| Course Unit Code | 114-0503/04 |
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| Number of ECTS Credits Allocated | 5 ECTS credits |
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| Type of Course Unit * | Choice-compulsory |
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| Level of Course Unit * | Second Cycle |
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| Year of Study * | First Year |
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| Semester when the Course Unit is delivered | Winter Semester |
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| Mode of Delivery | Face-to-face |
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| Language of Instruction | English |
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| Prerequisites and Co-Requisites | There are no prerequisites or co-requisites for this course unit |
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| Name of Lecturer(s) | Personal ID | Name |
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| MAH11 | prof. Ing. Martin Macháček, Ph.D. et Ph.D. |
| WRO25 | Ing. Tomáš Wroblowský, Ph.D. |
| Summary |
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The aim of the subject is to both deepen and expand students´ knowledge of
macroeconomic phenomena acquired in the first year of their studies. The
subject covers various areas of mainstream macroeconomic theory at the
intermediate level. Unlike introductory macroeconomics ("Macroeconomics A")
course, this subject strongly emphasizes microeconomic foundations of
macroeconomic theories and thus requires sound knowledge of basic economic
principles. Within the subject, neo-Keynesian, monetarist, new classical and
new Keynesian doctrines are confronted and discussed. |
| Learning Outcomes of the Course Unit |
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- analyze the short-run, medium-run, and long-run macroeconomic phenomena and processes by formal models
- compare the mainstream macroeconomic theories and identify their strenghts and weaknesses
- explain the consequences of monetary and fiscal policies within competing macroeconomic models
- calculate the equilibrium values of aggregate output, price level, interest rate and other variables and changes in these values in response to macroeconomic policies
- contrast the closed economy models and open economy models with differing rate of capital mobility
- evaluate the importance of alternative macroeconomic approaches and methodologies for generating social welfare
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| Course Contents |
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1. The IS-LM model.
- Interest rate as a determinant of aggregate demand.
- Goods and services market and the IS curve.
- Money market and the LM curve.
- General equilibrium in a closed economy.
- Fiscal policy multipliers.
- Monetary Policy multipliers.
2. Fiscal and monetary policies in the IS-LM model.
- Efficiency of fiscal and monetary policies: the case of „liquidity trap“.
- Efficiency of fiscal and monetary policies: the „Classical“ case.
- Partial and complete crowding-out effects of fiscal expansionary policy.
- Central bank dilemma.
- The Keynesian monetary transmission mechanism.
- Fiscal and monetary policy mix.
3. The augmented IS-LM model.
- Shortcomings of the simple version of IS-LM model.
- Term structure of interest rates.
- The yield curve as an indicator of future recessions and expansions.
- Inflation expectations, maturity premium and the interest-rate gap.
- Derivation of the ALM curve from the LM curve. IS-ALM model.
- Limitations of macroeconomic policies in the globalized financial markets.
4. Aggregate demand and aggregate supply.
- Derivation of the AD curve from the IS-LM model.
- Impact of the fiscal and monetary policies on the AD curve.
- Neoclassical model of aggregate supply. Production function as an output-employment relationship.
- Keynesian model of aggregate supply. Fixed prices and wages in the short-run.
- Friedman´s model of aggregate supply. Asymetric information in the labour market. Adaptive expectations.
- The Lucas model of aggregate supply. Imperfect information and the rational expectations.
5. The macroeconomics of imperfect competition.
- New Keynesian macroeconomics.
- Monopolistic competition and the mark-up price setting.
- Nominal rigidities. Price and wage contracts. Menu costs.
- Real rigidities. Efficiency wages. Credit rationing.
- Monopolistic competition in the long-run. Entry-exit models.
- The New Keynesian policy recommendations.
6. Unemployment and inflation.
- Original Phillips curve with wage changes and its later modifications.
- The short-run trade-off between inflation and unemployment.
- Natural rate of unemployment and the NAIRU.
- Phillips curve and the AS-AD model.
- Taylor curve - the inflation-output trade-off.
- Expected inflation, dynamic aggregate demand (DAD), and dynamic aggregate supply (DAS).
- Monetary and fiscal policies in the DAS-DAD model.
7. Consumption, investment and the business cycle.
- Simple aggregate consumption function. The Kuznets puzzle.
- The life-cycle hypothesis. The permanent income hypothesis.
- Barro-Ricardo equivalence hypothesis.
- Tobin´s „q“ theory of investment.
- Business cycles with deterministic trend. Business cycles with stochastic trend.
- The intertemporal substitution hypothesis. Real-business-cycle model with technology shocks. Endogenous money supply.
- Stylized facts of business cycles.
8. Economic Growth.
- Economic growth and economic development.
