Course Description

Course Name

Advanced Macroeconomics

Session: VGSS3122

Hours & Credits

15 SCQF Credits

Prerequisites & Language Level

Taught In English

  • There is no language prerequisite for courses at this language level.

Overview

Short Description
With the ultimate aim of understanding the causes and consequences of fluctuations in macroeconomic activity, this course sets out the micro-foundations of modern macroeconomic theory by analyzing the optimizing choices of households, firms and the government in the markets for goods, labour, capital and public bonds. This is achieved in a general equilibrium framework by examining the interaction in all markets simultaneously.

Course Aims
The aims of this course are to:
- Understand the causes and consequences of fluctuations in macroeconomic activity using a micro-founded theory which analyzes the optimizing choices of households, firms and the government in the markets for goods, labour, capital and public bonds.
- Appreciate how each market interacts such that market clearing equilibrium prices and quantities can be solved for simultaneously.
- Learn the mathematical, numerical and graphical tools to undertake the above analysis.
- Apply the theoretical and analytical tools to a variety of real world examples including: productivity policy and growth; moral hazard and unemployment benefits; economic rents and corruption; unemployment benefits as insurance; taxes and employment policy; regulation of airlines, oil and pollution; immigration waves and rural-urban migration; savings rate, permanent income and the debt crisis; capital market regulation; and policies to foster capital market trade.

Intended Learning Outcomes of Course
By the end of this course, students should be able to:
- Specify the behaviour of households, firms and the public sector in the key markets comprising modern general equilibrium macroeconomic models.
- Model both representative and heterogeneous households based on their preferences, constraints and endowments.
- Model the representative firm based on its profit motives and technological constraints.
- Solve a general equilibrium model at the steady-state taking into account the simultaneous interaction of multiple agents in multiple markets.
- Understand the motives, constraints and consequences of government policy.
- Undertake simple and constrained optimization in static framework.
- Conduct dynamic optimization using the Lagrangian and dynamic programming methods.
- Solve systems of equations analytically, graphically and numerically.
- Graph the primitive functions and optimality conditions occupying the various models studied in a spreadsheet or in a math package such as Matlab or Maple.

*Course content subject to change