Advanced Macroeconomics 7.5 credits

The course has the objective of providing the student with theories and methods for analysing macroeconomic growth and short-run macroeconomic fluctuations. The first part of the course is concerned with growth and focuses on questions such as why some economies are richer than others and what determines the rise of real incomes over time. A range of models designed for this purpose is reviewed, including the Solow growth model in which growth is exogenously determined and models in which growth is determined endogenously. The second part of the course is concerned with the various theories and determinants of short-run macroeconomic fluctuations. Since the behaviors of consumption and investment are central issues in short-run macroeconomic fluctuations, their determinants are examined in detail. Theories of unemployment and wage determination are likewise covered extensively. Business cycle models with different assumptions on how expected inflation is determined are explored, including those based on static expectations, adaptive expectations, and rational expectations. A simple dynamic stochastic general equilibrium model is presented. Real business cycle theory and modeling based on the New Keynesian and Sticky Information Philips Curves are introduced. The connection of financial markets and financial crises to short-run macroeconomic fluctuations is also discussed. Finally, the second part of the course devotes time to theories and analysis of fiscal and monetary policies. **Connection to Research and Practice** Macroeconomic theories are presented in connection with empirical studies and real-world macroeconomics issues. Macroeconomic indicators, theories, and models are put into practice through the exercises and the assignment.