Students

ECON3011 – Macroeconomic Policy

2023 – Session 2, Online-scheduled-weekday

General Information

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Unit convenor and teaching staff Unit convenor and teaching staff
Jeffrey Sheen
jeffrey.sheen@mq.edu.au
Credit points Credit points
10
Prerequisites Prerequisites
20cp at 2000 level including ECON204 or ECON2004
Corequisites Corequisites
Co-badged status Co-badged status
Unit description Unit description
This unit develops a range of macroeconomic models with a focus on a selection of key contemporary issues. For example, the unit may include studying appropriate business cycle measurement and shocks, inflation targeting and alternative monetary policy frameworks, fiscal policy constraints, recurrent financial crises and the need for financial regulation, digital financial and technological innovations, population dynamics, climate change mitigation and the implications of growing inequality. Students will develop an understanding of the reasons for these sort of problems, and how key policy institutions such as the RBA, APRA and Treasury are addressing them.

Important Academic Dates

Information about important academic dates including deadlines for withdrawing from units are available at https://www.mq.edu.au/study/calendar-of-dates

Learning Outcomes

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

  • ULO1: Analyse and explain macroeconomic policy in a general framework.
  • ULO2: Appraise how monetary and fiscal policies are determined in the context of the current economic environment.
  • ULO3: Critically evaluate the effectiveness of current macroeconomic policy in achieving stated goals.

General Assessment Information

See https://policies.mq.edu.au/document/view.php?id=190&version=1

Late Assessment Submission Penalty (written assessments) 

Unless a Special Consideration request has been submitted and approved, a 5% penalty (of the total possible mark) will be applied each day a written assessment is not submitted, up until the 7th day (including weekends). After the 7th day, a grade of ‘0’ will be awarded even if the assessment is submitted. Submission time for all written assessments is set at 11.55 pm. A 1-hour grace period is provided to students who experience a technical concern. 

For any late submissions of time-sensitive tasks, such as scheduled tests/exams, performance assessments/presentations, and/or scheduled practical assessments/labs, students need to submit an application for Special Consideration. 

Assessment Tasks

Name Weighting Hurdle Due
Essay assignment 20% No Week 12, Friday midnight
Final examination 50% No In final examination period
Mid-session class test 25% No Week 7
Participation 5% No In ZOOM sessions

Essay assignment

Assessment Type 1: Report
Indicative Time on Task 2: 20 hours
Due: Week 12, Friday midnight
Weighting: 20%

 

Provide an answer to questions of an analytical nature and/or write a short essay/report which might require the use of Australian data.

 
On successful completion you will be able to:
  • Appraise how monetary and fiscal policies are determined in the context of the current economic environment.
  • Critically evaluate the effectiveness of current macroeconomic policy in achieving stated goals.

Final examination

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

 

A two-hour examination will be held during the University Examination Period, and will be on based on material covered in lectures from weeks 1 to 13 (inclusive), with an emphasis on material presented after the class test.

 
On successful completion you will be able to:
  • Appraise how monetary and fiscal policies are determined in the context of the current economic environment.
  • Critically evaluate the effectiveness of current macroeconomic policy in achieving stated goals.

Mid-session class test

Assessment Type 1: Quiz/Test
Indicative Time on Task 2: 15 hours
Due: Week 7
Weighting: 25%

 

The 80 minute class test will be based on the lecture material and exercises covered in weeks 1 to 6.

 
On successful completion you will be able to:
  • Analyse and explain macroeconomic policy in a general framework.
  • Appraise how monetary and fiscal policies are determined in the context of the current economic environment.

Participation

Assessment Type 1: Participatory task
Indicative Time on Task 2: 0 hours
Due: In ZOOM sessions
Weighting: 5%

 

Students are expected to participate in live seminars and the forum

 
On successful completion you will be able to:
  • Analyse and explain macroeconomic policy in a general framework.
  • Appraise how monetary and fiscal policies are determined in the context of the current economic environment.

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

Lectures are formally on Wednesays 3-5pm online. The first segment is a recorded lecture, while the second segment will begin at 3:30pm as an interactive ZOOM session in which you are expected to participate.

Required and Recommended Texts and/or Materials

There is no required textbook for this course.

It is assumed that you understand well an intermediate macroeconomics textbook eg

O. Blanchard and J. Sheen, Macroeconomics, 2014, 4th edition, Pearson

(https://www.pearson.com.au/9781442559516)

 

A good reference text for this unit is:

S. Williamson, Macroeconomics , 2018, 6th global edition, Pearson

(https://www.pearson.com.au/9781292215761)

Useful readings for the topics are given in the Unit Schedule, and extra readings may be

recommended during the lectures.

Unit Schedule

WEEKS 1-2 (26 July, 2 August).

Refresher on ISLM, AS-AD; Malthusian growth model, Solow growth model, Endogenous growth models (JS)

  • Blanchard and Sheen 2013 Chs 5-12
  • McLeay,M. Radia, A and Thomas R. 2914 Money creation in the modern economy. Bank of England Quarterly Bulletin Q1 2014
  • Williamson Chs 1,-3, 7-8

WEEK 3 (9 August).

