Should The Government Do In The Event Of A Financial Crisis

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his course is about macroeconomic policy with special focus on the recent economic crisis. Questions will be addressed such as: How does monetary policy affect the economy? What is the effect of government spending and tax cuts? What should the government do in the event of a financial crisis?

The main objective of the course is to introduce students to the type of models and methods used in current research in macroeconomics both in the scholarly literature but also in the practice of central banks and major policy institutions. The current financial crisis and the economic recession of 2007-2009 will serve to illustrate the challenges confronted by macroeconomic analysis. Empirical analyses will complement the understanding of some important features of US macro and financial data.

Students are assumed to have already completed intermediate-level courses in microeconomic theory, macroeconomic theory, and econometrics, and to be familiar with the fundamentals of multivariate calculus and linear algebra.

The main reference for this class are lecture notes that will be posted prior or right after each lecture.

A reference textbook for the course is Jordi Gali, Monetary Policy, Inflation and the Business Cycle, Princeton University Press, 2008 along with Michael Woodford’s Interest and Prices, Princeton University, 2003. These books will be supplemented with additional readings, often providing applications of the theory. Many of the additional readings are

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