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- Term 2
The purpose of this course is to provide an overview of closed and open economy macroeconomic theory with coverage of important theoretical issues and methods. A critical assessment is made of the analytical underpinnings of contemporary mainstream economic theories and policies, and heterodox alternatives are explored. Topics covered include: advanced models in macroeconomics with special emphasis on explanations of business cycles, theories of economic growth, open macroeconomics and implications for economic policy design in advanced and developing economies.
Objectives and learning outcomes of the course
On successful completion of the course, students will be able to:
- Understand how macroeconomic theory and method has developed from the Keynesian revolution onwards, especially how both orthodox and alternative heterodox theoretical principles have been applied to the short period performance of closed economies;
- Understand economic performance in the long period (theories of economic growth) has evolved
- Understand how the analysis of international macroeconomic relations and policies has evolved
- Understand how the contemporary macroeconomic analysis is relevant (or not) to catching-up economic development
- Understand the consequences of the increasing dependence upon general equilibrium modelling;
- Understand the relationship between short and long run macroeconomic performance;
- Understand the relationship between microeconomics and macroeconomics;
- Understand the consequences of assuming different types of expectations in macroeconomic models
- Understand heterodox approaches to macroeconomics.
Students will be expected to be familiar with the main schools of economic thought to be found in the literature and to answer questions on these in essays and examination both expositionally and critically, whilst displaying an understanding of the technical, theoretical and conceptual content of macroeconomics at the level of academic journal publications.
Method of assessment
Assessment weighting: Exam 70% / Coursework 30% (1 essay). All coursework can be resubmitted.
Please note that this preliminary reading list provides a choice of introductory readings. There is no need to cover the entire reading list. It is recommended interested students browse these readings and focus on one or two they find of most interest.
- Any advanced undergraduate macroeconomics textbook
- Blanchard, O., D. Romer, M. Spence and J. Stiglitz (eds) (2012). In the Wake of the Crisis: Leading Economists Reassess Economic Policy. Cambridge: MIT Press.
- Hillier, B. (1991) The Macroeconomic Debate. Models of the Closed and Open Economy, Blackwell Publishing [A slightly dated, but nevertheless useful and clear overview over core debates in macroeconomic theory].
- Snowdon, B. and P. Vane (2005). Modern Macroeconomics. Its Origins, Development and Current State. Cheltenham: Edward Elgar [includes a dedicated chapter on the theory of economic growth].
- Taylor, L. (2010). Maynard’s Revenge. Cambridge (Mass): Harvard University Press. [A recent critique of mainstream business cycle theory and its policy implications against the backdrop of the global financial crisis. Develops an alternative Keynesian macroeconomic framework for policy analysis].
- Taylor, L. (2004). Reconstructing Macroeconomics. Cambridge (Mass): Harvard University Press. [This is an alternative to Taylor (2010) that is available as a free download at: http://digamo.free.fr/ltaylor3.pdf. Provides a more detailed account and critique of mainstream short and long period macroeconomic analysis and develops an alternative heterodox framework building on Keynesian and Structuralist elements].
- Thirlwall, A.P. (2003). The Nature of Economic Growth [this contains a useful and accessible overview over early developments in neoclassical and heterodox economic growth theory.