Lecture at Irkutsk State University; Mathematical Faculty Nov. 29th-

Dec.3rd

Macroeconomics, foreign trade and the European Union. Basics

and Examples.

Macroeconomics, foreign trade and European Union. Basics.

Lecture 1 29.11.2010Dipl.- Kfm. Thomas Stiegler, University of Göttingen.2

Lecturer: Dipl.-Kfm. Thomas Stiegler

2002 – 2007 studies in business administration in Göttingen

2007 – date scientific assistent, lecturer in Macroeconomics at Economic faculty of Göttingen University

PhD thesis on the economical convergence processes in former socialistic states.

09.2010 – 09.2011 at ИГУ through Erasmus Mundus programme of European Union

email: thomasstiegler@gmx.de

Macroeconomics, foreign trade and European Union. Basics.

• aggregated parameters at national / international scale• parameters are observed on markets• all three markets can be influenced by the state

• macroeconomics analyzes the actions of the stakeholders and predicts its consequences!

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1. What is Macroeconomics?

Macroeconomics, foreign trade and European Union. Basics.

the state can influence any market! How should the state act on the markets?

how can the national wealth be improved? how can inflationary tendencies be avoided? are the surpluses/deficits in foreign trade

sustainable or should the state act? How can he act?

which exchange rate policy is useful?

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Is there any practical use of Macroeconomics?

Macroeconomics, foreign trade and European Union. Basics.

• the state acts mainly in two economic fields:

fiscal policy : Spending of the state, taxes, social aid, subsidies for companies etc.

monetary policy: Interest rates, supply with money etc.

However fields like Competition laws, Foreign (trade) policy, Social politics, Education politics interact with questions like above.

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Fields of action of the state

Macroeconomics, foreign trade and European Union. Basics.

To summarize:• macroeconomics analyses aggregated parameters of an economy • it tries to judge an economic situation • it advices economic policy in order to reach a growth in national wealth• it analyses and evaluates international economic relations

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What macroeconomic does

Macroeconomics, foreign trade and European Union. Basics.

• community of independent states• bound by multinational treaties, valid for each member• some authority of national states is passed over to Unions institutions• When passed to EU: Any member has to accept the EU institution

This process lasts for over 50 years now and is deepening. However it is argued if the way of EU is one to a national state like the USA.

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2. What is the European Union?

Macroeconomics, foreign trade and European Union. Basics.

In general for each field of politics there are four possibilities of the stage of EU competences: Fields where the EU can pass acts and directives valid in all memberstates

Fields where the EU passes a common politic, which has to be realized by legal process in each single member state

Fields where the EU works out a common position in a field, but the realization of this is facultative for the members

Fields where is no competence for EU politics

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Different competence levels in EU

Macroeconomics, foreign trade and European Union. Basics.

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development of member states 1957 -2007

Macroeconomics, foreign trade and European Union. Basics.

• after WWII European politicians tried to avoid wars by binding war important industries together • the economical cooperation was intensified, as well on non war important fields, political cooperation was aimed at

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A short history of European integration (1)

Macroeconomics, foreign trade and European Union. Basics.

• in 1967 the European Community was founded and thus the legal framework intensified.• after intensifying cooperation in the following 20 years the Community was enlarged from 6 member states to 12 in 1986

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A short history of European integration (2)

Macroeconomics, foreign trade and European Union. Basics.

• in the late 1980 a new framework was developed. EC should be transformed in a political Union as well as real common market.• in 1991 the European Union was founded. The common market was realized and a common European citizenship introduced. Border controls fell apart and every citizen could work and live where he wants

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A short history of European integration (3)

Macroeconomics, foreign trade and European Union. Basics.

• in 1999 the EURO was implemented, like agreed in 1991• in 2004 and 2007 middle and eastern European stated joint EU• 2010 the constitution of the EU got into action. Making EU more democratic as well as bringing it closer to some kind of state. EU of today is a community of synchronized politics as well as economic Union

Lecture 1 29.11.2010Dipl.- Kfm. Thomas Stiegler, University of Göttingen.13

A short history of European integration (4)

Macroeconomics, foreign trade and European Union. Basics.

• 27 member states• Population: 501 million people

• Russia 142 million, USA 308 million• if seen as a single state, that’s world’s 3rd place after

China and India

• Area: 4,3 million km² • Russia 17 million km²; USA 9,6 million km²

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Some basic data on EU (1)

Macroeconomics, foreign trade and European Union. Basics.

• GDP total: $18,4 trillion • Russia $2,1 trillion; USA $14,2 trillion • if seen as a single state EU is the biggest economy

of the world

• GDP per head: $ 36.788 • Russia $ 14.920; USA $ 46.381

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Some basic data on EU (2) – the economy

Macroeconomics, foreign trade and European Union. Basics.

• state acts with his fiscal and monetary policy in macroeconomics• EU got competences from national states

• Fiscal policy; Funds for convergence processes, agricultural policy and so on

• Monetary policy. European Central Bank issues the money (EURO) and thus controls this field.

• European Common market and tariff union connect states

close to each other Macroeconomic situation is connected closely with EU

Lecture 1 29.11.2010Dipl.- Kfm. Thomas Stiegler, University of Göttingen.16

Where is the connection between Macro an EU?

Macroeconomics, foreign trade and European Union. Basics.

• Select points from macroeconomic theory or international trade and give a short sight into the theory

• Give some examples from real macroeconomics

To cover the whole field of EU – macro connections we could fill years with! What we do is just some short examples to show some applied macroeconomics.

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What we will do in the following chapters