This course provides students with a graduate-level introduction to key macroeconomic questions. The dynamic nature of modern macroeconomic models necessitates sufficient familiarity with optimal control and dynamic programming methods, which are discussed in the course. We will discuss a selection of topics related to economic growth, consumption, investment, unemployment and monetary and fiscal policy. The lectures will loosely follow the widely used textbook Advanced Macroeconomics by David Romer, with the table of contents given below. By no means will it be possible to cover all chapters.After having completed the course, students have gained familiarity with the construction and workings of (stylized) dynamic macroeconomic models. The methods and modelling approaches learned during this course are important also in other fields, e.g., asset pricing, investment theory, etc.

EC2: Macroeconomics is divided into lectures and practice sessions.The lectures are devoted to develop an in-depth understanding of the models presented. This includes tools to solve and simulate these models as well as discussions concerning their usefulness and limitations.The practice sessions, in which attendance is mandatory, deepen the knowledge obtained in the lectures by discussing both pencil and paper as well as computer exercises that have to be prepared by the participants. 

Time-, interest- and knowledge-adequate selection from the following chapters:The Solow Growth ModelInfinite-Horizon and Overlapping-Generations ModelsEndogenous GrowthCross-Country Income DifferencesReal-Business-Cycle TheoryNominal RigidityDynamic Stochastic General-Equilibrium Models of FluctuationsConsumptionInvestmentFinancial Markets and Financial CrisesUnemploymentMonetary PolicyBudget Deficits and Fiscal PolicyThe item list is encompassing – and in this form too much for our allocated time, therefore we will make a “sensible” selection, based on prior knowledge and specific interests (compatible with prior knowledge).

Common Body of Knowledge – CBK 5: Bridging Economics and CBK 3: Bridging Computing

Common Body of Knowledge – CBK 1: Mathematical Methods and CBK 2: Statistical Methods.

Romer, D. (2019) Advanced Macroeconomics, McGraw-Hill, Fifth Edition.

Practice sessions: For the practice sessions you will have to solve the exercises of the corresponding exercise sheet. During the practice sessions you will be asked – chosen randomly – to present your solution for any of the exercises you ticked. You are expected to give a short and succinct presentation of your solutions.The deadline for ticking the exercises in the checklist and uploading the solutions is at 1:00pm on the day of the corresponding practice session.A necessary condition for successfully completing the practice sessions is to tick at least 60% of the exercises. If it turns out that you are absent (without excuse) or haven’t prepared the exercise, you may be penalized with up to 5 minus points. In addition, you will lose the point for the exercise you ticked in the list (or all if you are absent). Serious flaws in the solutions presented will lead to deductions. You may, however, also be awarded bonus points for particularly good explanations of exercises and contributions (to the discussions).There will be a closed-book written final exam.

The final exam is strictly based on the actual contents discussed in the lectures and practice sessions.

Each part (practice sessions and final exam) must be completed successfully (i.e., at least 50% of the attainable points have to be achieved) with both parts each contributing 50% to the overall grade; this means that taking the final exam is conditional upon completing the practice sessions successfully.The overall final grade is – in case both parts are completed successfully – the arithmetic mean of the two sub-grades, rounded in favour of the student.If one of the two parts is not completed successfully EC2:Macroeconomics needs to be repeated in its entirety. [This is required by law and not for us to decide.]