Macroeconomics II

Introduction

The main focus of the course is short term macroeconomics and understanding the business cycle. The main aim of the course is to provide a deeper understanding of monetary and fiscal policy in a small open economy like the Norwegian, where international factors are relatively important for optimal national policy. Participants will also learn about the macroeconomic development of the Norwegian economy, economic effects of spending government petroleum revenues, and the flexible inflation targeting framework of monetary policy.

Other related themes which are important in this course are financial instability and government debt crises, nationally and internationally.

Course content

• Model based analysis of short-term effects of monetary and fiscal policy on aggregate employment and output.
• Monetary and fiscal policy under fixed and flexible exchange rates.
• Short and long run macro supply functions and Phillips curves.
• Nominal anchoring of an economy.
• The European Monetary Union.
• Monetary policy under flexible inflation targeting.
• Fiscal policy: Goals and policy instruments.
• Spending of petroleum revenues and the real exchange rate.
• Macroeconomic development of the Norwegian economy. Asset bubbles, financial and government debt crises.