MACROECONOMICS AND FINANCIAL MARKETS :POLICY LESSONS
The course aims to provide the students understanding business cycles and financial markets. To this purpose, students will be able to solve and simulate, using the DYNARE software in MATLAB, general equilibrium models.
Knowledge and understanding: The student must demonstrate firstly that she/he has acquired the basic tools to solve and simulate general equilibrium models and secondly be able to rationalize the results.
Applying knowledge and understanding: The student is required to demonstrate that he/she has acquired the theoretical and analytical tools underlying monetary and fiscal policies.
Making judgements: The student is required to demonstrate that he/she has acquired a critical interpretation ability relatively to the topics discussed during the course. In particular, the student must be able to discuss the compatibility between stylized facts and predictions formulated on the basis of simulated models.
Communication: The student should be able to give clear and exhaustive answers to the questions of the written exam and, eventually, to the ones of the oral interview.
Lifelong learning skills: The student should be able to deepen the topics presented during the course, also integrating his/her knowledge with scientific publications identified by the student.
Macroeconomics, microeconomics, mathematics.
I Module (24 hours)
Business cycle: definition and stylized facts
Introduction to DYNARE
The Real Business Cycle Theory
Simulation of Real Business Cycle models and empirical evidence
II Module (24 hours)
New Keynesian theory
Simulation of New Keynesian models and empirical evidence
Financial frictions, credit channel and business cycle
The course proceeds along two parallel paths: theoretical and applicative. As for the theoretical part, classes focus on the study of general equilibrium models. As for the application part, the focus is on the solution and simulation of these models, as well as their interpretation.
In a first phase, the course presents models characterized by completely perfect markets, according to the theory of the Real Business Cycle.
Secondly, the course deals with models characterized by imperfections in the goods market and in the labor market by incorporating the notions of price and wage stickiness, according to the Neo-Keynesian theory.
The third and final part presents models characterized by imperfections in financial markets and financial frictions.
Classes, follow-up meetings, laboratory exercises.
Marchetti E., Teorie del Ciclo Economico, Editore Esculapio (selection of chapters)
Possible reading material will be provided during the course.
In order to evaluate the achievement of the mentioned learning objectives, the learning assessment takes place at the end of the course.
The examination consists of a written test and oral interview on all the topics covered during the course.