1

Projekt współfinansowany ze środków Unii Europejskiej w ramach Europejskiego Funduszu Społecznego

Prof. Mariusz Próchniak, Ph. D. Department of Economics II SGH Warsaw School of Economics

MACROECONOMICS II

Course Syllabus

1. Introduction to macroeconomics. National income accounting

1.1. Introduction to macroeconomics 1.2. Gross domestic product 1.3. GDP and the other measures of national income 1.4. The circular flow 1.5. Three methods of measuring GDP 1.6. Nominal and real GDP

2. Macroeconomic equilibrium

2.1. Consumption 2.2. Saving 2.3. Investment 2.4. State budget 2.5. Exports and imports 2.6. Aggregate demand 2.7. Equilibrium at the goods market – Keynesian cross 2.8. Multiplier 2.9. Automatic stabilizers 2.10. Government policy 2.11. The balanced budget multiplier 2.12. The paradox of thrift

3. The monetary system and the money market

3.1. Money and its functions 3.2. The monetary system 3.3. Monetary aggregates 3.4. Money multiplier 3.5. Money control by the central bank 3.6. The money market 3.7. Monetary policy

2

4. The IS-LM model

4.1. Interaction of the goods and money markets 4.2. The IS curve 4.3. The LM curve 4.4. Equilibrium in the IS-LM model

5. Monetary and fiscal policy according to the IS-LM model

5.1. Expansionary fiscal policy 5.2. Restrictive fiscal policy 5.3. Expansionary monetary policy 5.4. Restrictive monetary policy 5.5. Policy mix 5.6. The efficiency of fiscal and monetary policy 5.7. The liquidity trap 5.8. The classical case

6. The AD-AS model: Keynesian and classical schools compared

6.1. The aggregate demand curve (AD, MDS) 6.2. The aggregate supply curve (AS) 6.3. Equilibrium in the AD-AS model 6.4. Economic policy according to the AD-AS model: differences between Keynesian and

classical schools 6.5. The aggregate supply curve in the ‘real’ economy

7. The full textbook AD-AS model: The analysis of macroeconomic shocks

7.1. The adjustment mechanism 7.2. The expectations-augmented supply curves 7.3. The price-adjustment function 7.4. Demand-side shocks 7.5. Supply-side shocks (short-run and long-run) 7.6. Ricardian equivalence and intertemporal budget constraint

8. Unemployment and the labor market

8.1. Basic concepts 8.2. Types of unemployment 8.3. Labor market 8.4. Supply-side economics 8.5. Hysteresis 8.6. Okun’s law

3

9. Inflation

9.1. Basic concepts 9.2. Calculation of price indices 9.3. Inflation and interest rates 9.4. The Phillips curve 9.5. The quantity theory of money 9.6. Sources of inflation 9.7. Inflationary expectations. The rational expectations hypothesis 9.8. Costs of inflation

10. The open economy

10.1. Foreign exchange (forex) market 10.2. Exchange rate systems 10.3. Real and nominal exchange rates. International competitiveness 10.4. The balance of payments 10.5. Tariffs

11. The Mundell-Fleming model (the IS-LM model for an open economy)

11.1. The adjustment mechanism under floating and fixed exchange rate systems 11.2. Fiscal policy 11.3. Monetary policy 11.4. International financial distortions 11.5. Devaluation

12. Comparison of schools of economic thought. Focus on monetarism vs. new classical

school

12.1. General comparison 12.2. Monetarism 12.3. The quantity theory of money 12.4. The expectations-augmented Phillips curve 12.5. Balance of payments theory and exchange rate determinants 12.6. Policy implications of the monetary approach 12.7. The new classical school 12.8. Continuous market clearing 12.9. The aggregate supply hypothesis 12.10. Equilibrium business cycle theory 12.11. Policy implications of the new classical school

13. Business cycles and the real business cycle theory

13.1. Business cycles and growth cycles 13.2. Business cycles: traditional and alternative approach 13.3. Business cycle theories in historical perspective 13.4. Real business cycle theory

4

14. Economic growth and convergence

14.1. The neoclassical growth theory 14.2. The Solow model 14.3. The Ramsey model 14.4. Endogenous models of economic growth 14.5. The Romer learning-by-doing model 14.6. The Lucas model 14.7. Neoclassical revival: the Mankiw-Romer-Weil (augmented Solow) model 14.8. Growth empirics: economic growth determinants 14.9. Convergence 14.10. Growth accounting and total factor productivity (TFP)

5

Literature Obligatory literature: Próchniak M., Macroeconomics II, Szkoła Główna Handlowa w Warszawie, Warszawa 2015

[ISBN: 978-83-65416-38-4]. Begg D., Vernasca G., Fischer S., Dornbusch R., Economics, McGraw Hill, London 2010.

Earlier editions, e.g.: Begg D., Fischer S., Dornbusch R., Economics, McGraw-Hill, London 2005. Polish translation: Begg D., Fischer S., Dornbusch R., Makroekonomia, PWE, Warszawa 2007.

Dornbusch R., Fischer S., Startz R., Macroeconomics, McGraw Hill, London – New York 2010. Hall R.E., Taylor J.B., Makroekonomia, Wydawnictwo Naukowe PWN, Warszawa 2002

(available also in English). The newer book: Hall R.E., Papell D.H., Macroeconomics: Economic Growth, Fluctuations, and Policy, W.W. Norton, 2005.

Additional literature: Barro R.J., Macroeconomics, John Wiley, New York 1993. Blanchard O., Macroeconomics, Pearson Prentice Hall, New Jersey 2009. Burda M., Wyplosz Ch., Macroeconomics: A European Text, Oxford University Press, Oxford

2009. Polish translation: Burda M., Wyplosz Ch., Makroekonomia. Podręcznik europejski, PWE, Warszawa 2000.

Dornbusch R., Fischer S., Macroeconomics, McGraw-Hill, New York 1994. Mankiw N.G., Macroeconomics, Worth Publishers, New York 2009. Mankiw N.G., Taylor M.P., Makroekonomia, PWE, Warszawa 2009 (available also in English). Romer D., Advanced Macroeconomics, McGraw-Hill, New York 2006. Polish translation:

Romer D., Makroekonomia dla zaawansowanych, Wydawnictwo Naukowe PWN, Warszawa 2000.

Snowdon B., Vane H., Wynarczyk P., A Modern Guide to Macroeconomics. An Introduction to Competing Schools of Thought, Edward Elgar, Cheltenham-Northampton 2002.

Most of the books are available in various editions. Sometimes the list of the authors changes between various editions of the same – as to the ‘core’ – book.