Open Economy Macroeconomics

Macroeconomics is an "alphabet" of the economy. It examines the basic economic laws, the way in which economy functions, basic economic policies and their impact on the achievement of the basic macroeconomic goals. The purpose of this subject is that students, after being familiarized with the demanding and complex subject matter on the basic studies, approach the study of macroeconomics at a higher level with the use of econometric analysis.

Macroeconomics is a very complex field of theory, science and practice. The main outcome of studying this scientific discipline is that students, after mastering this very demanding and complex subject matter, can easily and quickly understand the comprehensive analysis of modern macroeconomic issues and problems, whose importance is greater today than ever before. After acquiring detailed knowledge in the basic studies about basic economic laws, the way in which economy functions, basic economic policies and their impact on the achievement of the basic macroeconomic goals, macroeconomics is the studied at a higher level in the master studies, which in addition to theoretical knowledge also requires the application of econometric analysis.

Macroeconomic balance sheets; Basics of economic growth; Labor market and unemployment; Intertemporal budget constraint; Consumption and investment; The real exchange rate; Money and demand for money; Equilibrium in the money market in the short and in the long run; The money supply and monetary policy; Objectives, targets and instruments of monetary policy; Output, employment and prices; Goods Market and the IS curve; Money Market and the LM curve; Taylor rule and the TR curve; Macroeconomic equilibrium with fixed and flexible prices; Aggregate demand and aggregate supply; Output and interest rate at fixed and flexible exchange rate; Aggregate demand and inflation; Aggregate demand and aggregate supply in a fixed and flexible exchange rate regime; The shocks of supply and demand; Business cycles; Fiscal policy; Demand management policies; Economics of supply. Financial markets and macroeconomics. Determinants of the exchange rate in the short term. Construction of the international monetary system. Foreign currency crisis. Selection of exchange rate regime. Objectives of the central bank; Inflation in macroeconomic schools; Central bank management; Independence of the central bank; Transparency, communication and responsibility of the central bank; Functions of the central bank; Management of foreign exchange reserves; Causes and resolution of banking crises; Price bubbles; Research in the central banks; Key macroeconomic relations; Monetary policy instruments; Characteristics of modern monetary policy; Liquidity trap; The standard model of time inconsistency; Modes of monetary policy; New classical macroeconomics and consistency of economic (monetary) policy; Intermediate targets of monetary policy.

Lectures, seminar classes and practical exercises.

Colloquium I (0-20 points); Colloquium II (0-20 points); Final exam (0-50 points); Attendance (2point); Class activities (seminar papers, discussions, case studies) (0-8 points)

Burda, М.; Wiplosz, C. (2012). Macroeconomics. Belgrade: Faculty of Economics (translation from English). Fabris, N. (2006). Central Banking in Theory and Practice. Central Bank of Montenegro.