To pass this subject, students must show a sufficient level of knowledge of the fundamental interrelationships between short, mid, and long-term phenomena, as well as the distinctive features of how an economy open to the world functions. This knowledge will be verified via a diagnosis of the problems emerging from specific situations in a country or region and the student’s judgement of the best economic policy alternatives to solve them.
Students who pass this subject will be able to:
a) Distinguish between the short, mid, and long-term aggregate dynamics of economies: agents, flows, assets, and relevant prices in each case. To be specific, to point out the motors which guarantee positive economic growth rates.
b) Interrelate the short, mid and long-term dynamics with the appropriate mechanisms of how markets work.
c) Identify the influence of the flexibility or rigidity of markets – especially of the labour market – on the dynamic behaviour of economies.
d) Identify short-term behaviour as a phenomenon of economic cycles fluctuating around a long-term tendency and be able to identify its origin.
e) Identify the specific features of the behaviour of the main markets and economic policy tools within open economies. To be specific, the exchange rate and capital mobility systems, as well as the opportunities and limits that open economies represent.
f) Propose mid and long-term economic policy diagnoses and measures in strongly globalized dynamic macroeconomic contexts.
Macroeconomics II extends the vision, introduced in the second part of Macroeconomics I, on how the economy works in two aspects.
In the first block, we extend the time frame of our analyses with the aim of studying specific questions and macroeconomic phenomena in a mid and long-term context. These questions are studied in a framework of dynamic reasoning. Firstly, a model is formulated with the objective of analyzing the phenomenon of inflation and its relationship with other macroeconomic variables. Afterwards, long-term income growth is studied, formulating a model in which many questions related to the determinants of economic growth will be dealt with (the Solow model). Finally, the phenomenon of economic cycles is studied, providing a vision which integrates the short, mid, and long-term cycles.
In the second block we shall look at the problems which arise when economies are opened to the world. Firstly, we shall study how currency markets operate and how exchange rates are decided on in different systems. Secondly, we shall study the aggregate behaviour of open economies within the framework of the Mundell-Fleming model. The effectiveness of fiscal and monetary policies, the sustainability of certain exterior imbalances and the role of politics in the exchange rate will be studied.