Foreign Exchange, Oil and Macroeconomic Policies

The course provides an in-depth analysis of theories of inflation targeting, foreign exchange markets and business cycles, and looks at effects of macroeconomic policies in a small open economy. The importance of the oil industry for the rest of the economy is also considered.

Knowledge

You learn

• theoretical models for the functioning of markets for foreign exchange
• models of how foreign exchange markets interact with the rest of the economy
• how fiscal and monetary policy affects a small open economy
• what inflation targeting is, and models of optimal monetary policy
• models that distinguish between non-traded and traded sectors
• how the oil industry affects the economy

Skills

You should be able to

• understand and explain how the exchange rate is determined
• discuss different ways to set the interest rate and what consequences this has for main macroeconomic variables
• trace out the effects of different types of macroeconomic policy
• analyze how the central bank should change the interest rate when the economy is exposed to different economic shocks
• analyze how economic policy has different effects on non-traded and traded sectors
• discuss economic opportunities and challenges in an oil economy

General competence

You should be able to

• read and understand reports and research articles dealing with issues discussed in the course

2 hours of lectures every week. Information about tutorials and compulsory activity will be announced at the beginning of the term.