Course description
Our course is motivated by large questions and by issues that affect many people. Why are some countries rich while others are poor? Why are there fluctuations in aggregate economic activity? What causes inflation? Why is there unemployment?

Macroeconomics focuses on the aggregate behavior of consumers and firms, the behavior of governments, the overall level of economic activity in individual countries, the economic interactions among nations, and the effects of fiscal and monetary policy.

The two central issues of macroeconomics are long-run growth and business cycles. Long-run growth refers to the increase in a nation’s productive capacity and average standard of living that occurs over a long period of time, whereas business cycles are the short-run ups and downs, or booms and recessions, in aggregate economic activity.

The first part of our course is devoted to the theory of economic growth. Our purpose is to introduce students to these major questions and to the theoretical tools necessary for studying them. Discussions of theories and models developed to analyze growth are placed in the context of the broad empirically observed patterns and historical processes underlying the current state of the world economy. This course discusses what determines the economic growth, why some countries are growing while other are not, why some countries ended up being rich while many others remain poor, how globalization influences growth prospects of countries, and how historical, cultural, religious, institutional, geographic and other non-economic factors (dis)stimulate economic growth. Economic growth is discussed in relation to inequality, including, most importantly, their mutual influence. This brings in the issues of ethical and value judgments related to the issues of economic growth and technical progress, and if growth does make us happier.

In the second part our aim is to provide the students understanding of the basic macroeconomic models and the current state of debates on issues of fiscal austerity, unorthodox monetary policy, and the reasons for economic and financial crises. A special emphasis will be made on the worst economic crisis of the 20th century – the Great Depression and 2008-2009 economic and financial crisis. We cover basic macroeconomic models (neoclassical, IS-LM, AD-AS, Mundell-Fleming) both for closed and open economy setting and discusses economic crises (their typology, main theories explaining these crises, applicability of the basic macroeconomic models to explaining crises and offering solutions). All models are placed in historical context and discussed in terms of economic policy advice they offer. The course ends with discussing the problems of globalization in relation to macroeconomic policy effectiveness and the latest suggestions for changing the global monetary order.

Learning outcomes
By the end of this course, students should be able to:
• understand and correctly use main macroeconomic notions;
• understand main assumptions and limitations of the basic macroeconomic models;
• discuss the main empirical facts about economic growth;
• explain the main economic and non-economic factors affecting economic growth;
• use theoretical models for explaining main facts about economic growth including the difference of growth rates between different countries;
• discuss various measures of inequality and main facts about inequality in the past century;
• critically discuss the relation between economic growth and inequality and the main theories aiming at explaining this relation;
• summarize relations between economic growth and subjective well-being.
• use the basic macroeconomic models for explaining real-life macroeconomic phenomena;
• critically discuss macroeconomic policy advice based on different macroeconomic theories and their relevance for the particular situation;
• critically discuss main views on the reasons of economic and financial crises and corresponding policy advice;
• provide their own opinion substantiated in the economic theory on the reasons for the latest economic and financial crisis;
• critically comment the current debates on the economic policy in the developed countries.

Key topics
• Macroeconomics and growth: definition, main notions, relevant statistical indicators, data issues
• Economic growth and people's well being
• Income distribution across the world and global income inequality
• Growth accounting
• Factors affecting economic growth: physical capital, population growth, human capital, technological progress
• Non-economic factors affecting economic growth: natural resources, environment, culture, religion and geography, institutions
• Globalization and growth
• Convergence hypothesis: do countries converge in terms of growth rates or incomes
• Economic growth and inequality
• Basic macroeconomic models and their historical background (closed- economy case): Neoclassical model, IS-LM model, Phillips curve and AD-AS model
• Open economy: exchange rates, balance of payments, mobility of the factors of production
• Basic macroeconomic models for the open economy: Mundell-Fleming model, Neoclassical model of small and large open economies
• Economic and financial crises: main notions, definitions, typology
• Great Depression: causes, policy response, influence on economic profession
• Economic and financial crises of 2008-2009: causes, policy response
• Current state of macroeconomic policy debates

Prerequisites
This course has no prerequisites. However, some basic mathematics, algebra, and graphing will be used.

Evaluation
Presentations and written assignments 25%
In-class participation 10%
Home assignments 15%
Mid-term exam 25%
Final exam (course paper) 25%

Presentations: during the course the students will jointly read two books: by Daron Acemogly and James Robinson ‘Why national fail?’ and by John Cassidy ‘How markets fail: the logic of economic calamities’. Students will be given assignments to read a prescribed portion of the book and prepare short presentations every week. Each presentation should be 10 minutes and summarize in a concise manner the main points from a relevant chapter.
Written summaries: each presentation should be accompanied by a short (1-2 pages) written summary of the material covered in the presentation. These short summaries will be provided to all students, and the mid-term and final exams might contain questions related to the books that will be jointly read in the classroom.
Presentations will be followed by in-class discussions relating presentations to the material studied during the class. Each student might be asked to comment on the material presented, using the material from the previous classes. An active in-class participation is essential. It is important to be ready to answer questions and discuss assigned readings as well as material used in the classroom and to provide feedback on other students’ presentations.
Home assignments: there will be 2-4 written home assignments (1-2 per each part) to check the progress of students during the course, their understanding of models and theories discussed as well as their application to real life situations.
Mid-term exam will contain a number of open questions covering the studied material related to the first part of the course – i.e. economic growth.
Final exam will contain a number of open questions covering the studied material related to the second part of the course – i.e. business cycles and economic crises.

Suggested literature
Core texts
David N. Weil. 2013. Economic Growth. Pearsons, 3rd edition.
N. Gregory Mankiw. 2016. Macroeconomics. Macmillan Learning, 9th edition.

Additional reading
Liaquat Ahamed. 2009. Lords of Finance: the Bankers Who Broke the World. Penguin Press.
A Handbook of Alternative Monetary Economics. 2006. Arestis and Sawyer (eds.). Edward Elgar.
John Cassidy. 2010. How Markets Fail: The Logic of Economic Calamities. Picador; Reprint edition.
William Easterly. 2001. The Elusive Quest for Growth. MIT Press.
Charles P. Kindleberger. 1996. The World Economy and National Finance in Historical Perspective. University of Michigan Press.
Simon Johnson, James Kwak. 2010. 13 Bankers: the Wall Street Takeover and the Next Financial Meltdown. Pantheon.
Carmen M. Reinhart, Kenneth Rogoff. 2009. This Time is Different: Eight Centuries of Financial Folly. Princeton University Press.
William Scarth. 2014. Macroeconomics. The Development of Modern Methods for Policy Analysis. Edward Elgar.
Andrew Ross Sorkin. 2009. Too Big to Fail. Viking.
Michael Spence. 2010. The next convergence. Picador.
J. Stiglitz. 2016. The Euro: How a Common Currency Threatens the Future of Europe. W. W. Norton & Company.

Further readings will be suggested during classes. Obligatory readings will vary between 40 and 50 pages per week.