ECONOMIC POLICY I

This course is among those characterizing the Bachelor’s Degree programme in Economics and Management. 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 dynamics. 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.

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

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 market.

3. Making judgements:
3.1. Evaluate the condition of a particular macroeconomic system and formulate hypothesis 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 and medium run.
3.3. Understand the current economic debate and critically assess the empirical relevance of the models studied.

Compulsory Prerequisites: http://www.unive.it/pag/14770/

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 program for the course is as follows:

National accounts; price indexes and inflation rate
Goods market
Financial markets
IS-LM model
Extending the IS-LM model
Open economy and IS-LM model
Labour market
Phillips curve, natural rate of unemployment and inflation
From the short to the medium run: the IS-LM-PC model

O. Blanchard, A. Amighini e F. Giavazzi, Scoprire la macroeconomia 1. Quello che non si può non sapere, Il Mulino, Bologna, 2021
Additional material on specific topics will be made available on Moodle.

Assessment consists in a written exam of 90 minutes. The exam consists of multiple choice items plus a two of exercises and/or open-ended questions. In order to pass the exam, the final mark should be at least 18/30. 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.

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.

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This subject deals with topics related to the macro-area "Poverty and inequalities" and contributes to the achievement of one or more goals of U. N. Agenda for Sustainable Development