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Intro: Master Level Macroeconomics

This document provides an overview of topics to be covered in a Master Level Macroeconomics course. The course will use representative agent models to study macroeconomic outcomes from the decisions of consumers and firms. Key topics that will be covered include consumer and firm theory, the three macro markets of goods, labor, and financial markets, fiscal and monetary policy, general equilibrium modeling, different macroeconomic schools of thought, asset pricing, and important macroeconomic variables. Real-world data on GDP, consumption, investment, employment, prices, and business cycles will also be examined.

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83 views19 pages

Intro: Master Level Macroeconomics

This document provides an overview of topics to be covered in a Master Level Macroeconomics course. The course will use representative agent models to study macroeconomic outcomes from the decisions of consumers and firms. Key topics that will be covered include consumer and firm theory, the three macro markets of goods, labor, and financial markets, fiscal and monetary policy, general equilibrium modeling, different macroeconomic schools of thought, asset pricing, and important macroeconomic variables. Real-world data on GDP, consumption, investment, employment, prices, and business cycles will also be examined.

Uploaded by

ooaminoo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Master Level Macroeconomics

Intro
Modern macroeconomics
•  Modern macro builds on microfoundations.
•  Study decisions of consumers and firms that
yield macroeconomic outcomes.
•  But study which units? Heterogeneity
creates complexity.
•  Different approaches, e.g., group units
according to relevant heterogeneity, or use
representative agent model.
2
Our approach
•  Representative agent model
•  The building block of modern macro
•  There are a great many consumers and firms
that act identical to each other.
•  Many times this is an average (e.g. GDP per
capita, consumption per capita)

3
Topics we will cover
•  Consumer theory review: 2 goods
Consumers’ side
•  Consumption-leisure problem (static)
•  Intertemporal consumption decisions(dynamic)
•  Dynamic consumption-leisure problem
(together)
•  Derive labor supply, savings supply and goods
demand
4
Topics we will cover
Firms side
•  Dynamic profits max problem
•  Decisions on labor and capital inputs
•  Derive labor demand, investment demand
and goods supply

5
The Road Ahead

THE THREE MACRO (AGGREGATE) MARKETS


q  Goods Markets P

wage
q  Labor Markets

labor
interest
rate
q  Financial/Capital/Savings/Asset
Markets

capital

6
Topics we will cover
Fiscal Policy
•  Government expenditure and taxes
•  Ricardian equivalence: taxation timing does
not matter
•  Benchmark fiscal policy result

7
Topics we will cover
•  General Equilibrium
•  Consistent behavior of consumers, firms,
government
•  Shocks
•  Real Business Cycle model

8
Topics we will cover
Macroeconomic schools of thought
•  History
•  Real Business Cycle theory
•  Ney Keynesian macroeconomics

9
Topics we will cover
Asset Pricing
•  Infinite period problem
•  Consumption based asset pricing for stock
and bonds

10
Topics we will cover
Monetary Policy
•  Modeling money
•  Monetary policy in the real business cycle
model and the Friedman rule
•  Monetary policy in the New-Keynesian
model: monopolistic competition and sticky
prices

11
Key Macroeconomic Variables

12
Per Capita Real GDP (in 2005 dollars) for the
United States, 1900–2011
Percentage Deviations from Trend in
Real GDP (trend removed, focus on business
cycles)
Percentage Deviations from Trend in
Real Consumption and Real GDP
Percentage Deviations from Trend in
Employment and Real GDP
Percentage Deviations from Trend in Real
Investment and Real GDP
Price Level and GDP
•  Have a great semester

19

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