ECON50740

This is a PhD-level level course in macroeconomics. The principal focus is on the theoretical and empirical methods used by modern macroeconomists. The module has an applied focus, with extensive use made of Matlab to illustrate how to build and solve macroeconomic models. The second module in the sequence will focus on a range of topics related to macroeconomic policy.

Most of modern macroeconomics is focused on dynamics: How do macroeconomic variables change over time and how do the variables interact with each other? In some cases, macroeconomists design models intended to match data and be used for policy analysis. In other cases, they design ``stylised'' models designed to shed light on certain specific phenomenon or inter-relationships. Macroeconomic models also differ in other ways:
(a) Are they deterministic or stochastic?
(b) Do they use discrete time or continuous time?
(c) Do they use Lagrangian-based optimisation methods or more sophisticated techniques like dynamic programming and optimal control?

We will cover all of these model types and will use "type of model'' as our organising framework. The list of planned topics is as follows:

1. Deterministic Dynamic Models: Difference equations, differential equations, phase diagrams. optimal control.
2. Stochastic Dynamic Models: Markov chains, autoregessive models including vector autoregressions.
3. Rational Expectations Models: Stochastic difference equations with expectations, real business cycle model, DSGE models.
4. Dynamic Programming in Discrete Time: Finite horizon and infinite horizon dynamic programming in both deterministic and stochastic settings.