MACROECONOMIC ANALYSIS
Obiettivi formativi
Provide basic notions and methods of advanced macroeconomic theory with special focus on consumption, asset pricing, economic growth and equilibrium unemployment
Risultati di apprendimento attesi
1. Knowledge and understanding:
Being able to grasp main factors explaining economic development, individuals' savings and consumption decisions, asset allocation, and the scope for economic policies in market economies.
2. Applying knowledge and understanding:
The students will be able to:
• apply theoretical results to make cross-country comparisons in growth performance and understand and interpret empirical regularities in macroeconomic models of consumption and savings • examine major public policies by comparing the experiences of countries in Europe as well as
in the rest of the world.
3. Communications Skills:
This course will give the students the possibility to acquire and understand major terms and concepts in order to communicate their ideas, proposals, analysis and critical reasoning in the field of public
policy in the most effective and appropriate way.
4. Learning skills:
This course will contribute to empower learners giving them the tools to determine why certain public policies are followed and others are not and to evaluate explanatory the models in an independent way.
Contenuti Del Corso
Introduction to advanced macroeconomics with focus on the theory of consumption and asset pricing, neoclassical growth, endogenous growth and equilibrium unemployment.
Testi Di Riferimento
Class Notes, Pissarides (2000) "Equilibrium Unemployment theory", Romer, D. (2004) "Advanced Macroeconomic Theory"
Metodologie Didattiche
Regular lessons, class assignments and review sessions where the students are asked to make presentations.
Modalità di verifica dell'apprendimento
Written exam supplemented by a mid term exam and evaluation of the presentations in the review sessions.
Criteri per l’assegnazione dell’elaborato finale
Written exam, performance in class and grades in solving class assignments
Il syllabus affronta temi collegati alla sostenibilità?
Yes. At a very general level.
Settimana 1
Review of the Solow Growth Model. Dynamic efficiency. Cass criteria and Malinvaud Transversality. Ramsey Plans, Euler equations, Transversality, proving sufficiency.
Settimana 2
Lagrange Method. Stability analysis and linearization. Introduction to Bellman equations.
Settimana 3
Some standard examples. Social optima with overlapping generations. Modeling uncertainty. Characterizing Ramsey Plans under uncertainty. Costs of business cycles. Examples.
Settimana 4
Consumption and savings with complete markets. Budget sets, debt limits and the Euler equation. Ponzi games, transversality, integrability of life-time budget constraints, consumption smoothing and the permanent income hypothesis.
Settimana 5
The case of uncertainty: complete markets and incomplete markets. The certainty equivalent model. Precautionary savings. Asset pricing with long lived assets.
Settimana 6
Competitive equilibrium with complete markets and long-lived individuals. Consumption smoothing and risk sharing with no aggregate uncertainty. First Welfare Theorem. Overlapping generations model.
Settimana 7
First generation of endogneous growth model. Lucas (1988) and Romer (1986) model
Settimana 8
Continuing on previous topic.
Settimana 9
Endogenous growth model through expanding variety model, Romer (1990)
Settimana 10
Introduction to Poisson processes. Growth through creative destruction, Aghion and Howitt (1992) model. Discussion of empirical evidence
Settimana 11
Equilibrium unemployment theory. The Diamond-Mortensen-Pissarides model. The Bevridge curve and the Job creation schedule
Settimana 12
Comparative statics in the DMP model. Effects of unemployment insurance and severance payments on equilibrium unemployment. Empirical evidence