Compulsory Course - 2nd Semester (Spring 1st year) | Course ID: 005 | E-Class

Lecturer

George Chortareas

Language of instruction

Greek

Course Description

The course continues from Macroeconomic Theory I to analyse models that incorporate nominal rigidities in contexts where aggregate expenditure is associated with money. The goal is to familiarize students with elements of this literature used in the most recent developments in macroeconomic theory. We then cover more recent analytical frameworks that allow rigorous modelling of the optimizing behaviour of economic agents and incorporate elements from both classical and Keynesian perspectives. We consider how these models can be made operational for the purposes of economic policy analysis. In addition to the basic models, we cover topics including consumption theory, institutional design of monetary policy, fiscal deficits and fiscal policy, and the interactions of fiscal and monetary policy.

Course outline

• Introduction to business cycles and macroeconomic theories
• Workhorse models in macroeconomics
• Expectation modelling
• Elements of aggregate expenditure: Consumption and investment
• The role of imperfect information
• New Keynesian economics
• Dynamic stochastic models with optimizing behaviour and price/wage rigidities
• Policy analysis in the context of the new neoclassical synthesis
• Money
• Monetary policy
• Time inconsistency, strategic behaviour, and optimal monetary policy design
• Fiscal policy and fiscal deficits

Bibliography

Basic textbooks

• Romer, D., (2019), Advanced Macroeconomics, 5^th edition, New York, McGraw-Hill.
• Blanchard, O., and S. Fisher, (1989), Lectures on Macroeconomics, Cambridge, Massachusetts & London, MIT Press.

Other textbooks

• Gali, Jordi, (2008), Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework, Princeton, NJ, Princeton University Press.
• Wickens, M., (2008), Macroeconomic Theory a Dynamic General Equilibrium Approach, Princeton, NJ, Princeton University Press.
• Walsh, C., (2003), Monetary Theory and Policy, 2^nd edition, Cambridge, MA & London, MIT Press.
• Woodford, M., (2003), Interest & Prices: Foundations for a Theory of Monetary Policy, Princeton, NJ, Princeton University Press.
• Scarth, W.M. (1996), Macroeconomics: An Introduction to Advanced Methods, Toronto, Dryden Press.
• McCallum, B. T. (1989) Monetary Economics: Theory and Policy, London, Macmillan.  

References will be provided in each lecture.

Assessment

Written examinations in Greek after the end of the semester and a re-examination in September.