Introduction to Macroeconomics
Module Code: EC7031
- ECTS Credit: 10
- Mandatory/ Optional: Mandatory
- Module Coordinator: Prof Davide Romelli
Aims of Module
Which is the behaviour of consumption and investment? Why are fiscal policies so important? How can we assess the stability of social security systems? This course will examine the determinants of consumption and investment. It then turns to the investigation of the most important issues related to budget deficits and fiscal policies, including the consequences of underfunded social security systems.
The module will be delivered through a combination of lectures (8 hours) and tutorials (3 hours). Tutorials will be delivered by a Teaching Assistant.
On completion of the module, students will be able to:
- exposit and critically appraise modern theoretical models of the determination of the major macroeconomic variables in light of empirical evidence.
- use appropriately the main techniques and methodologies employed in macroeconomic theory.
- Consumption: Utility functions. Permanent income hypothesis. Precautionary savings.
- Investment: Investment and Production. Investment with and without adjustment costs (Q Theory).
- Budget Deficit and Fiscal Policy
- Overlapping Generations Models: Applications to growth theory and social security systems.
- Problem Set 1: Consumption
- Problem Set 2: Investment
- Problem Set 3: Fiscal Policy and OLG
ReadingReadings will be drawn from a selection of academic papers. Overviews of some of the core material covered in the module are provided by:
- Obstfeld, M. and Rogoff, K. (1996). Foundations of international macroeconomics. MIT Press.
- Romer, D. (2012). Advanced macroeconomics. McGraw-Hill.
- Sorensen, P.B. and Whitta-Jacobsen, H.J. (2010). Introducing Advanced Macroeconomics: Growth and business cycles. McGraw-Hill.
- Jones, C. (2016). Macroeconomics. W.W. Norton & Company.
Assessment for the module is based on a final exam accounting for 60% of the grade. In addition, students will hand in weekly problem sets making up the remaining 40%.