The course introduces state-of-the-art methods used in current macroeconomics research to understand short-run business cycle and inflation dynamics, as well as economic stabilisation policies.
We will develop a broad and deep knowledge of modern Dynamic Stochastic General Equilibrium (DSGE) macroeconomic models that employ microeconomic foundations and rational expectations. These models will be solved using advanced analytical and numerical-computational approaches. More specifically, we will use the DSGE neoclassical Real Business Cycle and New Keynesian frameworks to understand the different sources of aggregate economic fluctuations, and to examine the positive and normative roles of fiscal and monetary policies.
Finally, the course examines contemporary issues such as inflationary shocks, government debt financing through distortionary taxation, optimal (un)conventional monetary and fiscal policies in a zero interest rate-liquidity trap environment, and financial frictions.