University of Essex

EC991-8-AU-CO:
Topics in Macroeconomics

The details

Year: 2023/24

Department: Economics

Campus: Colchester Campus

Term: Autumn

Level: Postgraduate: Level 8

Status: Current

Start date: Thursday 05 October 2023

End date: Friday 15 December 2023

Credits: 20

Last updated: 07 September 2023

Requisites for this module

Pre-requisites: (none)

Co-requisites: (none)

Pre and / or co-requisites: (none)

Prohibited modules: (none)

Key module (requisite for): (none)

Key module for

(none)

Module description

This module covers topics in decision theory, game theory, and contract theory with an emphasis on mathematical formalism. The module will introduces the basic mathematical framework and methods that are relevant to research in these topics.

Module aims

The aims of this module are:

To introduce students to the mathematical formalism involved in understanding research in economic theory.

To introduce students to the topics of decision theory, game theory, and contract theory at the level of the postgraduate textbooks listed in the bibliography.

Module learning outcomes

By the end of this module, students will be expected to be able to:

Understand the basic mathematical frameworks and methods used in theoretical economics analysis, particularly the topics of decision theory, game theory, and contract theory.

Understand, develop, and solve problems in the basic mathematical frameworks relevant for these topics.

Module information

This module builds on MRes Microeconomics, MRes Macroeconomics, MRes Econometrics, and Mathematical Methods. Students who wish to take this module without the four modules indicated above should contact the module instructor.

The assignments for this module aim to help develop students understanding of the mathematical frameworks and methods used in the above noted topics. The test and exam for this module aims to assess the students understanding of these issues through solutions of problems.

Learning and teaching methods

This module will be delivered via:

Lectures.
Classes.

Lectures will cover key points and concepts relevant for understanding the topics of this module.

Feedback for this module will occur through:

Class meetings where we will go over the answers to problem sets and where you will be able to ask questions about your own method of solution.
Answers that will be posted on the website for the module that will give you written guidance and feedback on the appropriate method to approach the problems, assignments.
Tests.
Academic support hours where additional questions can be addressed and further feedback obtained.

Students should make sure that they use these methods and resources to understand how to improve their own performance.

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.

Bibliography

Pissarides, C.A. (2000) Equilibrium Unemployment Theory. 2nd edn. Cambridge, US: MIT Press. Available at: https://search.ebscohost.com/login.aspx?direct=true&db=nlebk&AN=32637.
Mortensen, D. (2003) Wage Dispersion: Why are Similar Workers Paid Differently? Cambridge, US: MIT Press. Available at: https://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=100091.
Abowd, J.M., Kramarz, F. and Margolis, D.N. (no date) ‘High Wage Workers and High Wage Firms’, Econometrica, 67(2), pp. 251–333. Available at: https://onlinelibrary-wiley-com.uniessexlib.idm.oclc.org/loi/14680262.
Bontemps, C., Robin, J.-M. and Van den Berg, G.J. (no date) ‘An Empirical Equilibrium Job Search Model With Search on the Job and Heterogeneous Workers and Firms’, International Economic Review, 40(4), pp. 1039–1074. Available at: https://doi.org/10.1111/1468-2354.00052.
Burdett, K. and Mortensen, D.T. (no date) ‘Wage Differentials, Employer Size, and Unemployment’, International Economic Review, 39(2), pp. 257–273. Available at: https://doi.org/10.2307/2527292.
Postel-Vinay, F. and Robin, J.-M. (no date a) ‘Equilibrium Wage Dispersion with Worker and Employer Heterogeneity’, Econometrica, 70(6), pp. 2295–2350. Available at: https://onlinelibrary-wiley-com.uniessexlib.idm.oclc.org/loi/14680262.
Postel-Vinay, F. and Robin, J.-M. (no date b) ‘The Distribution of Earnings in an Equilibrium Search Model with State-Dependent Offers and Counteroffers*’, International Economic Review, 43(4), pp. 989–1016. Available at: https://doi.org/10.1111/1468-2354.t01-1-00045.
S. Rao Aiyagari (1994) ‘Uninsured Idiosyncratic Risk and Aggregate Saving’, The Quarterly Journal of Economics, 109(3), pp. 659–684. Available at: https://www.jstor.org/stable/2118417.
Imrohoroglu, A. (1992) ‘The welfare cost of inflation under imperfect insurance’, Journal of Economic Dynamics and Control, 16(1), pp. 79–91. Available at: https://doi.org/10.1016/0165-1889(92)90006-Z.
Huggett, M. (1993) ‘The risk-free rate in heterogeneous-agent incomplete-insurance economies’, Journal of Economic Dynamics and Control, 17(5-6), pp. 953–969. Available at: https://doi.org/10.1016/0165-1889(93)90024-M.
Krusell, P. and Smith, Jr., A.A. (1998) ‘Income and Wealth Heterogeneity in the Macroeconomy’, Journal of Political Economy, 106(5), pp. 867–896. Available at: https://www.jstor.org/stable/10.1086/250034.
Auclert, A. et al. (2021) ‘Using the Sequence-Space Jacobian to Solve and Estimate Heterogeneous-Agent Models’, Econometrica, 89(5), pp. 2375–2408. Available at: https://doi.org/10.3982/ECTA17434.
Galí, J. (2015) Monetary policy, inflation, and the business cycle: an introduction to the new Keynesian framework and its applications. Second edition. Princeton: Princeton University Press. Available at: https://app.kortext.com/Shibboleth.sso/Login?entityID=https://idp0.essex.ac.uk/shibboleth&target=https://app.kortext.com/borrow/121581.
Woodford, M. (2003) Interest and prices: foundations of a theory of monetary policy. Princeton, N.J.: Princeton University Press. Available at: https://www-jstor-org.uniessexlib.idm.oclc.org/stable/10.2307/j.ctv30pnvmf.
Taylor, J.B. (1993) ‘Discretion versus policy rules in practice’, Carnegie-Rochester Conference Series on Public Policy, 39, pp. 195–214. Available at: https://doi.org/10.1016/0167-2231(93)90009-L.
Thomas J. Sargent, Neil Wallace (1975) ‘“Rational” Expectations, the Optimal Monetary Instrument, and the Optimal Money Supply Rule’, Journal of Political Economy, 83(2), pp. 241–254. Available at: https://www.jstor.org/stable/1830921.
Bullard, J. and Mitra, K. (2002) ‘Learning about monetary policy rules’, Journal of Monetary Economics, 49(6), pp. 1105–1129. Available at: https://doi.org/10.1016/S0304-3932(02)00144-7.
Thomas J. Sargent (1982) ‘Beyond Demand and Supply Curves in Macroeconomics’, The American Economic Review, 72(2), pp. 382–389. Available at: https://www.jstor.org/stable/1802363.
Leeper, E.M. (1991) ‘Equilibria under “active” and “passive” monetary and fiscal policies’, Journal of Monetary Economics, 27(1), pp. 129–147. Available at: https://doi.org/10.1016/0304-3932(91)90007-B.
Lawrence J. Christiano, Martin Eichenbaum, Charles L. Evans (2005) ‘Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy’, Journal of Political Economy, 113(1), pp. 1–45. Available at: https://www.jstor.org/stable/10.1086/426038.
Rupert, P. and Šustek, R. (2019) ‘On the mechanics of New-Keynesian models’, Journal of Monetary Economics, 102, pp. 53–69. Available at: https://doi.org/10.1016/j.jmoneco.2019.01.024.
Galí, J. (no date) ‘Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations?’, American Economic Review, 89(1), pp. 249–271. Available at: https://search-ebscohost-com.uniessexlib.idm.oclc.org/login.aspx?direct=true&db=bsu&AN=1724755&site=ehost-live&authtype=sso&custid=s9814295.
Christiano, L.J., Eichenbaum, M. and Vigfusson, R. (2003) ‘What Happens After a Technology Shock?’ Available at: https://www.nber.org/papers/w9819#:~:text=We%20provide%20empirical%20evidence%20that,average%20productivity%20and%20output%20up.
Woodford, M. (no date) ‘Simple Analytics of the Government Expenditure Multiplier’, American Economic Journal: Macroeconomics, 3(1), pp. 1–35. Available at: https://www.nber.org/system/files/working_papers/w15714/w15714.pdf.
McKay, A. (no date) ‘The Power of Forward Guidance Revisited’, American Economic Review, 106(10), pp. 3133–58. Available at: https://search-ebscohost-com.uniessexlib.idm.oclc.org/login.aspx?direct=true&db=bsu&AN=118440204&site=ehost-live&authtype=sso&custid=s9814295.
Kaplan, G. (no date) ‘Monetary Policy According to HANK’, American Economic Review, 108(3), pp. 697–743. Available at: https://search-ebscohost-com.uniessexlib.idm.oclc.org/login.aspx?direct=true&db=bsu&AN=128220269&site=ehost-live&authtype=sso&custid=s9814295.

