Prof Per Krusell 32L.1.19, Dr Ethan Ilzetzki 32L.1.11, Prof Wouter Den Haan 32L.1.08A and Prof Francesco Caselli 32L.1.21

Prof Jordi Gali

This course is compulsory on the MRes/PhD in Economics and MRes/PhD in Finance. This course is not available as an outside option.

The course will cover topics in advanced macroeconomics with emphasis on fundamentals and applications to recent theoretical advances:

i. Economic growth: Neoclassical Growth Model, Optimizing Behaviour in dynamic models under certainty, Endogenous Technological Change, Imitation and Convergence, Growth and Development Accounting, Appropriate Technology.

ii. Search and Matching: The Matching Model, Efficiency Wages, Growth and Unemployment.

iii. Dynamic Stochastic General Equilibrium Models : Real Business Cycles, applications to models of heterogeneous agents and open economy. Fiscal policy analysis.

iv. Monetary Economics: models with credit frictions, sticky prices, search.

30 hours of lectures and 15 hours of classes in the MT. 30 hours of lectures and 15 hours of classes in the LT.

Exercises are set for each class.

A good general textbook that is mostly below the level of the course is:

D Romer, Advanced Macroeconomics, McGraw-Hill Advanced Series in Economics, New York, 1996.

For the growth part the main references are the textbooks by:

D. Acemoglu, Introduction to Modern Economic Growth, Princeton University Press, 2009; R J Barro & X Sala-i-Martin, Economic Growth, McGraw-Hill, 1997.

Other useful texts include:

L Ljungqvist & T Sargent, Recursive Macroeconomic Theory, MIT Press, 2000; N Stokey & R E Lucas, Recursive Methods in Economic Dynamics, Harvard University Press, 1989.

More economic applications, with some required readings can be found in:

M Obstfeld & K Rogoff, Foundations of International Macroeconomics, MIT Press, 2000; P Aghion & P Howitt, Endogenous Growth Theory, MIT Press 1998; C A Pissarides, Equilibrium Unemployment Theory, MIT Press 2000.

References for recent theoretical advances published in the journals will be given during the course.

Exam (100%, duration: 3 hours, reading time: 15 minutes) in the summer exam period.