Macroeconomic Theory

The course analyzes how consumers, firms, the government, and the international economy interact on markets for goods, labor, physical and financial capital, and currencies. Models are developed for aggregate analysis of each of these markets and their interdependences. The theories presented deal with output determination, capital formation, consumption, savings, employment, unemployment, international trade, interest rates and exchange rates. The role of the government is analyzed and the scope for relevant economic policy discussed. The emphasis is on the long run development of the economy, such as causes and effects of economic growth and the structure of international trade, but the short and intermediate time horizon with adjustment and business cycles are also treated. A theme in the course is how macroeconomic relationships are founded in microeconomic analysis.