Advanced Macroeconomics 2400-M1PPZMAK
Part I: Monetary Economics
1. Classical and Keynesian Macroeconomic Theory. The aim of the lecture is to present the classical and keynesian macroeconomic models in a formal way and to prepare grounds to discuss the new models in keynesian and classical tradition.
2. Flexible Prices and the Role of Expectations. The aim of the lecture is to present the Friedman's model of imperfect information in the labor market and the Lucas' misperception theory. Derivation of inflation bias and discussion of the benefits of central bank independence.
3. Nominal Rigidities. The aim of the lecture is present the Rotemberg’s model of costly price changes. Then the resulting price setting policy is used in the derivation of the New Keynesian Phillips curve. The latter is combined with the new IS curve to allow the analysis of the short run money non-neutrality.
4. Bank lending and other channels of monetary policy transmission. The aim of the lecture is to discuss the consequences of moral hazard and adverse selection in the credit market. The asset price and the exchange rate channels are also presented.
5. The New Keynesian model with credit market imperfections. The aim of the lecture is to analyze the central bank’s policy with the use of the new Keynesian model augmented to include the risk premium in the credit market.
6. Monetary Growth Theory: Money in the Utility Function and Cash-in-Advance Constraint. The aim of the lecture is to present the Sidrauski's model of money in the utility function and to analyze money neutrality when money plays its role as medium of exchange and various transactions are subject to the CIA constraint. The second objective is to discuss empirical research devoted to the link between inflation and long-run growth rates.
Part II: Economic Growth
7. Main trends in contemporary economic development. A review of the Solow growth model.
The aim of the lecture is to present the most important facts on contemporary economic development and present basic conclusions resulting from the Solow growth model (4 hours)
8. The Ramsey, Cass and Koopmans’ model and its extension.
The lecture aims at presenting the theory of the RCK model (and its extensions) as well as selected empirics (4 hours)
9. The “Ak” growth models.
The lecture aims at presenting the Ak growth models that are based on a linear production function as well as the results of empirical research on main factors of long-run growth (3 hours)
10. The economic sources of technological progress. The aim of the lecture is to discuss models that aim at explaining the determinants of technological progress (3 hours)
11. Income inequality and convergence.
The aim of the lecture is to discuss possible convergence mechanisms and to present empirical data on income inequalities between and within countries (3 hours)
12. Political economy and economic growth (3 hours). The aim of the lecture is to present the results of theoretical and empirical research on the relationship between political factors and long-term economic growth
Part III: Labor Economics
1. Basic neoclassical concepts of the labor market. The aim of the lecture is to revise basic concepts of neoclassical economics applied to labor market, labor supply, labor demand, equilibrium wages and institutions. Course hours: 2, students' self-study hours: 2.
2. Labor market regularities in the short and long run. The aim of this lecture is to present basic regularities (stylized facts) of the labor market functioning in the long and short run in developed and developing countries. Course hours: 2, students' self-study hours: 2.
3. Equilibrium unemployment rate – NAIRU model. The aim of this lecture is to present the model of the NAIRU – non-accelerating inflation rate of unemployment and the analysis of the determinants of equilibrium unemployment rate and it's short run and long run changes. Course hours: 3, students' self-study hours: 3.
4. Basic model of efficiency wages. The aim of this lecture is to present and analyse basic version of efficiency wages theory to explain why wages might be set over the market-clearing level. Course hours: 2, students' self-study hours: 2.
5. Shapiro-Stiglitz model of efficiency wages. The aim of this lecture is to analyse Shapiro-Stiglitz model, and explain the concept of principal-agent problem of imperfect monitoring of workers' effort. Course hours: 3, students' self-study hours: 3.
6. Wage bargaining and unions. The aim of this lecture is to present and analyse insiders-outsiders model and wage negotiations process, as well as the role of labor unions and their influence on the labor market performance. Course hours: 3, students' self-study hours: 3.
7. Search and matching theory. The aim of this lecture is to present search and matching theory of the labor market and the flow concept into the labor market. Course hours: 3, students' self-study hours: 3.
8. Empirics of the labor market. The aim of this lecture is to present empirical methods and findings regarding verification of labor market theory. Course hours: 2, students' self-study hours: 2.
