This course provides students with a thorough understanding of macroeconomic analysis by exposing them to macroeconomic theories that have come to dominate the study of employment, inflation, balance of payments, economic growth and business cycles. The course begins with the mathematical treatment of the traditional IS-LM and AD-AS models to understand the debate between different schools of thoughts as to how a closed economy works. The new consensus model or new Keynesian 3-equations model will be discussed to explain the working today’s modern macroeconomy. The traditional IS-LM model will be extended to include the BP schedule to describe the working of an open economy. The course will emphasize the results of macroeconomic research, giving however some attention to the methods used in macroeconomic analysis and research.

After completing this course, the student will be able to:

1. Explain how to develop theoretical models that help understand the working of the closed and open economy.
2. Construct macro models by means of calculus and linear algebra derive both short-run and long-run equilibrium for the economy and fiscal and monetary policy multipliers.
3. Examine the debate between different schools of thoughts – classical, Keynes, neoclassical, new Keynesian and New Classical – as to how the economy works and how the level of employment, inflation and output are determined.
4. Evaluate the current theoretical and empirical research in macroeconomics and interpret their findings

1. An Overview: evolution of macroeconomics
2. Classical model of employment and inflation
3. Keynes’s model of employment
4. Keynes vs. the classics
5. Phillips curve ant the Keynesian-Neoclassical synthesis
6. Inflation and unemployment: Friedman’s model
7. The new classical macroeconomics
8. Aggregate Demand & Supply: Short-run, long-run and stability analysis
9. Macroeconomic Models for Open Economy and Exchange Rates
10. The demand side of the economy
11. The supply side of the economy
12. The 3-equations model of macroeconomy
13. Mundell-Fleming Macroeconomic Model for an Open Economy
14. Monetary and Fiscal Policies under Fixed and Flexible Exchange Rates
15. Donbusch Overshooting Macroeconomic Model

• Olivier Blanchard (2017), Macroeconomics, 7^th Edition, New York, USA: Pearson.
• Carlin, W. and Soskice, D. (1990), Macroeconomics and the Wage Bargain: A Modern Approach to Employment, Inflation and the Exchange Rate,Oxford, UK: Oxford University Press.
• Moosa, I.A. and Bhatti, R.H. (2010), The Theory and Empirics of Exchange Rates, Singapore, World Scientific Publishing.

Macroeconomics: Institution, Instability and the Financial System by Carlin, W. and Soskice, D (2015), Oxford, UK: Oxford University Press.