1) Goals : The objective of this course is to give students a comprehensive understanding of the theoretical and practical issues shaping current economic policies in developed countries, mainly European ones, with an illustrative focus on France. The course gives particular attention to the current context of the Great Recession, and to the gains and losses that can be expected from policy coordination. It focuses on the particular challenges posed to the members of the Euro area and to the constraints this situation puts on policy action.
This course is composed of two parts, corresponding to Magistère Year 1 and Magistère Year 2.
The use of an original software (Macsim2) to simulate economic policies in France and the other main developed countries illustrates the possible impact of economic policies.
2) Course overview :
The first part of the course is devoted to study : i) economic policies, and the main types of actions, their expected impacts and their difficulties ; ii) the economic growth theories ; iii) the indicators of economic stabilization (mainly output gap and potential growth) and the appropriate policies to increase potential growth.
The second part of the course is devoted to study : iv) fiscal theory and fiscal policies ; v) and vi) each of the two components of the policy-mix (taxes and government spending on one side and monetary policy on the other), in the context of the European Monetary Union.
Macro-simulation with Macsim2 helps to appreciate concretely the empirical impact of specific policies. This software is a user-friendly simplified multinational model which gives the opportunity to simulate policies in different monetary and financial contexts (monetary union, risk premium on interest rates, exchange rate and short term interest determination…).