Macroeconomics: European Perspective

Course goals

Learning objectives 
At the end of the course, you are able to:

• Describe the macroeconomic principles that determine output, employment, inflation, and economic growth in the long run.
• Distinguish between nominal and real variables and explain the classical dichotomy and monetary neutrality.
• Explain the determinants of long-run economic growth using a simple growth framework.
• Describe the functioning of the monetary system, including money creation and the role of central banks.
• Analyse short-run economic fluctuations using the IS-LM model.
• Use the Aggregate Demand–Aggregate Supply (AD–AS) framework to study output and inflation dynamics.
• Explain the Phillips curve and the relationship between inflation and unemployment.
• Analyse the effects of fiscal and monetary policy in both the short and long run.
• Describe how economies fluctuate around their long-run equilibrium.
• Think in terms of abstract economic models when discussing macroeconomic questions.
• Take a well-reasoned position regarding macroeconomic problems and economic policy. 
• Interpret basic macroeconomic data and apply simple models in policy discussions.

Content

Please note that this course specifically focusses at first years Economics and Business Economics students. Students from other departments with an interest in macroeconomics are advised to select EC1PMA as that course will be better equipped for your position.

In this introductory course in macroeconomics, we provide students with a structured framework to understand how modern economies function in both the long and short run.

The course begins with an introduction to key macroeconomic concepts such as GDP, inflation, unemployment, and interest rates. Students learn to distinguish between nominal and real variables and to interpret macroeconomic data.

We then analyse the determinants of output and growth in the long run. Using a simple growth model, we study how capital accumulation, labour, and technological progress determine living standards. Special attention is given to the distinction between long-run growth and short-run fluctuations, as well as the neutrality of money in the long run.

Building on this foundation, we examine the monetary system and the role of central banks in money creation and inflation. Students learn how money affects prices and interest rates and how expectations matter for macroeconomic outcomes.

After defining the long-run equilibrium of the economy, we turn to short-run economic fluctuations. The IS-LM model is introduced to analyse the interaction between goods markets and financial markets. This framework is used to study the effects of fiscal and monetary policy on output and interest rates.

We then extend the analysis to the Aggregate Demand–Aggregate Supply (AD–AS) model to study inflation dynamics and supply shocks. The Phillips curve is introduced to explain the relationship between inflation and unemployment and the role of expectations in shaping short-run trade-offs.

Throughout the course, theoretical insights are connected to real-world developments, including financial crises, inflationary episodes, and contemporary policy debates in Europe and beyond.

Academic skills
Communication skills

• being able to give a brief oral presentation on a specific subject

Information processing

• being able to work with data software, such as Excel

Academic reasoning

• thinking conceptually, thinking in terms of theory and the capability to confront its predictions in real life

Academic research

• being able to execute the instructed research design,
• being able to execute an instructed empirical research,
• being able to apply theoretical concepts in research

Social responsibility

• being able to work in a team for a well-designed task or project

Effort requirement
You meet the effort requirement if you attend more than 80% of the tutorial sessions and participate in the empirical project.

In case online access is required for this course and you are not in the position to buy the access code, you are advised to contact the course coordinator for an alternative solution. Please note that access codes are not reusable meaning that codes from second hand books do not work, as well as access codes from books with a different ISBN. Separate or spare codes are usually not available.