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Poslední úprava: Mgr. Anna Papariga (15.09.2022)
This is a compulsory course in the CERGE-EI Master of Arts in Economic Research. In this course, we will think about real world phenomena through the lens of the state of the art macro models. These models are general equilibrium models build from explicit micro foundations. The course can be divided into several parts. The introduction will serve to motivate most of the rest of the course. In the second part of the course, we will learn to build dynamic general equilibrium macroeconomic models from microfoundations, i.e. from optimizing economic agents. Subsequently, we will use these models to study several real world phenomena. This will be the main part of the course. The phenomena, we will study are: (i) business cycles, (ii) economic growth, (iii) the role of (fiscal) policy, (iv) economic inequality. |
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Poslední úprava: Mgr. Anna Papariga (15.09.2022)
There is no main textbook. The main reference for you will be the slides I will post in advance and class participation. As background reading, I recommend:
Williamson, Stephen D. (2008): Macroeconomics, Third Edition (there is also the 4th and 5th editions, the 5th edition is on CMS), Pearson International Edition. I will base (some of ) my lectures on the slides coming with the book. I will make my own slides and as well as Williamson slides available. In principle, you do not need to have the book as long as you come to lectures. The book serves more as a background reading.
You can also use other intermediate macro textbooks for additional reading, such as:
Doepke M., Lehnert A., and A. Sellgren (1999): Macroeconomics, available for download at: https://faculty.wcas.northwestern.edu/mdo738/book.htm
Wickens M.: Macroeconomic Theory: A Dynamic General Equilibrium Approach (can be downloaded in pdf), Princeton.
Ales L.: Intermediate Macro, lecture notes, see https://www.andrew.cmu.edu/user/ales/intermediate-macro.pdf
And more ...
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Poslední úprava: Mgr. Anna Papariga (15.09.2022)
There will be 4 problem sets each consisting of 5% of the grade. You will work on the problem sets in groups and submit just one version per group. The problem sets will be graded and returned to you. Parts of the problem sets will be discussed in the TA sessions. The problem sets will serve as a preparation for the exam. There will be a midterm exam (20% of the grade) and a final exam (40% of the grade). Finally, there will be a group project (20% of the grade) consisting of several parts, whose first part will be assigned already during one of the first weeks. |
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Poslední úprava: Mgr. Anna Papariga (15.09.2022)
Week 1 & 2 - Intro and Data.
1. Introduction
· GDP, growth and business cycles. Basic facts. Why do we need macroeconomic models? Basic structure of a macromodel. Why do we need microeconomic foundations? Lucas critique. Readings: W, chapter 1.
2. Data Issues
· Measurement Issues. National income and product accounts. The product, income and ex- penditure approach. Nominal vs. real GDP. Readings: W, chapter 2. · Price indexes: Paasche, Laspeyres, Fisher. International price comparisons, Balassa-Samuelson effect. Seasonal adjustment. Readings: W, chapter 2, 3. · Business cycle measurement. Hodrick-Prescott filter. Definitions and properties of business cycles. Components of GDP. Comovements and cyclicality. Persistence and volatility. Leads and lags. Correlation vs. causality. Readings: W, chapter 3. Week 3 & 4 - Theory.
3. Consumer Theory for Macro
· Dynamic utility maximization problems. 2 period example with savings. Consumption smoothing. Permanent income hypothesis. Infinite horizon consumption-savings problem. Readings: W, chapter 4, DLS, chapter 2.
4. Firm Theory
· Technology and production function. Profit maximization, static and dynamic. Representative firm. Demand for labor. Readings: W, chapter 4.
5. General Equilibrium (in Pure Exchange Economies)
· Consumer maximization problems. Market clearing. Definition of equilibrium. Normalization of prices. Walras Law. Feasibility. Pareto optimality. First welfare theorem. Second welfare theorem. Readings: DLS, chapter 5. · Apples and oranges example. Solving for the equilibrium. Edgeworth box. Determining graphically the Pareto optimal allocations. Illustration of FWT and SWT. Aggregation, representative consumer. Readings: DLS, chapter 5, Williamson, page 100. Week 5 & 6 - Business Cycles. 3 lectures, midterm.
6. Business Cycles
· Introducing an infinite horizon macromodel. The neoclassical growth model. The RBC model: productivity shocks as source of business cycles. Constructing and estimating the Solow residual. Successes of the RBC model. Shortcomings of the RBC model. Readings: W, chapter 11, DLS, chapter 9. Week 7 & 8 - Growth. 3 lectures.
7. Growth
· Data. · Neoclassical growth model (Solow model) with population growth and constant technology. Dynamics. Steady state. Comparative statics. Readings: W, chapter 6, DLS, chapter 11. · Solow model with population and technology growth. International convergence? Introducing an endogenous growth model with human capital accumulation. Readings: W, chapter 7. · Endogenous growth model with human capital accumulation. Dynamics of the model. Long run income disparity among countries. The role of education. Readings: W, chapter 7. Summary of the course.
Week 9 & 10 - Government Policy. 3 lectures.
8. Government Policy
· Data. · Models: Positive analysis of government (fiscal) policy in a dynamic (2 period) macro model. · Simple optimal taxation, Ramsey problems (dynamic, 2 period).
Week 11 & 12 - Inequality. 4 lectures.
9. Inequality
· Data. Between group vs. within group inequality. Autor's paper, Pikkety's book etc. · Models: Positive analysis. Skill-biased technical change. · Normative applications. Optimal taxes in the presence of inequality.
Presentations of Group Project, 1 or 2 lectures.
Final exam during last class meeting.
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