Macro Policies and Institutions
Course explores major contemporary issues in macroeconomic policies and institutions – drawing on theoretical analysis, empirical evidence, and practical experience. Although the primary focus is on advanced economies, coverage extends to emerging-market economies as well. Topics encompass basic policy goals, instruments, applications, and their consequences. Against this background, the prevention of, and policy response to, financial (banking, currency, fiscal) crises are explored. In this context, the course addresses major challenges facing policymakers in the recent U.S. and Eurozone crises, as well as earlier crises in emerging markets. Particular emphasis is placed on institution-building to cope with these challenges. The lectures are grouped in four parts that cover principal areas of macroeconomic policymaking: monetary policy and institutions; macroprudential supervision and regulations; fiscal policy and institutions; and interactions and tradeoffs among policy instruments.
The goal of the course is to expose students to hands-on application of analytical tools to real-world macroeconomic issues faced by policymakers, within an orderly conceptual framework. It seeks to familiarize students with the design and operation of monetary and fiscal institutions, as well as of financial regulations, to strengthen economic stability and growth.
Lectures, class discussion, readings, and preparation of a policy memorandum should enable students to undertake critical evaluation of current macroeconomic policymaking. Thus, the course provides a practical toolkit for students envisaging a career in public service at home or abroad, or employment at a private financial institution. Alternatively, it seeks to motivate students to pursue further graduate study or research on policy issues.
(1) Policy memorandum (35% of final grade). Student is expected to draft a brief policy
memorandum (addressed to an appropriate high-level government official) on a macroeconomic policy issue in a country selected by the student. Grade is determined by analysis of the issue, including supporting evidence.
(2) Final examination (55% of final grade). Student is expected to select and answer two out of three essay questions. Grade is determined by student’s ability to apply concepts, policy tools, and institutional arrangements that are relevant to the question, with references to class lectures and readings, as appropriate.
(3) Class participation (10% of the final grade). Student is expected to interact in class, whenever appropriate. Time permitting, student may have an opportunity to make a brief presentation of the draft policy memorandum. Grade is determined by student’s contribution to better understanding of course material.