Projekt współfinansowany ze środków Unii Europejskiej w ramach Europejskiego Funduszu Społecznego MACROECONOMICS II Course Syllabus

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1 Projekt współfinansowany ze środków Unii Europejskiej w ramach Europejskiego Funduszu Społecznego Mariusz Próchniak, Ph. D. Department of Economics II Warsaw School of Economics MACROECONOMICS II Course Syllabus 1. Introduction to macroeconomics. National income accounting 1.1. Introduction to macroeconomics 1.2. Gross domestic product 1.3. GDP and the other measures of national income 1.4. The circular flow 1.5. Three methods of measuring GDP 1.6. Nominal and real GDP 2. Macroeconomic equilibrium 2.1. Consumption 2.2. Saving 2.3. Investment 2.4. State budget 2.5. Exports and imports 2.6. Aggregate demand 2.7. Equilibrium at the goods market Keynesian cross 2.8. Multiplier 2.9. Automatic stabilizers Government policy The balanced budget multiplier The paradox of thrift 3. The monetary system and the money market 3.1. Money and its functions 3.2. The monetary system 3.3. Monetary aggregates 3.4. Money multiplier 3.5. Money control by the central bank 3.6. The money market 3.7. Monetary policy 1

2 4. The IS-LM model 4.1. Interaction of the goods and money markets 4.2. The IS curve 4.3. The LM curve 4.4. Equilibrium in the IS-LM model 5. Monetary and fiscal policy according to the IS-LM model 5.1. Expansionary fiscal policy 5.2. Restrictive fiscal policy 5.3. Expansionary monetary policy 5.4. Restrictive monetary policy 5.5. Policy mix 5.6. The efficiency of fiscal and monetary policy 5.7. The liquidity trap 5.8. The classical case 6. The AD-AS model: Keynesian and classical schools compared 6.1. The aggregate demand curve (AD, MDS) 6.2. The aggregate supply curve (AS) 6.3. Equilibrium in the AD-AS model 6.4. Economic policy according to the AD-AS model: differences between Keynesian and classical schools 6.5. The aggregate supply curve in the real economy 7. The full textbook AD-AS model: The analysis of macroeconomic shocks 7.1. The adjustment mechanism 7.2. The expectations-augmented supply curves 7.3. The price-adjustment function 7.4. Demand-side shocks 7.5. Supply-side shocks (short-run and long-run) 7.6. Ricardian equivalence and intertemporal budget constraint 8. Unemployment and the labor market 8.1. Basic concepts 8.2. Types of unemployment 8.3. Labor market 8.4. Supply-side economics 8.5. Hysteresis 8.6. Okun s law 2

3 9. Inflation 9.1. Basic concepts 9.2. Calculation of price indices 9.3. Inflation and interest rates 9.4. The Phillips curve 9.5. The quantity theory of money 9.6. Sources of inflation 9.7. Inflationary expectations. The rational expectations hypothesis 9.8. Costs of inflation 10. The open economy Foreign exchange (forex) market Exchange rate systems Real and nominal exchange rates. International competitiveness The balance of payments Tariffs 11. The Mundell-Fleming model (the IS-LM model for an open economy) The adjustment mechanism under floating and fixed exchange rate systems Fiscal policy Monetary policy International financial distortions Devaluation 12. Comparison of schools of economic thought. Focus on monetarism vs. new classical school General comparison Monetarism The quantity theory of money The expectations-augmented Phillips curve Balance of payments theory and exchange rate determinants Policy implications of the monetary approach The new classical school Continuous market clearing The aggregate supply hypothesis Equilibrium business cycle theory Policy implications of the new classical school 13. Business cycles and the real business cycle theory Business cycles and growth cycles Business cycles: traditional and alternative approach Business cycle theories in historical perspective Real business cycle theory 3

4 14. Economic growth and convergence The neoclassical growth theory The Solow model The Ramsey model Endogenous models of economic growth The Romer learning-by-doing model The Lucas model Neoclassical revival: the Mankiw-Romer-Weil (augmented Solow) model Growth empirics: economic growth determinants Convergence Growth accounting and total factor productivity (TFP) 4

5 Literature Obligatory literature: Begg D., Vernasca G., Fischer S., Dornbusch R., Economics, McGraw Hill, London Earlier editions, e.g.: Begg D., Fischer S., Dornbusch R., Economics, McGraw-Hill, London Polish translation: Begg D., Fischer S., Dornbusch R., Makroekonomia, PWE, Warszawa Dornbusch R., Fischer S., Startz R., Macroeconomics, McGraw Hill, London New York Hall R.E., Taylor J.B., Makroekonomia, Wydawnictwo Naukowe PWN, Warszawa 2002 (available also in English). The newer book: Hall R.E., Papell D.H., Macroeconomics: Economic Growth, Fluctuations, and Policy, W.W. Norton, Additional literature: Barro R.J., Macroeconomics, John Wiley, New York Blanchard O., Macroeconomics, Pearson Prentice Hall, New Jersey Burda M., Wyplosz Ch., Macroeconomics: A European Text, Oxford University Press, Oxford Polish translation: Burda M., Wyplosz Ch., Makroekonomia. Podręcznik europejski, PWE, Warszawa Dornbusch R., Fischer S., Macroeconomics, McGraw-Hill, New York Mankiw N.G., Macroeconomics, Worth Publishers, New York Mankiw N.G., Taylor M.P., Makroekonomia, PWE, Warszawa 2009 (available also in English). Romer D., Advanced Macroeconomics, McGraw-Hill, New York Polish translation: Romer D., Makroekonomia dla zaawansowanych, Wydawnictwo Naukowe PWN, Warszawa Snowdon B., Vane H., Wynarczyk P., A Modern Guide to Macroeconomics. An Introduction to Competing Schools of Thought, Edward Elgar, Cheltenham-Northampton Most of the books are available in various editions. Sometimes the list of the authors changes between various editions of the same as to the core book. 5