomics, 11ª ed., Pearson-Addison Wesley, 2009

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 with final exam

Assessment Components

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

Calculation formula of final grade

Distribution assessment: 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%.