Applied Macroeconomics

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The aim of this 45-hours lecture is to present modern macroeconomic methods and models used both by researchers and analysts to understand and predict macroeconomic phenomena. Upon completion students will be able to use acquired tools to explain and interpret the workings of the macroeconomy at an advanced level.

The course is composed of three parts. The first part is devoted to static (intersectoral) general equilibrium analysis. The second part covers core growth facts and theories. The third part is devoted to analyzing and modeling business cycles phenomena.

Part I: Static General Equilibrium (15 h):

1. Two-sector Robinson Cruzoe model.

2. Multiple household types.

3. Taxes and transfers. Government sector. Investment in static models.

4. Endogenous labour supply. Wage setting and unemployment.

5. International trade. Armington aggregator.

Part II: Dynamic General Equilibrium: Growth (15 h):

1. Growth facts. Solow model.

2. Ramsey model.

3. Optimal taxation in the long run.

4. Endogenous growth.

5. Overlapping Generations.

Part III: Dynamic Stochastic General Equilibrium: Business Cycles (15 h):

1. Real Business Cycle model.

2. Unemployment over business cycle. Search & matching framework.

3. New Keynesian model.

4. Optimal monetary policy.

5. Financial Frictions.

Lecture notes

KNOWLEDGE / WIEDZA

Students know how to the main macroeconomic models in the fields of static general equilibrium, economic growth and business cycles and their implications for economic policy.

SKILLS / UMIEJĘTNOŚCI

Upon completion of the course students will be able to:

• Formulate simple general equilibrium models

• Understand the logic behind macroeconomic statics and dynamics

• Understand processes behind economic growth and business cycles

• Evaluate the effects of changes in macroeconomic policy

K_W01, K_U03

Evaluation is based on the final exam (70%), as well as homework assignments (30%). The points from the exam and homework add up to the final grade.