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Course, academic year 2023/2024
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Economic Policy - JEB020
Title: Economic Policy
Guaranteed by: Institute of Economic Studies (23-IES)
Faculty: Faculty of Social Sciences
Actual: from 2021
Semester: summer
E-Credits: 5
Examination process: summer s.:
Hours per week, examination: summer s.:2/0, Ex [HT]
Capacity: unknown / unknown (185)
Min. number of students: unlimited
4EU+: no
Virtual mobility / capacity: no
State of the course: cancelled
Language: English
Teaching methods: full-time
Teaching methods: full-time
Note: course can be enrolled in outside the study plan
enabled for web enrollment
priority enrollment if the course is part of the study plan
Guarantor: Ing. Vladimír Dlouhý, CSc.
doc. Petr Janský, M.Sc., Ph.D.
Class: Courses for incoming students
Pre-requisite : {Group of prerequisites can be completed either by JEB004 or JEM163}
Incompatibility : JPB337
Is incompatible with: JPB337
Is pre-requisite for: JEB021
Examination dates   Schedule   Noticeboard   
Annotation -
Last update: doc. Petr Janský, M.Sc., Ph.D. (24.02.2017)
The course is intended to all students, who want to supplement theoretical studies by practical experiences from 20th century economic policies. However, it is especially intended for the students, who will seek employment in financial and banking sector, eventually in state administration. After introductory lecture the course starts with the discussion of economic development in major economies in 1870-1913, stressing the importance of gold standard. Following lectures tackle economic situation after WWI, hyperinflation of 1920s and the restoration of gold standard, causes and depth of Great Depression and consequences of Keynesian revolution for macroeconomic policies. The course continues with the period after WWII: birth and building blocks of Bretton-Woods system, post-war reconstruction (including Marshall plan) and birth of European monetary system (EMS) and European integration. Discussion of economic policies of end 1950s and 1960s follows, based on neoclassical synthesis (Philips curve, Okun’s law) and with fixed exchange rates. Next lecture is devoted to monetarism and later to rational expectations and Lucas critique. The curse follows with economic policies after the end of Bretoon-Woods system, with floating exchange rates and describing reaction to stagflation of 1970s. Last three lectures deal with stabilization policies of 1980s (inflation and deficits), with European common currency project and finally, with different types of financial crisis in both developed and emerging economies from 1980 till 2007.
The course will be finished by written exam, composed of eight questions. Five questions require a brief written answer, three questions are of Yes x No type (each is devoted to particular issue and contains three sub questions). Each answer might generate up to 5 points, in total you can get 40 points maximally. Evaluation: 0-25 points – 4, 26-30 points – 3, 31-35 points – 2, 36-40 points – 1.
Literature -
Last update: Ing. Monika Hollmannová (17.02.2020)

Literature will be provided at the end of the each chapter of lectures.

Macroeconomics a European Text, Seventh Edition, Michael Burda and Charles Wyplosz, June 2017, ISBN: 9780198737513

Macroeconomics (7th ed.). N. Gregory Mankiw (2010), Worth Publishers. ISBN 978-1-4292-1887-0.

Macroeconomics (7th Edition), by Olivier Blanchard, Pearson Education,Inc., ISBN-13: 978-0133780581
Requirements to the exam -
Last update: Ing. Vladimír Dlouhý, CSc. (10.05.2020)

The course will be finished by written exam, composed of eight questions. Six questions will require brief, compact asnwer, might be accompanie by graph or short mathematical expression. Two quesions will require just Yes or No answers. Answers to questions 1-6 might generate up to 15 points each, answers to questions 7 and 8 might generate up to 5 points each. In total you can get 100 points maximally. Evaluation: A: 90+ to 100, B: 80+ to 90, C: 70+ to 80, D: 60+ to 70, E: 50+ to 60, F: 50 or less.
Syllabus -
Last update: Ing. Vladimír Dlouhý, CSc. (15.09.2013)

Economic policy – syllabus

1. Introduction – 20th century: macroeconomics, economic policy and basic data

Macroeconomics and economic policy. Long-term growth trends in world regions. Long-term growth factors. Growth and welfare distribution. Short-term fluctuations after WWII: USA and Europe, growth, inflation, unemployment, budget deficit and current account deficit. The recent crisis.

