Macroeconomics

• Credit value: 30 credits at Level 6
• Convenor: Professor Stephen Wright
• Prerequisites: Mathematics for Economists and Microeconomics or courses with similar content taught at a similar level
• Assessment: in-class test in the spring term (20%) and a three-hour examination (80%)

Macroeconomics studies the behaviour of the economic system as a whole. In this module we build heavily on the material covered in Microeconomics. We proceed on the assumption that microeconomic tools are crucial to understanding macroeconomics, but also acknowledge the gaps that still remain in economists' abilities to explain macroeconomic behaviour in terms of basic microeconomics.

We start from 'microfoundations', based on the assumption of profit-maximising firms with production functions, and utility-maximising consumers. The aggregate production function provides a crucial tool in analysing the mechanism of economic growth, and income disparities between different countries.

As the course proceeds, we progressively introduce additional complexity to the models analysed, such as the analysis of economies with 'Keynesian' features, including a comparison with alternative models based on the assumption of perfect frictionless markets.

We will use some calculus and other mathematical tools, but there is also a strong emphasis on geometric intuition, as well as repeated reference to empirical evidence.

By the end of this module, you will be able to:

• understand and use macroeconomic data and the key identities that are used in their construction
• understand the core microeconomic models of profit maximising firms and utility-maximising consumers, making both labour supply and consumption decisions
• understand and use models of growth and income disparities
• understand the core elements of the 'stochastic growth'/'real business cycle' model and the similarities and contrasts with 'Keynesian' models
• understand models of inflation and hyperinflation
• show awareness of the insights macroeconomic data can shed on competing models
• use macroeconomic models to provide a framework for the analysis of different macroeconomic policies.