Core Macroeconomics, Hilary Term 2017

Week 1: A Keynesian closed-economy model

This week introduces the closed economy model of Carlin & Soskice, which is built up from three components: an IS-LM demand side; a supply side derived from the imperfectly competitive labour market model; and a monetary policy rule for the central bank. We will use the model to discuss the economy's response to various shocks, and the implementation of monetary policy. The problem set, and our tutorial, will test your understanding of the model's foundations and mechanics.

Assignment

Please complete the Department's problem set, which you can download here.

Readings

Carlin & Soskice, Macroeconomics. Institutions, Instability, and the Financial System, (Oxford: OUP, 2015), Chapters 1-4. The first sections of Ch. 13 are also relevant for lectures 1-4. This text will often be designated "C&S".