Advanced Macroeconomics 2400-ZU1MAZ
Part I: Economic growth and economic policy
Topic 1: Solow growth model with human capital; basic endogenous growth models. This seminar’s aim is to present formal treatment of the neoclassical growth model and discuss Solow model in comparison with the AK model and other endogenous growth models.
Topic 2: Public debt. This seminar’s aim is to analyze the dynamics of public debt and its long-run consequences, including fiscal dominance.
Topic 3: Consumption and investment. This seminar’s aim is to discuss long-run theory of consumption – Friedman’s permanent income hypothesis and Modigliani’s lice-cycle theory. Empirical aspects of neoclassical investment theory are discussed and q-Tobin model of investment is presented.
Topic 4: Monetary policy goals and rules. This seminar’s aim is to discuss the significance of price and output stability. Moreover, the optimal policy rule is derived from the objective function optimization subject to simple AD and AS constraints.
Topic 5: Monetary policy transmission. The aim of the seminar is to analyze the transmission channels of monetary policy: traditional Keynesian, asset price, exchange rate and banking channels.
Topic 6: New Keynesian economics. This seminar’s aim is to present formal treatment of the explanation of price stickiness, Rotemberg model and interpretation of the New Keynesian Phillips curve.
Part II: Labor economics and international economics
Topic 7: Unemployment. This seminar’s aim is to discuss the concept of the natural unemployment rate in modern approach with determinants and differentiation among OECD countries. Furthermore, a search and matching model of the labor market is presented and discussed. The concept of efficiency wage model is discussed using the Shapiro and Stiglitz model.
Topic 8: New trade theory. This seminar’s aim is to present the gravity model of trade and to discuss theoretical models of international trade after dropping the neoclassical assumptions.
Topic 9: Balance of payments – intertemporal approach. This seminar’s aim is to explain the balance of payments position and accounts with intertemporal approach to consumption, investment and savings.
Topic 10: International financial markets and exchange rate theory. This seminar’s aim is to discuss theory of exchange rate determination: interest rate parity, purchasing power parity, monetary approach and elasticity approach.
Type of course
Course coordinators
Learning outcomes
Knowledge:
Upon completion of this seminar the student:
- has advanced knowledge of exchange rate determinants, trade flows and the balance of payments
- has advanced knowledge of endogenous growth models
- has knowledge on the long-run determinants of the unemployment rate and its short-run fluctuations
- has advanced knowledge on the monetary policy rules and instruments and limitations
- understands the reasons for money non-neutrality in the short run
Skills:
Upon completion of this seminar the student will be able to:
- use advanced macroeconomic models to interpret the real-life economic interdependencies
- model economic mechanisms
- formulate policy recommendations regarding fiscal and monetary government's policy
- recommend institutional solutions for reducing unemployment and inflation
- characterize the factors of external equilibrium of the economy
- predict the impact of fiscal and monetary policy on the short-run and long-run dynamics of production and prices.
- work effectively in a team and on his/her own
- convey information and ideas and information in a logical and understandable manner using professional language.
Assessment criteria
Grades will be based on two midterm exams held at the end of the first and second semester (weight = 30% each), presentation in the first semester (weight = 20%) and presentation in the second semester (weight = 20%). The pass grade at or above 50%.
Students who scored less than 50% will have the opportunity to take a comprehensive final exam (which will cover both semesters) in June and September. The pass grade at or above 50%.
Bibliography
Bodea, C. and Higashijima, M. (2017), “Central bank independence and fiscal policy: Can the central bank restrain deficit spending?”, British Journal of Political Science 47(1), 47-70.
De Haan, J., Bodea, C., Hicks, R., and Eijffinger, S.C.W. (2018) “Central bank independence before and after the crisis”, Comparative Economic Studies 60(2), 183-202.
Elwood (2010), Advancing the Credit Channel and Credit Rationing in the Undergraduate Curriculum: A Useful Model, Journal of Economics and Finance Education 9(1)
Fratzscher, M., Lo Duca, M., and Straub, R. (2016) “ECB unconventional monetary policy: Market impact and international spillovers”, IMF Economic Review 64(1), 36-74.
Friedman, B.M. (2013), The Simple Analytics of Monetary Policy, NBER Working Paper 18960.
Jones Ch. „Introduction to Economic Growth” W.W. Norton &Company
Jones, Ch. (2005) “Growth and Ideas”, w: Handbook of Economic Growth, Volume 1B. Edited by Philippe Aghion and Steven N. Durlauf
Kose, M., Nagle, P., Ohnsorge, F., Sugawara, N. (2019) “Global Waves of Debt. Causes and Consequences”, World Bank, https://www.worldbank.org/en/research/publication/waves-of-debt.
Roberts (1995), New Keynesian Economics and the Phillips Curve, Journal of Money, Credit and Banking 27(4, part I).
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.
Shapiro, Stiglitz (1984) 'Equilibrium Unemployment as a Worker Discipline Device', American Economic Review, Vol. 74, pp. 433-444.
Dixit A.K., Stiglitz J.E. (1977) Monopolistic Competition and Optimum Product Diversity, The American Economic Review, Vol. 67, No. 3 (Jun., 1977), str. 297-308.
Krugman P. (1987) Is free trade passe?, Journal of Economic Perspectives, Vol. 1, No. 2.
Krugman P. (1979) Increasing Returns, Monopolistic Competition, and International Trade, Journal of International Economics, Vol. 9, No. 4. (1979), str. 469-479.
Bernhofen D. (1999) Intra industry trade and strategic interaction: Theory and evidence, Journal of International Economics 47, str. 225-244.
Gandolfo G. (2002) International Finance and Open-Economy Macroeconomics, Springer-Verlag, rozdz. 18.
Feldstein M., Horioka C. (1980) Domestic Saving and International Capital Flows, Economic Journal, Vol. 90, str. 314-329.
Van Marrewijk Ch. (2005) Basic Exchange Rate Theories, Discussion Paper No. 0501, University of Adelaide.
Additional information
Additional information (registration calendar, class conductors, localization and schedules of classes), might be available in the USOSweb system: