Principles of Macroeconomics

All of us are affected by macroeconomic forces – they shape the very world we live in. And governments all around the world try to shape those forces in ways that (hopefully) improve the lives of their constituents. In this subject, we will examine the major theories used by macro economists to analyse national economies and the international economy.

About the Course
In this course, we will examine the main bodies of economic theory that have been used to guide economists’ and policy makers’ understanding of the macroeconomy. Macroeconomics is a word derived from the Greek prefix “makros”, meaning large. It is the study of economic aggregates, of national and international economies and of the economic management role played by governments and international organisations.

The founder of modern macroeconomics, the British economist John Maynard Keynes, famously wrote “The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist.” This will be the key theme we explore in the course, the influence of theory and the way that policy responses to events like recession, unemployment, inflation and the Global Financial Crisis, reflect that theory.

We will cover important macroeconomic concepts such as the national accounts, unemployment and inflation, explain how the ideas associated with John Maynard Keynes laid the foundation for governments’ active management of the macroeconomy in the post war era, and examine the intellectual basis for the monetary and fiscal policy responses to the Global Financial Crisis.  Economists’ approaches to the analysis of long run economic growth will also be considered. The approach will be critical. There are few areas of human endeavour that attract so much debate and disagreement as the management of a modern industrial economy. We will not shy away from those debates. But what we will do is emphasise the systematic theorising that underlies the way macroeconomists and policy makers approach their task. The aim is to enable those who take the course to become informed analysts of the macroeconomy and of current (and past) macroeconomic policy debates.

Nilss Olekalns
University of Melbourne

Professor Olekalns received his B.Ec. with Honours in economics from the University of Adelaide in 1982 and completed an M.Ec. at the Australian National University in 1984. He was awarded his Ph.D. in economics in 1993 from LaTrobe University. He began teaching in the Department of Economics at the University of Melbourne in 1994 where, for the last thirteen years, he has lectured to first year students in Macroeconomics. He has been a visiting scholar at the International Monetary Fund, a guest lecturer at the Monetary Authority of Singapore and an invited lecturer for the Australian and New Zealand School of Government.

Professor Olekalns has published on a variety of macroeconomic topics including fiscal and monetary policies, exchange rates, output and inflation volatility, and interest rates. His papers have appeared in The Journal of Political Economy, The Review of Economics and Statistics, The Journal of Macroeconomics, The Journal of International Money and Finance, the Southern Economic Journal, The Economic Record, as well as many other international journals. He has also received numerous awards for his teaching including the inaugural Edward Wood Prize for Teaching Excellence. He is currently the Deputy Dean of the Faculty of Business and Economics at the University of Melbourne.