BS2549: Macroeconomic Theory

The function of this module is to provide students with a firm foundation in the workings of the macroeconomy.  The module equips students with an understanding of the macroeconomic problems, concepts, principles, theories and techniques.  Its role is to provide the intermediate step towards the advanced Macroeconomic Analysis and provides the foundation for specialist optional modules in year 3.

The Macroeconomic Theory module aims to provide students with a sound understanding of the method and scope of macroeconomic analysis, focusing in particular on models of the business cycle.

A. Knowledge and Understanding:

• comprehend the key determinants of saving and investment, output and employment.
• appreciate the main differences between Classical and Keynesian theories of the business cycle.
• understand the determinants of long-term economic growth.
• be familiar with recent developments in the analysis of consumption, investment and asset demand.

B. Intellectual Skills: 

• analyse and evaluate competing theories of the business cycle.
• critically evaluate models of economic growth.
• apply and evaluate theories of the determinants of aggregate demand.

C. Discipline Specific Skills: 

• apply competing theories of the business cycle to the cyclical behaviour of key macroeconomic variables.
• illustrate and compare the potential effects of specific macroeconomic policies using different theories of the business cycle.
• apply neoclassical and endogenous growth models to the analysis of saving, investment and population growth.
• compare the operation of the open economy under different exchange rate regimes, including the effects of fiscal and monetary policy.

D. Transferable Skills: 

• demonstrate the ability to undertake both diagrammatic and mathematical analyses of macroeconomic issues.
• development analytical, communication and learning skills through class work and web-based exercises.
• develop problem-solving skills.
• interpret real world macroeconomic data.

The module will be delivered through a mix of large & small group face-to-face sessions, including, where relevant, supporting digital learning activities and/or recordings

The autumn semester exam requires students to use materials from the module to analyse and solve problems of a theoretical or practical nature. The Spring semester exam has two parts: the first part develops material covered in classes and requires students to solve and analyse problems of a theoretical or practical kind; the second part is essay based and require students to demonstrate an understanding of macroecomic theory. 

Productivity, Output and Employment; Consumption, Saving and Investment; Saving and Investment in the Open Economy; Business Cycles; Business Cycles in the Classical Model; The Real Business Cycle Model; New Keynesian Economics: The Macroeconomics of Wage and Price Rigidity; Business Cycles and Macroeconomic Policy; Long-Run Economic Growth; The Asset market, Money and Prices Household Decisions to Consume and Save: A More Formal Treatment; Monetary Policy and the Supply of Money Government Spending and its Financing; The Government Budget; Exchange Rates and the Open Economy.