Lesson 1: A journey around the world
What is Macroeconomics about?
The financial and economic crisis in the US, Europe, China and Italy.
Lesson 2: A journey around the book
Aggregate production, income and GDP. Nominal and real GDP, levels or growth rates of GDP. Transactions registered in GDP.
The Unemployment rate.
The Inflation rate, GDP deflator, the Harmonized Index of Consumption Prices.
Short, medium and long run.
Math corner: how to calculate the derivative of a product and a ratio.
Lesson 3: The market of goods
GDP composition, inventories and the aggregate demand.
Consumption and consumer confidence index. Investments, stock and flow. Public expenditure.
How to determine production in a close economy.
Dynamic adjustment and the multiplier.
Investments and Savings: an alternative way to reach equilibrium in the goods market.
Fiscal policy of the Government. Fiscal Compact in the European Union.
Lesson 4: The financial markets
Income, saving and wealth. Money, IOU, assets and bonds.
Money demand and the assets mix. The interest rate.
Central Bank's monetary policy and open market operations.
How to determine the price of an asset in the market.
READING 1: The 'liquidity trap'.
Lesson 5: The market of goods and the financial market: IS curve and LM curve
The market of goods in the short run, Production and interest rate in equilibrium. IS curve. IS curve movements (due to exogenous components of the aggregate demand).
The financial market and LM curve in the short run. Real money, real income and interest rate.
READING 2: Japanese recession in the 1990s
Lesson 6: IS-LM model
The model: general equilibrium of Production and Interest rate.
Fiscal policy. Monetary policy. Economic policy mix (expansionary/restrictive).
Cases of “divergent” policies in history.
READING 3: The financial crisis in 2008-2009
Lesson 7: The financial market part II: extension of IS-LM model
Nominal and real interest rate. One-year nominal interest rate. Relationship among real, nominal interest rates and expected inflation.
Empirical evidence on the real and nominal interest rates in Italy since 1982. Zero lower bound and the problem of deflation.
Risk and risk premium. Returns to ten-year treasury bonds, company stocks AAA and BBB since January 2000. Returns to ten-year treasury bonds, German bonds, Italian BTP and Greek bonds since January 2000.
Lesson 8: The financial markets part II: the extended IS-LM, cont.
The role of financial intermediaries. Leverage and Debt to Assets ratio. Credit restrictions after a negative financial shock, impact on investments. Policy rate.
Negative financial shock and production in equilibrium. Negative financial shock and zero lower bound.
From real estate crisis to financial crisis. Real estate prices and "subprime" mortgages. Transmission from real estate market to financial market. Macroeconomic implications: interest rate and expectations. International contagion. Economic policy response.
Lesson 9: Open economy macroeconomics
Nominal exchange rate. Going from nominal to real exchange rates. Choice between domestic or foreign goods. Definition of real exchange rate. Real appreciation or depreciation.
Empirical evidence of real exchange between Eurozone and the UK. Factors affecting appreciation and depreciation of the real exchange rate. Empirical evidence on inflation differentials between Eurozone and the UK. From bilateral exchange rates to multilateral exchange rates. Effective real exchange rate. Opening up of the financial markets. Open economy financial markets.
Lesson 10: Open economy macroeconomics, cont.
Balance of payments. Balance of payments of the EU in 2015.
Choice between national/international financial assets. "Expected" nominal exchange rate. Evaluation of the expected return of an international asset. Interest rate parity.
Rewriting of interest rate parity equation. Interest rates and exchange rates. Interpretation and numerical example.
READING 4: The sudden crash of the English pound
READING 5: Never ending crash of Her Majesty the Pound
READING 6: A mini Pound
Lesson 11: The goods market in open economy
Domestic demand (Z) in open economy. Different interpretation between the real exchange rate and its reciprocal. The determinants of Consumption, Investment and Public Expenditure. The determinants of Imports. The determinants of Exports. Trade balance = net exports. Graphical representation of equation ZZ domestic demand.
Production in equilibrium and net exports. An increase in domestic demand. "Multiplier” effect in an open economy. An increase in foreign demand.
Lesson 12: The goods market in open economy, cont.
Revising fiscal policy. Economic policy coordination among countries.
Depreciation, trade balance and production. Real depreciation.
Marshall-Lerner Condition. Effects of a real depreciation on aggregate demand.
Equivalence of the effect of a real depreciation and an increase of foreign production and demand.
READING 7: The financial crisis of Mexico in 1994.
Combination of fiscal policy and exchange rate policy. Depreciation impact on trade balance in the short and medium run. Look at the dynamics: J curve. Saving, Investment and Trade balance deficit. Equilibrium condition in the market of goods in open economy: revised IS curve.
READING 8: The exchange rate crisis
Lesson 13: Production, interest rate and exchange rate
The equilibrium in the market of goods in open economy. Real interest rate and real exchange rate.
