INTERMEDTE MACROECONOMC THEORY

(Description for summer and semester course)

This course introduces macroeconomic theory for the analysis of aggregate variables such as income, employment, prices, and the interest rate. The first part of the course is devoted to studying the determination of the aggregate demand in the goods markets and the equilibrium of monetary markets, using an IS-LM model extended with elements of the banking sector and the open-economy framework. Next, the supply-side of the economy is examined with special attention to the labor market, wage setting and price setting behavior. The Phillips Curve (PC) introduces the tradeoffs between inflation and unemployment, and the role of expectations for inflation dynamics. The integrated IS-LM-PC model is then used to evaluate macroeconomic policies that aim at stabilizing the economy with output produced at its potential level
and the inflation rate at the central bank target. The recent episode of high inflation is simulated with a proper numerical calibration of the IS-LM-PC model.