Advanced Macroeconomics 2400-ICU1AMA
The main objective of this course is to familiarize students with key analytical models in modern macroeconomic literature. The course consists of three parts. The first part is devoted to microfoundations of macroeconomic models such as consumption, investment and the government sector. The second part focuses on exogenous and endogenous growth theories and covers neoclassical models as well as new growth theory. The third part concentrates on business cycles and covers real business cycle and new Keynesian
theories, as well as various labor market issues.
Detailed course program and readings
Part I: Microeconomic Foundations
1. Consumption [BB (2004): 1, Romer (2012): 8]
2. Government sector [Romer (2012): 12]
3. Neoclassical labor markets [Barro (1997): 2]
4. Investment [BB (2004): 2, Romer (2012): 9]
Part II: Economic Growth
Neoclassical Growth Theory
1. Solow-Swan model [Acemoglu (2009): 2, AH (2009): 1.2, BS (2004): 1, Romer (2012): 1]
2. Growth empirics [Acemoglu (2009): 3, BS (2004): 11, 12, Romer (2012): 4]
3. Overlapping generations (OLG) model [Acemoglu (2009): 9, Romer (2012): 2B]
4. Ramsey-Cass-Koopmans (RCK) model [Acemoglu (2009): 8, AH (2009): 1.3, BS (2004): 2,
Romer (2012): 2A]
New Growth Theory
1. AK models and externalities [Acemoglu (2009): 11, AH (2009): 2, BS (2004): 1.3, 4, 5,
Romer (2012): 3]
2. Expanding product variety models [Acemoglu (2009): 13, AH (2009): 3, BS (2004): 6]
3. Improving product quality models [Acemoglu (2009): 14, AH (2009): 4, 5, BS (2004): 7]
4. Diffusion of technology [Acemoglu (2009): 18, AH (2009): 7, BS (2004): 8]
Part III: Business Cycles and Labor Markets
1. Real Business Cycles (RBC) model [Romer (2012): 5]
2. Models of unemployment [BB (2004): 5.3, 5.4, Romer (2012): 10]
3. New Keynesian model and monetary policy [Romer (2012): 7, 11]
4. Coordination failures and financial frictions [BB (2004): 5, Romer (2012): 6]
Knowledge and skills
1. Students know and understand the dynamic (expected) utility maximization problem of the consumer. S2A_W02, S2A_W06, S2A_W08, S2A_W11
2. Students know and understand the dynamic (expected) profit maximization problem of the producer. S2A_W02, S2A_W06, S2A_W08, S2A_W11
3. Students know and understand the methods of economic welfare evaluation. S2A_W02, S2A_W06, S2A_W08, S2A_W11
4. Students are able to solve and analyze the following general equilibrium models: overlapping generations, Ramsey, endogenous growth, Real Business Cycles and New Keynesian. S2A_W02, S2A_W06, S2A_W08, S2A_W11
5. Students understand the basic theorems of welfare economics. They are able to distinguish competitive equilibrium from the Pareto optimum allocation/social planner allocation. S2A_W02, S2A_W06, S2A_W08, S2A_W11
6. Students know and understand the forces governing the processes of long-run economic growth. S2A_W02, S2A_W06, S2A_W08, S2A_W11
7. Students know and understand the forces governing the processes of business cycle fluctuations. S2A_U01, S2A_U02, S2A_U03, S2A_U04, S2A_U06, S2A_U07, S2A_U08
1. Students understand that macroeconomics can be applied to real economic and social issues and that the analysis can be performed using economic models.
2. Students can interpret reality based on general equilibrium models and they are able to combine the microeconomic and macroeconomic view.
3. Students are able to undertake employment in entreprises or public organizations that deal with design and assessment of economic policy.
4. Students are able to formulate and present their views based on their knowledge and engage in discussion concerning these views.
5. Students are able to fulfill their duties and plan the work schedule on their own.
S2A_K03, S2A_K04, S2A_K05, S2A_K06, S2A_K07
In order to pass the course students need to collect at least 50 points from the two following components:
- mid-term exam (50 points)
- final exam (50 points)
Students can also earn up to 15 additional points by completing homework assignments.
- All exams are to be taken by all students at the same time (only one date for everyone).
- There will be only one possibility to retake any of the failed exams for all students at the same time.
- Absence from any of the exams is equivalent to failing it.
- There will be no other possibilities of completing the course.
- ‘0 tolerance for cheating’.
There is no single textbook for this course. Materials for this course come from various textbooks and articles. Most often reference will be made to the selected chapters from the following books:
Acemoglu D. (2009) Introduction to Modern Economic Growth, Princeton University Press, Princeton.
[BS] Barro R.J., Sala-i-Martin X. (2004) Economic Growth, Second Edition, The MIT Press, Cambridge, M.A.
Romer D. (2012) Advanced Macroeconomics, Fourth Edition, McGraw-Hill, New York.
[AH] Aghion P., Howitt P.W. (2009) The Economics of Growth, The MIT Press, Cambridge, M.A.
[BB] Bagliano F.C., Bertola G. (2004) Models for Dynamic Macroeconomics, Oxford University Press, Oxford.
Barro, R.J. (1997) Macroeconomics, Fifth Edition, The MIT Press, Cambridge, M.A.
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