This course analyzes the complex, and so often very subtle yet very powerful, interactions among policy-makers (governments and central banks), financial markets and the macroeconomy. It is essentially a course about the overall economic environment in which economic agents –governments, central banks, firms, financial institutions, investors, households— operate. It is about identifying the major forces at work in the global economy and financial markets; understanding their complex interactions; recognizing the dilemmas they pose to national and international policy-makers; and identifying the risks and opportunities they create for all economic agents.

Using as unifying threads two perennial educational tools, the IS/LM and the Mundell-Fleming models, the course covers many diverse topics, such as, business cycles and long-run growth, inflation, unemployment, balance of payments, exchange rates, international capital flows and stabilization policies. Special emphasis is placed on the interactions between financial markets and the “real” economy, and, in particular, on endogenous credit cycles, ‘bubbles’, the role of asset prices in the conduct of economic policy, plus currency and banking crises.

Essentially, the course aims at teaching how to anticipate macroeconomic developments in the fast-changing global economy. Specialized courses later in the program will teach how to design business and investment strategies to cope with the risks these developments entail and (possibly) profit from the opportunities they create.