The second part of the Macroeconomic Principles course considers short-run fluctuations in the macroeconomy, and appropriate policy responses to them. The first part introduces the Keynesian IS-MP/LM framework as a device for considering demand-driven equilibrium, and contrasts this system with the Classical approach. The next section builds to the AS-AD framework as a hybrid model linking short-run and long-run analysis, allowing inflation and output to be determined jointly. The course then turns to open economy macroeconomics in the short run, considering fixed and floating exchange rate regimes, and the different policy options available for governments in these settings.

The purpose of this course is to introduce students to both the theoretical and empirical literature concerning macroeconomic analysis of the labour market. On the theoretical side, our main aim will be to study the most relevant frameworks for reading papers in the field - e.g., random search, directed search, wage posting, and island models. Particular emphasis will be placed on the quantitative evaluation of these frameworks. On the empirical side, we will aim to familiarise ourselves with key stylised facts in labour market data, particularly with regard to business cycle patterns. As time allows, we will endeavour to cover new topics at the research frontier.