Advanced Macroeconomics

Teacher

The teachers are Etienne Farvaque and Florence Huart from USTL Lille 1 in Lille (FR).

Contact

Etienne Farvaque Université de Lille – Sciences et Technologies
Bât. SH2, Cité scientifique
59655 Villeneuve d’Ascq Cedex
France
etienne.farvaque@univ-lille1.fr

Florence Huart Université de Lille – Sciences et Technologies
Bâtiment SH2
59655 Villeneuve d’Ascq Cedex
France
florence.huart@univ-lille1.fr

Pre-requisites

Students are supposed to have standard knowledge in Intermediate Macroeconomics:

  • Basic Neo-classical and Kenynesian macroeconomic models
  • Theories of inflation and unemployment
  • Standard macroeconomic analysis of taxes, budget expenditures and money creation
  • Neo-classical growth theory.

Course contents

Economic Growth

  • The Solow Growth Model:

Basic structure and developments (including human capital)

Empirical consequences: growth accounting, convergence

  • Accumulation and the Ramsey-Cass-Koopmans Model:

Basic structure. Balanced growth and the golden rule

Adding government

  • Endogenous Growth and the debate on convergence:

The basic AK model

Endogenous growth, knowledge accumulation, research and innovation

Basic results on convergence. The convergence debate

Economic Fluctuations

  • New Classical Macroeconomics and Real Business Cycle Theories:

The Basic RBC model and its implications

Empirical applications and the persistence of output fluctuations

  • New Keynesian Macroeconomics and the analysis of Nominal Rigidities:

Sticky prices, sticky wages, imperfect labor markets, imperfect competition

Output-inflation tradeoffs: Natural rate of unemployment and the Phillips Curve

  • Dynamic Stochastic General Equilibrium Models

Fiscal and Monetary Policies

  • Explaining unemployment and inflation:

The debate around the Phillips curve

Efficiency-wage models, implicit contracts, insider-outsider models

Search and matching models

The hysteresis hypothesis

  • Fiscal policies:

Automatic stabilizers

Ricardian Equivalence

Budget deficits and sustainability

  • Monetary policies:

Inflation, money growth and interest rates

Dynamic (in-)consistency of monetary policies

Interest-rate rules

Core reading

  • D. Romer, Advanced Macroeconomics, McGraw-Hill Series Economics, 4th edition, ISBN 978-0073511375
  • O.J. Blanchard, Lectures on Macroeconomics, MiT Press, ISBN 9780262022835

Learning outcomes

Upon successful completion of the course, students should be able:

  • To use macroeconomic tools for analyzing macro-economic budget and monetary policies (at least in a closed economic concepts),
  • To determine the pros and cons of these policies
  • To prepare developping these analyses in an open economy context and in the context of European Integration.

Organisation

The module consists of 12 lectures of two hours each. Students get one lecture per week.

During the interval between two lectures, the students are asked to work on exercises and research papers.

Assessment

The students will be evaluated by means of a written assignment.