Shanghai Jiao Tong University · Summer School 2026
Syllabus
This course introduces macroeconomics through models and data, using Charles I. Jones (6th ed.). Why economies grow, why inflation and unemployment move, how recessions and financial crises occur, and how monetary and fiscal policy affect output, prices and debt.
Course overview
Macroeconomics studies GDP, consumption, saving, investment, inflation, unemployment, interest rates and government debt, and how these variables move over time. The course is organised in four blocks: the long run, the three numbers of output, unemployment and inflation, the short-run model, and the government.
Each lecture sets out a model, compares it with evidence and discusses its limits. Figures are built live from public series, including FRED, the World Bank, the IMF and the OECD. The course uses real episodes such as the Great Depression, the 1970s, the 2008 financial crisis, Covid-19, the Volcker disinflation and current global debt.
Learning outcomes
- measure the economy, including GDP and the identity Y = C + I + G + NX, real versus nominal values, price indices, unemployment and inflation, and read data on a ratio (log) scale;
- explain long-run prosperity with the production, Solow, and Romer–Jones models, and decompose income differences into capital and total factor productivity;
- analyse the labour market and the natural rate of unemployment, and the causes and costs of inflation (the quantity theory and the Fisher equation);
- use the short-run model, including the IS, MP and Phillips curves and the AS/AD framework, to trace how shocks and monetary policy move output and inflation;
- interpret financial crises, the zero lower bound, deflation, and quantitative easing within the model, and in real episodes (1929, 2008, Covid-19);
- analyse government budgets and debt dynamics, including the (r − g) snowball, sustainability and debt crises, and evaluate fiscal policy and current global debt;
- work fluently with real macroeconomic data and connect models to the evidence.
Teaching & assessment
Teaching. A 2-hour-40-minute class each day, Monday to Friday, for three weeks; in addition, the teaching assistants run roughly 3 hours 20 minutes of discussion sessions per week. Teaching combines lectures, guided discussion, a group activity each day, and a group project, with live data work throughout. No programming is required, though Python examples are provided.
Assessment. The final grade combines attendance (12%), three quizzes (20%), a midterm (20%), a group project and presentation (18%), and a final examination (30%). Quizzes are short and held at the start of class; Quiz 1 (Lectures 1–3) on Thursday 2 July, Quiz 2 (Lectures 4–6) on Wednesday 8 July, and Quiz 3 (Lectures 7–8) on Tuesday 14 July. The midterm (Lectures 1–6) is on Friday 10 July; the group presentations on Thursday 16 July; and the final (Lectures 8–10) on Friday 17 July. Dates and coverage are on the Exams page.
Grading scale
Weekly schedule
| Day | Session | |
|---|---|---|
| Week 1: Foundations & the long run | ||
| Mon 29 Jun | Lecture 1: Introduction to Macroeconomics | |
| Tue 30 Jun | Lecture 2: Measuring Well & the Facts of Growth | |
| Wed 1 Jul | Lecture 3: A Model of Production, and the Solow Model | |
| Thu 2 Jul | Quiz 1 (L1–3) | |
| Fri 3 Jul | Lecture 4: Growth and Ideas | |
| Week 2: The three numbers & into the short run | ||
| Mon 6 Jul | Lecture 5: The Labour Market & Unemployment | |
| Tue 7 Jul | Lecture 6: Inflation | |
| Wed 8 Jul | Quiz 2 (L4–6) | |
| Thu 9 Jul | Lecture 7–8: An Introduction to the Short Run & the IS–MP–Phillips Model | |
| Fri 10 Jul | Midterm Examination (Lectures 1–6) | |
| Week 3: The short-run model in action & the government | ||
| Mon 13 Jul | Lecture 9: AS/AD and Financial Crises | |
| Tue 14 Jul | Quiz 3 (L7–8) + Presentation Information | |
| Wed 15 Jul | Lecture 10: Government, Debt and Fiscal Policy | |
| Thu 16 Jul | Group Project Presentations | |
| Fri 17 Jul | Final Examination (Lectures 8–10) | |
Lecture overview
Introduction to Macroeconomics
What macroeconomics studies; aggregate output, prices, unemployment, inflation and the global economy; and how models and data are used together.
Key idea: macroeconomics studies the economy as a whole using a small set of aggregate variables and models.
Measuring Well, and the Facts of Growth
The index-number problem (Laspeyres, Paasche, Fisher) and chain weighting; PPP versus market exchange rates; the hockey stick of growth and the central growth-versus-level scatter.
