Module Lead: Professor John Fender

Credits: 20

Introduction and module objectives

The module is divided into two components: (1) Growth and business cycles; (2) Open Economy Macroeconomics. Each component comprises 20 hours of lectures and accompanying classes. 

(1) Growth and business cycles

This component of the course investigate the time paths of consumption, output, capital, labour, factor prices and real money, under the assumption of intertemporal optimisation. Traditional and endogenous growth theories are discussed and their public policy implications considered.

(2) Open Economy Macroeconomics

This component is divided into three parts. In the first, the relationships between goods markets and asset markets in different countries are discussed; this involves the discussion of topics such as purchasing power parity and uncovered interest parity; the second considers a variety of open macroeconomic models including the Mundell-Fleming and Dornbusch models and the third considers policy issues such as exchange rate target zones and speculative attacks on fixed exchange rate regimes.

Learning outcomes:

By the end of the module students should be able to:

  • Demonstrate a comprehensive understanding of substantial parts of advanced modern macroeconomic theory of the closed economy;
  • Critically evaluate the impact of an open economy for macroeconomic behaviour and policy;
  • Identify and discuss the dilemmas and constraints facing policy makers (especially monetary policy makers);
  • Critically appraise current macroeconomics journal literature;
  • Analyse and solve a variety of complex technical problems relating to macroeconomic models.


  • Two hour class test (20%)
  • Three hour written examination (80%)