114-0503/01 – Macroeconomics B (MAC B)

Gurantor departmentDepartment of EconomicsCredits4
Subject guarantorprof. Ing. Martin Macháček, Ph.D. et Ph.D.Subject version guarantorprof. Ing. Martin Macháček, Ph.D. et Ph.D.
Study levelundergraduate or graduateRequirementCompulsory
Study languageEnglish
Year of introduction2004/2005Year of cancellation2011/2012
Intended for the facultiesEKFIntended for study typesFollow-up Master
Instruction secured by
LoginNameTuitorTeacher giving lectures
MAH11 prof. Ing. Martin Macháček, Ph.D. et Ph.D.
WRO25 Ing. Tomáš Wroblowský, Ph.D.
Extent of instruction for forms of study
Form of studyWay of compl.Extent
Full-time Credit and Examination 2+1

Subject aims expressed by acquired skills and competences

- analyze the short-run, medium-run, and long-run macroeconomic phenomena and processes by formal models - compare the mainstream macroeconomic theories and identify their strenghts and weaknesses - explain the consequences of monetary and fiscal policies within competing macroeconomic models - calculate the equilibrium values of aggregate output, price level, interest rate and other variables and changes in these values in response to macroeconomic policies - contrast the closed economy models and open economy models with differing rate of capital mobility - evaluate the importance of alternative macroeconomic approaches and methodologies for generating social welfare

Teaching methods



The aim of the subject is to both deepen and expand students´ knowledge of macroeconomic phenomena acquired in the first year of their studies. The subject covers various areas of mainstream macroeconomic theory at the intermediate level. Unlike introductory macroeconomics ("Macroeconomics A") course, this subject strongly emphasizes microeconomic foundations of macroeconomic theories and thus requires sound knowledge of basic economic principles. Within the subject, neo-Keynesian, monetarist, new classical and new Keynesian doctrines are confronted and discussed.

Compulsory literature:

1. BARRO, Robert J., Angus CHU a Guido COZZI. Intermediate Macroeconomics. Cengage Learning, 2017. ISBN 978-1473725096. 2. BURDA, Michael a Charles WYPLOSZ. Macroeconomics – A European Text. 7th ed. Oxford: Oxford University Press, 2017. 624 p. ISBN 978-0198737513. 3. DORNBUSCH, Rudiger, Stanley FISCHER and Richard STARTZ. Macroeconomics. 13th ed. New York: McGraw-Hill Education, 2017. 640 p. ISBN 978-1259253409.

Recommended literature:

1. HALL, Robert E. a David H. PAPELL. Macroeconomics: Economic Growth, Fluctuations, and Policy. 6th edition. W. W. Norton and Company, 2005. 576 s. ISBN 978-0393975154. 2. HOOVER, Kevin D. Applied Intermediate Macroeconomics. Cambridge: Cambridge University Press, 2011. 940 s. ISBN 978-0521763882. 3. MANKIW, Gregory N. Macroeconomics. 10th edition. Worth Publishers, 2018. 656 s. ISBN 978-1319105990.

Way of continuous check of knowledge in the course of semester


Other requirements


Subject has no prerequisities.


Subject has no co-requisities.

Subject syllabus:

