| Module Identifier |
EC30810 |
| Module Title |
TOPICS IN MACROECONOMICS 2 |
| Academic Year |
2004/2005 |
| Co-ordinator |
Mr Bruce Morley |
| Semester |
Semester 2 |
| Pre-Requisite |
EC30320 |
| Course delivery |
Seminars / Tutorials | 4 Hours |
| |
Lecture | 11 Hours |
| Assessment |
| Assessment Type | Assessment Length/Details | Proportion |
|---|
| Semester Exam | 1.5 Hours | 80% |
| Semester Assessment | | 20% |
| Supplementary Assessment | 1.5 Hours examination and/or resubmission of coursework | 100% |
|
Learning outcomes
On successful completion of this module students should be able to:
Through lecture presentation, seminar discussion and reading (see below) you should grasp a firm understanding of recent work by economists to explain the importance of the exchange rate to the domestic economy and how it relates foreign economies to the domestic economy and what causes exchange rates to "overshoot" their long-run levels. You should also be able to explain the sources of rigidities in the economy and their role and importance in explaining unemployment and macroeconomic fluctuations. Specifically you should gain a working understanding of the following topics:
-
The various models of exchange rate determination and relationships between the exchange rate and macroeconomy, such as purchasing parity and uncovered interest parity.
-
The importance of the monetary model of the exchange rate and the Dornbusch sticky price model.
-
Real Business Cycle theories, and whether economic fluctuations can be explained by technology shocks
-
Models of efficiency wages and insider-outsiders, and how they may contribute to real wage rigidity and unemployment
-
Theories of nominal price rigidity, and whether they can explain economic fluctuations
From these you should also be able to gain an understanding of how the open economy operates and how particular types of behaviour in response to uncertainty and market imperfection lead to detrimental aggregate effects on the economy. In turn you should be able to further inform your ideas and views on the debate surrounding the effectiveness of macroeconomic policy.
Brief description
This module presents some advanced macroeconomic models and theories, concentrating on the main open economy models and the new Keynesian approach to economies.
Aims
The module aims to teach more advanced topics in the macroeconomic analysis of the open economy and economic fluctuations. Students will be taught the main models of exchange rate determination and the macroeconomic implications of "non-competitive" or "non-optimising" forms of behaviour by households, as consumers and suppliers of labour, and by firms as price-setters and as users of labour. The module will contrast the ideal "New-Classical" world with "New-Keynesian" theories, and so address the important question of macroeconomic policy effectiveness.
Content
-
Description of main open economy relationship such as purchasing power parity
-
Dornbusch study price model of the exchange rate
-
Real busines cycles
-
Efficiency wage theory
-
New Keynsian explanations of nominal rigidities
Transferable skills
-
independent work on assessed coursework requiring research skills
-
use of internet for research and use of word to write up the coursework
-
economic analysis of contemporary issues
Reading Lists
Books
** Recommended Text
Pilbeam, Keith (2001) International Finance
Abel, Andrew and Bernanke, Ben (2000) Macroeconomics
4th edition. Addison Wesley Longman
Mankiw, N Gregory and Romer, David (eds) (1991) New Keynesian Economics, Vols 1 and 2
MIT Press
Romer, David (1996) Advanced Macroeconomics
McGraw Hill
Notes
This module is at CQFW Level 6