Description
The second course in the macro sequence deals with short-run economic fluctuations, money, general equilibrium and open economy. We will start from the role of money in the economy and determinants of money demand and supply. Then we will discuss short-run economic fluctuations. Finally, we will consider some stylized facts about consumption and investment. The course will be supplemented with multiple macroeconomic applications and examples of policies. The second part of the course puts together a general equilibrium model of a closed and later an open economy. The goal is to model the impact of macroeconomic policies, analyze the key features of an economy’s international exposure and consider open economy implications for macroeconomic policies. Are current account deficits good or bad? Why monetary policy works under a floating exchange rate and not under the fixed exchange rate? What is the impossible trinity of an open economy? The course will provide the tools to answer these and many other policy questions, and is the basis for further study of international macroeconomics.
