Economic Policies

Instance: 2025/2026 - 2S

Cycles of Study/Courses

Last updated on 2025-06-02.

Fields changed: Calculation formula of final grade, Obtenção de frequência, Avaliação especial

Teaching language

Objectives

This course aims to show how macroeconomic stabilization policies (namely monetary and fiscal policy) can affect the main economic variables. 

Combining theoretical elements with reflection on concrete cases, the analysis encompasses the short-term effects, but also the long-term effects of policies that may occur via hysteresis mechanisms.

Learning outcomes and competences

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  Understand the implications of macroeconomic models for the definition and implementation of macroeconomic policies.

  
  


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  Identify the persistence mechanisms of crisis and macroeconomic policies.

  
  


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  Identify the macroeconomic objectives.

  
  


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  Identify the main macroeconomic policy instruments (fiscal and monetary) and their effects.

  
  


• Describe how those instruments were applied after the recent financial crisis, and following the COVID-19 pandemic


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  Identify the causes and problems arising from excessive inequality in the distribution of income and wealth, and the policies for their mitigation.

  
  

  
  
  
  

Working method

Program

I. The Great Schools of Economic Thought and the Impact of Macroeconomic Policy

1. The Phillips curve
2. The monetarist perspective
3. The new classical perspective
4. The new keynesian perspective
5. The post-keynesian perspective

II.The Presence of Hysteresis in the Dynamics of Employment, Unemployment and Investment

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

III.The Role of Monetary Policy

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

IV.The Role of Fiscal Policy

1. The nature of the government's budget constraint.
2. The Keynesian perspective of fiscal policy and the concept of fiscal multiplier.
3. The non-Keynesian effects of monetary policy
4. The value of the fiscal multipliers and the effects of fiscal policy.
5. The fiscal policy in the context of the recent financial crisis.
6. The fiscal policy in the context of the COVID-19 pandemic.

IV.The Economics of Inequalities and Economic Policy
       1.The socio-economic problems caused by excessive    inequality in the distribution of income and wealth.
       2.  The recent dynamics of inequalities.
       3.  The causes of rising inequalities in recent years.
       4.  Economic policies to mitigate inequalities.
       5. Economic policies for shared prosperity.

Mandatory literature

Complementary Bibliography

Teaching methods and learning activities

Evaluation Type

Assessment Components

Amount of time allocated to each course unit

Eligibility for exams

that assess different parts of the curricular unit's program. The first test will take place during the semester, and the second test will take place on the date of the regular season exam.

Calculation formula of final grade

Alternative 1 (distributed assessment): two test, each one with a a weight of 45%. 10% of the final grade rewards attendance and participation in class.

Alternative 2: Final exam.
The final grade is determined by the following formula:
Final grade = Max(90% * final exam grade + 10% * attendance and participation; final exam grade)

Special assessment (TE, DA, ...)

For students with official status exempting them from class attendance, and in cases where the minimum attendance requirement is not met, the final grade is calculated as follows:

Option 1: Two tests, each weighted at 50%.
Option 2: Final exam grade.

Classification improvement

Classification improvement is only possible by means of a final exam, and in accordance with the assessment regulations.

Observations