ECON 402: Syllabus 1

Advanced Macroeconomics, ECON 402

Department of Economics

St. Francis Xavier University

Winter 2016

Instructor: Teng Wah LEO

Time Blocks and Location: T1/T2 (Tuesday & Thursday, 3:45 p.m. - 05:05 p.m.),

NH154

Office Hours: Tuesday from 10 a.m. - 12 p.m., Wednesday from 12 noon - 4 p.m.

Objective: The course is designed to introduce current theories in macroeconomics

through the discussion of the evolution of the field from Solow’s Growth Model to Real

Business Cycle Models. The discussion of each theory begins with introducing mathemat-

ical techniques that will help with your understanding of the insights that each derives.

These include Calculus of Variation, Optimal Control Theory and Dynamic Programming.

The tools gained will hopefully allow you to model ideas of your own.

Evaluation:

1. 40% 4 × Assignments

2. 30% Mid Term Examination

3. 30% Final Examination

If you are unable to attend, a valid reason together with proof must be provided. The

decision is vested ultimately with me.

Required Text:

David Romer (2006), Advanced Macroeconomics, 3rd edition (or later), McGraw-Hill/Irwin.

Supplementary Reading:

� Alpha C. Chiang (1992), Elements of Dynamic Optimization, McGraw-Hill/Irwin.

� Thomas J. Sargent (1987), Dynamic Macroeconomic Theory, Harvard University

Press.

� Jerome Adda & Russell Cooper (2003), Dynamic Economics, MIT Press.

ECON 402: Syllabus 2

Course Outline:

1. Why do we need Dynamics in Macroeconomics? Chiang (1992) Chapters 1-6. (1

Weeks)

� Finite Horizon: Taylor’s (1989) Optimal Monetary Policy.

� Infinite Horizon: Ramsey’s (1928) Theory of Saving.

2. The Solow Growth Model: Romer (2006) Chapter 1. (1 Week)

3. Infinite-Horizon Model (Neoclassical Theory of Optimal Growth): Cass’s (1965)’s

Optimum Growth Model, Romer (2006) Chapter 2 & Chiang (1992) Chapter 9. (1

Week)

4. Overlapping-Generations Models: Romer (2006) Chapter 2. (1 Week)

5. New Growth Theory: R & D Models, Romer (2006) Chapter 3. (1 Week)

6. Real Business-Cycle Theory: Romer (2006) Chapter 4. (1 Week)

7. Dynamic Programming: Adda & Cooper (2003) Chapters 2-3, & Sargent (1987)

Chapter 1. (3 Weeks)

� Inflation & Monetary Policy, Romer (2006) Chapter 10.

8. Search: Sargent (1987) Chapter 2. (3 Week)