Zagrebačka škola ekonomije i managementa Syllabus: Advanced Macroeconomics SYLLABUS Advanced Macroeconomics (ECTS 8) LECTURERS Lecturers TBA Contact E-mail: TBA COURSE DESCRIPTION This course offers and overview of two major competing macroeconomic theories - Real Business Cycles theory and New Keynesian theory. Extensions of these two models and methods for solving them are also included in the course. HOURS Theoretical classes, lectures Seminars and problems solving exercises Total 30 hours (15 weeks * 2 hours) 30 hours (15 weeks * 2 hours) 60 hours PREREQUISITES Students are expected to be familiar with 1st semester maths course as well as macro I and macro II at the first year. GRADING Your grade will be determined based an exam composed of two parts each worth 30 points, regular exercises divided into two sections each worth 15 points and an essay worth 10 points One should expect the following percentage performance/grade schedule: 90-100% = excellent (5), 80-89% = very good (4), 70-79% = good (3), 55-69% = pass (2). 1 Syllabus: Advanced Macroeconomics Zagrebačka škola ekonomije i managementa PRELIMINARY COURSE OUTLINE 1) Historical development of modern macroeconomics based of microeconomic principles (RATEX revolution, Real Business cycles theory, New Keynesian theory, dynamic stochastic models of general equilibrium) 2) RBC model with certainty, in discreet time I (model structure, competitive equilibrium and the social planner, welfare theorems, steady state analysis, basics of dynamic programming, recursive approach, contraction mapping theorem, Bellman’s equation) 3) RBC model with certainty, in discreet time II (dynamic analysis, model linearization, calibration, result analysis, policy functions, impulse responses; Methods for solving discreet dynamic models in macroeconomics, iterating the policy function, solving via Euler equation, Benvenista-Scheinkman conditions, equivalence of the sequential problem and functional equation) 4) RBC model with labor under uncertainty, in discreet time (modified social planner problem, model analysis, intertemporal substitution) 5) RBC under uncertainty (technological shock, model linearization, solving in Dynare) 6) RBC evaluation with regard to real data (model simulation, impulse responses) 7) International RBC models (correlation anomalies) 8) RBC extensions – inclusion of money (Cooley-Hansen model) 9) Money-in-the-utility model 10) Cash-in-advance models, Taylor rule 11) Keynesian dynamic stohastic model (monopolistic competition, Blanchard-Kiyotaki model) 12) Price rigidities a la Calvo i a la Rotemberg (New Keynesian model, New Keynesian Phillips curve) 13) Comparison of RBC and Keynesian model results 14) Small open economy model I (Blanchard-Obsfeld model) 15) Small open economy model II (example of Croatian economy) READING LIST J. Adda i R. Cooper (2003), Dynamic Economics, The MIT press D. Krueger (2006), Macroeconomic Theory, Lecture Notes J.F. Villaverde (2009), Methods in Macroeconomic Dynamics, Lecture Notes C. Walsh (2003), Monetary Theory and Policy, The MIT Press. T.F. Cooley (1994), Frontiers of Business Cycle Research, Princeton University Press 2