Type of course
Upon the lecture completion a student:
- knows the basic methods used in macroeconomic modeling
- knows determinants of GDP components
- knows consumption theory
- knows investment theory
- knows neoclassical and new growth theories
- knows different taxes and their side effects
- know benefits and shortcomings of different social security systems
- knows and explains the long-run money neutrality
- is able to recognize the obstacles to the conduct of monetary policy arising from uncertainty and lags
- is able to provide explanation for the short-run money non-neutrality
- is able to analyze unemployment by means of various theoretical approaches
- understands the concept of equilibrium unemployment rate and is able to analyse its short and long run fluctuations
- is aware of labor market imperfections and inefficiency arising from the nature of wage setting, negotiations, unions and externalities of jobs and workers search and matching
Upon the lecture completion a student:
- is able to interpret macroeconomic phenomena by referring to advanced theoretical models
- is able to understand and interpret determinants of economic growth in developed and developing countries
- is able to use advanced business cycle models to explain the dynamics of prices and output
- is able to assess monetary policy from the perspective of its short and long run consequences
- is able to recommend an optimal choice of monetary policy instruments and strategies
- is able to analyze the influence of various factors on the labor market performance in the short run and in the long run
- is able to recognize the influence of institutional factors on the labor market performance
- is able to analyze the links between education and demand for qualifications and labor market using human capital theory
- is able to recommend policy instruments and strategies to improve labor market performance and reduce the sources of inefficiency
KW01, KW02, KW03, KW04, KU01, KU02, KU03, KU04, KU05, KU06, KU07, KK01, KK02, KK03
The assessment is based on the results of the final exam. The exam will comprise 3 components corresponding to the 3 thematic parts of the lecture. Each component will include 3 questions: 2 analytical and 1 short essay on 2 papers specified below in the required literature section. Students choose 1 analytical question from each component and 1 short essay from all components, i.e. they answer 4 questions in total. All questions are worth 10 points. To pass students need to collect 16 points.
Required: lecture notes
Bean, ,Ch. (2018), Central Banking after the Great Recession, Economic Affairs 38(1), 2-15.
Mohanty, M.S., Rishbah, K. (2016), Financial Intermediation and Monetary Policy Transmission in EMEs: What Has Changed post-2008 Crisis? BIS Working Papers no 546 (section IV excluded).
Lecture 1: Serletis, The Demand for Money. Theoretical and empirical approaches, Springer, 2007, Chapters 1 and 2. You can access this book through the BUW website.
Lecture 2: Romer, Advanced Macroeconomics, chapter 6A
Lecture 3: Roberts (1995), New Keynesian Economics and the Phillips Curve, Journal of Money, Credit and Banking 27(4, part I).
Lecture 4: Elwood (2010), Advancing the Credit Channel and Credit Rationing in the Undergraduate Curriculum: A Useful Model, Journal of Economics and Finance Education 9(1).
Walsh (2003), Monetary Theory and Policy, 2nd ed., The MIT Press, ch. 7.2.1-7.2.2.
Lecture 5: Friedman, The Simple Analytics of Monetary Policy, NBER Working Paper 18960.
Lecture 6: Serletis, The Demand for Money. Theoretical and empirical approaches, Springer, 2007, ch. 5.2, 8.3.
REQUIRED – lecture notes
Barro R & Sala-i-Martin X. "Economic Growth" MIT Press
Spolaore & Wacziarg (2013) “How deep are the roots of economic development?” Journal of Economic Literature vol. 51(2)
McManus R. & Ozkan G. (2018) „Who does better for the economy? Presidents versus parliamentary democracy?” Public Choice, vol. 176
Jones Ch. „Introduction to Economic Growth” W.W. Norton &Company
Sala-I-Martin, X. (1997) “ I Just Ran Two Million Regressions”, The American Economic Review, Vol. 87, No. 2,
Acemoglu D. & Suresh Naidu & Pascual Restrepo & James A. Robinson, 2014. "Democracy Does Cause Growth," NBER Working Papers , National Bureau of Economic Research, Inc.
Acemoglu D. & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, vol. 91(5).
REQUIRED: lecture notes and slides
Blanchflower, D. G., Bryson, A. (2010). The wage impact of trade unions in the UK public and private sectors. Economica, 77(305), 92-109.
Strobl, E., Walsh, F. (2007). Estimating the shirking model with variable effort. Labour Economics, 14(3), 623-637.
Bagliano F., Bertola G. (2004) Models for Dynamic Macroeconomics, Oxford University Press, pp. 188–211.
Ball L., Mankiw N.G. (2002) ’The NAIRU in Theory and Practice’, NBER Working Paper No. 8940.
Blanchard O., Katz L. (1997) ’What Do We Know and Do Not Know About the Natural Rate of Unemployment?’, Journal of Economic Perspectives , Vol. 11, No. 1, pp. 51-72.
Cahuc P., Zylberberg A. (2004) Labor Economics, MIT Press.
Layard R., Nickell S., Jackman R. (1991) Unemployment. Macroeconomic Performance and the Labour Market, Oxford University Press.
Lindbeck, Snower (2001) 'Insiders versus Outsiders', Journal of Economic Perspectives, Vol. 15, No. 1, pp. 165-188.
Romer D. (2006) Advanced Macroeconomics, McGraw-Hill/Irwin.
Shapiro, Stiglitz (1984) 'Equilibrium Unemployment as a Worker Discipline Device', American Economic Review, Vol. 74, pp. 433-444.
Yellen J. L. (1984) 'Efficiency Wage Models of Unemployment', American Economic Review , Vol. 74, pp. 200-205.
Information on level of this course, year of study and semester when the course unit is delivered, types and amount of class hours - can be found in course structure diagrams of apropriate study programmes. This course is related to the following study programmes:
- Finance, Investments and Accounting, part-time, second cycle
- Computer Science and Econometrics, part-time, second cycle
- Finance, Investments and Accounting, full time, second cycle
- Computer Science and Econometrics, full time, second cycle
Additional information (registration calendar, class conductors, localization and schedules of classes), might be available in the USOSweb system: