Macroeconomics, 15 Credits

Contents

The overall purpose of this course is to introduce the student to macroeconomic theory, i.e. to provide a good understanding of how the economy works in the short- and long-run, and to analyze the possibilities and limitations of fiscal and monetary policy. The course consists of three modules. 

Module 1: Economic growth, distribution, and sustainability (5 hp)

The module begins with an introduction to long run economic growth and related questions such as distribution of income, living standards and sustainability. This is followed by a review of concepts that are central to analyzing long-term growth such as aggregate savings, capital accumulation and technological development. The module also covers topics related to technological change and its impact on the labor market and living standards. 

Module 2: The labor market and the financial sector (5 hp)

In this module we focus on the basic cornerstones of macroeconomic analysis, starting by introducing the labor market and its role for understanding the supply side of the economy.  Then the money market and the central bank's role in the economy are covered. In this context, interest rate formation, the connection between the private banking system and the central bank. This module also covers basic concepts of asset pricing as well as asset market bubbles.

Module 3: Macroeconomic policy (5 hp)

This module covers economic shocks and cyclical fluctuations and the role of fiscal and monetary policy. Here, models are introduced that can be used to analyze aggregate supply and aggregate demand in the short and medium term. This part of the course also deals with the open economy and how real and financial flows are reflected in the balance of payments. Exchange rate determination and international financial markets are also covered. Various economic crises and how the economic-political framework can be designed are also studied in this module.

Expected learning outcomes

Module 1: Economic growth, distribution, and sustainability (5 hp)

After completing the module, the student is expected to be able to:

Knowledge and understanding

• Define and calculate levels and changes in material welfare over time and between individuals as well as between countries.
• Explain the determinants underlying long-term economic growth.
• Explain how saving, technological change and population growth affect the distribution of income in the economy and a country's material well-being the long-term.
• Explain the components of aggregate production and demand.
• Explain the interaction between the technological change and the labor market in the long term and its consequences for living standard.
• Communicate orally and in writing the central concepts of the course in English.
• Skills and abilities
• Discuss and problematize possible conflicts between economic growth and social/environmental sustainability.

Module 2: The labor market and the financial sector (5 hp)

After completing the module, the student is expected to be able to:

Knowledge and understanding

• Explain the determinants of wage determination and price setting.
• Explain the causes and the consequences of unemployment.
• Explain the concept of intertemporal consumption decision and consumption smoothing.
• Explain the role and functioning of the credit market.
• Knowledge of price determination on financial markets and explain the causes of asset market bubbles.
• Explain the roles of the central bank and of the private banking system and the interaction between the private banking system and the central bank.

Module 3: Macroeconomic policy (5 hp)

After completing the module, the student is expected to be able to:

Knowledge and understanding

• Explain and illustrate short- and long-run effects of economic shocks on GDP.
• Explain and illustrate the interactions between the goods and money markets in the short and long run, and describe the possibilities and limitations of monetary and fiscal policy as instruments to stabilize GDP in closed and open economies.
• Explain the relationships between an economy's output, inflation, and unemployment.
• Explain central bank monetary policy implementation and interest rate formation.

Skills and abilities

• Apply macroeconomic models to relevant and current economic problems.
• Describe the current economic situation in Sweden and suggest possible options for active stabilization policy.

Required Knowledge

Form of instruction

The teaching consists of lectures and seminars.

Examination modes

The examination in the first module consists of an assignment and seminars. The examination in the second and third module consists of written examination and seminars. The results from the seminars are only valid during the current semester.

The following grading scale will be used for the course: Pass with Distinction (Väl Godkänd, VG), Pass (Godkänd, G) and Fail (Underkänd, U).

A student who does not pass the first examination will be offered an opportunity to sit a re- examination within two months. An additional examination opportunity is normally offered every academic year, one week prior to the start of the autumn term. If required by specific circumstances, other forms of examination may be used.

A student that has failed an examination on two occasions has a right to have another examiner or grading teacher appointed, unless there are special reasons against it. A written request addressed to the Director of Studies should be made no later than two weeks before the next examination opportunity. A written request should be submitted to the Director of Studies no later than two weeks before the next examination opportunity.

Exceptions from examination form as stated in the syllabus can be made for a student who has a decision on pedagogical support for disabilities. Individual adaptations of the examination form should be considered based on the student's needs. The examination form shall be adapted within the framework of the expected learning outcomes stated in the course syllabus. At the request of the student, the course responsible teacher, in consultation with the examiner, must promptly decide on the adapted examination form. The decision must then be notified to the student.

Academic integrity and cheating

As a student, you are expected to act with academic integrity. This means writing and presenting within the limits of the academic rules and expectations communicated in the university's regulations and what is otherwise specified by the responsible department. Disciplinary action may be taken against students who uses unauthorized help aids or in some other way tries to mislead on a test or when another type of task is being evaluated. Rules and regulations concerning the production of academic texts and correct referencing will be applicable to written assignments. Submitted material may be subject to plagiarism control. In addition, Umeå University rules and regulations for education and research apply.