Macroeconomics in the Global Economy

NUS Business School
National University of Singapore
BMA5011: Macroeconomics in the Global Economy
Semester 1, AY2012/2013
Instructor: Sun Bae Kim
Teaching Assistant: Jiang Bo
Course objective
This course has two objectives.
The first is to introduce MBA students to the basic tools (“core models”) of
macroeconomics and international economics. The course begins with the short run analysis
of business cycle dynamics (how output, employment, interest rate and price are
determined) and the role of stabilization policy. It then moves on to the long run analysis of
what drives economic growth. The final segment of the course extends these analyses to the
open economy. Key issues covered here include the determination of exchange rate in the
short- and the long run, the effectiveness of monetary and fiscal policy under high capital
mobility, how economic “shocks” are transmitted internationally and what policy can
achieve in response.
The second objective of the course is to link the basic insights of the “core models” to “real
life” or case studies, with special focus on Asia. The aim here is to demonstrate that
economics can be a powerful tool to understand and, possibly anticipate, key
macroeconomic events and developments and their feedback mechanism to policy and
financial markets.
Assessment method
 Class participation (15%)
 Assignments (15%)
 In-class exams (70%)
o Exam 1 (30%): October 9, 2012
o Exam 2: (40%) November 20, 2012
Required text
 Olivier Blanchard, Macroeconomics, Fifth Edition (International Edition 2011),
I. Introduction & Preliminaries
1. Why study macro? Goal of the course, roadmap, schedule
2. Use of models in economics
3. How to get the most out of the course
4. National income accounting and other major macroeconomic variables
II. Introduction to Business Cycles: Output in the Short Run
1. Income and Spending: Keynesian Multiplier Model
2. Money, Interest, and Income: IS-LM Model
3. Aggregate Demand and Aggregate Supply
4. Monetary Policy and Inflation
5. Fiscal Policy
6. Case Studies (non-exhaustive)
i. The Great Recession
ii. Perspectives on Central Banking and Monetary Policy
iii. Fiscal Sustainability and Sovereign Debt Crisis
III. Economic Growth in the Long Run
1. Growth Accounting
2. Growth Theory: The Neoclassical Model
3. Case Studies
iv. Perspectives on Asia’s Growth
v. The Rise of BRICs
IV. Open Economy Macro
1. Foreign Exchange and the Balance of Payments
2. Exchange Rate in the Short Run
3. Policy in an Open Economy: Mundell-Fleming Model
4. International Transmission of Shocks and Policy Options
5. Exchange Rate in the Long Run: Real Equilibrium Exchange Rate
6. Policies for Internal and External Balance
7. International Monetary System: Historical Perspectives
8. Case Studies (non-exhaustive)
vi. Singapore’s Exchange Rate Framework
vii. Global Imbalance and International Policy Coordination
viii. “Twin Crises”: Asia vs. Europe