Master
2020/2021
Advanced Macroeconomics
Type:
Compulsory course (Strategic Corporate Finance)
Area of studies:
Finance and Credit
Delivered by:
Department of Theoretical Economics
Where:
Faculty of Economic Sciences
When:
1 year, 1, 2 module
Mode of studies:
offline
Master’s programme:
Strategic Corporate Finance
Language:
English
ECTS credits:
5
Contact hours:
90
Course Syllabus
Abstract
This course along with Econometrics and Advanced Microeconomics forms the core trinity of compulsory disciplines that provide theoretical background for the master’s program in economics at the HSE Faculty of Economic Sciences. The one-semester course is taught in English in the 1st and 2nd modules to the first-year graduate students. The course focuses on selected topics which are central to modern macroeconomics, like the short-run economic fluctuations, stabilization policies in the medium-run, long-run economic growth, as well as political economy issues of macroeconomic policies. Both basic and more advanced theoretical models and analytical techniques are widely used in the course but are treated as tools for granting insights into important issues, not as ends in themselves. The course aims to develop a model-based way of ‘aggregate thinking’ and make students ready to apply relevant macroeconomic tools in their further studies and professional career
Learning Objectives
- introduce students to widely used macroeconomic theories and their applications
- ensure students can apply macroeconomic analysis using both graphical and algebraic techniques to the study of contemporary and historical economic cases
- develop students’ ability to put their research and professional interests into a broader political and macroeconomic context
- encourage students to question and critically assess existing academic and non-academic literature in their research area from the macroeconomic perspective
- enable students to communicate their ideas using modern internationally recognised professional language of economists
- enable students to critically evaluate modern macroeconomic trends, provide competent reasoning to lead well-grounded discussions
- enhance students' peer-learning through moderation of their collaborative work on a team project on macroeconomic policy
- develop students' skills to present the results of group and individual research projects both orally and in writing
Expected Learning Outcomes
- ILO 1: formulate basic macroeconomic principles and quantify relations between macroeconomic aggregates
- ILO 3: derive closed form solutions to standard macroeconomic problems both algebraically and graphically
- ILO 5: justify empirical relevance of the macroeconomic models and feasibility of policy recommendations
- ILO 6: evaluate and develop relevant macroeconomic models to illustrate real-life phenomena through applying good group working practices
- ILO 4: assess the potential and limitations of the macroeconomic models and critically evaluate their applicability
- ILO 2: describe the models and methods used in macroeconomic analysis of the short-, medium-, and long-run
Course Contents
- Introduction to macroeconomicsBasic macroeconomic problems and concepts. Macroeconomic variables and problems with aggregation. National accounts, total output and national income. Aggregate demand components. Goods market equilibrium in an open economy. Keynesian Cross diagram and the multiplier. Fiscal policy and balanced budget multiplier
- Open economy macroeconomics in the short-runIS schedule. Fiscal and redistribution policies in an open economy with heterogeneous agents. Financial market equilibrium. Money supply and money demand. LM schedule. Banking system and the role of CB. Open economy macroeconomics: balance of payments, exchange rate determination, CIP, UIP, LOOP. General equilibrium and macroeconomic policies in an open economy. Fiscal and monetary policies in the IS-LM-BP model. International macroeconomics and policy transmission. Repercussion effects, economic sanctions, trade embargo and capital movement restrictions
- Closed economy macroeconomics in the medium-runLabour market, wage and price determination. Unemployment. AD – AS model. Sticky prices, wages and information. Inflation, expectations and Phillips curve. Expectations and microeconomic foundations of aggregate consumption and investment. Political economy in macroeconomics. Policy rules vs. discretion. Credibility, accountability, transparency and time inconsistency. Policy goals, targets and instruments.
- Economic growthThe Solow model. Neoclassical production function, constant returns to scale and Inada conditions. Dynamics of the model and the concept of the balanced growth path. Policy shocks and transition dynamics. Golden rule of capital accumulation and dynamic efficiency. Growth accounting. Absolute and conditional convergence. Quantitative measure of the speed of convergence. Convergence clubs and the identification problems with cross-country regressions: selection bias and measurement error. Saving and investment in growth regressions. Convergence and the dispersion of per capita income: β- and σ-convergence. The OLG model and endogenous saving rate. Steady state and dynamic efficiency. The AK model and the absence of diminishing returns to capital. Endogenous growth with transitional dynamics and CES production functions. Growth models with poverty traps. Accumulation of knowledge and exogenous allocation of resources to R&D sector. Dynamics of knowledge accumulation in the model without capital and in the generalised model. The importance of returns to scale to produced factors and the role of population growth. Nature of knowledge (non-rivalry and non-excludability) and determinants of its accumulation.
