*Conducted in term:*2020Z

*Erasmus code:*14.3

*ISCED code:*0311

*ECTS credits:*6

*Language:*English

*Organized by:*Faculty of Economic Sciences

*Related to study programmes:*

# Macroeconomics II 2400-PP2MA2a

Lectures 1- 3. Introduction. The dynamic DAD/DAS model.

The aim of the lectures is to derive the DAD-DAS model and use it to analyse the impact of demand and supply shocks.

The tutorials are devoted to solving quantitative and qualitative problems and tasks, designed to depend the understanding of the DAD/DAS model

Lectures 4-7. Growth Dynamics: The Solow Model.

The aim of the lectures is to analyze the determinants of the rate of economic growth under the neoclassical assumption of diminishing marginal product of capital and exogenous technological progress. The aim of tutorials is to quantitatively decompose growth rates, analyze the properties of the steady state and to explain differences in the level of income using Solow growth

Lectures 8-10 Microfoundations. Consumption and Saving; The Interest Rate and Consumption – The Intertemporal Choice of Consumer; The Life-Cycle and Permanent-Income Hypothesis.

Investment The User Cost of Capital; The Desired Capital Stock; Taxes and the Desired Capital Stock; From the Desired Capital Stock to Investment

The aim of the lectures is to analyze consumptions and investment determinants. The aim of tutorials is to analyze the determinants of consumption and investment using empirical and analytical examples.

Lectures 11-13 Fiscal and monetary policies. Government Spending and Its Financing; The Government Budget Constraint; The Evolution of the Debt-to-GDP Ratio; Cyclically Adjusted Deficit; Ricardian Equivalence.

The Conduct of Monetary Policy, Money Supply Determination, Money Demand and Equilibrium in the Money Market.

The aim of the lectures is to identify the determinants of government debt dynamics and the constraints that excessive debt imposes on fiscal policymaking and to discuss the modern conduct of monetary policy. The aim of tutorials is to calculate the value of primary surplus required to maintain a stable debt to GDP ratio for various values of real interest rate and GDP growth rates and to present advantages and weak points of various monetary policy strategies.

## Type of course

## Course coordinators

## Mode

## Learning outcomes

Upon the lecture completion, a student:

KNOWLEDGE:

- is able to identify the determinants of output, unemployment, interest rate, and prices in the short, medium and long run.

- is able to analyze the impact of demand and supply shocks on the economy.

SKILLS:

- is able to select an appropriate model to analyze macroeconomic phenomena in different time horizons, different phases of the business cycle and different degrees of nominal rigidities.

- is able to design an optimal monetary and fiscal policy mix aimed at achieving low inflation and output stabilization and predict the consequences of monetary and fiscal policy.

- is able to interpret the empirical relations between macroeconomic variables using theoretical models and on this basis to explain the strength and the responsiveness to external influences of the detected macroeconomic relations.

- is able to describe macroeconomic processes in a formalized way at the intermediate level.

- is able to recognize basic limitations of using theoretical models to explain real-world economic problems.

SOCIAL SKILLS:

-is able to meet time-constrained targets through effective planning and organization.

KW01, KW002, KW03, KW04, KW05, KU01, KU02, KU03, KU04, KK01, KK02, KK03

## Assessment criteria

1. Points from the tutorial

2. Points from the written final exam

3. Points from the introductory on-line tests.

The final grade from Macroeconomics II is given based on the:

• Final exam: 54 points

• Tutorial: 40 points

• On-line tests: 6 points

Approximate grading:

0 – 49 points: fail; 50 - 59 points: satisfactory; 60 - 69 points: satisfactory+; 70 - 79 points: good; 80 - 89 points: good+; 90 - 97 points: very good; 98 - 100 points: very good!

FINAL EXAM

The final exam be held at the Faculty of Economic Sciences.

The final exam will consist of open-ended questions and single-choice questions. The maximum amount of points is 54.

The prerequisite to take the exam is to pass the tutorial.

On-line test

There will be 6 (before-the-lecture) entry assignments, held on-line, on Moodle Platform. Each assignment will consist of 5, single-choice questions. These assignments will cover the material discussed during the previously held lectures.

Each assignment will be accessible for 24 hours (opening on Monday, closing on Tuesday), but once the assignment is open, it has to be completed within 10 minutes. After 10 minutes the assignment will close and it will not be possible to re-open it.

Points from each assignment:

• 0-2 correct answers – 0 points

• 3 correct answers – 0,5 points

• 4-5 correct answers – 1 points

The maximum amount of points from all assignments is 6. These entry assignments cannot be re-taken.

TUTORIAL

The maximum tutorial mark is 40 points and is based on 3 components:

• 1st test, worth 10 points. The test will be held on-line

• 2nd test, worth 18 points. The second test will be, on-line or off-line, at the Faculty of Economic Sciences, depending on the Dean’s regulations.

• Presentation on a chosen subject, worth 12 points. Presentation should include a brief summary of the relevant theory and graphical/statistical data analysis. Presentations should be prepared in groups of 2-3 students (3-person groups can be accepted by the teacher if a heavy workload with data analysis is necessary to achieve the goals of your presentation). The Students choose the subject by themselves. Presentations last up to 10 minutes and will be held on-line. Please note that you can make the presentation only during class time and cannot resubmit the presentation to achieve a higher score.

Passing the tutorial requires collecting at least 21 points.

## Bibliography

Mandatory

Mankiw G., Macroeconomics, Worth Publishers, 2003 or newer

Supplementary:

Abel, A. B. and Bernanke B. S. (2005), Macroeconomics, Pearson Education.

## Additional information

Information on *level* of this course, *year of study* and semester when the course
unit is delivered, types and amount of *class hours* - can be found in course structure
diagrams of apropriate study programmes. This course is related to
the following study programmes:

Additional information (*registration* calendar, class conductors,
*localization and schedules* of classes), might be available in the USOSweb system: