Home » Departments and Centres » Academic catalogue » Course detail

Open sidebar menu

Macroeconomics 1 (ECO-CO-MACRO1)

ECO-CO-MACRO1

Purpose

>see below

Description

>

Macroeconomics I, Part I: Equilibrium with Complete Markets and Dynamic Programming,

Jesus Bueren European University Institute, 2024

1. Equilibrium with complete markets.
- Static exchange economies
- Exchange economies with infinitely lived agents
- Exchange economies with infinitely lived agents and uncertainty
2. Dynamic programming
- From the sequential to the recursive formulation
- The principle of optimality
- The contraction mapping theorem
- Solving the Bellman equation: discrete state-space methods.
- Application: the Neoclassical growth model in discrete time
- Recursive Competitive Equilibrium in the Neoclassical growth model
3. Stochastic dynamic programming
- Introducing uncertainty in dynamic programming
- Application: The Neoclassical growth model with productivity shocks
Evaluation. 90% final exam + 10% problem sets

Books. The key references for this course are Ljungqvist and Sargent (2012), Adda and Cooper
(2003), and Stokey, Lucas and Prescott (1989), Azzimonti et. al. (2024) download it here .

Macroeconomics I-Part 2.
Professor Alexander Monge-Naranjo
 
DESCRIPTION
This core half-credit macro course covers the basic dynamic models of incomplete markets that must be familiar to all research economists, not just those doing macro. In the first lecture, we will cover the basics of asset prices in macroeconomic models with complete and incomplete markets. In the second and third lectures, we will discuss the literature on aggregate consumption, including the permanent income, life-cycle, and precautionary saving models. In the fourth and fifth lectures, we develop the baseline incomplete markets dynamic general equilibrium model.

GRADING
The grade will be based on a final exam (90%) and two problem sets (10%).
Main text: We will largely follow chapters from Ljungqvist and Sargent’s “Recursive Macroeconomic Theory” (LS) Fourth Edition, MIT Press, 2018. In the lectures, I will also directly reference papers and other sources as needed. I will upload the slides of the class in Brightspace.

Other References: A number of other books can provide support during the class. For example:
Adda and Cooper. Dynamic Economics. MIT Press, 2003.
Azzimonti et al. Macroeconomics. https://phdmacrobook.org/
QuantEcon: https://quantecon.org/ Source of lectures, codes and much more, put forth by Tom Sargent and John Stachurski.
Stachurski. Economic Dynamics. MIT Press, 2009.
Stokey, Lucas, and Prescott. Recursive Methods in Economic Dynamics. Harvard University Press, 1989.

LECTURES
Lecture 1: Asset Pricing Implications of Macro Models.
Lecture 2: Asset Prices. Consumption with Complete and Incomplete Markets.
Lecture 3: Consumption with Complete and Incomplete Markets.
Lecture 4: Equilibrium with Incomplete Markets: Huggett/Aiyagari.
Lecture 5: Equilibrium with Incomplete Markets: Huggett/Aiyagari.

Register for this course