Master’s Programme in Economics (Research track). Open to doctoral students in economics.
The course builds upon the contents of Advanced Macroeconomics 1.
After the course, the student should
- Understand and be able to solve macroeconomic models with incomplete markets (in particular, the concepts of idiosyncratic uncertainty, borrowing constraint, and stationarity issues as covered in partial and general equilibrium setups)
- Understand the search and matching theory applied to macroeconomic models of the labour market (in particular, concepts such as labour market tightness and reservation wages as determinants of the unemployment rate)
Annually in the second period
The course builds upon the models studied in the Advanced Macroeconomics 1 course, further introducing uncertainty, capital market incompleteness and general equilibrium stochasticity. As another application of recursive and stochastic macroeconomic models, it introduces search and matching theory for the analysis of labour market issues.
In addition to the lecture material, selected parts of Recursive Macroeconomic Theory by Ljungqvist and Sargent, 3rd edition (2012, MIT Press; 2nd edition, 2004, available online); Applied Intertemporal Optimization by Wälde (2011, available online); Macroeconomic Theory: A Dynamic General Equilibrium Approach by Wickens, 2nd edition (2012); Unemployment Theory by Pissarides (2000, MIT Press) that are covered in the course are recommended.
Course material is delivered through the course website. The website also contains moderated discussion groups that support learning. 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. At least 40% of the homework assignments must be completed to take the exam.
The course consists of lectures (24 hours) and exercise sessions (8 hours), where solutions to the homework assignments are discussed. Participation in lectures and exercise sessions is not mandatory, but completing 40% of the homework assignments is required for taking the exam. 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.