The Macroeconomy: On and Off Equilibrium

Tue 24 July 2018


8:00 Breakfast
8:45 Director’s Introduction and Academic Briefing
9:00 Growth in the Long Run   (Brian Bell)
10:00 Syndicate Discussion
11:15The Short-Run in Macroeconomics   (Brian Bell)
12:15 Break, followed by Lunch at 12:30
1:15 Syndicate Discussion
2:15 The Medium-Run in Macroeconomics   (Brian Bell)
3:15 Syndicate Discussion
4:30 The Determinants of Exchange Rates  (Brian Bell)
5:45 Dinner
6:50 Depart Egrove for Theatre


Today we move our focus to economic aggregates. We seek to explain why economies work as they do. We begin by exploring the relationship between investment in an economy, government spending and consumption for the goods market to be in equilibrium, savings must balance investment; and aggregate demand for goods must balance their production. Not all goods and services consumed (or invested) in an economy are produced locally, so we also need to account for foreign trade. In the second lecture we introduce prices and the labour market. The aim is to explain what drives inflation and unemployment. We also qualify what we mean by an economy being in equilibrium. However an open economy needs to find an equilibrium in its domestic markets in response to the pressures of money and goods travelling into and out.  Our analysis cannot be complete without considering the response of the international markets and this will be in large part mediated via the exchange rate. Thus in the third lecture we consider the determinants of exchange rates. We also discuss how misaligned exchange rates reflect on balance of payments problems. In the final lecture we extend our horizon to the long run, which means ignoring the business cycle, to study how economists explain why certain economies grow faster than others. The lecture has a policy focus by asking what governments can do, if anything, to raise a country’s long run growth rate.

Brian Bell – King’s College, London

Brian Bell is a University Lecturer and Tutorial Fellow in Economics at Lady Margaret Hall.  He is also an Associate Fellow of the Centre for Economic Performance at the London School of Economics. He completed his DPhil in Economics at Nuffield College, Oxford in 1996 but since then has spent most of his career outside of academia. He worked as an Economist and Proprietary Trader for a number of Hedge Funds and Investment Banks in London and also spent time at the International Monetary Fund and the Bank of England. He resumed his academic career in 2009 and now focuses on issues of pay at the top of the earnings distribution (focused particularly on Bankers and CEOs) and on the economics of crime.