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	Description	Coursework weighting
Coursework	Assignment 1	25%
Coursework	Assignment 2	25%
Coursework	Assignment 3	25%
Coursework	Assignment 4	25%

Additional coursework information

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.

Exam format definitions

Remote, open book: Your exam will take place remotely via an online learning platform. You may refer to any physical or electronic materials during the exam.
In-person, open book: Your exam will take place on campus under invigilation. You may refer to any physical materials such as paper study notes or a textbook during the exam. Electronic devices may not be used in the exam.
In-person, open book (restricted): The exam will take place on campus under invigilation. You may refer only to specific physical materials such as a named textbook during the exam. Permitted materials will be specified by your department. Electronic devices may not be used in the exam.
In-person, closed book: The exam will take place on campus under invigilation. You may not refer to any physical materials or electronic devices during the exam. There may be times when a paper dictionary, for example, may be permitted in an otherwise closed book exam. Any exceptions will be specified by your department.

Your department will provide further guidance before your exams.

Overall assessment

Coursework	Exam
100%	0%

Reassessment

Coursework	Exam
100%	0%

Module supervisor and teaching staff

Supervisor: Dr Ran Gu, email: ran.gu@essex.ac.uk.
Dr Valerio Pieroni, email: valerio.pieroni@essex.ac.uk.

Teaching staff: Lectures & Classes: Dr Valerio Pieroni and Dr Ran Gu

Contact details: For further information, send an email message to pgteco@essex.ac.uk.

Availability

Available to incoming Essex Abroad / Exchange students: Yes

Available to Outside Option: No

Available to Audit: No

External examiner

Name: Dr Domenico Moro

Institution: university of Birmingham

Academic role: Lecturer

Resources

Teaching materials: Available via Moodle

Lecture recording: Of 40 hours, 32 (80%) hours available to students:
8 hours not recorded due to service coverage or fault;
0 hours not recorded due to opt-out by lecturer(s), module, or event type.

Further information

Department website: Economics

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The full Procedures, Rules and Regulations of the University governing how it operates are set out in the Charter, Statutes and Ordinances and in the University Regulations, Policy and Procedures.

Module Directory

EC991-8-AU-CO:Topics in Macroeconomics