Course Contents

1. A brief overview of seven schools of macroeconomic thought 2. Goods and Labour Market: Classical versus Keynes 3. Expectations and Desirability of wage price flexibility  Inflationary expectations (adaptive) and monetary instrument question  Cagan’s convergence requirement 4. New Classical Macro Economics  The role of rational expectations in macroeconomics  The Lucas supply curve  Policy ineffectiveness proposition  Lucas critique 5. Budget Deficit and Fiscal Policy  Macroeconomic model with government budget restraint and wealth effect  Ricardian equivalence revisited  Tax smoothing hypothesis  A model of debt crisis 6. Inflation and Monetary Policy  The Dynamic Inconsistency of low Inflation Monetary Policy  Addressing the Dynamic Inconsistency Problem  Inflation Targeting 7. Open Economy Macroeconomics  The Standard Mundell-Fleming Model  The Dornbusch Overshooting Model 8. Growth Models  The Solow growth model  Real business cycle theory 9. Theories of Consumption  The life cycle / permanent income hypothesis  The random walk model of consumption  Empirical application: two test of random Walk hypothesis

Course Synopsis

This course is planned to provide knowledge of contemporary, advanced macroeconomic theory. It aims to provide students with a detailed understanding of some fundamental models in macroeconomics. A goal of this course is to teach how to apply this information to study real world economic problems.

Course Learning Outcomes

After successful completion of this course students are expected to:  analyze and evaluate the most fundamental workhorse models in macroeconomics.  learn the quantitative tools of analysis in macroeconomics.  apply these tools to analyze practical questions in macroeconomics.  appraise advanced macroeconomic literature in a wide variety of relevant policy issues.