No extensions on within-session assessments will be granted for all assessments. Students who have not submitted the task prior to the deadline will be awarded a mark of 0 for the task, except for cases in which a formal application for Special Consideration is made (via http://www.ask.mq.edu.au/) and approved. If the application is successful, the missed assessment will be replaced by a supplementary test, which could involve an oral test.

Lectures MONDAYS 4-6PM, ONLINE

Lecture slides will be available on the unit web page at http://ilearn.mq.edu.au, and (barring technical hitches, the possibility of which should be allowed for) videos of the lectures will be available on Echo. During the semester, unforeseen circumstances may require the cancellation of a lecture and/or tutorial. Any changes will be announced as far as possible in advance both in lectures and on the unit website. Students are strongly advised that their learning is significantly enhanced by watching the lecture presentations online at the appointed time. It is assumed that students will attend all online lectures and tutorials at the prescribed times. Students who miss watching lectures put themselves at a significant disadvantage for several reasons, including:

(i) Not all the material in the text is covered in the unit, and not all the material in the unit is covered in the text. In some places the text deals with issues in greater depth than is necessary for the unit, and in other places it doesn’t go far enough. The lectures contain all the unit material taught at the level required for the assessment tasks, and are your guide to the unit content. The tutorials will demonstrate the way questions in macroeconomics are approached.

(ii) The lectures and tutorials will include significant guidance about the style and content of the final exam and recommendations about study technique.

(iii) It is difficult (and often impossible) for staff to provide meaningful assistance to students outside class times on topics for which they did not attend the relevant lectures and tutorials.

Required Text

Available from your Local Co-op Bookshop is the physical text with eBook: "Macroeconomics" Blanchard and Sheen, 4th edition, 2013 ISBN: 9781486041220 

This 4th edition is significantly different to the 3rd edition, and students are strongly advised to get access to the 4th edition. DO NOT get the 3rd (or earlier) edition. (Please do not email to ask if it's OK to get the earlier editions.)

Technology Used and Required Lecture and tutorial material as well as up to date information concerning any aspect of the unit, including any changes to the schedule, will be available to students by logging on to the unit web page at http://ilearn.mq.edu.au. Teaching and Learning Strategy This unit is taught as a mix of lectures and tutorials. The lectures are designed to provide the tools which can then be applied in tutorials. The tutorials comprise numerical problems and analytical questions and will be detailed in a separate document on iLearn at the end of week 2. There should be the opportunity to explore issues raised in lectures and to ask questions. The tutorials aim to improve understanding of macroeconomic theory and policy.

Topic 1 Introduction; a brief look at global conditions with a focus on Australia’s recent performance; output and business cycles, inflation, unemployment.

B&S Chs 1, 2

RBA Statement on Monetary Policy (May 2021),  https://www.rba.gov.au/publications/smp/2021/may/pdf/statement-on-monetary-policy-2021-05.pdf

Kellie Belrose "Bridging the Textbook Gaps on How the RBA Implements Monetary Policy" https://www.rba.gov.au/education/resources/teacher-updates/pdf/bridging-the-textbook-gaps-on-how-the-rba-implements-monetary-policy.pdf

Topic 2 The IS-LM model: Short-run goods market and money market equilibrium; monetary policy & fiscal policy; the policy mix – comparing a money supply rule with an interest rate rule.

B&S Chs 3, 4, 5

Reserve Bank of Australia “Monetary Policy” http://www.rba.gov.au/monetary-policy/index.html

David Romer (2000), Keynesian Macroeconomics Without the LM Curve, Journal of Economic Perspectives, Spring, pp 149-169

Topic 3 The labour market; wage and price setting in the medium run; the natural rate of unemployment; tax distortions and full employment.

B&S Ch 6

Mark Chambers et al (2021)  " Underemployment in the Australian Labour Market", https://www.rba.gov.au/publications/bulletin/2021/jun/pdf/underemployment-in-the-australian-labour-market.pdf

Christopher Kent (2014) "Cyclical and Structural Changes in the Labour Market" http://www.rba.gov.au/speeches/2014/sp-ag-160614.html

Topic 4  The AS-AD model: All markets together from the short run to the medium run; aggregate supply; aggregate demand with a fixed money supply and with an interest rate rule using an INFLATION TARGET; monetary, fiscal and oil price shocks in the AS-AD model.

B&S Ch 7

RBA Explainer: Australia's inflation target, https://www.rba.gov.au/education/resources/explainers/australias-inflation-target.html

Guy Debelle, "Monetary policy during Covid", (2021) https://www.rba.gov.au/speeches/2021/sp-dg-2021-05-06.html

Callum Hudson et al (2021)  "The Global Fiscal Response to COVID-19", https://www.rba.gov.au/publications/bulletin/2021/jun/pdf/the-global-fiscal-response-to-covid-19.pdf

Topic 5  Evolution of the Phillips curve; theories of expected inflation; the sacrifice ratio

B&S Ch 8

Heather Ruberl et al (2021) "Estimating the NAIRU in Australia", https://treasury.gov.au/sites/default/files/2021-05/p2021-164397_nairu.pdf

Topic 6 The macroeconomics of financial market crises.

B&S Ch 9

Luci Ellis (2009) “The Global Financial Crisis: Causes, Consequences and Countermeasures”, RBA Bulletin, May 2009 http://www.rba.gov.au/PublicationsAndResearch/Bulletin/bu_may09/Pdf/bu_0509_4.pdf

Jonathan Kearns (2020), "Banking and the COVID-19 Pandemic",   https://www.rba.gov.au/speeches/2020/pdf/sp-so-2020-12-15.pdf

Topic 7  The Long run: Sources and theories of economic growth and productivity; convergence across countries - PPP comparisons; growth over 2000 years; savings and capital accumulation; the golden rule savings rate 

B&S Chs 10, 11

P. Romer (1994) “The Origins of Endogenous Growth”, Journal of Economic Perspectives, Winter 1994

Australian Treasury (2021) "Intergeneration Report: Australia over the next 40 years",  https://treasury.gov.au/sites/default/files/2021-06/p2021_182464.pdf

Topic 8  Technology, population growth and the Solow model; institutions, technological progress and growth

B&S Chs 12, 13

R Gordon (2000) “Does the ‘New Economy’ Measure up to the Great Inventions of the Past?” Journal of Economic Perspectives, Fall 2000

Topic 9  Expectations - expected presented discounted value; nominal vs real interest rates; interest rates and monetary policy; the Fisher hypothesis; macroeconomic determinants of the yield curve or term structure; and of stock market prices; housing prices; expectations and consumption & investment; Tobin’s q; expectations and the IS-LM model.

B&S Chs 14, 15, 16, 17

Topic 10  The exchange rate; nominal & real, bilateral & multilateral exchange rates; the balance of payments; interest parity condition; the goods market in an open economy; exchange rates and net exports; J-curve; saving, investment and the trade balance.

B&S Chs 18, 19

Tim Atkin et al (2021) "Determinants of the Australian Dollar Over Recent Years", https://www.rba.gov.au/publications/bulletin/2021/mar/pdf/determinants-of-the-australian-dollar-over-recent-years.pdf 

Topic 11  The Mundell-Fleming model under floating exchange rates (with interest rate setting and inflation targeting); fixed exchange rates and exchange rate crises; exchange rate overshooting; choosing the exchange rate regime.

B&S Chs 20, 21

Topic 12  Back to Policy: Uncertainty and macro policy; credibility of policy-makers; fiscal policy and government budget constraint, government debt; challenges from the crisis - the liquidity trap, macroprudential policy.

B&S Chs 22, 23, 24