Faculty of Economics and Business
BACHELOR’S DEGREE IN BUSINESS ADMINISTRATION Course
Macroeconomics
Code
802270
Module
Economic environment
Area
Economics
Character
Compulsory
Credits
6
Attendance
2.7
Year
Second
Department
Non Attendance 3.3 Semester
3
DEPARTMENT OF PRINCIPLES OF ECONOMIC ANALYSIS I Coordinator: José Isidoro García de Paso
Professor Luis Miguel de Castro Lejarriaga
e-mail
[email protected]
Faculty of Economics and Business
SYNOPSIS SHORT DESCRIPTION Formal analysis of income determination, prices and other macroeconomic indicators in closed economies. Basic macroeconomic theories and models. PREVIOUS TRAINING REQUIREMENTS Introductory courses in Microeconomics, Macroeconomics and Mathematics TRAINING OBJECTIVES Acquisition of conceptual and theoretical basis for the analysis of short to medium term macroeconomic phenomena and developments inside a national, aggregate economy. Acquaintance with macro modelling and basic macroeconomic relationships on the business cycle, inflation and unemployment. Introduction to fiscal and monetary policy and formal analysis of fiscal multipliers. COMPETENCIES General: CG1, CG2, CG4 Cross-sectional: CT1, CT4, CT5 Specific: CE3, CE4, CE8
LEARNING METHODOLOGY A mixed methodology of teaching and learning will be used in all educational activities with the aim of encouraging students to develop a collaborative and cooperative attitude in the pursuit of knowledge. TOPICS COVERED (SYLLABUS) The goods & services markets and the financial markets in a closed economy. A basic general equilibrium model: the IS-LM model. The labor market, wage and price setting and aggregate supply The basic model of aggregate and aggregate supply. Equilibrium output and price levels determination.
Faculty of Economics and Business
% OF TOTAL CREDITS
ATTENDANCE
Lectures
20%
100%
Classes
20%
75%
Tutorials
6%
100%
Assessment activities
4%
100%
Homeworks and class assignments
20%
0%
Time to study
30%
0%
TEACHING ACTIVITIES
EVALUATION - GRADES Final exam
Weight in final grade
60%
A final exam (in January) covering all themes 1 through 6. Continuous evaluation
Weight in final grade
35%
Test at classes and essays asked for by the teacher and two mid-term exams Other graded activities
5%
Active participation at seminars, classes and lectures MORE ON EVALUATION CRITERIA The Continuous Evaluation (CE) methodology is based in four pillars: (i) a Final Exam (FE) covering the whole syllabus for this course (see below), (ii) essays and exercises to be solved by the student, (iii) two Mid-Term Exams MTE) covering half the themes in the syllabus each (these MTE do not substitute for the FE) and (iv) active participation at lectures, classes and seminars at the request of the teacher or motu proprio. Lectures and classes attendance is compulsory. The teacher will check this attendance one way or another at random (through on the spot exercise solving individually, or short essays writing, for instance). Ordinary call: Those students not undergoing CE and not writing the FE will be graded “Not presented”. Students undergoing CE and not FE, or students not undergoing CE but undergoing FE will be graded “Fail”. Undergoing CE means taking some of the activities in (ii) and (iii) above. Extraordinary call. The student that does not take the exam will be considered as NOT PRESENTED. The student that takes the exam will be evaluated according to the subject tab. The grade obtained in CE will be kept for the extraordinary exam only once. Continuous assessment in the extraordinary examination: in case one student has failed the ordinary examination, having attended the final exam and participated in the continuous assessment, the mark to be considered as continuous assessment for that extraordinary examination will be the final mark obtained in the ordinary examination.
Faculty of Economics and Business
RECOMMENDED WEEKLY SCHEDULE WEEK I
II
III
IV
V
VI
THEME THEME 1. Introduction. National Accounting framework. Main economic magnitudes and variables. THEME 2. The goods market (i). GDP composition. The demand for goods (private consumption, capital formation, government consumption). Determination of equilibrium output with lump-sum taxes. THEME 2. The goods market (ii). Determination of equilibrium output with proportional taxes. Public debt dynamics. SEMINAR: National Accounts framework and the Goods Market. THEME 3. The financial markets (i). Demand for money. Supply of money. The equilibrium interest rate. The liquidity trap. THEME 3. The financial markets (ii). Monetary Policy. Open Market Operations by Central Banks. The LM Schedule. The financial position of Commercial Banks. SEMINAR: Financial Markets
VII
VIII
IX
THEME 4. Goods and financial markets: the ISLM model. The goods market and the IS schedule. IS-LM equilibrium. Monetary and Fiscal Policy. The liquidity trap. THEME 5. The labor market. Wage and Price determination. Labor market equilibrium and the natural rate of unemployment. Natural output. SEMINAR: The labor Market
X
XI
XII
THEME 6. The Aggregate Demand-Supply Model (i). The Aggregate Demand and Aggregate Supply functions. THEME 6. The Aggregate Demand-Supply Model (ii). Short-term versus mid-term equilibrium output. Demand shocks and adjustment process in the short to medium
IN-CLASS ACTIVITIES (a)
(a)
OFF-CLASS ACTIVITIES • Study Chapters 1 & 2 of Blanchard et al. • Study Chapter 3 of Blanchard et al.
• Study Chapters 3 & 21 of (a) Blanchard et al. • Exercises Pack • Study Chapters 3 (a) & 21 of Blanchard et al. • Study Chapter 4 of Blanchard et (a) al. • Study Chapters 4 & 20 of (a) Blanchard et al. • Exercises Pack Mid-Term • Study Chapters 4 Exam I & 20 of Themes 1 to 3 Blanchard et al. • Study Chapters 5 & 20 of (a) Blanchard et al. • Exercises Pack • Study Chapter 7 of Blanchard et (a) al. • Exercises Pack • Study Chapter 8 (a) of Blanchard et al. • Study Chapter 8 (a) of Blanchard et al. • Study Chapter 8 of Blanchard et (a) al.
Faculty of Economics and Business
WEEK
XIII
XIV
IN-CLASS ACTIVITIES
THEME
OFF-CLASS ACTIVITIES
terms. THEME 6. The Aggregate Demand-Supply Model (iii). Fiscal and Monetary Policies. Supply shocks and Structural policies (Supply Policies). SEMINAR: model
The
Aggregate
• Study Chapter 8 of Blanchard et (a) al. • Exercises Pack Demand-Supply Mid-Term • Study Chapter 8 Exam II of Blanchard et Themes 4 to 6 al. • Exercises Pack
(a) At any lecture or class the teacher may decide on the spot to run a 1 hour written test to be completed by the attendants individually. These tests will generally consist in exercises solving and/or a short essay writing that will be handed out to the teacher at the end. Students will be graded for these tests.
Faculty of Economics and Business
RESOURCES BASIC IBLIOGRAPHICAL REFERENCES •
Blanchard O., A. Amighini & F. Giavazzi (2012): Macroeconomics. A European Perspective (2nd/ed.), Pearson.
•
Belzunegui, B; J. Cabrerizo, R. Padilla y I. Valero (2007): Macroeconomía: Cuestiones y Ejercicios Resueltos (3th/e), Pearson (only available in Spanish).
OTHER BIBLIOGRAPHY None OTHER RESORCES • Other teaching materials (exercises) are available at: http://www.ucm.es/info/macroint/ (only in Spanish). These materials are also available and updated in the CD delivered with Belzunegui et al. text. • Check also this course’s Campus Virtual for regular updates of lectures and class outlines and other reading materials.
