AØKB08024U Macroeconomics B

Volume 2013/2014
BSc. in Economics - compulsory
The course focuses on the business cycles which are a salient feature of macroeconomic developments in the short and medium term. Based on theories of private consumption, private investment as well as theories of wage and price formation, we explain how business cycles are generated by various types of shocks to aggregate demand and supply. We also provide a detailed description of the stylized empirical facts regarding business cycles.

In particular, the course deals with questions such as: - How do various macroeconomic variables move during a "typical" business cycle? - Why is economic growth so uneven and irregular? - What roles do the stock market and the housing market play in the explanation of business cycles? - What are the causes of short-run fluctuations in unemployment? - What are the welfare costs of business cycles? - Can active monetary and fiscal policy help to reduce business fluctuations? - What is the role of foreign trade and international capital flows in explaining business cycles? - Should exchange rates be fixed or flexible? - What are the benefits and costs of a monetary union?
Learning Outcome
The aim of the course is to describe and explain the macroeconomic fluctuations in the short run, i.e. the business cycles around the long run growth trend, as well as various issues related to this, and to teach the methodology used in formulating and solving formal models explaining these phenomena.

Students are to learn the most important stylized facts about business cycles and to acquire knowledge about theoretical dynamic models aimed at explaining these facts. In connection with this, the aim is to make students familiar with the distinction between deterministic and stochastic models. Furthermore, students are to gain an understanding of the distinction between the impulses initiating a business cycle and the propagation mechanisms that give business cycles a systematic character. Finally students are to learn how to use the models for analyzing the effects of macroeconomic stabilization policy under various assumptions regarding the exchange rate regime.

To obtain a top mark in the course students should at the end of the course be able to demonstrate full capability of using the techniques of analysis taught in the course as well as a thorough understanding of the mechanisms in the business cycle models for open and closed economies, including the ability to use relevant variants and extensions of the models in order to explain the effects of various shocks and the effects of macroeconomic stabilization policies under alternative monetary and exchange rate regimes.


  • Teorihistorie baseret på kap. 27, "The Story of Macroeconomics", i Olivier Blanchard: Macroeconomics, 5th ed, Pearson International Edition.
  • Peter Birch Sørensen og Hans Jørgen Whitta-Jacobsen: "Introducing Advanced Macroeconomics - Growth and Business Cycles". McGraw-Hill Education, 2nd Edition, 2010.

Følgende er pensum: Kapitlerne 13-20 samt 23-25. Undtaget er dog følgende afsnit og passager:

  • Fra og med afsnittet “The welfare costs of mark-up shocks” (side 561) til boksen på side 581. Forståelsen af boksen og resten af kapitel 19 er pensum.

Følgende afsnit er kun kursorisk læsning:

  • 17.3 “The Importance of nominal rigidities for the short-run trade-off between inflation and unemployment”
  • 18.4 “A different perspective: real business cycle theory”.
Macroeconomics A
3 hours of lectures and 2 hours of excercises per week for 14 weeks
  • Category
  • Hours
  • Class Exercises
  • 28
  • Exam
  • 3
  • Lectures
  • 42
  • Preparation
  • 133
  • Total
  • 206
7,5 ECTS
Type of assessment
Written examination, 3 hours under invigilation
3 hours writtten assignment taking place at Peter Bangs Vej 36.
Exam registration requirements
Two written assingments must be approved
Without aids
Marking scale
7-point grading scale
Censorship form
External censorship
20 % external censurship
Exam period
Will be published at the begining of the semester
Same as ordinary. But if only a few students have registered for the re-exam, the exam might change to an oral exams with a synopsis to be handed in. This means that the examination date also will change.
Criteria for exam assesment
The Student must in a satisfactory way demonstrate that he/she has mastered the learning outcome of the course.