Low inflation/high inflation, the natural rate of unemployment (JS)

  • Blanchard, O. 2018 Should we reject the natural rate hypothesis? Journal of Economic Perspectives, Vol 32, 1 Winter 2018 https://pubs.aeaweb.org/doi/pdf/10.1257/jep.32.1.97
  • Cassidy, N., Rankin,E., Read, M. and Seibold,C. 2019 Explaining Low Inflation Using Models https://www.rba.gov.au/publications/bulletin/2019/jun/explaining-low-inflation-using-models.html
  • Williamson Chs 14-15

WEEK 4 (16 August).

Secular stagnation, potential growth, technology and inequality (JS)

  • Arsov, I and Watson, B. 2019 Potential Growth in Advanced Economies RBA Bulletin 12 December 2019 https://www.rba.gov.au/publications/bulletin/2019/dec/potential-growthinadvanced-economies.html
  • Gordon, R. 2014 US Economic Growth is Over: The Short Run Meets the Long Run, Think Tank 20: Growth, Convergence and Income Distribution: The Road from the Brisbane G-20 Summit: https://www.brookings.edu/wp-content/uploads/2016/07/tt20-united-states-economicgrowth-gordon.pdf
  • PIIE 2020 How to Fix Economic Inequality? An Overview of Policies for the United States and Other High-Income Economies. (https://www.piie.com/microsites/how-fix-economic-inequality)

WEEK 5 (23 August).

Monetary policy frameworks – inflation targeting and alternatives (JS)

  • Debelle, G. 2018 Twenty-five Years of Inflation Targeting in Australia. RBA Conference, Central Bank Frameworks: Evolution or Revolution? 2018 https://www.rba.gov.au/speeches/2018/spdg-2018-04-12.html
  • Rogoff, K. 2017. Dealing with monetary paralysis at the zero bound. Journal of EconomicPerspectives, https://scholar.harvard.edu/files/rogoff/files/dealing_with_monetary_paralysis_at_the_zero_bound.pdf
  • RBA Explainer - Unconventional monetary policy. https://www.rba.gov.au/education/resources/explainers/unconventional-monetary-policy.html
  • Williamson Ch 15

WEEK 6 (30 August).

Links between fiscal policy and monetary policy – the government budget constraint, the fiscal theory of prices, hyperinflation (JS)

  • Blanchard and Sheen 2013 Chs 23-24
  • Blanchard, O. (2019) Public Debt and Low Interest Rates, American Economic Review, www.piie.com/system/files/documents/wp19-4.pdf
  • Blanchard, O. (2021) Fiscal Policy under Low Interest Rates Draft text: https://fiscal-policyunder-low-interest-rates.pubpub.org/
  • Cochrane, J. (2022) The Fiscal Theory of the Price Level Draft text: https://www.johnhcochrane.com/research-all/the-fiscal-theory-of-the-price-level-1

WEEK 7 (6 September).

Mid-session test - online 3pm.

                   ..Mid-session break...

WEEK 8 (27 September).

The causes of financial crises and policy responses (DO)

  • Reinhart, C. and K. Rogoff (2008), This Time is Different: Eight Centuries of Financial Folly, NBER Paper 13882, March https://www.nber.org/papers/w13882.pdf
  • RBA Explainer: The Global Financial Crisis, https://rba.gov.au/education/resources/explainers/pdf/the-global-financial-crisis.pdf
  • Williamson Ch. 18

WEEK 9 (4 October).

Financial regulation: Principles and practice (DO)

  • Yuksel, M. (2019), ‘A decade of post-crisis G20 financial sector reforms,’ RBA Bulletin, June https://rba.gov.au/publications/bulletin/2019/jun/pdf/a-decade-of-post-crisis-g20-financialsectorreforms.pdf
  • Orsmond. D. and F. Price (2016), ‘Macroprudential policy frameworks and tools,’ RBA Bulletin, December https://www.rba.gov.au/publications/bulletin/2016/dec/pdf/rbabulletin-2016-12-macroprudential-policy-frameworks-and-tools.pdf

WEEK 10 (11 October)

Digital money and the payments system; the future of cryptocurrencies, CBDCs – eg Bitcoin, Ripple, central bank digital currencies (JS)

  • Dark, C., Emery, D, Ma,J. and Noone, C. 2019 Cryptocurrency: Ten Years On. RBA Bulletin,www.rba.gov.au/publications/bulletin/2019/jun/cryptocurrency-ten-years-on.html
  • Kumar, A, Smith. C 2018 Crypto-currencies – An introduction to not-so-funny moneys, Journal of Economic Surveys 32,8 https://onlinelibrary.wiley.com/doi/full/10.1111/joes.12289
  • Härdle, W. and Harvey, C. and Reule, R., Understanding Cryptocurrencies (March 26, 2019).https://ies.keio.ac.jp/upload/20191125econo_Wolfbang_wp.pdf
  • Richards, T., Thompson, C., and Dark, C. Sep 2020. Retail central bank digital currency - design considerations, rationales and implications. RBA Bulletin. https://www.rba.gov.au/publications/bulletin/2020/sep/retail-central-bank-digital-currency-design-considerations-rationales-and-implications.html
  • Williamson Chs 18

WEEKS 11-12 (18 and 25 October).

Official Australian and global economy reports (JS)

  • Latest RBA Statement on monetary policy, Commonwealth Budget statements, World Economic Outlook et al

WEEK 13 (1 November).

Summary and overview, Q and A, discussion about final exam

 

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Unit information based on version 2023.04 of the Handbook