This course is designed for mainly first-year graduate students to help them understand the basic analytical tools of modern macroeconomics.
The first half of this course covers (i)the mathematical methods often used in macroeconomics (e.g., dynamic programming, optimal control theory, dynamical system), and (ii)the Ramsey–Cass–Koopmans model, which now gives us a benchmark for many areas of macroeconomic analysis. Then, in the second half, we extend this model to understand the mechanics of several important economic phenomena, including economic growth, business cycle, unemployment and so on.
The objective of this course is for students to become familiar with macroeconomics and to help them in their ability to read theoretical research papers in preparation for their own research.
dynamic general equilibrium model, Ramsey–Cass–Koopmans model, infinite-horizon optimization, dynamical system, steady state, competitive equilibrium path, endogenous growth model, productivity growth with knowledge spillovers, endogenous technological change by R&D, real business cycle models, calibration,
|✔ Specialist skills||✔ Intercultural skills||Communication skills||✔ Critical thinking skills||Practical and/or problem-solving skills|
I will give students homework assignments after we have finished each topic covered in this course.
|Course schedule||Required learning|
|Class 1||Guidance||Understand the purpose of studying macroeconomics.|
|Class 2||Mathematical Preliminary (1): Introduction to Infinite Horizon Optimization and Its Economic Implications||Understand the basics of infinite-horizon, discrete-time optimization problems, which are essential to study the graduate-level macroeconomics.|
|Class 3||(2): Introduction to Optimization in Continuous Time and Its Economic Implications||Understand the basics of infinite-horizon, continuous-time optimization problems, which are essential to study the graduate-level macroeconomics.|
|Class 4||Stylized Facts on Economic Growth and Business Cycles||Learn some important facts and data on economic growth and business cycles.|
|Class 5||Explanation of Basic Dynamic Macroeconomic Model (1): Setup of the Model||Understand the setup of the Ramsey–Cass–Koopmans model (RCK model), which gives a benchmark for dynamic macroeconomic analysis.|
|Class 6||(2): Characterization of Competitive Equilibrium Path||Derive the competitive equilibrium path of the RCK model.|
|Class 7||(3): On the Efficiency of Competitive Equilibrium Path||Discuss the efficiency of the competitive equilibrium path in the RCK model.|
|Class 8||Review of the first half of the course (classes 1-7) and midterm exam||Review of the first half of the course (classes 1–7) and midterm exam.|
|Class 9||A Macroeconomic Model of Productivity Growth with Knowledge Spillovers (1): Setup of the Model||Learn how to embed the knowledge spillovers to the RCK model.|
|Class 10||(2): Characterization of Equilibrium Path and Implications of Results for Real Economy||Derive the equilibrium path of the model, and learn implications for real economy.|
|Class 11||Explanation of Monopolistic Competition||Understand the properties of monopolistically competitive markets.|
|Class 12||A Macroeconomic Model of Technological Progress with Firms' R&D Activities (1): Setup of the Model||Learn how to embed the firms' R&D activities to the RCK model.|
|Class 13||(2): Characterization of Equilibrium Path and and Implications of Results for Real Economy||Derive the equilibrium path of the model, and learn implications for real economy.|
|Class 14||Brief Review of the Course||Review of the course.|
To enhance effective learning, students are encouraged to spend approximately 100 minutes preparing for class and another 100 minutes reviewing class content afterwards (including assignments) for each class.
They should do so by referring to textbooks and other course material.
There is no designated textbook. Handouts or slides used for each class will be available on the corresponding page of Tokyo Tech OCW-i by the day before the class.
(1) Acemoglu, D. (2009) Introduction to Modern Economic Growth, Princeton University Press.
(2) Adda, J. and R. Cooper (2003) Dynamic Economics, Cambridge, MIT Press.
(3) Barro, R. J. and X. Sala-i-Martin (2004) Economic Growth, Second Edition, Cambridge,MIT Press.
(4) Ljungqvist, L. and T. J. Sargent (2012) Recursive Macroeconomic Theory, Third Edition, Cambridge, MIT Press
The final grade is based on homework assignments.
Although there is no explicit prerequisite for this course, knowledge of micro- and macroeconomics at the undergraduate level and a basic understanding of nonlinear programming will be required.