ECON2004 – Macroeconomic Analysis and Applications

2022 – Session 1, In person/Online-scheduled-weekday, North Ryde

General Information

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Unit convenor and teaching staff Unit convenor and teaching staff Unit Convenor
Professor Jeffrey Sheen
Credit points Credit points
Prerequisites Prerequisites
50cp at 1000 level or above including ECON110 or ECON1021
Corequisites Corequisites
Co-badged status Co-badged status
Unit description Unit description

This unit builds on the IS-LM model by incorporating expectations into goods and financial markets, by introducing openness and by integrating the labour market. The aggregate supply and demand framework is used to examine the short- and medium-run effects of monetary and fiscal policy. Other topics may include: growth; inflation; unemployment; and financial crises. This unit should enable students to evaluate the recurrent debates on macroeconomic policy and to analyse important real-world problems.

Important Academic Dates

Information about important academic dates including deadlines for withdrawing from units are available at

Learning Outcomes

On successful completion of this unit, you will be able to:

  • ULO1: Analyse and apply theoretical models in contemporary macroeconomics.
  • ULO2: Critically analyse models and theories to solve contemporary macroeconomic problems.
  • ULO3: Apply macroeconomic models and theories to understand macroeconomic phenomena, and critique macroeconomic phenomena both individually and as a member of a team.

General Assessment Information

Late submissions of assessments

Unless a Special Consideration request has been submitted and approved, no extensions will be granted. There will be a deduction of 10% of the total available assessment-task marks made from the total awarded mark for each 24-hour period or part thereof that the submission is late. Late submissions will only be accepted up to 96 hours after the due date and time.

No late submissions will be accepted for timed assessments – e.g., quizzes, online tests.

Table 1: Penalty calculation based on submission time

Submission time after the due date (including weekends)

Penalty (% of available assessment task mark)

Example: for a non-timed assessment task marked out of 30

<24 hours


10% x 30 marks = 3-mark deduction

24-48 hours


20% x 30 marks = 6-mark deduction

48-72 hours


30% x 30 marks = 9-mark deduction

72 – 96 hours


40% x 30 marks = 12-mark deduction

>96 hours


Assignment won’t be accepted


Special Consideration

To request an extension on the due date/time for a timed or non-timed assessment task, you must submit a Special Consideration application. An application for Special Consideration does not guarantee approval.

The approved extension date for a student becomes the new due date for that student. The late submission penalties above then apply as of the new due date

Assessment Tasks

Name Weighting Hurdle Due
Group presentation 20% No At tutorials
Online quiz 10% No Weeks 3, 6, 9 and 12
Mid session online test 20% No Week 7, 6 April 2022
Final examination online 50% No University examination period

Group presentation

Assessment Type 1: Presentation
Indicative Time on Task 2: 20 hours
Due: At tutorials
Weighting: 20%


Part 1: Tutorial solution presentations (10%) Part 2: Central Bank Simulation (10%)


On successful completion you will be able to:
  • Analyse and apply theoretical models in contemporary macroeconomics.
  • Critically analyse models and theories to solve contemporary macroeconomic problems.
  • Apply macroeconomic models and theories to understand macroeconomic phenomena, and critique macroeconomic phenomena both individually and as a member of a team.

Online quiz

Assessment Type 1: Quiz/Test
Indicative Time on Task 2: 10 hours
Due: Weeks 3, 6, 9 and 12
Weighting: 10%


Several online quizzes will be held during the session. Details will be available in iLearn.


On successful completion you will be able to:
  • Analyse and apply theoretical models in contemporary macroeconomics.

Mid session online test

Assessment Type 1: Quiz/Test
Indicative Time on Task 2: 10 hours
Due: Week 7, 6 April 2022
Weighting: 20%


Mid session online test


On successful completion you will be able to:
  • Analyse and apply theoretical models in contemporary macroeconomics.
  • Apply macroeconomic models and theories to understand macroeconomic phenomena, and critique macroeconomic phenomena both individually and as a member of a team.

Final examination online

Assessment Type 1: Examination
Indicative Time on Task 2: 35 hours
Due: University examination period
Weighting: 50%


A two-hour examination, consisting of descriptive short and long answer questions, will be held during the University Examination Period.


On successful completion you will be able to:
  • Analyse and apply theoretical models in contemporary macroeconomics.
  • Critically analyse models and theories to solve contemporary macroeconomic problems.

1 If you need help with your assignment, please contact:

  • the academic teaching staff in your unit for guidance in understanding or completing this type of assessment
  • the Writing Centre for academic skills support.

2 Indicative time-on-task is an estimate of the time required for completion of the assessment task and is subject to individual variation

Delivery and Resources

Lectures WEDNESDAYS 12-2PM, 

Lecture slides will be available on the unit web page at, 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 engaging with the lecture presentations at the appointed time. Students who miss 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  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.

Note: the intended delivery mode may need to change after the start of the session due to the evolving covid situation and students need to ensure they keep up with iLearn Announcements made during the session accordingly.

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.) Note that the lectures present updated analysis beased on world events up to 2022.

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 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.

Unit Schedule

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),

Kellie Belrose "Bridging the Textbook Gaps on How the RBA Implements Monetary Policy"

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”

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",

Christopher Kent (2014) "Cyclical and Structural Changes in the Labour Market"

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,

Guy Debelle, "Monetary policy during Covid", (2021)

Callum Hudson et al (2021)  "The Global Fiscal Response to COVID-19",

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",

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

Jonathan Kearns (2020), "Banking and the COVID-19 Pandemic",

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",

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", 

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


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