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Learning Objectives

Part 1:
***Knowledge and understanding: Students will master the mathematical tools of dynamic optimization, including dynamic programming. These technical skills will be applied to economics for an understanding of the mechanisms driving economic growth, saving and investment in productive asset. These skills will be also used for the study of the business cycle in Macroeconomics II.
***Applying knowledge and understanding: By means of exercises, students will verify their understanding of the theories presented during classes and will apply them to a variety of economic scenarios (for instance, evalutating the effects of a demographic decline on economic growth).
***Making judgements: Students will be able to assess autonomously the implications of changes in exogenous conditions or of policy interventions on economic growth and on the investment in productive assets.
***Communication skills: Students will learn the meaning and use of terms related to economic growth commonly used by institutions, government and specialized scholars.
***Learning skills: Exercises will stimulate students’ learning ability.

Part 2:
Knowledge and Understanding
The course provides an introduction to modern macroeconomic modeling. Students will acquire knowledge of real business cycle models and monetary economies. They will learn essential numerical solution techniques and gain a solid understanding of central bank policies.

Applying knowledge and understanding
By the end of the course, students will be able to build modern macroeconomic models, solve these models numerically and assess them empirically.

Making judgements
Students will have the knowledge and tools to analyze and evaluate central bank policies using macroeconomic models and data.

Communication skills
Students will gain experience in communicating the results of their analysis by preparing and giving a presentation summarizing methodology and findings.

Learning skills
Students will not only be exposed to materials prepared by the lecturer, but will also be exposed to modern academic literature, as well as will learn about economic policy from the websites of central banks on their own. They will interact in groups, working on problems in teams and learning from each other.


Basic knowledge of macroeconomics, linear algebra, constrained optimization, Matlab.


1. Standard RBC model. Solving the model: equilibrium conditions, linearization, linear rational expectations. Numerical: introduction to Dynare, model solution, simulation, impulse responses. Empirical: obtaining macro data, extracting cyclical and trend components.

2. Money-in-utility model, cash-in-advance model, money in OLG. Nominal rigidities: New Keynesian model, welfare cost of inflation, optimal rate of inflation, optimal monetary stabilization policy, divine coincidence. Conduct of monetary policy by central banks, ZLB, unconventional monetary policy.


Lecture notes will be provided on the course webpage.

Recommended textbooks:
Romer, D. (2012). Advanced macroeconomics, New York: McGraw-Hill/Irwin.
Wickens, M. (2012). Macroeconomic Theory: A Dynamic General Equilibrium Approach, Princeton University Press.
Gali, J. (2008). Monetary Policy, Inflation and the Business Cycle: An Introduction to the New Keynesian Framework, Princeton University Press.


Calvo, Guillermo A. (1983). “Staggered prices in a utility-maximizing framework”. In: Journal of Monetary Economics 12.3, pp. 383 –398.
Bernanke, B., Gertler, M., Gilchrist, S. (1999). The Financial accelerator in a quantitative business cycle framework. Handbook of macroeconomics.
Kiyotaki, N., Moore, J., (1997). Credit cycles. Journal of Political Economy 105, 211–248.
Gertler M. and P. Karadi (2011). A model of unconventional monetary policy, Journal of Monetary Economics, 58, 17-34.
Ball, Laurence M. (2013). “The Case for Four Percent Inflation”. In: Central Bank Review 13.2, pp. 17–31.
Diercks, Anthony M. (2017). The Reader’s Guide to Optimal Monetary Policy. Available at SSRN: 2989237.
Blanchard, O. and K. C. Kahn (1980), "The Solution of Linear Difference Models under Rational Expectations", Econometrica, 48(5), 1305-11.
Jordà, Òscar. 2005. "Estimation and Inference of Impulse Responses by Local Projections." American Economic Review, 95 (1): 161-182.

Teaching methods

Lectures, applied sessions, programming sessions, seminars.
Working on individual and group home assignments.
Presenting results and findings.
Studying textbooks, articles and central banks' policies.

Exam Rules

Individual and group home assignments will account for 40% of the grade, the remaining 60% will be allocated to the written final exam.

Home assignments will test the ability of students to replicate, modify and work with the models presented in the lectures. They will consist of: (i) analytical tasks, such as deriving the model solution, characterizing the equilibrium, comparative statics exercises; (ii) numerical tasks, such as solving and simulating models on a computer; (iii) empirical tasks, such as collecting and analyzing data; (iv) communicating tasks, such as preparing a presentation summarizing the results and findings of an analysis.

The written exam will test students' overall understanding and knowledge of the course material. The exam questions may ask students to solve and analyze simple models analytically and make judgements on economic policy based on models covered in class.

The students who withdraw or fail an exam may take the exam again in the same exam session.