Social Sciences: Economics, University of Southampton

The aim of the module is to expose the students to current macroeconomic theories and their implications for understanding key macroeconomic issues.

The aim of the module is to expose the students to current macroeconomic theories and their implications for understanding key macroeconomic issues. To that end, the approach adopted emphasizes the dynamic dimension of interesting macroeconomic problems and the analysis of models based on explicit optimising behaviour by economic agents.

At the end of this unit you should be able to:
• Use the modern approach to macroeconomics to analyse a wide range of
issues.
• Understand and critically assess the recent development in macroeconomic theory and policy.

This module is organised in a sequence of topics. Economic growth is discussed in the context of the neoclassical growth model and the more recent endogenous growth theories. The empirical relevance of the different theories will be assessed critically. The theory of optimal intertemporal choices of consumption is examined next. Asset pricing is studied in this context. A number of fiscal policy issues, dynamic efficiency and Ricardian equivalence are the subject of the next block of lectures. Here the Ramsey model and the Overlapping
Generations Model will be put at work. Their welfare and policy implications are discussed and compared. The fourth block explores the sources and mechanisms of aggregate fluctuations and related policy issues. A Real Business Cycles model is presented as a benchmark to evaluate the importance of intertemporal substitution and technology shocks. Monetary extensions of the previous models and New Keynesian theories of price rigidity
will also be discussed in this context.

There are two lecture periods per week. In addition, there will be discussion classes.

Available on Blackboard.

0% coursework and 90% final examination. In the event of you having to resit this unit, your coursework marks will not be carried forward.