Macroeconomics: Economic Cycles, Frictions and Policy
| Code | School | Level | Credits | Semesters |
| ECON4018 | Economics | 4 | 15 | Autumn UK |
- Code
- ECON4018
- School
- Economics
- Level
- 4
- Credits
- 15
- Semesters
- Autumn UK
Summary
We start by laying the foundations of macroeconomic models with the use of very stylized one and two-period models in which consumers, firms and governments interact in the goods and factor markets. We will discuss how to solve macroeconomic models in the computer with the aid of these simple economies. We next move to study the determinants of long-run economic growth. The overarching question that we will study is: why are some countries so much richer than others? We will study several mechanisms that can potentially account for these differences, namely, capital accumulation, knowledge production and institutions. This section does not seek to be an exhaustive survey of models of economic growth it intends to highlight the mechanisms at play in a broad class of models. We will also place a strong emphasis on how to take the predictions derived from these models to the data. In the last section of the module, we turn our attention towards the ‘short run’. We will embed the consumption and labour supply decision studied at the beginning of the semester into a dynamic stochastic general equilibrium model of the macroeconomy, the standard real business cycle (RBC) model developed by Kydland and Prescott. We will study the investment decision of firms, and close the module by studying the search and matching model of unemployment of Mortensen and Pissarides.
Target Students
Available for students on the MSc Economic Development and Policy Analysis (MEDPA), MSc Financial Economics and MSc Financial and Computational Mathematics degrees. Also available for Economics PGR students.
Classes
This module is delivered through a combination of lectures and tutorials.
Assessment
- 100% Exam 1 (2-hour): Exam
Assessed by end of autumn semester
Educational Aims
The aim of this module is to consider a number of key areas in macroeconomics which are important both for model-building and policy analysis. Students will develop an understanding of some issues which are important in macroeconomics, an understanding of relevant analytical methods, both theory and model-based and an appreciation of the inter-temporal aspects of modern macroeconomics an appreciation of some important contemporary developments in macroeconomics that are relevant for policy analysis.Learning Outcomes
A Knowledge and Understanding. Students should demonstrate
A1: A broad knowledge of advanced core areas of economics, including economic concepts, principles and tools
A2: An understanding of advanced theoretical methods (including graphical and mathematical representations of economic ideas)
B Intellectual Skills. Students should be able to
B1: Model the essential features of complex economic systems
B2: Use analysis, deduction and induction to solve economic problems