-
Advanced Macroeconomics - ECON 421
Syed Muhammad Hussain,[email protected]
https://sites.google.com/site/syedmhussain1984/
Fall 2012-13
1 Course Description
This is an advanced course in the field of macroeconomics built on intermediate level macroeconomics courses.The course starts with the mathematical treatment of traditional IS-LM model. Soon after a dynamic IS-LMmodel would be introduced there we learn how to solve dynamic macro models and draw the phase diagrams. Inthe third module we attempt to provide micro foundations of the macro models. A two periods micro foundationbased model will be discussed next. Before discussing the real business cycle theories we will discuss monetaryintertemporal model.
2 Course Objectives
This is an advanced macroeconomics course. Throughout the course we will make use of both mathematics andgraphs to solve the model and draw inferences. By the end of the course, students should be able to:
Understand how to develop theoretical models that help to understand the workings of the economy. Solve macro models by means of calculus and linear algebra and derive both short-run and long-run
multipliers.
Learn the role of difference and differential equations in developing and solving macro models. Understand the differences among various school of thoughts.
Pre Requisites: Intermediate Macroeconomics.
3 Textbooks
Macroeconommics, Gregory Mankiw, Sixth edition. Macroeconomics: An Introduction to Advanced Methods, William Scarth, Second edition. Macroeconomics, Stephen Williamson, Fourth edition. Introducing Advanced Macroeconomics: Growth and Business Cycles, Sorensen and Whitta-Jacobsen,
Second edition.
Introduction to Dynamics Economic Models, Ferguson and Lim.
1
-
4 Topics
Review of IS-LM models. Graphical and algebraic analysis. (Mankiw Ch. 10,11. Scarth Ch. 2) Introduction to Dynamic Models. (Ferguson and Lim Ch. 1, Ch. 2)
An analysis of disequilibrium in goods and money market.
Phase diagrams and convergence in goods and money market.
Differential and Difference Equations.
Building blocks for the short run model. (Williamson Ch. 4) Consumer and Firm behavior.
Work-Leisure decision.
Profit maximization and labor demand function
One period model of a closed economy. (Williamson Ch. 5) Role of government.
Competitive Equilibrium.
Pareto Optimality.
Two-period model of consumption and saving. (Williamson Ch. 8, Sorensen Ch. 16) Monetary Intertemporal Model. (Williamson Ch. 11, Sorensen Ch. 17)
Analysis of Monetary Policy.
Analysis of real and nominal shocks.
Real Business Cycle Theories. (Williamson CH. 12, Sorensen Ch. 19) Basic RBC model.
Money in the RBC model.
Government Policy in the RBC model.
The different schools of thoughts in Economics.
5 Grading
The assessment in this course will be based on the following:
7 announced quizzes for a total of 30% of the total grade. The quiz with the lowest grade will be droppedfor each student. I will not accept any missed quiz petitions.
An in-class mid-term examination worth 30% of the total grade. A final exam worth 40% of the total grade.
2
