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Syllabus

EN IT

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 assets.
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 (6 hours)
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 (9 hours)
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 (9 hours)
Ramsey optimal growth, long-run convergence, and saddle-path stability
Competitive equilibrium and Welfare Theorems
The stochastic growth model

Consumption Theory and Asset Pricing (12 hours)
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.

Bibliography

- 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.

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.

Unsuitable: significant deficiencies and/or inaccuracies in
knowledge and understanding of the topics; limited capacity for
analysis and synthesis, frequent generalizations.

18-20: barely sufficient knowledge and understanding of the topics
with possible imperfections; sufficient capacity for analysis,
synthesis and autonomy of judgement.

21-23: Routine knowledge and understanding of the topics; Correct
analysis and synthesis skills with coherent logical argumentation.

24-26: Fair knowledge and understanding of the topics; good capacity
for analysis and synthesis with rigorously expressed arguments.

27-29: Comprehensive knowledge and understanding of the topics;
Considerable ability to analyze, synthesize. Good autonomy of judgement.

30-30L: Excellent level of knowledge and understanding of the topics.
Remarkable analytical and synthetic skills and independent judgement.
Arguments expressed in an original manner.