The equilibrium in the financial markets in open economy. Choice between national and international financial assets.
Rewriting the equation of interest rate parity.
A joint analysis of the market of goods and the financial markets in open economy.
Effect of an increase of the national interest rate. Why is the IS curve negatively sloping in an open economy? The impact of monetary policy in open economy.
READING 9: The debate on euro
Lesson 14: Production, interest rate and exchange rate, cont.
The impact of fiscal policy in open economy.
Parity, variable parity, fluctuation bands and the European Monetary System (SME).
Monetary policy in a fixed exchange rate regime. Fiscal policy in a fixed exchange rate regime.
SME crisis. Advantages and disadvantages of fixing the exchange rate.
READING 10: The Italian economy does not need to go back to lira
Lesson 15: The labor market – part I
A journey around the labor market. Labor markets in EU. Labor markets in the world.
Job flows. Movements within unemployment.
US unemployment rate and unemployment duration. US unemployment rate and firing. Wage determination. Collective contracts. Workers’ collective contractual strength. Job nature and contractual strength. Market conditions and contractual strength. The theory of efficiency wages.
Lesson 16: The labor market – part II
Wages, prices and unemployment. Expected prices and unemployment. The other determinants Z.
Minimum wage. Employment Protection Legislation.
Price determinants. Price "mark-up" and the degree of market competition.
The equation for wages: Wage Setting.
European evidence about the completeness of single market and the real wages. Equilibrium real wages and unemployment. Effect of an increase of unemployment subsidies on real wages and equilibrium unemployment. Effect of a mark-up increase on real wages and equilibrium unemployment.
Where we are and where we are going. Natural level of employment. Potential production.
Lesson 17: The Phillips curve, natural rate of unemployment and inflation
Empirical evidence of the relationship between the unemployment rate and inflation. Samuelson-Solow evidence on American data. Inflation, expected inflation and unemployment. The original formulation of the Phillips curve.
Seeming trade-off and its disappearance in the '70s. Phillips curve ‘evolution’. US inflation since 1900, persisting and positive after the beginning of the '60s. Modified Phillips curve (accelerated).
Phillips curve and the natural rate of unemployment, NAIRU. Differences in the natural rate across countries.
Lesson 18: From short to medium run: the IS-LM-PC model
What explains unemployment in Europe? The natural rate of unemployment fluctuations over time.
High inflation and the Phillips curve. Price-Wages spiral and the Italian ‘Scala Mobile’.
Why deflation is bad. Phillips curve and deflation.
Let us put together the IS-LM model with the Phillips curve, PC. "Output Gap" and Phillips curve in terms of Output Gap.
Lesson 19: The IS-LM-PC model
Dynamics of adjustment and the medium run. Revising the role of expectations. Zero lower bound and deflation spiral. Fiscal compact: a revision.
The effects of an increase in oil prices.
Economic growth: stylized facts. How to measure the standard of living. Large increase in the standard of living since 1950.
Per capita income convergence in different countries.
Lesson 20: Economic growth: stylized facts
How we measure the standard of living in a country. Time series in the long run of real GDP and per capita real GDP.
Per capita GDP convergence. Look at two millennials. Look at different countries.
The aggregate production function and its properties. Sources of economics growth.
Lesson 21: Saving, capital accumulation and production
Capital stock and production relation, capital effects on aggregate production. Production effects on capital accumulation. Investments as accumulation of physical capital.
Capital stock and production dynamics. Saving rate and production. Saving rate and consumption. To get an idea about measures: dynamic effects of an increase of the saving rate.
Saving rate and the golden rule of capital accumulation.
Lesson 22: Technological progress and growth
Productivity, production and unemployment in the short run. Empirical evidence.
Productivity and the natural rate of unemployment. Empirical evidence.
The financial markets and expectations.
The expected present discounted value (= actual value). Examples of how to use the actual value.
Assets prices and returns curve. Assets prices as an actual value.
Arbitrage and assets prices. From prices to asset returns. How to interpret the asset returns curve.
Lesson 23: Expectations, consumption and investments
Investments and expected profits. Present value of expected profits. The decision to invest.
A useful special case with static expectations.
Investments and current profits. Profits and sales. Profit function per unit of capital.
Investments and the stock market. Tobin’s q. Volatility.
Lesson 24: Fiscal policy
Public balance deficit. Government’s balance budget. How the Government finances its deficit.
Present and future taxation: debt reimbursement after 1 year, 2 years, t years. Debt stabilization starting in year t.
Debt/GDP over time. The reduction of public debt after the world wars. Debt/GDP in Italy and in other European countries. Simulation to stabilize the Italian debt on Maastricht Treaty parameters. Dangers of a high public debt. Debt default. Seigniorage.
