30510 - MONETARY AND FISCAL POLICY: CURRENT CHALLENGES

At least one course of macroeconomics is STRONGLY recommended. Some calculus and some simple first difference equations will be used.

The first goal of this course is to discuss the main contemporary macroeconomic issues, particularly in Europe, using a rigorous framework but with an emphasis on facts and problems as opposed to complicated theoretical models. The experience of many years has taught me that in many cases our students leave Bocconi without a clear understanding of basic terms and facts. This, however, does not mean that we can just talk about problems as in newspapers or talk shows. We want to make sure that we wil have all the tools needed to study a problem in a rigorous manner; that we will use all the terms correctly and precisely; and that we will have the right intuitions, besides knowing the formulas and the models. The second goal of this course is methodological. Most, if not all, macroeconomic problems do not have an obvious, black-or-white solution: there are pros and cons in any solution we might think of. And in virtually all cases reasonable and competent individuals have very different views of the same issue. I will therefore strive to present all the main sides of the debate, instead of presenting a simple model with a simple, one-sided solution.

This is the program for the course:

• Preliminaries: GDP and national income accounting, price indices, nominal and real quantities.
• Preliminaries: interes rate and bond prices.
• Preliminaries: a basic macroeconomic model
• Money, the monetary base, and the balance sheets of the sectors
• The money supply process
• The response of monetary policy to the Eurozone crises 
• The government deficit and debt
• The debate on government debt
• The debate on the effects of government spending and taxes
• The debate on fiscal consolidations and austerity.
• The exchange rate and the current account.
• Monetary abnd fiscal policies in an open economy
• The debate about monetary unions and the Euro.
• The view from Germany.

Identify the main issues in the European economic policy debate, understand the various sides of the debate, discuss critically the alternative proposals.

Understand the various sides of the debate on European issues, and discuss critically the alternative proposals.

• Face-to-face lectures
• Online lectures

Online lectures will follow the guidelines of the University following the COVID pandemics

With the purpose of measuring the acquisition of the above-mentioned learning outcomes,the assessment process is based on a written examination (100% of the final grade)

The written exam consists of exercises and/or open questions, aimed at assessingstudents' ability to:

•   Apply the analytical tools illustrated during the course.

•   Solve simple economic models and explain their implications.

•   Identify the economic effects of monetary and fiscal policies.

•   Absrib the intuition underlying the main concepts discussed in class

The exam also consists of short statements (true or false) to discuss,aimed at assessing students' ability to:

•   Precisely define the main economic variables and concepts.

•   Articulate economic reasoning.

•   Correctly apply the knowledge and skills acquired during the course.

Lecture notes will be posted online before each lecture.