Economic Policy

Instance: 2021/2022 - 1S

Cycles of Study/Courses

Teaching language

Objectives

This course aims to show how the government, through stabilization policies can affect the main economic variables. 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 effects that may operate through hysteresis mechanisms.

Learning outcomes and competences

At the end of the course, students should be able to:

• Identify the main macroeconomic policy instruments and their effects.
• Describe how those instruments were applied after the recent financial crisis, and how they can be used to stabilise the economy following the COVID-19 pandemic.
• Identify the persistence mechanisms of crisis and macroeconomic policies.

Working method

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

Program

1. The Dynamical stochastic General Equilibrium Model

1. Assumptions
2. The problem of the unrealistic assumptions and the predictive power of the model
3. The model in the context of the recent financial crisis
4. Consequences for macroeconomic policy

2. The Presence of Hysteresis in the Dynamics of Employment/ Unemployment

1. The concept of hysteresi
2. The Micro foundations
3. The Empirical evidence
4. Consequences for macroeconomic policy

3. The Role of Monetary Policy

1. The monetary policy of the ECE
2. The non-conventional measures of monetary policy
3. The reaction of the ECB to the recent financial crisis
4. The reaction of the ECB to the COVID-19 pandemic

4. The Role of Fiscal Policy

1. The non-Keynesian effects of monetary policy
2. The value of the fiscal multipliers and the effects of fiscal policy
3. The fiscal policy in the context of the recent financial crisis
4. The fiscal policy in the context of the COVID-19 pandemic

Mandatory literature

Teaching methods and learning activities

Evaluation Type

Assessment Components

Amount of time allocated to each course unit

Eligibility for exams

Two reports on proposed topics with a maximum of 5 pages, each with a weighting of 50%



1st Report delivered by October 31, 2021

2nd Report delivered by December 17, 2021

Calculation formula of final grade

Class. 1st Report x 0.5 + Class. 2nd Report x 0.5

Classification improvement