Updated A.Y. 2024-2025

MACROECONOMICS I

Learning Objectives:

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. 

Prerequisites:

Calculus, Principles of Microeconomics, Principles of Macroeconomics 

Program:

Introduction to Growth Theory
   The Solow model in discrete and continuous time
   Transitional dynamics and dynamic inefficiency
   Sustained growth and technological progress
   Growth accounting and empirical evidence

Introduction to Dynamic Programming
   The Principle of Optimality
   The Contraction Mapping Theorem and the Bellman Equation
   Concavity and differentiability of the value function
   First-order conditions, the Euler Equation, and the Transversality Condition

Foundations of Neoclassical Growth
   Ramsey optimal growth, long-run convergence, and saddle-path stability
   Competitive equilibrium and Welfare Theorems
   The stochastic growth model

Consumption Theory and Asset Pricing
   Dynamic programming under uncertainty and the Euler equation
   Optimal saving, intertemporal substitution, and wealth effect
   Hall’s random walk theory of consumption and its empirical assessment
   Precautionary saving and liquidity constraints
   Lucas’ model of asset prices and no-arbitrage theory

Books:

- Daron Acemoglu, Introduction to Modern Economic Growth, Princeton University Press, 2009.
- David Romer, Advanced Macroeconomics, McGraw-Hill, 2011.
- Lecture notes.

This material is necessary.

Teaching methods:

In additional to conventional lectures, there will be 5 practice classes. In a practice class students will work on similar exercises to those in the final test. Students will attend classes on a voluntary basis, unless a different policy will be suggested by the department.

Exam Rules:

During the course, students will complete home assignments, each of which will be graded. Every exercise within the assignments will be scored on a scale from 0 to 3 points. The final exam will consist of a written test containing, tentatively, two exercises and two theoretical questions. Students will be able to enhance their final exam grade by incorporating the grades from their home assignments. Up to 15% of the final exam grade can be integrated from the home assignment scores. 

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