Macroeconomic Analysis

Module code: ECN6520

  • To analyse the aims of monetary policy in advanced economies, including the design of optimal monetary policy.
  • To provide you with an advanced understanding of fiscal policy, debt dynamics with references to sovereign debt crises.
  • An introduction to the concept of financial frictions in the context of the recent financial crisis.
  • Setting up dynamic framework with which to analyse long-run economic growth (Ramsey Model) as well as short-run fluctuations (real business cycle theory)
  • To examine the role of exchange rates and current accounts in dynamic open economy macroeconomics.

The module is core for

Learning objectives

The intended learning outcomes are that by the end of the module you should
  • An understanding of the aims and challenges faced by monetary policy makers.
  • An understanding the role of fiscal policy and debt dynamics and be able to comment on the origins of Europe’s debt crisis.
  • An understanding and knowledge of the role of financial frictions and financial intermediation in macroeconomics.
  • An understanding and knowledge of dynamic macroeconomics models for the analysis of both economic growth and short-run fluctuations.
  • An understanding of how the exchange rate and current account affect the transmission mechanism in open economies


Preliminary outline:

  1. Inflation, unemployment and a framework for monetary policy analysis.
  2. Monetary Policy in macroeconomic model.
  3. The design of optimal monetary policy.
  4. Fiscal policy, the role of state and debt dynamics
  5. Debt crises & fiscal consolidation in the context of the recent European experience.
  6. Financial frictions in macroeconomics.
  7. Ramsey’s model of economic growth.
  8. Real business cycle theory.
  9. Aspects of open economy macroeconomics

Note that the schedule of topics may be altered.

Teaching methods

Two hour lecture and one hour workshop over nine weeks.


The assessment of this module will be by unseen exam (80%) and a class test (20%).

Basic reading

We advise you not to buy books before the module begins, as the reading list may change. If you wish to read in advance, look for these texts in the University library

The following textbooks can be used as background reading:

Macroeconomics: Imperfections, Institutions and Policies, by Wendy Carlin and David Soskice. OUP 2005.

In addition to that, you will be required to consult other text books, available in the University Library, as well as scholarly articles, as directed.

Prerequisites Knowledge of advanced macroeconomics at undergraduate level.

Module leader Prof Christoph Thoenissen

Please note that the leader may change before the module begins

Semester Autumn

Credits 15