2. Economic growth 1890 – 1913 and gold standard

Basic data, economic cycles 1870 – 1913. Economic growth and international capital flows. Gold standard and fixed exchange rates. Different expectations on economic policy compared with 20th century.

3. First World War consequences and economic policies of 1920s

The economic consequence of peace talks. Critical indebtedness of defeated countries. Hyperinflation in Germany, Austria, Hungary and Poland: data, causes and policies. Return to gold standard, differences to the period before 1013.

4. Great Depression and end of gold standard

Data: inflation and unemployment in the USA and in Europe 1928 – 1938. Alternative explanations of causes, depth and length of Great Depression. New Deal. End of gold standard and of international monetary system. Crisis of economic theory.

5. Keynesian revolution

General theory, basic building blocks: labor market and involuntary unemployment, effective demand and unemployment equilibrium, consumption, savings and multiplier, marginal efficiency of investment, liquidity preference and interest determination on money market. Limiting cases: liquidity trap and interest inelastic investment. Policy consequences: fiscal and monetary stimulation of aggregate demand, multipliers. Impact of General Theory for post-war policies.

6. Bretton-Woods system, economic policies of post WWII reconstruction

International Monetary Fund, dollar-gold standard, USD as central currency. Post-war reconstruction: the new role of state, heavy industry nationalization, different shades of indicative planning (France, Japan), social market economy (Germany), welfare state (Scandinavia). Origins of European integration, origin of EMS. Data: extraordinary economic growth (USA, Europe, Japan), shallow economic cycle.

7. Economic policy of 1960s, neoclassical synthesis

Neoclassical synthesis: general acceptance of Keynesian policy recommendations. Neoclassical model with Phillips curve: inflation–unemployment trade-off, long-term stability problem. Interdependence among unemployment, wage inflation and productivity. Potential product (at full employment). Okun’s law. Economic policies in 1950s and 1960s in USA and Great Britain: stop and go, rebirth of monetary policy, Kennedy’s tax cuts (USA), Radcliffe Report (Great Britain), stabilization at fixed exchange rates.

8. Monetarism

Quantitative theory and demand for money. Keynesian and monetarist transmission mechanism. Implications of monetary policy efficiency. Natural values (unemployment/employment, product). Expectations-augmented Phillips curve, turn in empirical evidence after 1970 (Europe, USA). Policy consequences: adaptive expectations, accelerationist hypothesis, speed and costs of disinflation, rules vs. discretion. Foundation of rational expectations and Lucas critique.

9. End of Bretton-Woods system, floating exchange rates, stagflation and subsequent disinflation, liberalization at beginning of 1980s.

Economic policy at floating exchange rates. New dynamics of international capital flows. Policy reaction to oil shocks and lasting recession in developed countries. Economic policy of fast growing South Asian economies. Disinflation and twin deficits in the USA. Crisis of post-WWII economic policies – new administrations of Margaret Thatcher and Ronald Reagan. Supply side economics. Privatization and liberalization. Tax cuts and diminishing role of state, Laffer curve.

10. Stabilization policies 1980 – 2007

Unemployment and budget deficits in USA and Europe. Hyperinflation in Israel and Latin America. Central banks’ independence and anti-inflationary policies. Inflation targeting, Taylor rules. Beginning of 21st century: USA – Great Moderation, Europe – stagnation and need of structural reforms, emerging economies – BRICs.

11. Euro

Competitive devaluations and leading role of D-Mark in 1980s. Suitable economic and political conditions for common currency project at the beginning of 1990s. Delors Report, meeting Maastricht criteria. Introduction of Euro and stable performance 2002 – 2007. Causes and deepening of common currency crisis, attempts for resolution. Today’s situation.

12. Financial crisis in different parts of the world 1980 – 2013

Financial crisis in selected developing countries in the second half of 1980s. German unification and EMS crisis in 1992. Currency crisis: Mexico (1994), Thailand (1997), southeast Asia (1998). Financial and economic crisis after 2007. Policy lessons for coming years.

 
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