Advanced Microeconomics and Macroeconomics

A.Y. 2020/2021
Overall hours
Learning objectives
This course is designed to provide a rigorous introduction to both modern microeconomics and modern macroeconomics. Its objective is to equip students with the basic analytical tools to read and understand the academic literature and the policy debate on both microeconomic issues (e.g. how consumer choice and firm behaviour are affected by market design and public policy) and macroeconomic issues (e.g. the efficacy and desirability of fiscal and monetary policies).
Expected learning outcomes
For the Advanced Microeconomics module: After the course, students must be able to use economic reasoning to understand the main determinants of individuals' and firms' decisions, the
functioning of markets in real world settings, and how they are influenced by public policies or changes in economic fundamentals. This theoretical knowledge is highly complementary to the data analysis techniques that students will learn in other courses (such as "Research Methods") and are key to a correct understanding and interpretation of the empirical evidence. Students will also acquire the basic knowledge needed to approach more advanced topics in other subfields of economics for which microeconomics is a pre-requisite (e.g. development, education, health, industrial, international, labour, and public economics, among others).

For the Advanced Macroeconomics module: By the end of the course, students will be equipped with analytical tools for improving their knowledge and understanding of some major real-world macroeconomic issues (for example: why delegating monetary policy to an independent central bank? Should government fiscal policy be constrained by rules? Which factors can trigger bank runs or sovereign debt crises? how can government policy help to avoid them? What are the macroeconomic and welfare effects of different social security systems? Can government use fiscal policies to affect economic growth?) Students should know as how to use economic analysis to make informed judgements about macroeconomic issues. Seminar presentations (on a voluntary basis) will enable students both to test their understanding and ability to communicate knowledge of the relevant topics and to discuss real-world macroeconomic issues with their pairs.
Course syllabus and organization

