• University of Exeter Business School
• Module

Macroeconomics II

Module description

Summary:

The first term covers economic growth and develops a dynamic macroeconomic model from micro foundations, that is aggregate relationships are built up from microeconomic optimisation by representative agents, an important feature of modern macroeconomics. With this foundation, ideas are formalised further in the second term, before delving in to more open economy macroeconomics.

The second term explores two core areas of modern macroeconomics: monetary policy and international macroeconomics. Students will deepen their understanding about the role of monetary policy in the macroeconomy and study its limitations focusing particularly on the role of private sector expectations. Students will also develop their knowledge of how international trade in goods and financial assets affects the macroeconomy and acts to widen the scope of policy decisions.

Internationalisation

This module takes a European and American perspective of macroeconomics, but these ideas are application even in developing countries. You will gain an understanding of exchange rates, why they change over time, what determines them, how to assess the economic prospects of countries. Any company in a global economy must deal with these issues.

This module addresses some of the major policy questions affecting the world economy today. It takes an international perspective on these problems and students will gain an understanding of the policy trade-offs faced by policymakers in the closed and open economies.

External Engagement

Previously, we had a guest speaker lecture on Central Bank policy.

Employability

In this module you will develop a number of valuable skills, including their capacity for logical thinking, problem solving, analytical and discursive skills.

Module aims - intentions of the module

The aim of the module is to equip students with the basic theoretical ideas behind modern macroeconomic policymaking. The module will focus on the role played by monetary policy in both closed and open economy settings. The module will also help to develop students' ability to think critically about in interaction between financial markets and monetary institutions.

Intended Learning Outcomes (ILOs)

ILO: Module-specific skills

On successfully completing the module you will be able to...

• 1. Critically assess different policy proposals for managing the macro-economy;
• 2. Analyse macroeconomic problems qualitatively and quantitatively.

ILO: Discipline-specific skills

On successfully completing the module you will be able to...

• 3. Develop analytically ability by solving well-defined economic problems;
• 4. Analyse economic models by expressing relationships through graphs;
• 5. Present and discuss a piece of economic analysis;
• 6. Evaluate the characteristics of macroeconomic data and their statistical properties.

ILO: Personal and key skills

On successfully completing the module you will be able to...

• 7. Identify the essential elements of, and to organise ways to think about, a problem;
• 8. Demonstrate organisational skills developed by reading for the course topics and preparation for classes.

Syllabus plan

• Measurement
• Economic growth
• Micro foundations and a dynamic macro model
• Expectations: The basic tools. Consumption and investment. Output and policy.
• Liquidity Traps
• Interest Rate Rules
• Monetary Policy and Expectations
• Optimal Monetary Policy
• Intertemporal Approach to the Current Account
• The Law of One Price and Real Exchange Rate
• Nominal Exchange Rate Determination

Learning activities and teaching methods (given in hours of study time)

Details of learning activities and teaching methods

Formative assessment

Summative assessment (% of credit)

Details of summative assessment

Details of re-assessment (where required by referral or deferral)

Re-assessment notes

Deferral – if you have been deferred for any assessment you will be expected to submit the relevant assessment. The mark given for a re-assessment taken as a result of deferral will not be capped and will be treated as it would be if it were your first attempt at the assessment.

Referral – if you have failed the module overall (i.e. a final overall module mark of less than 40%) you will be expected to submit the relevant assessment. The mark given for a re-assessment taken as a result of referral will be capped at 40%

Indicative learning resources - Basic reading

Basic reading:

• Abel, A., Bernanke, B., and Croushore, D., Macroeconomics (8th edition, or above) Pearson.
• Williamson, S. D., Macroeconomics, 5th ed., Pearson
• Mankiw, G., and Taylor, M, Macroeconomics (European edition/6th edition, or above), Worth.

Note: there are many versions (inc. ‘International’ and ‘European’) of these books and they change only marginally from edition to edition.

Key words search

Macroeconomics