Economic Fluctuations and Foundations of Macro Policy

lecon2021  2022-2023  Louvain-la-Neuve

Economic Fluctuations and Foundations of Macro Policy
5.00 credits
30.0 h
De la Croix David; de Walque Grégory (compensates De la Croix David);
Main themes
We start with an emprical part, in which we decompose macroeconomic time series into trend and cycle compo-nents. The inspection of cyclical parts gives then hints to build and evaluate subsequent theory. To study the key tradeoff mentionned above, we develop a two-period model which allows to introduce expectations in a simple way. The method the consists in analyzing the general equilibrium and its properties. We shall at least develop the following themes: Effect of productivity shocks, effect of fiscal policy and its financing, openess to trade, money and inflation, exchange rate regimes. We shall also compare the predictions of the neoclassical approach with the one with the Keynesian ISLM ones which have been seen in the BA course. We all compare with a multiple equilibria set-up. During the lectures, we shall establish numerous links with other courses (for exam-ple one can discuss the first welfare theorem, the theory of comparative advantages...)
Learning outcomes

At the end of this learning unit, the student is able to :

1 At the end of the course, students should have the following four competen-cies. (1) To understand some important tradeoffs agents face (consumption/leisure, consumption/saving, money holdings/bond holdings, investment by firms). (2) To know how these tradeoffs are modified by the fundamen-tal parameters of the economy, by expectations and by policies. (3) To be able to analyze the global conse-quences of individual choices and the determination of equilibrium. (4) To understand how this equilibrium is affected by shocks
Teaching methods
Ex catedra teaching, exercices et applications.
Evaluation methods
 Written or oral evaluation to assess the students' understanding of the methods and tools seen in class.
Williamson, Macroeconomics, Pearson.
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Faculty or entity

Programmes / formations proposant cette unité d'enseignement (UE)

Title of the programme
Learning outcomes
Master [60] in Economics : General

Master [120] in Mathematical Engineering

Master [120] in Economics: General