Victor Polterovich

Macroeconomics– 3.

2006-2007

Victor Polterovich

Course syllabus

Macroeconomics-3 is the first part of the obligatory graduate coursework for Masters degree. Macro-3 consists of 14 lectures and 7 seminars. Primary course objective – to master common models macroeconomics and elements of monetary theory.

Problem sets will comprise 30% of the final grade and the exam will account for 70%.

1. INTRODUCTION: problems and methods in modern macroeconomics.

(В), ch.1.

2. GROWTH ACCOUNTING. SOLOW MODEL

Basic Solow model; steady state, stability, comparative statics. Drawbacks of the model. Growth model with human capital.

(R), ch.1, ch. 3, p.126-140

(BS) ch. 1, p.14-56

(А), ch.7, p.68-72

3. SAVINGS, INVESTMENT AND GROWTH. RAMSEY MODEL

Ramsey model of optimal economics growth. , definition of solution, transversally condition. Keynes-Ramsey rule. Steady states, stability. Budget constraint in continuous time. No-Ponzi-game condition. Decentralized Ramsey model. Effectiveness and equilibrium paths.

Government in decentralized model. Ricardian equivalence. Capital income taxation. Investment and saving in an open economy. Tobin's q. Impact of production shocks.

(В), ch.2;

(А), p. 72-75.

(R), ch.2, p.47-75

(BS) ch.2, p.59-92, ch.3 p.96-101

4. ENDOGENOUS GROWTH THEORY

Relaxing decreasing return to scale in production assumption. AK model of growth. Growth model with governmental public good provision. Comparison with results of Solow model.

(BS) ch. 4, p.140-144, p.152-167

5. OVERLAPING GENERATIONS MODEL (OLG)

Model statement. Steady states and stability. Optimality conditions of equilibrium paths. OLG, finite time horizon and planning problem. Effect of delayed consumption.

Bequests in OLG. Social security and capital accumulation.

(В), ch. 3, p. 91- 114

(R), ch. 2, p.72 –85

(BS) ch. 3, p.128-135

6. MONETARY ECONOMICS

Functions of money. Neutrality and Superneutrality of money. Superneutrality in OLG. Superneutrality of money in Sidrausky model. Optimal quantity of money, Fridman rule.

(В), ch. 4, 154- 168, 188- 201

LITERATURE

(В) Blanchard, O.J. and S.Fisher (1992). Lectures on Macroeconomics. Cambridge, MA.: MIT Press.

( R ) Romer, D. (1996). Advanced Macroeconomics. New-York : McGraw-Hill.

A. Azariadis, C. (1993). Intertemporal Macroeconomics. Cambridge, MA: Blackwell.