A Short Introduction to Macroeconomic Policy

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Introduction

This short course provides an overview of the ways in which governments try to influence the economy. It will provide an explanation of what monetary and fiscal policy are, and why they are used. We will assess the ECB’s response to the financial crisis and the 2009 Obama stimulus bill. Emphasis will be on providing a framework for participants to refine their own opinions.

Prerequisites

The course does not rely on any previous study of economics. However, a familiarity with economic terms (such as “inflation”, “GDP”, “balance sheet”), and an awareness of contemporary policy debates (such as zero lower bound monetary policy), will be useful. The course is aimed at people who watch Newsnight but don’t quite feel they understand the economic foundations of what’s being said.

Teaching methods

  • Lectures (2 sessions)
  • Case discussion (1 session)
  • Workshop (1 session)

Textbook

The only mandatory readings are provided in the schedule below. However the course is designed to tie into the following (amazing) textbook:

The website for the book contains an array of other resources: http://econ.anthonyjevans.com/books/markets-for-managers/

An additional reading list is available here: http://econ.anthonyjevans.com/2010/03/course-readings/

An edited list of highly recommended articles from The Economist is here: http://econ.anthonyjevans.com/2011/05/the-economist-an-mba-reader/


Schedule 

9:00am  Breakfast

9:15am  Welcome address

9:30am Session 1: Monetary policy: A Beginner’s Guide to Central Banking*

Video: “An introduction to the Dynamic AD-AS model

11:15am Break

11:30am Session 2: The Euro in crisis

“The Euro in Crisis: Decision Time at the European Central Bank” Harvard Business School case no. 9-711-049 (£)

Questions: 

1. How does the ECB conduct monetary policy?

2. What actions were taken after the BNP Paribas freeze?

3. How do these actions compare to the Federal Reserve?

1:00pm Lunch

2:00pm Session 3: Fiscal policy: The Confidence Multiplier*

3:30pm Break

3:45pm Session 4: Workshop

Market for Managers Problem Set

Questions: 7.1, 7.2, 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 9.1, 9.2, 9.4

4:45pm Debrief

5:00pm Finish

Note: Sessions marked with an asterix (*) have a lecture handout available in advance. Cases marked with a pound sign (£) will be distributed in advance.


Extensions

The course does not cover the following: international economics, business cycle theory, growth theory, supply-side economics.