BAEcon Economics and Data Analytics

Year of entry: 2024

Course unit details:
Macroeconomics 4

Course unit fact file
Unit code ECON20032
Credit rating 10
Unit level Level 2
Teaching period(s) Semester 2
Available as a free choice unit? Yes

Overview

This one-semester course in international macroeconomics aims to provide students with the theoretical tools and empirical facts for understanding and thinking critically about macroeconomics in an international context. At the end of the term students will be able to interpret some key international macroeconomic policy issues, presented in policy-oriented publications and the popular press, using a new core theoretical framework where banks play a prominent role, and to understand how national macroeconomic policy challenges intersect with international economic issues - including the ongoing fight by central banks to bring inflation under control.

Pre/co-requisites

Unit title Unit code Requirement type Description
Advanced Mathematics ECON10071A Pre-Requisite Compulsory
Macroeconomics 3 ECON20031 Co-Requisite Compulsory
Advanced Mathematics ECON20071 Co-Requisite Compulsory
Advanced Mathematics ECON10071B Pre-Requisite Compulsory
ECON20032 Prerequisites: ECON20031 AND (ECON10071A OR ECON10071B OR ECON20071)

ECON20032 Prerequisites: C: ECON20031 and P: ECON10071 or C: ECON20071

Aims

This one-semester course in international macroeconomics aims to provide students with the theoretical tools and empirical facts for understanding and thinking critically about macroeconomics in an international context. At the end of the term students will be able to interpret some key national and international macroeconomic policy issues, presented in policy-oriented publications and the popular press, using a new core theoretical framework where banks play a prominent role, and to understand how national macroeconomic policy challenges intersect with international economic issues - including the ongoing fight by central banks to bring inflation under control.

Learning outcomes



 

Syllabus

Syllabus (9 weeks)

The course will focus on the following topics:

Topic 1. National Accounts and the Balance of Payments. [1 session]

Topic 2. Exchange Rates and the Foreign Exchange Market. [1 session]

Topic 3. Macroeconomic Policies in an Open Economy: The FF-GG-XX model. [5 sessions]

Topic 4. Financial Globalisation: Global Banking, Capital Flows and Macro-Financial Stability. [1 session]

Topic 5. International Coordination of Macroeconomic Policies. [1 session]

 

Tutorials (5 sessions)

Session 1. Overall structure of the FF-GG-XX model.

Session 2. Derivation of the GG and XX curves and solution of the FF-GG-XX model under fixed exchange rates.

Session 3. Policy analysis and transmission of external shocks in the FF-GG-XX model under fixed exchange rates.

Session 4. Derivation of the FG and XX curves, and solution of the FF-GG-XX model under flexible exchange rates.

Session 5. Policy analysis and transmission of external shocks in the FF-GG-XX model under flexible exchange rates.

 

General References

Robert C. Feenstra, and Alan M. Taylor, International Macroeconomics, 5th ed., Macmillan. 2021. Hereafter FT.

Pr. P.-R. Agénor, "The FF-GG Model for Macroeconomic Policy Analysis in a Closed Economy," Technical Manual 1.

Pr. P.-R. Agénor, "The FF-GG-XX Model for Macroeconomic Policy Analysis in an Open Economy," Technical Manual 2.

 

General References, by Topic

Topic 1: FT Chapter 5.

Topic 2: FT Chapters 2 and 4.

Topic 3: TM (mandatory reading, except for Section 4 and Appendix). Topic 4: FT Chapter 6.

Topic 5: Technical Note (optional reading).

Teaching and learning methods

Synchronous activities (such as Lectures or Review and Q&A sessions, and tutorials), and guided self-study

Knowledge and understanding

At the end of this course students should be able to understand:

1. Key concepts of national accounts in an open economy;

2. The functioning of the foreign exchange market and the role of interest parity conditions in determining fluctuations in national currencies;

3. How fiscal and monetary policies affect macroeconomic aggregates, including output, prices, and the current account, as well as exchange rates, in an open economy where banks play a critical role in the financial system;

4. How the globalisation of banking affects the international transmission of financial shocks;

5. The benefits of international coordination of macroeconomic policies in response to global shocks.

Intellectual skills

(i) problem-solving skills;

(ii) skills of analysis, and the use of analytical models;

(iii) the evaluation and critical analysis of arguments, theories and policies;

(iv) understand and evaluate policy-oriented publications on international macroeconomic issues.

Practical skills

(i) independently locate and assess relevant literature, and to draw on these to develop understanding and to construct arguments.

Transferable skills and personal qualities

(i) select and deploy relevant information;

(ii) communicate ideas and arguments in writing;

(iii) apply skills of analysis and interpretation;

(iv) manage time and work to deadlines;

(v) use ICT to locate, analyse, organise and communicate information (e.g. internet, on-line databases, search engines, library catalogues, spreadsheets, specialist programs, word processing and presentation software).
 

Assessment methods

20% Mid-term exam. Online, multiple choice questions on taught material. 

80% Exam, Open book exam. 

Feedback methods

Piazza, drop-in sessions, virtual office hours.

Recommended reading


 

Teaching staff

Staff member Role
Pierre-Richard Agenor Unit coordinator

Additional notes

For every 10 course unit credits we expect students to work for around 100 hours. This time generally includes any contact times (online or face to face, recorded and live), but also independent study, work for coursework, and group work. This amount is only a guidance and individual study time will vary.

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