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. One 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 models in which growth is exogenously determined (e.g., the Solow growth model) and models in which growth is determined endogenously. The other part of the course is concerned with the various theories and methods for analysing 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, wage determination, and inflation 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, with consideration of the effects of both demand shocks and supply shocks. Real business cycle theory and modeling based on the New Keynesian economics are introduced. <br> <br> <br> **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.