Master’s Programme in Economics (Research track). Open also to doctoral students in economics.
The course builds upon the contents of Advanced Macroeconomics 1 and 2
After the course, the student should
- Be able to calculate stylised facts using macroeconomic data
- Be able to linearise and solve linear dynamic models
- Understand and master the real business cycle model (RBC)
- Be able to augment the RBC model with other economic features and shocks
Annually in the third period
The course starts with an introduction to business cycle facts and methods. Then we present the main theoretical concepts and methods for solving and calibrating stochastic dynamic general equilibrium (DSGE) models, starting with the basic real business cycle model (RBC). Further topics include the extension to the open economy as well as the analysis of financial frictions and asset pricing.
The course will mainly draw elements from the following books:
- David DeJong and Chetan Dave (2011). Structural Macroeconometrics, 2nd ed., Princeton University Press
- Michael Wickens (2011). Macroeconomic Theory, 2 ed., Princeton University Press
- George McCandless (2008). The ABCs of RBCs. An Introduction to Dynamic Macroeconomic Models, Harvard University Press
- Stephanie Schmitt-Grohe and Martin Uribe, Open Economy Macroeconomics, textbook manuscript, current version at: http://www.columbia.edu/~mu2166/book/
Course material is delivered through the course website. Problem sets are designed to support learning of the course material.
The grade on a scale from 0 (fail) to 5 is based on the points earned in the final exam.
The course consists of lectures (24 hours) and exercise sessions (8 hours), where solutions to the homework assignments are discussed. The lectures and exercise sessions are not mandatory. There is a written final exam based on the lecture material and the homework assignments. The homework assignments consist of analytical exercises. They familiarise the student with the theory and calculations typically required in applying and extending the models that have been studied in the lecture. They also involve the interpretation of model economies.