Topics in Macroeconomics
Postgraduate: Level 8
Thursday 03 October 2019
Saturday 14 December 2019
11 July 2019
Requisites for this module
This module is for post-graduate research students in the Department of Economics. In the first half of the course we will analyse the implications of search frictions for the labour market. In particular, we will analyse the existence of unemployment and of wage dispersion across similar workers. We will develop the main tools of the search and matching approach, and we discuss both theoretical and empirical literature. We will look at some or all of the following topics (depending on progress through the term):
- Job Search Theory
- On-the-job Search and Wage Posting
- Sequential Auctions and Individual Bargaining
- Sorting in the Labour Market
- Firm-worker Contracting
In the second half of the course we will study normative and positive aspects of dynamic fiscal policy with a particular focus on government debt. After a short introduction to quantitative macroeconomics using the software Matlab, we look at fiscal policy chosen by governments that (i) face political economy distortions, i.e., cannot commit beyond the current tax, expenditure, and debt policies; (ii) are subject to limited commitment, i.e., may strategically choose not to honour the outstanding debt obligations. Specifically, we will look at some or all of the following topics (depending on the progress through the term):
- Standard solution methods for dynamic economic problems: value function iteration, time iteration, function approximation.
- The political economy of government debt accumulation.
- Sovereign debt and default.
The primary objective is for students to acquire the necessary tools for modern macroeconomic analysis. This requires close study and understanding of recent research outputs. For some topics we will rely upon some advanced mathematics or quantitative methods (especially, dynamic programming), which will be explained in class as we go along.
Upon successful completion of this course, students will have acquired a grasp of the main issues, theories, and tools facing modern macroeconomists. In particular, they will be able to critically assess the role of macroeconomic policy in the short and long run.
No additional information available.
The course will consist of one 2-hour lecture and one 2-hour practical class per week, over 10 weeks. The practical class will be computer based. During these classes we will go through computational problems that arise from the lecture materials.
Assessment will be based on 4 pieces of coursework. These will typically, but not necessarily always, be based on analytical and computational problems related to those discussed in the lectures and classes.
Students will give one presentation in the last part of the course. They can choose to present either their own work in progress, or discuss an existing research paper that is course-related.
- Pissarides, Christopher A. (c2000) Equilibrium unemployment theory, Cambridge, Mass: MIT Press.
- Postel-Vinay, Fabien; Robin, Jean-Marc. (2002-11) 'Equilibrium Wage Dispersion with Worker and Employer Heterogeneity', in Econometrica. vol. 70 (6) , pp.2295-2350
- A. Alesina; A. Passalacqua. (2016) 'The Political Economy of Government Debt', in Handbook of macroeconomics, Amsterdam: Elsevier. vol. Handbooks in economics, pp.2599-2652
- Mark Aguiar; Manuel Amador. (2014) 'Sovereign Debt', in Handbook of international economics, Amsterdam: North Holland. vol. Handbooks in economics, pp.647-688
- Mario J. Miranda; Paul L. Fackler. (2002) Applied computational economics and finance, Cambridge, Mass: MIT Press.
- Mortensen, Dale. (c2003) Wage dispersion: why are similar workers paid differently?, Cambridge, Mass: MIT Press.
- Postel-Vinay, Fabien; Robin, Jean-Marc. (2002-11) 'The Distribution of Earnings in an Equilibrium Search Model with State-Dependent Offers and Counteroffers*', in International Economic Review. vol. 43 (4) , pp.989-1016
The above list is indicative of the essential reading for the course. The library makes provision for all reading list items, with digital provision where possible, and these resources are shared between students. Further reading can be obtained from this module's reading list.
Assessment items, weightings and deadlines
|Coursework / exam
Module supervisor and teaching staff
Ran Gu and Andreas Mueller
Dr Francis Kiraly
Available via Moodle
Of 100 hours, 50 (50%) hours available to students:
50 hours not recorded due to service coverage or fault;
0 hours not recorded due to opt-out by lecturer(s).
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