How do macroeconomic policies affect the aggregate economy, households and the private sector? How do economists nowadays evaluate quantitatively these effects? This class will give you a detailed understanding of this. Monetary policy decisions by central banks and fiscal policy decisions by governments shape up consumption, investment, labour markets, inflation and GDP in advanced economies. Economists use advanced models to simulate and predict these effects. In this class we will cover the baseline of such models – time-series (VAR) econometric models and dynamic stochastic general equilibrium (DSGE) models. They are used to estimate the exact effects of monetary and fiscal policy on output and inflation. We will cover important papers analysing the effects of decisions by central banks and finance ministries. The course will also have a specific distributional angle and will take into account the growing literature in distributional macroeconomics.

To sum up, students will gain:

• an overview of contemporary debates in economic policy based on recent empirical research
• an understanding of the basics of models used in institutions to evaluate quantitatively these effects
• knowledge of major academic publications in this sphere and the policy implications of them

After completing this course, students will:

• know key methods of macroeconomics
• be aware of their implications for policy by central banks and finance ministries
• be able to understand better some milestone academic publications in macro
• have a knowledge about the current state-of-the-art discussions on macroeconomics and inequality (distributional macro)

Attendance and active participation are mandatory. Missing two classes with prior notification is accepted.

The lecturer introduces major methods in modern macroeconomics and how to understand them better. This is followed by a discussion of some leading academic contributions on macroeconomics and economic policy of recent years. These include presentations. Active discussions each week are expected, with a focus on the relevance of the discussed topics on ongoing world macroeconomic debates and events. The teaching is designed to encourage students to actively participate in the debates, raise questions, and gain experience in macroeconomic decision-making.

30% - Active participation in class

30% - Homework and paper presentations

40% - Final exam

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