Dr Ethan Ilzetzki 32L.1.10, Prof Per Krusell 32L.1.18 and Dr Shengxing Zhang 32L.1.16

This course is compulsory on the MRes in Economics (Track 1), MRes in Economics (Track 2) and MRes/PhD in Finance (Route 1). This course is available on the MRes/PhD in Finance (Route 2). 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. In addition, there will mock examinations in Lent term week 0 and in Summer term week 1.

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) in the main exam period.