Macroeconomic Theory

This course employs the tools of macroeconomics to study various macroeconomic problems. The problems range from economic stability in the short run, to change prices in the medium run, and economic growth in the long run. We cover macroeconomic theories and models, and apply them to address macroeconomic issues in the real world.

Macroeoconomic Theory I – Fall

The MT1 has two main parts: theories and applications. First, students gain conceptual and theoretical knowledge. Then, we develop models to explain the behavior of the economy in the short run.

The primary goal of first semester is to develop a consistent way of thinking about some key macroeconomic phenomena such as output gap, inflation, and unemployment.

In particular, we will try to address the following type of questions:

Why does macroeconomic activity fluctuate?
How do different shocks and policies affect employment, output, inflation, investment and consumption over the business cycle?

Macroeoconomic Theory II – Spring

The MT2 focuses on long-run dynamics of the economy by developing the tools of modern growth theory. The second semester covers Solow growth model as a description of how the economy evolves over time and emphasizes the roles of capital accumulation and population growth.

After developing basic theories to explain the economy in the long run and in the short run, we turn to several topics that refine our understanding of the economy. We analyze some of the microeconomic decisions behind macroeconomic phenomena. Once students have solid command of standard macroeconomic models, the book uses these models as the foundation for discussing some of the key debates over economic policy. Then, we focus on the various debates over government debt and budget deficits. Finally, we discuss the financial system and its linkages to the overall economy.

Textbooks