88065 - MACROECONOMICS

Learning outcomes

At the end of the course the student should have acquired a good understanding of macroeconomic models used to study the determinants and evolution of output, unemployment and prices, in the short and medium run, and of issues related to the conduct of monetary and fiscal policy. In particular, he/she knows: - the role played by nominal and real rigidities in the transmission of monetary shocks and the role of rational expectations; - the determinants of unemployment; - the meaning of sustainability and solvency in the public debt dynamics; - models of the political economy of public debt and default.

Course contents

The course lies at the crossroad between quantitative methods and macroeconomics. Therefore, elementary concepts of linear algebra and basic knowledge of dynamic programming are required. Familiarity with MATLAB is desired.

By the end of the course, students will have developed a solid understanding of the macroeconomic models commonly used to analyze the determinants and dynamics of business cycles — the recurrent expansions and contractions of economic activity over time. The course organization more in details is as follows:

• The Real Business Cycle model, primitives, long-run equilibrium, linearization and solution;

• The New-Keynesian (NK) paradigm and models with nominal frictions;

• State space models and Kalman filter; the VAR representation of business cycle models;

• Departure from representative (RA) agent model: the Two Agent NK (TANK) model;

• Departures from full-information rational expectations (FIRE);

• Hands on business cycle models with Dynare.

Readings/Bibliography

Students can mostly rely on the slides. A list of suggested text books, readings and various sources follow:

Galì, J., Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework, Princeton University Press, 2008.

M. Azzimonti, P. Krusell, A. McKay, and T. Mukoyama, Macroecononomics, https://phdmacrobook.org/

Teaching methods

Theoretical classes will be supported and complemented by hands-on exercises. As a consequence, the course will require the use of computers and programs; we will work with Matlab and Dynare.

Assessment methods

Assessment consists of one final exam. Grading scale:

<18 failed

18-23 sufficient

24-27 good

28-30 very good

30 e lode outstanding

Teaching tools

Slides, lecture notes, and readings will be available on the platform VIRTUALE: https://virtuale.unibo.it/

Office hours

See the website of Filippo Piermaria Ferroni