Key idea: on a ratio scale, US output is a near-straight ~2% line for 150 years. The growth-versus-level scatter is the field's central question.
A Model of Production, and the Solow Model
The Cobb-Douglas production model, capital and labour, and total factor productivity as the residual that explains income differences; then the Solow model, its steady state and capital accumulation, and why it cannot explain sustained long-run growth.
Key idea: income gaps split into capital and TFP, and the Solow steady state has zero long-run growth without sustained technological progress.
Growth and Ideas
Why Solow's capital accumulation cannot sustain long-run growth; ideas as a non-rival, increasing-returns input; the Romer model of growth from ideas; and the Jones correction for the missing scale effect.
Key idea: ideas are non-rival, so investing in them can sustain growth forever, but only a model with diminishing returns to the existing stock of ideas fits the data.
The Labour Market, Wages, and Unemployment
The competitive labour market and why unemployment is never zero; the bathtub natural rate; wage rigidity, efficiency wages, and search frictions; the return to education and inequality; Okun's law.
Key idea: a market that clears predicts zero unemployment; the natural rate ū = s̄/(s̄+f̄) is why it never is.
Inflation
The quantity theory MV = PY and money neutrality (long-run only); π = gM − gY; the Fisher equation; the costs of inflation and of deflation; seignorage and the fiscal roots of high inflation.
Key idea: inflation is a monetary phenomenon in the long run; the Fisher equation i = R + πe ties money to interest rates.
An Introduction to the Short Run: Booms, Busts, and Two Great Crises
Potential output and the output gap; the three premises of the short-run model; the anatomy of a financial crisis (leverage and the accelerator); 2008 versus Covid-19.
Key idea: a recession is an output gap Ỹ < 0; sticky prices make money non-neutral in the short run.
The IS–MP–Phillips Model
The IS curve and the multiplier; the MP curve and the zero lower bound; the Phillips curve and the sacrifice ratio; the model run on three shocks; the Taylor rule and the Volcker disinflation.
Key idea: IS, MP, and Phillips together determine output and inflation; the Taylor principle is what keeps the system stable.
Stabilisation Policy: AS/AD and Financial Crises
Collapsing IS-MP-Phillips into the AS/AD framework; shock dynamics and rules versus discretion; the risk-premium wedge, the ZLB, deflation and quantitative easing; crises in the model.
Key idea: AS/AD puts the short run in one graph. A risk-premium wedge at the ZLB can turn a recession into a near-depression.
The Government and the Macroeconomy
The budget constraint and the debt-GDP law of motion; the (r − g) snowball and sustainability; self-fulfilling debt crises; current global debt, imbalances and fiscal policy.
Key idea: debt/GDP rises when (r − g)b exceeds the primary surplus. The currency denomination of the debt affects whether high debt is manageable or a crisis.
Textbook, reading & data
The course is taught with data; figures are built live from public series, and students are encouraged to reproduce them and to run the growth and debt arithmetic on their own country.
- Required text. Jones, Charles I. Macroeconomics. 6th ed. New York: W. W. Norton & Company, 2024.
- Blanchard, Olivier. Macroeconomics. 8th ed. Pearson, 2021. Supplementary.
- Mankiw, N. Gregory. Principles of Macroeconomics. 8th ed. Cengage, 2017. Supplementary.
- Growth & ideas: Solow (1956); Romer (1990); Jones (1995; 2022); Bloom, Jones, Van Reenen & Webb, "Are Ideas Getting Harder to Find?" (2020); Hall & Jones (1999).
- Labour & inequality: Goldin & Katz, The Race between Education and Technology (2008); Diamond–Mortensen–Pissarides (search & matching).
- Money & inflation: Friedman; Cagan (1956); Sargent, "The Ends of Four Big Inflations" (1982); Fisher.
- Short run & crises: Okun; Phillips; Taylor (1993); Kydland & Prescott (1977); Diamond & Dybvig (1983); Reinhart & Rogoff, This Time Is Different (2009); Bernanke, the "global saving glut" (2005).
- Government & debt: Barro, tax smoothing (1979); Calvo (1988); Cole & Kehoe, "Self-Fulfilling Debt Crises" (2000); De Grauwe (2012); IMF, Global Debt Monitor (2025).
- Data: FRED (Federal Reserve Bank of St. Louis); the World Bank (World Development Indicators); the IMF (WEO, Global Debt Monitor, Fiscal Monitor); the OECD; US BEA & BLS; NBER recession dates; the Maddison Project.
