Course Introduction

Intermediate Macroeconomics, EC2211

Martin Flodén
Fall 2025
Department of Economics, Stockholm University
Contact information

• E-mail: [Link]@[Link]

• Web: [Link]

• Office hours: by appointment

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Contact information

• Administration

◦ Karin Blomqvist
Email: economics2@[Link]

• Seminars

◦ Yunxi Yang
Email: [Link]@[Link]

◦ Montassar Ghachem
Email: [Link]@[Link]

• Details on your teacher assignment posted on Athena

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Lectures

• 11 lectures + 1 recap

• Lecture notes downloadable from the course webpage on Athena after class
(I will often make them available before class)

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Examination

• Five-hour exam held on campus

• Maximum number of points: 100 (90 for grade A, 75 for B, 60 for C, 50 for
D and 45 for E)

• Exam will comprise short questions, longer analytical questions and an essay
question

• Credit from the seminar series will yield up to 10 points on the exam (10
percent of the final grade)

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Seminars

• 4 seminars, held by Yunxi Yang and Montassar Ghachem

• Seminars voluntary but handing in satisfactory solutions to the problem

sets yields credit on the exam, worth up to 10 points

• Work in groups of 2-3 people

• Answers should be in English, compiled into a single document and

submitted group-wise to your seminar teacher

• Submit answers electronically, by uploading them in Athena

• Satisfactory solutions required for credit

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More on the seminars

• Handing in satisfactory solutions to the seminar exercises yields a maximum

of 10 points for the final exam
◦ This means that you start the exam with 10 points and that the exam
questions sum up to a maximum of 90 points
◦ Those without credit have to answer an additional question, which can yield up
to 10 points

• Some of the assignments may be challenging

◦ You do not need to solve assignments perfectly to obtain full credit
◦ But you should demonstrate a reasonable effort in the following sense: you
should seriously attempt to solve each task and clearly state the steps involved
in obtaining a solution

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Can you use AI?

• Yes!

• The assignments are there to give you incentives to work with the material.
It is ok, and often a good idea, to use AI tools such as chatGPT to get help
with difficult material.

• Use AI as a tool to enhance your learning, not to economize on the effort

you put in to solving assignments.

• Note that AI models will not always give answers that are correct or
consistent with the material that we work with in this course.

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Literature

• Textbook: Charles I. Jones (2024), Macroeconomics,

W.W. Norton, 6E International Student Edition.

• Lecture notes (=presentation slides) and problem sets:

These are important parts of the course. They also
indicate what material and models you should focus on.

• Articles and policy reports: These are for policy

perspectives or in-depth understanding. You should look
more closely at articles marked by a *. Don’t get stuck on
technical material that we have not covered in class.

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Charles ”Chad” I. Jones

• Professor, Stanford University (Graduate

School of Business)

• Expert on economic growth, recently with a

focus on artificial intelligence

• [Link]

Chad Jones

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Prerequisites

• I assume that you have taken an introductory course in macroeconomics,

like EC1211 Macroeconomic Theory and Applications

• If you have not, you will have to read the textbook more carefully as I will
skip some material that I know was covered well in that course

• There will be some repetition of material covered in EC1211, but my

ambition is that we can dig further into some interesting/important
macroeconomic questions

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Contents

• Facts about economic aggregates and macroeconomic models

• Familiarize you with common macroeconomic tools and concepts, and

develop your analytical skills

• Continuous references to historical and current macroeconomic phenomena

• Global perspective as well as special focus on Sweden

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What do macroeconomists do?

1. Describe and measure the economy

◦ National accounts, growth, unemployment, inflation, productivity, resource
utilization, ...
◦ Welfare, inequality
◦ ...

2. Analyze causality, policy options

◦ Policies and institutions that promote economic growth
◦ Economic effects of fiscal and monetary policy
◦ ...

3. Forecasting

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This course

1. Focus on understanding how the economy works

◦ Understand and interpret economic data
◦ Understand economic relationships, causality

2. We need models
◦ Macroeconomists’ laboratories

3. Very little focus on forecasting

4. Much of our knowledge comes from economic failures and crises
◦ We will consider specific current and historical events

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Some examples
What is GDP and what does it measure?

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Why do some countries grow rapidly, others not?

Real GDP per capita, 2011 USD. Source: The Maddison Project. 15
Why did inflation increase so much?

Percent annual change in HICP for Sweden and the Euro area, CPI for the United States. Sources: Eurostat and FRED.
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What can central banks achieve?

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Is it important that central banks are independent?

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Should we worry about high and growing public debt?

Source: IMF World Economic Outlook

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Models and data
“All theory depends on assumptions which are not quite true.
That is what makes it theory. The art of successful theorizing
is to make the inevitable simplifying assumptions in such a way
that the final results are not very sensitive.”

— Robert Solow

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Why models?

• Simplified versions of reality

• Models are economists’ laboratories; once equilibrium is characterized we

can conduct policy experiments

• Different models serve different purposes

• Impossible to incorporate all features in one model: tractability

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Modeling principles

• Exogenous variables: treated as given in the analysis

• Endogenous variables: determined within the model
• Variable of interest should be endogenously explained
• The models analyze how exogenous variables affect the endogenous variables

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Models: Agents

• Ideally, models should be based on the behavior of individual agents:

◦ Households maximize utility
◦ Firms maximize profits

• Other agents and institutions:

◦ Financial institutions
◦ Trade unions
◦ Vested interest groups (political lobbies)
◦ ...

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Economic policy

• Economic policy: government may try to influence the general equilibrium

by affecting the incentives of individual agents

• Government: fiscal authority + central bank

• Fiscal policy: taxes, subsidies, transfers, government consumption

• Monetary policy: interest rates, money supply, exchange rates

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Data

• Data and econometric techniques used for:

◦ Descriptive analysis
◦ Causal analysis (requires exogenous variation)

• I will try to provide links to useful data sources along the course

• Some very useful sources for macro data:

◦ International organizations: OECD Data Explorer; IMF World Economic Outlook; the
World Bank; BIS
◦ Statistical agencies: Statistics Sweden; Eurostat; Bureau of Labor Statistics
◦ Private initiatives: Penn World Tables (annual macro data 1950-2019 for 183
countries; the Maddison Project (very long time series on growth and income)
◦ Central banks: Riksbank (e.g. interest rates and exchange rates); ECB (a lot of
European financial data); St Louis Fed’s FRED database (mostly U.S. macro and
financial data, very user-friendly!)

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