Postgraduate Course: Advanced Topics in Macroeconomics (ECNM11005)
Course Outline
| School | School of Economics |
College | College of Arts, Humanities and Social Sciences |
| Credit level (Normal year taken) | SCQF Level 11 (Postgraduate) |
Availability | Available to all students |
| SCQF Credits | 10 |
ECTS Credits | 5 |
| Summary | The course extends the core macroeconomics course to (1) endogenous business cycle theories, and (2) issues related to inequality. These are topics of key importance in modern macroeconomics and should be taken by students who plan to do a PhD on macroeconomic theory or applied macroeconomics. |
| Course description |
The course will be divided into two main components as follows:
Component 1: The Endogenous Business Cycle Theories. (Dr. Sun) Two sessions;
There is a long tradition in the history of economics thoughts suggesting that booms sow the seeds of the subsequent busts. However, this view that business cycles are endogenous plays a small role in mainstream business cycle theory, which is dominated by the view that business cycles are exogenous. Exogenous business cycle theory views business cycles as essentially "the random summation of random causes". The standard Real Business Cycle (RBC) theory is such an example. Should there be no shocks, the economy will converge to steady state in which there are no fluctuations. By contrast, endogenous business cycle theory says that even when there are no shocks, the economy will still fluctuate perpetually in a deterministic way. Hence, cycles are embedded in the economic system.
This part of the course will introduce students to the recent developments in endogenous business cycle theory.
In the first lecture, we will see how demand complementarity may endogenously generate business cycles. Beaudry et al., (2015) and (2018) develop a model that captures this idea. In their setup, booms and busts arise endogenously because agents want to concentrate their purchases of goods at times when purchases by others are high, since in such situation unemployment is low and therefore taking on debt is perceived as being less risky.
In the second lecture, we will see how credit market imperfection can endogenously generate business cycles. We will study the model developed by Farboodi and Kondor (2021). In their model, lax lending standards will lead to high output growth but the deterioration of loan quality. When the loan quality is sufficiently low, lenders switch to tight standards, causing low output growth but a gradual improvement in the quality of loans. This eventually triggers a shift back to a boom with lax lending standards, and the cycle continues.
Component 2: Inequality. Empirics and some theory. (Professor Jose V. Rodriguez Mora) Four sessions;
Inequality is a prevalent topic in economics.
First, we will look at what do we mean by inequality and explore different measures of inequality. We will look at different data sources, their pros and cons, and will look at distributional accounts. We will then look at the distribution of inequality across countries, and the evolution of inequality across time.
We will also spend some time looking at intergenerational mobility and inequality of opportunity, its data challenges, and its measurement. We will explore what we know on its geographical distribution and its evolution over time.
Finally, we will look at the theory. We will explore models of heterogeneity in different dimensions. Look at differences in human capital accumulation, models of relative advantage in the labor market, and ways of generating fat tails.
|
Entry Requirements (not applicable to Visiting Students)
| Pre-requisites |
|
Co-requisites | |
| Prohibited Combinations | |
Other requirements | Students should be enrolled on MSc Economics, MSc Economics (Econometrics), MSc Economics (Finance) or MSc Mathematical Economics and Econometrics.
Any other students must email sgpe@ed.ac.uk in advance to request permission.
|
Information for Visiting Students
| Pre-requisites | Students should be enrolled on MSc Economics, MSc Economics (Econometrics), MSc Economics (Finance) or MSc Mathematical Economics and Econometrics.
Any other students must email sgpe@ed.ac.uk in advance to request permission.
|
| High Demand Course? |
Yes |
Course Delivery Information
|
| Academic year 2024/25, Available to all students (SV1)
|
Quota: None |
| Course Start |
Block 4 (Sem 2) |
Timetable |
Timetable |
| Learning and Teaching activities (Further Info) |
Total Hours:
100
(
Lecture Hours 18,
Summative Assessment Hours 2,
Programme Level Learning and Teaching Hours 2,
Directed Learning and Independent Learning Hours
78 )
|
| Assessment (Further Info) |
Written Exam
100 %,
Coursework
0 %,
Practical Exam
0 %
|
| Additional Information (Assessment) |
We will have a final exam (100%) assessment. The final exam will take place by the end of Block 3 in the middle of Sem 2. The exam will be of 2 hours and will contain 1 or 2 model analysis questions and 1 or 2 long essay questions for you to answer. |
| Feedback |
We will get the exam marks back within four weeks of the exam. |
| No Exam Information |
Learning Outcomes
On completion of this course, the student will be able to:
- Have a contemporary understanding of endogenous business cycle theories and inequality theories and empirics.
- Develop a research interest in modern macroeconomics. These are particularly beneficial to students who plan to pursue a PhD on macroeconomic theory or applied macroeconomics.
- Contribute to the debates on what causes business cycles and inequality.
- Develop and demonstrate research and investigative skills such as problem framing and solving, and the ability to assemble and evaluate complex evidence and arguments.
- Develop and demonstrate communication skills in order to critique, create and communicate understanding, and to collaborate with and relate to others.
|
Reading List
Component 1:
Beaudry, P., Galizia, D. and Portier, F., 2015. Reviving the limit cycle view of macroeconomic fluctuations (No. w21241). National Bureau of Economic Research.
Beaudry, P., Galizia, D. and Portier, F., 2018. Reconciling Hayek¿s and Keynes¿ views of recessions. The Review of Economic Studies, 85(1), pp.119-156.
Farboodi, M. and Kondor, C.P., 2021. Rational Cycles and Endogenous Lending Standards. Technical Report, Massachusetts Institute of Technology.
Component 2:
We will update during the course |
Additional Information
| Graduate Attributes and Skills |
Not entered |
| Keywords | Not entered |
Contacts
| Course organiser | Mr Tiancheng Sun
Tel:
Email: T.Sun@ed.ac.uk |
Course secretary | Miss Heather Milligan
Tel:
Email: hmillig3@ed.ac.uk |
|
|
University Homepage