Single session

Lesson period
Third trimester
Lectures will be provided in class wherever it is possible due to restrictions imposed by the COVID19 situations. The preferred online platform will be zoom, through which lectures will be recorded. In addition there are going to be online meetings on Zoom to discuss topics of the course. The exercises classes will be designed according to the availability of rooms and the rules provided by the university (e.g. being in class or on zoom)
Prerequisites for admission
Students are expected to have fully mastered the following topics: linear algebra, intermediate calculus, static optimization. Introductory knowledge of game theory is useful. Basic knowledge of first-order differential and difference equations (qualitative solution) and of dynamic optimization under certainty is useful for the Advanced Macroeconomics module.
For the Advanced Microeconomics module, students are expected to have a reasonable knowledge of topics taught in introductory and intermediate microeconomics (i.e. consumer and producer theories, partial competitive equilibrium theory). Useful preparatory readings are: Hal Varian, Intermediate Microeconomics: A modern approach, 9th Edition (Last Edition). Regarding Mathematics, Simon, C.P. and Blume, L. (1994), Mathematics for Economists, W. W. Norton & Company, Inc.
For the Advanced Macroeconomics module, students are assumed to be familiar with intermediate macroeconomics taught on textbooks such as O.J. Blanchard (2005 or subsequent editions). Macroeconomics, Prenctice Hall, or S.D. Williamson (2014, fifth edition), Macroeconomics, Pearson.
Assessment methods and Criteria
The course is assessed with two distinct examinations, one for the Advanced Microeconomics module (taught in the second term), and the other for the Advanced Macroeconomics module (taught in the third term). The final assessment is based on a written exam. The final written exam for Adv. Microeconomics consists of multiple choices questions based on exercises similar to those that have been solved in the course classes.
The final mark will be the weighted average (with equal weights) of the mark obtained in the Advanced Microeconomics exam and of the mark obtained in the Advanced Macroeconomics exam. The Advanced Macroeconomics mark can be topped up by successfull student seminar presentation (on a first-come-first-served voluntary basis). Further details on student seminars will be given at the start of the course (in the third term).
Module Advanced Microeconomics
Course syllabus
1. Preference and Utility
2. Demand Theory and Applications
3. Production Theory and Applications
4. Choice under uncertainty
5. Perfect Competition
6. Monopoly
7. Introduction to Oligopoly
The program could be subject to some changes from year to year. Please check the ARIEL website for updates.
Teaching methods
The course uses both lectures in which students will be taught microeconomic theory and classes mainly devoted to solving exercises.
Teaching Resources
Hal Varian, Microeconomic Analysis, Third Edition.
Specific indications on the textbook will be provided at the beginning go the course
Module Advanced Macroeconomics
Course syllabus
Preliminary Program:
Lectures 1 - 2: Introduction; Flexible prices and production functions in the long-run; Labour markets and technological progress; Empirical exercise: technology shocks and their consequences.
Lectures 3 - 4: Neutrality of Money in the long-run; Empirical evidence on money neutrality; Granger Causality; Identification strategies in a structural VAR model; solving the Price Puzzle; Empirical exercises (with papers).
Lectures 5 - 6: Money Demand and Supply; role of Central Bank; Policy Instruments and Targets; the Corridor of Interest Rates; Problem Set 1.
Lectures 7 - 8: The AS-AD model; the role of Monetary Policy; Interpretation of demand/supply shocks and model dynamics; Problem Set 2.
Lectures 9 - 12: A Benchmark New-Keynesian Model; Output gap; Derivation and log-linearization; Taylor Rule and Inflation Targeting; Calibration and simulation of a simple NK model (in Matlab).
Lectures 13 - 16: Monetary Policy Analysis; Commitment; Rules vs. Discretion; Liquidity trap; Quantitative Easing and Unconventional Monetary Policy. Empirical Exercises: effects of ECB monetary policy tools. Problem Set 3.
Lecture 17 - 18: Term structure; role of Fiscal Policy; Expectations theory; role of financial markets; Empirical exercise: identification of 'news' shocks.
Lectures 19 - 20: Credit frictions; Information Asymmetries; Adverse Selection and Moral Hazard; the Role of Collateral. Problem Set 4.
Teaching methods
20 lectures, each lasting for two hours.
Every two lectures (approx.) an empirical/numerical exercise or data application will be presented, using Matlab and Eviews; more details, including the availability of several routines that operate with the two software, will be given during the course and posted on ARIEL & Microsoft TEAMS (please check both to void any technical inconsistencies or uploading delays).
During the course, there will also be Problem Sets proposed to be solved by students; we will solve them together after a 1 week time has passed. Students who are regularly active, forthcoming, display high interest and offer (approx.) solutions will be rewarded with a max. of 3 points that count toward the final mark. Solutions will be made available on ARIEL & TEAMS.

Students of this course are assumed to be somehow familiar with the main economic concepts (e.g. aggregate demand and supply, equilibrium), main transmission mechanisms of macroeconomic policies (e.g. monetary & fiscal) and the main institutions (e.g. central bank). At the very minimum, students must be avid and regular readers of financial news media (e.g. Bloomberg, FT).
Students should also be somehow familiar with optimization techniques and single/ multivariate time-series econometrics.
Teaching Resources
For all students.
Outlines of lectures (slides and hand-outs) will be uploaded on ARIEL & Microsoft TEAMS as the course proceeds. Lectures will refer to macroeconomics textbooks such as: (1) C. Walsh - Monetary theory and policy, MIT Press, 2010, 3rd edition (available on the internet); (2) F Mishkin - The Economics of Money, Banking and Financial Markets, 2004, 7th edition (or subsequent editions); (3) several influential academic papers will be made available as support on ARIEL & Microsoft TEAMS.
Module Advanced Macroeconomics
SECS-P/01 - ECONOMICS - University credits: 6
Lessons: 40 hours
Module Advanced Microeconomics
SECS-P/01 - ECONOMICS - University credits: 6
Practicals: 40 hours
Lessons: 20 hours
Professor: Grembi Veronica
To set a meeting, please contact me by @email or using TEAMS
To set a meeting, please contact me by @email or using TEAMS