1. The IS-LM model. - Interest rate as a determinant of aggregate demand. - Goods and services market and the IS curve. - Money market and the LM curve. - General equilibrium in a closed economy. - Fiscal policy multipliers. - Monetary Policy multipliers. 2. Fiscal and monetary policies in the IS-LM model. - Efficiency of fiscal and monetary policies: the case of „liquidity trap“. - Efficiency of fiscal and monetary policies: the „Classical“ case. - Partial and complete crowding-out effects of fiscal expansionary policy. - Central bank dilemma. - The Keynesian monetary transmission mechanism. - Fiscal and monetary policy mix. 3. The augmented IS-LM model. - Shortcomings of the simple version of IS-LM model. - Term structure of interest rates. - The yield curve as an indicator of future recessions and expansions. - Inflation expectations, maturity premium and the interest-rate gap. - Derivation of the ALM curve from the LM curve. IS-ALM model. - Limitations of macroeconomic policies in the globalized financial markets. 4. Aggregate demand and aggregate supply. - Derivation of the AD curve from the IS-LM model. - Impact of the fiscal and monetary policies on the AD curve. - Neoclassical model of aggregate supply. Production function as an output-employment relationship. - Keynesian model of aggregate supply. Fixed prices and wages in the short-run. - Friedman´s model of aggregate supply. Asymetric information in the labour market. Adaptive expectations. - The Lucas model of aggregate supply. Imperfect information and the rational expectations. 5. The macroeconomics of imperfect competition. - New Keynesian macroeconomics. - Monopolistic competition and the mark-up price setting. - Nominal rigidities. Price and wage contracts. Menu costs. - Real rigidities. Efficiency wages. Credit rationing. - Monopolistic competition in the long-run. Entry-exit models. - The New Keynesian policy recommendations. 6. Unemployment and inflation. - Original Phillips curve with wage changes and its later modifications. - The short-run trade-off between inflation and unemployment. - Natural rate of unemployment and the NAIRU. - Phillips curve and the AS-AD model. - Taylor curve - the inflation-output trade-off. - Expected inflation, dynamic aggregate demand (DAD), and dynamic aggregate supply (DAS). - Monetary and fiscal policies in the DAS-DAD model. 7. Consumption, investment and the business cycle. - Simple aggregate consumption function. The Kuznets puzzle. - The life-cycle hypothesis. The permanent income hypothesis. - Barro-Ricardo equivalence hypothesis. - Tobin´s „q“ theory of investment. - Business cycles with deterministic trend. Business cycles with stochastic trend. - The intertemporal substitution hypothesis. Real-business-cycle model with technology shocks. Endogenous money supply. - Stylized facts of business cycles. 8. Economic Growth. - Economic growth and economic development. - Solow-Swan model of economic growth. Cobb-Douglas production function with constant returns to scale. - Investment and capital depreciation. The process of capital accumulation. - Steady-state growth and its determinants. - Consumption-per-capita maximization. The „golden rule“. - Empirical problems of the Solow-Swan growth model. New growth theory. - Alternative measurement of the capital stock in an economy. Human capital. - Endogenous technology development. R&D models. 9. The IS-LM-BP model. - The IS function in an open economy. - Net export function with a real exchange rate. - The LM function under fixed and floating exchange rates. - Interest rate spread and the net capital inflow. - The BP curve, its components, steepness, and shifts. - Mundell-Fleming model. - External imbalance in the Mundell-Fleming model – adjustment under alternative exchange rate regimes. 10. Fiscal and monetary policies in the IS-LM-BP model. - Efficiency of fiscal and monetary policies in the Mundell-Fleming model: the case of fixed exchange rates. - Efficiency of fiscal and monetary policies in the Mundell-Fleming model: the case of floating exchange rates. - Efficiency of fiscal and monetary policies in an economy with limited capital mobility. - Efficiency of fiscal and monetary policies in an economy with internationally immobile capital. - Several limitations of macroeconomic analysis in the IS-LM-BP model framework. Tutorials: 1. Topical macroeconomic problems of the Czech Republic (discussion). 2. The IS-LM model. Fiscal policy multipliers. Monetary policy multipliers. 3. The IS-ALM model. Analysis of the changes in expected inflation and the maturity premium components. 4. Aggregate demand and aggregate supply. The Lucas model of aggregate supply. New Keynesian model. 5. Unemployment and inflation. Comparison of Phillips and Taylor curves. Adjustment process in the DAS-DAD model. 6. Economic growth accounting. Correlation analysis of the business cycle. 7. The IS-LM model with a real exchange rate. The IS-LM-BP model with perfect and imperfect capital mobility. 8. Accreditation test.

Conditions for subject completion

Full-time form (validity from: 1960/1961 Summer semester)
Task nameType of taskMax. number of points
(act. for subtasks)
Min. number of points
Exercises evaluation and Examination Credit and Examination 100 (100) 51
        Exercises evaluation Credit 35 (35) 18
                Laboratory work Laboratory work 12  0
                Written exam Written test 20  0
                Other task type Other task type 3  0
        Examination Examination 65 (65) 0
                Written examination Written examination 65  0
Mandatory attendence parzicipation:

Show history

Occurrence in study plans

Academic yearProgrammeField of studySpec.ZaměřeníFormStudy language Tut. centreYearWSType of duty
2010/2011 (N6208) Economics and Management (6208T062) Marketing and Business (00) Marketing and Business P Czech Ostrava 1 Compulsory study plan
2010/2011 (N6202) Economic Policy and Administration (6202T010) Finance (01) Finance P Czech Ostrava 1 Compulsory study plan
2009/2010 (N6202) Economic Policy and Administration (6202T010) Finance (01) Finance P Czech Ostrava 1 Compulsory study plan
2009/2010 (N6208) Economics and Management (6208T062) Marketing and Business (00) Marketing and Business P Czech Ostrava 2 Compulsory study plan

Occurrence in special blocks

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