Transcript economia.uniroma2.it

Macroeconomics precourse – Part 2
Academic Year 2013-2014
Course Presentation
This course aims to prepare students for the Macroeconomics
course of the MSc in BA. It provides the essential background in
macroeconomics
PAOLO PAESANI
Office: Room B6, 3RD floor, Building B
Telephone: 06-72595701
E-mail: [email protected]
Office hours: to be agreed
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Macro
EMPLOYMENT AND UNEMPLOYMENT
POP = LF + NLF
LF = Employed + Unemployed
Unemployed = Voluntary + Involuntary + Frictional
NLF = Young (< 15) + Old (> 70) + Others (15 << 70)
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Micro
Mankiw (2011)
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Macro
MONEY
Mankiw (2011)
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Macro
MONEY
Money supply (M) = Currency (C) +
bank deposits (D)
GOVERNMENT
Bank deposits (D) = current account
deposits D(1) + saving deposits
D(2)
Monetary base (B) = Currency +
Required Bank reserves (R1) +
Voluntary reserves (R2)
Monetary aggregates
Mankiw (2011)
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Micro
MONEY
GOVERNMENT
1. M = C + D
2. B = C + R
3. C = c D c > 0
4. R = R1 + R2 = aD + bD = (a+b)D
0 < (a+b) < 1
M = [(1+c) / (a + b + c)] B
[(1+c) / (a + b + c)] = Money multiplier
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Macro
MONEY
Every economic system is linked to the others
through multiple channels:
GOVERNMENT
1. International trade of goods and services
(Exports and Imports);
2. International mobility of factors of
production (migration, foreign direct
investment);
3. Private international financial flows
(portfolio investment, forex transactions)
4. Public international financial flows
(management of official forex reserves,
interntional aid, international transfers)
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Macro
MONEY
Every economic system is linked to the others
through multiple channels:
GOVERNMENT
1. International trade of goods and services
(Exports and Imports);
2. International mobility of factors of
production (migration, foreign direct
investment);
3. Private international financial flows
(portfolio investment, forex transactions)
4. Public international financial flows
(management of official forex reserves,
interntional aid, international transfers)
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Macro
MONEY
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Macro
INTEREST RATE
Nominal interest rate = price of money over time = Additional sum of
money the borrower agrees to pay, on top of the loaned amount, to the
original lender or to the current owner of the loan.
Nominal interest rate = Real interest rate + Expected inflation + Credit
risk premium + Liquidity premium + Other risk premiums
Real interest rate (ex ante) = Nominal interest rate – Expected inflation
Real interest rate (ex post) = Nominal interest rate – Actual inflation
If current inflation exceeds (falls short) of expected inflation, the ex post
real interest rate is higher than the ex ante real interest rate.
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Macro
INTEREST RATE
Mankiw (2011)
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Macro
EXCHANGE RATE
Nominal exchange rate = price of one currency in terms of another
currency = Amount of foreign currency per unit of domestic currency
Real exchange rate = (Nominal interest rate *– Domestic price leve) /
Foreign price level
Nominal and real exhange rate can be bilateral or multilateral (effective)
Appreciation = Nominal Exchange rate up (in nominal and real terms)
Depreciation = Nominal Exchange rate down (in nominal and real terms)
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Macro
REFERENCE
Mankiw, G.N. (2010) Brief Principles of Macroeconomics, 6° ed.,
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