DECO 22A04 - Intermediate Macroeconomics

This second-year undergraduate course is designed for those who have a deeper interest in macroeconomics. It aims to (1) enhance participants' ability to read, comprehend, and evaluate contemporary mainstream macroeconomic research using formal models and existing empirical evidence, and (2) provide an overview of the history of mainstream macroeconomics since J. M. Keynes' magnum opus, The General Theory. Ever since the ‘Keynesian revolution', mainstream macroeconomics has been among the most policy-oriented fields within economics, characterized by recurring episodes of irreconcilable disagreement regarding the meaning and relevance of proposed concepts and models. However, a significant paradigm shift occurred in the early 1970s following Robert E. Lucas' critique, leading to a greater emphasis on explicit microfoundations and empirical testing in contemporary research standards. In the first part of the course, we will be concerned with the short- and medium-term determination of macroeconomic aggregates and their interconnections, with special focus on employment and unemployment. The exposition of the Keynesian paradigm will be followed by a discussion of the Lucas critique and its implications for contemporary macroeconomic research. The Keynesian paradigm will then be contrasted with various micro-founded neoclassical models of employment. A conclusion about Second-Generation New Keynesian modelling (using the terminology of Michel De Vroey) will follow. In the second part of the course, we will shift our attention to the long-term determination of macroeconomic aggregates and their interconnections. We will begin with the major question of what explains differences in long-run output growth across different regions and time periods. This part will include a detailed review of the Solow model, accompanied by a brief overview of endogenous growth theory. If time permits, the final sessions will be devoted to a discussion of potential dynamic inefficiency within an overlapping-generations model that explicitly incorporates households' consumption-savings decision-making. The course borrows from various (text)books (see references below), but participants are advised against buying any of the (text)books as the course material made available to them will be sufficient for successful completion of the course.

Daniel GYETVAI

Séminaire

English

Spring 2023-2024

1. Group presentation: 15-minute presentation of a paper in Session 11 (30%) 2. Take-home assignment (30%) 3. Final exam in Session 12 (30%) 4. Participation (10%)