Macroeconomics and Economic Application

Introduction

This course provides an introduction to macroeconomic analysis. Particular emphasis is placed on business cycles and monetary and fiscal policy, which complements the focus on economic growth in the course "Sustainable economic development".  The students will be introduced to the measurement of macroeconomic variables and national accounts. A main objective is to give students a deeper academic insight into how monetary policy and fiscal policy work in the short term in a small open economy such as Norway. This includes an understanding of flexible inflation targeting in monetary policy and the use of petroleum revenues in fiscal policy. In addition, explanations for unemployment of a short-term and long-term nature will be emphasised.  The course will also go into topics such as automation and financial crises. An overall goal is for the students to understand traditional thinking about short-term economic fluctuations and stabilization policies, and be able to link this to considerations of efficient resource utilization over time in a small open economy.

Course content

1. National accounts and main economic variables
2. Model-based analysis of short-term fluctuations in economic activity.
3. Monetary and fiscal policy under fixed and flexible exchange rates.
4. The relationship between economic activity, expectation formation, and inflation.
5. Monetary policy under flexible inflation targeting.
6. Fiscal policy: Objectives and instruments. Use of petroleum revenues, the real exchange rate, the flow of resources between the traded and non-traded sectors. Long-term effects of fiscal policy.
7. Norwegian macroeconomic developments.
8. Unemployment.
9. Specific macroeconomic events such as financial crisis, energy shortage, automation, pandemic, or trade conflict.