Teaching

Overview

The course provides analytical models to understand the determinants of exchange rates, the dynamics of the balance of payments, and the interaction between monetary and fiscal policy in open economies. It develops the ability to evaluate policy choices and interpret major global macroeconomic phenomena, combining theoretical foundations with empirical applications and real-world case studies. Detailed program:

1. International accounts, balance of payments and the foreign-exchange market.

2. Exchange-rate theories, Purchasing Power Parity (PPP), Uncovered Interest Parity (UIP), the overshooting model, and carry trade.

3. Monetary and Fiscal Policy in an open economy, IS-LM-BP and Mundell-Fleming models;

4. Exchange-Rate regimes and currency crises, such as first-, second-, and third-generation crisis models;

5. Optimum Currency Areas, for a theoretical foundations and the Eurozone experience;

6. The International Monetary System, global imbalances and the net international investment position.

Textbook: Paul R. Krugman, Maurice Obstfeld and Marc Melitz, International Economics: Theory and Policy, Pearson, 12th edition, 2021.

Overview

This course is the technical and tutorial part of the larger module “Global Macroeconomics”. Lectures aim at teaching how to solve and simulate quantitative macroeconomic models designed to explain business cycles and economic fluctuations in a context that highlight the role of forward looking expectations and uncertainty in macroeconomics. Detailed program:

1. Recursive methods, and introduction to dynare;

2. Deterministic simulation: solution of the Solow (1956) model, and simulation of the Ramsey-Cass-Koopmans economy;

3. Real Business Cycle (RBC) models, and introduction to log-linearization;

4. Baseline New Keynesian (NK) models;

5. Optimal monetary policy (discretion vs. commitment) in NK models;

6. Topics in Bayesian estimation.

All the models are firstly introduced in their theoretical framework, to then learn how to simulate them in dynare.

Teaching material

The teaching material for this course can be found here.

The aim of the course is to provide an understanding of the context and the interactions of the principal macroeconomic variables, enabling a critical assessment of the behaviour of economic agents and economic institutions. This is achieved through a theoretical framing of fundamental institutional knowledge within which their behaviour can be analysed at the macroeconomic level. The syllabus focuses on the macroeconomic analysis of the theory of effective demand and Keynesian underemployment equilibria. In particular, the following topics are addressed:

1. National accounting;

2. The theory of aggregate demand and the Keynesian model;

3. Money market and the interest rate;

4. Analysis of stabilisation policies within the IS–LM model;

5. Monetary policy: money supply and the central bank;

6. The Mundell–Fleming model of the open economy.

Textbook:  R.Dornbusch, S.Fischer, R.Startz, G.Canullo, P.Pettenati, Macroeconomia, McGrawHill, 13esima edizione, anno 2024