Introductory macroeconomics
PROF. LUCA COLOMBO
COURSE AIMS
The course analyses the main macroeconomic aggregates (consumption, savings,
investment, public spending, demand and supply for real money balances, imports
and exports, international capital flows, and so on). These variables characterise
any economic system, and are of remarkable importance in determining aggregate
production, employment levels, public sector’s deficits or surpluses, inflation. The
macroeconomic scenario – while stemming from the many decisions taken by
individual economic agents (such as consumers and firms) – is the background
conditioning their choices. Accordingly, any relevant economic decision, for
example the firms’ investment ones, should consider the macroeconomic
framework.
COURSE CONTENT
– Macroeconomic variables and national accounting.
– The role of aggregate demand in a fixed-price economy.
– Consumption, savings and exogenous investment within the basic Keynesian
model; static and dynamic multipliers.
– The public sector and the determination of the output level: the impact of taxes,
transfers, and public spending.
– Equilibrium on the market for goods: the IS curve.
– Imports, exports and their effects on output in an open economy.
– Money supply and monetary policy. Equilibrium on the money market and the
LM curve.
– Exchange rates, capital movements and the IS-LM-BB model. The impact of
monetary and fiscal policies.
– Macroeconomic equilibrium with flexible prices; the aggregate demandaggregate supply model.
– The Phillips curve and the flexibility of nominal wages; the natural
unemployment rate.
– Inflationary pressure, output level, and the roles of monetary and fiscal policies.
READING LIST
O. BLANCHARD-A. AMIGHINI-F. GIAVAZZI, Macroeconomics: A European Perspective, Pearson, 2013
(2nd edition).
Supplementary readings:
G. MANKIW, Macroeconomics, Macmillan Education, 2013 (8th Edition).
Detailed indications about the links between the topics covered in class and the textbook and
supplementary readings indicated above will be provided by the lecturer in due time.
The outlines of each lecture will be available on the lecturer's webpage at the address
http://docenti.unicatt.it/eng/luca_vittorio_angelo_colombo/.
TEACHING METHOD
Classroom lectures and review sessions.
ASSESSMENT METHOD
Students will be evaluated based on a written exam, which will deal both with
theoretical questions and specific problems. The answers to the questions aimed at testing
the understanding of fundamental theoretical issues will be evaluated by looking at the
extent of the candidate’s knowledge, as well as at her/his ability to convey key messages in
conceptually consistent ways through a clear and precise exposition. All problems will be
designed in a way to effectively test the analytical and problem solving skills of the
candidate.
All questions and problems will be analytically evaluated out of thirty points and a
student’s final grade will be determined as the average of the marks obtained in each of the
questions composing the exam.
Written exams can possibly be followed by an oral examination, which has a residual
value only and can imply an increase or decrease up to a maximum of three points of the
grade obtained in the written examination.
Students are allowed to take a midterm exam that will be offered in the week explicitly
stated in the Academic calendar for this purpose. The midterm exam will deal with the
topics effectively covered during the lectures that have taken place up to the exam week. If a
student takes the midterm exam she/he is required to complete the entire exam by the first
exam session following the end of the course. The results of the midterm exam will no
longer be held valid after the end of the first exam session following the end of the course.
Further information will be posted on the lecturer's web page.
NOTES
Students should be familiar with the material of the first-year Mathematics course.
Further information can be found on the lecturer's webpage at
http://docenti.unicatt.it/eng/luca_vittorio_angelo_colombo/, or on the Faculty notice board.