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 11.55pm. 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.

LECTURES:  Wednesdays 3-pm

Lecture slides will be available prior to the lecture on the unit web page at http://ilearn.mq.edu.au.

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.

REQUIRED TEXT Available from your the local bookshop is the physical text with eBook: "Macroeconomics"

Blanchard, Sheen, Huangfu and Wang, 5th edition, Pearson, 2025 ISBN: 97806557|(3418 -etext, 3425 - print, 3432 ePub)

This BSHW 5th edition is significantly different to the 4th edition of 2013, and students are strongly advised to get access to the 5th edition. DO NOT get the 4th (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.

There are no tutorials in Week 1. Tutorials begin in Week 2.

Topics 1-13 will be covered in Weeks 1-13. Some topics will require more and some less than a week.

INTRODUCTION

Topic 1:  A tour of key contemporary issues in the world; key macroeconomic concepts

• BSHW Chs 1 and 2

 

MODELLING SHORT RUN EQUILIBRIUM

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.

• BSHW Chs 3, 4 and 5
• Reserve Bank of Australia “Monetary Policy” http://www.rba.gov.au/monetary-policy/index.html
• Kellie Belrose and Joyce Tan "Bridging the Textbook Gaps on How the RBA Implements a Change to the Cash Rate",   

https://www.rba.gov.au/education/resources/teacher-updates/pdf/bridging-the-textbook-gaps-on-how-the-rba-implements-monetary-policy.pdf

 

Topic 3:  Extending the IS-LM model - real and nominal interest rates, risk and risk premia, financial shocks and crises

• BSHW Chs 6

 

MODELLING MEDIUM RUN EQUILIBRIUM

 

Topic 4:  The labour market; the WS-PS model - wage and price setting in the medium run; the natural rate of unemployment

• BSHW Ch 7
• Mark Chambers, Blair Chapman and Eleanor Rogerson (2021) " Underemployment in the Australian Labour Market", https://www.rba.gov.au/publications/bulletin/2021/jun/underemployment-in-the-australian-labour-market.html

 

Topic 5 The Phillips Curve (PC), inflation and the natural rate of unemployment

• BSHW Ch 8
• Heather Ruberl and Thomas Williamson (2021) "Estimating the NAIRU in Australia", https://treasury.gov.au/sites/default/files/2021-05/p2021-164397_nairu.pdf

Topic 6: The IS-LM-PC model, adjustment from the short run to the medium run equilibrium; the 'zero' lower bound and deflation; fiscal consolidation, energy price shocks

• BSHW Ch 9

 

MODELLING LONG RUN EQUILIBRIUM

Topic 7:  The facts of growth; why some countries are rich and some poor; convergence; sources of growth; the basic Solow growth model - saving and capital accumulation

• BSHW Chs 10 and 11
• 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:  The Solow growth model with technological progress and population growth; the future of technological progress - AI and productivity growth; inequality; climate change

• BSHW Chs 12 and 13
• R Gordon (2000) “Does the ‘New Economy’ Measure up to the Great Inventions of the Past?” Journal of Economic Perspectives, Fall 2000

 

EXTENSION OF THE CORE MODEL - THE ROLE OF EXPECTATIONS IN FINANCIAL MARKETS, EXPENDITURES AND OUTPUT FLUCTUATIONS

Topic 9:  Financial markets and expectations; PDVs, yield curve, stock markets and housing; asset price bubbles

• BSHW Ch14

 

Topic 10: Expectations effects on consumption, investment and equilibrium output; uncertainty

• BSHW Chs 15 and 16

 

EXTENSION OF THE CORE MODEL - THE OPEN ECONOMY

Topic 11: Openness in all markets; the nominal and real exchange rate, multilateral exchange rates, the balance of payments, interest parity condition; the goods market in an open economy; exchange rates and net exports; saving, investment and the trade balance.

• BSHW Chs 17 and 18
• Tim Atkin, Isabel Hartstein and Jarkko Jääskelä (2021) "Determinants of the Australian Dollar Over Recent Years", https://www.rba.gov.au/publications/bulletin/2021/mar/determinants-of-the-australian-dollar-over-recent-years.html

Topic 12: The open economy IS-LM-IP model; fixed vs flexible exchange rate regimes

• BSHW Chs 19 and 20

 

EXTENSION OF THE CORE MODEL - BACK TO POLICY - A SUMMARY

Topic 13: Uncertainty and macro policy; credibility of policy-makers; fiscal policy and the government budget constraint, government debt; monetary policy and financial stability.

• BSHW Chs 21, 22, and 23
• RBA Explainer: Australia's inflation target, https://www.rba.gov.au/education/resources/explainers/australias-inflation-target.html