- Solow-Swan model of economic growth. Cobb-Douglas production function with constant returns to scale.
- Investment and capital depreciation. The process of capital accumulation.
- Steady-state growth and its determinants.
- Consumption-per-capita maximization. The „golden rule“.
- Empirical problems of the Solow-Swan growth model. New growth theory.
- Alternative measurement of the capital stock in an economy. Human capital.
- Endogenous technology development. R&D models.
9. The IS-LM-BP model.
- The IS function in an open economy.
- Net export function with a real exchange rate.
- The LM function under fixed and floating exchange rates.
- Interest rate spread and the net capital inflow.
- The BP curve, its components, steepness, and shifts.
- Mundell-Fleming model.
- External imbalance in the Mundell-Fleming model – adjustment under alternative exchange rate regimes.
10. Fiscal and monetary policies in the IS-LM-BP model.
- Efficiency of fiscal and monetary policies in the Mundell-Fleming model: the case of fixed exchange rates.
- Efficiency of fiscal and monetary policies in the Mundell-Fleming model: the case of floating exchange rates.
- Efficiency of fiscal and monetary policies in an economy with limited capital mobility.
- Efficiency of fiscal and monetary policies in an economy with internationally immobile capital.
- Several limitations of macroeconomic analysis in the IS-LM-BP model framework.
Tutorials:
1. Topical macroeconomic problems of the Czech Republic (discussion).
2. The IS-LM model. Fiscal policy multipliers. Monetary policy multipliers.
3. The IS-ALM model. Analysis of the changes in expected inflation and the maturity premium components.
4. Aggregate demand and aggregate supply. The Lucas model of aggregate supply. New Keynesian model.
5. Unemployment and inflation. Comparison of Phillips and Taylor curves. Adjustment process in the DAS-DAD model.
6. Economic growth accounting. Correlation analysis of the business cycle.
7. The IS-LM model with a real exchange rate. The IS-LM-BP model with perfect and imperfect capital mobility.
8. Accreditation test. |
| Recommended or Required Reading |
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| Required Reading: |
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BARRO, Robert J., Angus CHU a Guido COZZI. Intermediate Macroeconomics. Cengage Learning, 2017. ISBN 978-1473725096.
BURDA, Michael a Charles WYPLOSZ. Macroeconomics – A European Text. 7th ed. Oxford: Oxford University Press, 2017. 624 p. ISBN 978-0198737513.
DORNBUSCH, Rudiger, Stanley FISCHER and Richard STARTZ. Macroeconomics. 13th ed. New York: McGraw-Hill Education, 2017. 640 p. ISBN 978-1259253409. |
BARRO, Robert J., Angus CHU a Guido COZZI. Intermediate Macroeconomics. Cengage Learning, 2017. ISBN 978-1473725096.
BURDA, Michael a Charles WYPLOSZ. Macroeconomics – A European Text. 7th ed. Oxford: Oxford University Press, 2017. 624 p. ISBN 978-0198737513.
DORNBUSCH, Rudiger, Stanley FISCHER and Richard STARTZ. Macroeconomics. 13th ed. New York: McGraw-Hill Education, 2017. 640 p. ISBN 978-1259253409.
|
| Recommended Reading: |
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KRUGMAN, Paul R. a Robin WELLS. Macroeconomics. Fourth edition. New York: Worth Publishers, 2015. ISBN 978-1-4641-1037-5.
MANKIW, Gregory. Macroeconomics. 10th edition. New York: Macmillan International Higher Education, 2019. ISBN 978-1-319-24358-6.
ROMER, David. Advanced macroeconomics. 5th edition. New York: McGraw-Hil, 2019. ISBN 978-1-260-18521-8.
|
KRUGMAN, Paul R. a Robin WELLS. Macroeconomics. Fourth edition. New York: Worth Publishers, 2015. ISBN 978-1-4641-1037-5.
MANKIW, Gregory. Macroeconomics. 10th edition. New York: Macmillan International Higher Education, 2019. ISBN 978-1-319-24358-6.
ROMER, David. Advanced macroeconomics. 5th edition. New York: McGraw-Hil, 2019. ISBN 978-1-260-18521-8.
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| Planned learning activities and teaching methods |
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| Lectures, Seminars |
| Assesment methods and criteria |
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| Task Title | Task Type | Maximum Number of Points
(Act. for Subtasks) | Minimum Number of Points for Task Passing |
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| Credit and Examination | Credit and Examination | 100 (100) | 51 |
| Credit | Credit | 35 (35) | 18 |
| 1st semester check | Written test | 8 | 0 |
| 2nd semester check | Written test | 8 | 0 |
| Case study | Other task type | 4 | 0 |
| Credit test | Written test | 15 | 5 |
| Examination | Examination | 65 | 28 |