MACROECONOMICS-1

This course is among those characterizing the Bachelor’s Degree programme in Economics and Business. The aim of the course is to provide an overview of main macroeconomic issues and tools. The course analyses models explaining the determinants of equilibria in goods and financial markets in closed and open economy. A particular attention is devoted to the temporal evolution of the equilibrium, distinguishing between short and medium run. The models analysed in the course will help understanding the effect of economic policies, such as fiscal policy and monetary policy, on three main macroeconomic variables: aggregate output, unemployment rate and inflation rate. The course will also introduce basic models of economic growth, which explain the evolution of aggregate production in the long run.

1. Knowledge and understanding:
1.1. Understand the interconnections between goods and financial markets.
1.2. Understand the determinants of short and medium run equilibrium in goods and financial markets in closed and open economy.
1.3. Understand the effect of fiscal and monetary policies in the short and in the medium run.
1.4. Understand the determinants of long run economic growth.

2. Ability to apply knowledge:
2.1. Identify effects of economic policies on goods and financial markets
2.2. Apply macroeconomic models to understand which economic policy tools may be used to achieve specific goals set by governments or central banks in terms of output, unemployment rate and inflation.
2.3. Evaluate the differential impact of alternative economic policy instruments on the equilibrium in good and financial markets.

3. Making judgements:
3.1. Evaluate the condition of a particular macroeconomic system and formulate hypotheses on its future evolution, based on analytical models.
3.2. Based on the models studied in the course, evaluate the efficacy of alternative economic policies on various macroeconomic objectives in the short, medium and long run.
3.3. Understand the current economic debate and critically assess the empirical relevance of the models studied.

Mandatory priority exam: see https://www.unive.it/pag/21218/
Prerequisites: main learning outcomes of the Math course (first and second module) must be achieved (even if the exam has not been taken yet). In particular, students should be familiar with basic tools of analytic geometry and systems of equations.

The complete program for the 12 credits course is as follows.

First module:
- National accounting; definition of inflation rate
- The Goods Market
- Financial Markets
- Goods and Financial Markets: The IS-LM Model
- Financial Markets II: the extended IS-LM model
- The Labour Market
- The Phillips Curve, the Natural Rate of Unemployment, and Inflation
- Putting All Markets Together: From the Short to the Medium Run: IS-LM-PC model

Second module
- Financial Markets and Expectations
- Expectations, Output, and Policy
- Openness in Goods and Financial Markets
- The Goods Market in an Open Economy
- Output, the Interest Rate, and the Exchange Rate
- Exchange Rate Regimes
- Fiscal Policy
- Economic growth

O. Blanchard, A. Amighini e F. Giavazzi, Macroeconomia. Una prospettiva europea, Il Mulino, Bologna, 2020. Capitoli: II - IX (primo modulo); X, XIV, XVI - XX, XXII (secondo modulo).
Dispense ed integrazioni su argomenti specifici di entrambi i moduli verranno messe a disposizione dai docenti.

Assessment consists in a written exam divided in two parts, one for each module. Each part consists of a set of questions and exercises on theoretical aspects or numerical applications of the topics in the course programme. Final mark is the simple average of the marks obtained in the two parts. In order to pass the exam, the students have to get at least 14/30 in each part and at least 18/30 as an average of the two parts.
The use of books, notes and electronic devices (with the only exception of a calculator) is not allowed during the examination. Oral exams are not possible.
There is the possibility of taking two partial exams, at the end of the first and second period respectively on the topics covered in each module. Students who pass the first partial exam have to take the second partial exam at the end of the second module. Students that fail partial exams cannot take the exam in first session in January.

The exam assesses students’ knowledge and understanding of the topics included in the program as well as students’ ability to apply the theoretical framework acquired in the course to evaluate the effect of monetary and fiscal policies on macroeconomic equilibrium.

a) Teachers’ frontal lectures;
b) Tutorials

The exercises presented during the tutorials and the topics discussed in teachers’ notes are part of the exam’s program.

Additional exercises can be found in this book: D. W. Findlay, Esercizi di Macroeconomia. Guida allo studio del testo di O. Blanchard, A. Amighini, F. Giavazzi, Il Mulino, Bologna, 2021.

The detailed programme for the exam and all the mandatory supplementary material will be made available during the course through the moodle area accessible from the lecturer's web page.

written