MACROECONOMICS 2

2nd Module, 2002/2003

Instructors: Christof Ruehl, Kirill Sosunov, Poul Thomsen

Basic Texts: Jeffrey D. Sachs and Felipe Larrain B. (1993) Macroeconomics in the Global Economy (S&L)

Rudiger Dornbusch and Stanley Fischer (1990) Macroeconomics (fifth edition) (D&F)

Requirements: This is a 7 weeks course. There will be 14 lectures (2 each week) and 6 problem sets, distributed each week and to be handed in to the teaching assistants in sections a weak later. There will be a final exam given at the end of the module. Problem sets will comprise 30% of the final grade and the exam will account for 70%.

Syllabus and Reading

1. Aggregate Demand Components and Their Determinants: A Brief Review. Macroeconomic Policies and Output Determination: Closed Economy (S&L, Ch.12, D&F, Ch.4, 5) [3 lectures]

2. Macroeconomic Policies in the Open Economy: Fixed Exchange Rates (S&L, Ch.13, D&F, Ch.6) [2 lectures]

3. Macroeconomic Policies in the Open Economy: Flexible Exchange Rates (S&L, Ch.14, D&F, Ch.6) [2 lectures]

4. Some Extentions of the Traditional IS-LM Framework [1 lecture]

5. Inflation and Unemployment. Introduction to Dynamic AD/AS. Rational Expectations (S&L, Ch.11, 15, 16, D&F, Ch.14) [3 lectures]

6. Long-Term Growth and Business Cycles. Solow Model of long-term growth. Introduction to business cycles theories: Real Business Cycles and New-Keynesian approach. (S&L, Ch.17, 18) [3 lecture]