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Econ-714 Advanced Macroeconomics
Campus NBS
Programs PG
Session Fall Semester 2016
Course Title Advanced Macroeconomics
Course Code Econ-714
Credit Hours 3.0
Pre-Requisutes Macroeconomic Theory
Course Objectives The course will focus on issues and accumulation of knowledge in the field of macroeconomics. The understanding of the subject matter will require thorough knowledge of mathematical methods especially linear algebra and calculus.
Detail Content
  • An Overview of Macroeconomics
  • Traditional Macroeconomics
    • Classical Model
      • Simple Classical Model
      • Comparative Static Results, Money Neutrality
      • Significance of Correspondence Principle & Stability Analysis.
    • Keynesian Model
      • The Simple Keynesian Model
      • Involuntary Unemployment
      • Generalized Disequilibrium Model
    • Extended Model
      • The Role of Government Budget Restraint
      • Wealth Effect and Money Neutrality
    • Intrinsic Dynamics
      • Financing Budget Deficit
      • The Desirability of Bond Financed Deficits
    • Open Economy Macroeconomics
      • The Standard Mundell/Flaming Model
      • The Dornbusch ‘Overshooting’ Model
      • The Overshooting Model with Stock-Flow Dynamics
  • Expectations and Desirability of Wage-Price Flexibility
    • Inflationary Expectations (Adaptive) and Monetary Instrument Question
    • Cagan’s Convergence Requirement
    • Dynamics and Phase Plan Analysis
  • New Classical Macroeconomics
    • The Role of ‘Rational’ Expectations in Macroeconomics
    • The Lucas Supply Curve
    • Policy Ineffectiveness Proposition
    • Lucas Critique
    • Rational Expectations and Staggered Adjustment of Wages and Prices
  • Real Business Cycle Theory
    • Theories of Fluctuation
    • A Baseline RBC Model
    • Solving the RBC Model in General Case
    • Empirical Applications
  • New Keynesian Macroeconomics
    • Are Small Frictions Enough?
    • Small Manu Cost and Large Business Cycle
    • Near Rational Model of Wage- Price Inertia
  • Inflation and Monetary Policy
    • Inflation, Money Growth and Interest Rates
    • Seignorage and Inflation
    • The Dynamic Inconsistency of Low Inflation Monetary Policy
    • Addressing the Dynamic Inconsistency Problem
    • Independence of Central Bank and Stabilization Policy
    • Inflation Targeting
  • Theories of Unemployment and Multiple Equilibria
    • A Generic Efficiency Wage Model
    • Shirking, Insider – Ousider, and Implicit Contract Models
    • Search and Matching Models and the possibility of Multiple Equilibria
  • Behavioral Foundations I: Consumption
    • Earlier Theories of Consumption Behavior
    • The Life-Cycle/Permanent Income Hypothesis
    • The Random Walk Model of Consumption
    • Empirical Applications: Two Tests of the RW Hypothesis
    • Finite and Infinite Horizon Models
  • Behavioral Foundations II: Investment
    • Calculus of Variation and Optimal Control Theory: An Overview
    • Neoclassical Model of Investment
    • An Adjustment Cost Model of investment
    • A Continuous model of investment
    • Adjustment Cost Model and Tobin’s q-Theory
    • Empirical Applications
  • Growth Models
    • The Dynamics of the Solow Model
    • The Ramsey-Cass-Koopmans Model
    • The Diamond Model
    • New Growth Theory: Research and Development and Human Capital Models
Text/Ref Books
  • Advanced Microeconomics 3rd Edition (2008) by David Romer, New York: The McGraw Hill Companies, Inc
  • Methods of Macroeconomic Dynamics (1995) by Stephen Turnovsky
  • Lectures on Macroeconomics (1996) by Olivier Blanchard and Stanley Fischer, Cambridge: The MIT Press.
  • Macroeconomics: An introduction to Advanced Methods (1996) by William Scarth (2nd Edition), Toronto: DRYDEN, Harcourt, Brace and Company
  • Controversies in Macroeconomics (1994) by K. Alec Chrystal and Simon Price.
  • The Foundations of Modern Macroeconomics (2002) by Ben J. Heijdra and Frederick Van der Ploeg. New York, Oxford University Press
Time Schedule Fall Semester, 2011
Faculty/Resource Person Dr. Ather Maqsood Ahmed
Ph.D (Economics), The Johns Hopkins University, USA
M.A (Economics), University of Waterloo, Canada
M.Sc (Economics), Quaid-i-Azam University, Islamabad Pakistan
Discipline: Economics
Specialization: Macroeconomics, Public Finance, Applied Economics