Module Name: Macroeconomics

Courses Title: Macroeconomics

Module Category: Core

Module Code: Econ-M1031

Module Competency: Analyze and evaluate macroeconomic policy
Cr Hrs: 4
Instructor: Kidist G.
Module Description
The course code is Econ-1031, and it is offered in the first semester for first year students.
Macroeconomics I focus mainly on short run analysis of an economy or business cycle. Hence, the main
aim of this course is to present and discuss the different views of economists (as represented by school of
thought) on how an economy behaves in the short run, how equilibrium is achieve in the short run, and
the role of market forces and government in short run economic stabilization. For this purpose, this part is
divided in to three parts: Introduction, aggregate demand and supply analysis of a closed economy, and
the analysis of open economy macroeconomics.
Module objective
In this module the students are exposed to look at the aggregate analysis of an economy and the
interrelationship between various aggregate economic variables. It also incorporates the monetary and
fiscal policy instruments through which government can influence the value and dynamics of aggregate
economic variables and thereby the performance of economies. It also presents the analysis of
transmission mechanism of the effect of macroeconomic policies on the behavior of economic agents.
Generally, the module enhances the knowledge of the students regarding the functioning of the economy
as a whole as well as the rest of the world thereby to develop a closer link between academic learning and
the professional practice in analyzing various economic aspects.

Course Title: Macroeconomics I

Econ 1031
Schedules of lecture time, Topics and Reading materials

We Lecture Topics Of Lecture Main Reference

ek (Hour)
Chapter 1: The State of Macroeconomics – Introduction
6 hour 1.1 What macroeconomics is about?  N.GregoryMankiw,
 1.2 Basic Concepts and Methods of Macroeconomics 2007,
Analysis Macroeconomics 4 th
1.3 Macroeconomic Goals and Instruments edition
1.4 The State of Macroeconomics: Evolution and Recent  William H. Branson,
Developments 2006 Macroeconomic
Classical macroeconomics Theory and Policy
Keynesian macroeconomics
Neo-classical macroeconomics
Chapter 2: National Income Accounting

8 hour 2.1 The concepts of GDP and GNP

2.2 Approaches of measuring national income (GDP/GNP)  N.GregoryMankiw,
2.3 Other Social Accounts (GNP, NNP, NI, PI and DI) 2007,
2.4 Nominal versus Real GDP Macroeconomics 4 th
2.5 The GDP Deflator and the Consumer Price Index edition
2.6 GDP and Welfare  William H. Branson,
2.7 The Business Cycle 2006 Macroeconomic
2.8 Unemployment and Inflation Theory and Policy

Chapter 3:Aggregate Demand in the closed Economy

14 hour 3.1. Foundations of Theory of Aggregate Demand  N.GregoryMankiw,
3.2. The Goods Market and the IS curve 2007,
3.3. The Money market and the LM curve Macroeconomics 4 th
3.4. The Short Run Equilibrium edition
3.5. From the IS-LM to Aggregate demand  William H. Branson,
2006 Macroeconomic
Theory and Policy
Chapter 4:Aggregate Demand in the Open Economy
 12 hour 4.1. International flows of Capital Goods  N.GregoryMankiw,
4.2. Saving and Investment in the Small Open Economy 2007,
4.3. Exchange rates Macroeconomics 4 th
4.4. The Mundell-Fleming model edition
4.5. fiscal and monetary policies in an open economy with  William H. Branson,
perfect capital mobility 2006 Macroeconomic
Fixed exchange rate Theory and Policy
Floating exchange rate
4.6 Limitations of the Mundell-Fleming model

Chapter 5: Aggregate Supply

8 hour 5.1. Introduction

5.2. The Classical Approach to Aggregate Supply

5.3. The Keynesian approach to Aggregate Supply

5.3.1. The Sticky Price model

5.3.2. The Sticky Wage Model

5.3.3. The worker- misperception model

5.3.4. Imperfect information Analysis

Chapter 6: Behavioral Foundations : theories of consumption

16 6.1 the Keynesian consumption Function
6.1 the early empirical successes
6.2 secular Stagnation, Simon Kuznets and the consumption
puzzle
6.3 Irvin Fischer’s Model
6.4 Modigliani’s Life cycle Hypothesis model
6.5 Friedman’s permanent income Hypothesis
6.6 Hall’s Random Walk model
Rational expectations
 Adaptive expectations
Naïve expectations

Reference:

Text Books

1. N. Gregory Mankiw, 2007, Macroeconomics 4th edition Worth Publishers USA

2. William H. Branson, 2006 Macroeconomic Theory and Policy
3. Dornbusch, R. and S. Fischer: Macroeconomics
Additional readings

4. Eduard Shapiro, 2007. Macroeconomic Analysis 5th edition New Delhi

5. Olivier Blanchard, 1997.Macroeconomics Prentice Hall Inc. New jersey USA
6. Frederick Mishkin, 1998. The Economics of Money, Banking and Financial Markets 5 th
edition USA.
7. Colander, 2001. Macroeconomics 4th edition Newyork.
Module delivery methods
The delivery method shall be student centered. Student are highly expected to participate in class works at
the middle and end of each session and in group discussion inside of the class. Specifically the course will
be delivered through the following methods
 Lecture method
 In-class problem solving
 Group work and readings assignments
Assessment methods
Student evaluation in this module consist both formative and summative assessment including quizzes,
test and final exam. Marks will be allocated according to the following grading schedule.

Assessment method weight

Assignment 20%
Quizzes(max of 10% each) 30%
Final exam 50%
Total 100%