RNy 30 Sep 2008
From next week (lecture 8) and onwards, the main reference will be Introducing Advanced
Macroeconomics by Sørensen and Whitta-Jakobsen. We will refer to that book as IAM.
As you know , most of the syllabus is from “Book 2” of IAM.
Lecture 8 and 9 will address the dynamic closed economy model. Ch 14, facts about business cycles,
is interesting as background reading, but since this is not a course in business cycles analysis per se,
there will no be exam questions from Ch 14.
You should have quite clear ideas about the contents of Ch 15 and Ch 16, because it gives the
background to the specification of the aggregate demand curve, which we will use a lot, but I will not
expect detailed knowledge about these chapters though.
Ch 17 is definitively important for the rest of the course and lecture # 8 will start with that chapter.
Ch 18 is about the supply side of the close economy and is another way of rationalizing the Phillips
curve than we have used so far. The implication of the Phillips curve for the dynamics of wages and
prices is of course exactly the same as we have now been through, so I will not spend time on Ch 18
in the lectures. We will instead introduce the concept of short-run and long-run aggregate supply
curves directly, with reference to the IDM part of the course. Seminar exercise 6 contains a question
to Ch 18 though.
Ch 19-22 contain important applications of the short-run dynamic model to the closed economy. Ch
23 and onward is on the open economy, and we spend most of our time on those chapters.