Dynamic Macroeconomics (Module I: Growth Theory + Module II: Investment and Labour Markets Theory)
A.Y. 2023/2024
Learning objectives
The course analyses the main tools and findings of modern Dynamic Macroeconomics. It applies formal economic reasoning and advanced optimization techniques to the study of dynamic growth theory, dynamic investment theory, and dynamic labor economics.
Module 1:
The main purpose of Module 1 is to present a set of theories and models that should be familiar to any professional economist. It is designed to provide students with the principal mathematical techniques needed to properly handle the typical dynamic problems arising in modelling modern economic growth. Through a large set of applications to several semi-endogenous and fully-endogenous growth theories (AK-type, Human Capital-based and R&D-based growth theories), Module 1 is ultimately aimed at discussing and clarifying the concepts and methods' foundations that are traditionally used in economics, in order to come out with a unified and rigorous approach to dynamic economic systems.
Module 2:
The course will study the most up-to-date research in the macroeconomics of investment-theories with adjustment costs and the matching models of the labour market. Mastering the tools of these theories/models will allow students to better understand the links between stocks and flows in the labour-market, the market-effects of important labour market institutions (such as employment protection legislation, minimum wages and unemployment benefits), and to explore the foundations of optimal investment decisions in the presence of frictions and/or market imperfections.
Module 1:
The main purpose of Module 1 is to present a set of theories and models that should be familiar to any professional economist. It is designed to provide students with the principal mathematical techniques needed to properly handle the typical dynamic problems arising in modelling modern economic growth. Through a large set of applications to several semi-endogenous and fully-endogenous growth theories (AK-type, Human Capital-based and R&D-based growth theories), Module 1 is ultimately aimed at discussing and clarifying the concepts and methods' foundations that are traditionally used in economics, in order to come out with a unified and rigorous approach to dynamic economic systems.
Module 2:
The course will study the most up-to-date research in the macroeconomics of investment-theories with adjustment costs and the matching models of the labour market. Mastering the tools of these theories/models will allow students to better understand the links between stocks and flows in the labour-market, the market-effects of important labour market institutions (such as employment protection legislation, minimum wages and unemployment benefits), and to explore the foundations of optimal investment decisions in the presence of frictions and/or market imperfections.
Expected learning outcomes
Dynamic Macroeconomics, Module 1: Growth Theory
At the end of this course students will be able to: (1) Further investigate the fundamental techniques of modern dynamic macroeconomics (such as the analysis of a model's phase diagram and transitional dynamics); (2) Read autonomously the fundamental literature on modern fully- and semi-endogenous growth theory; (3) To interpret economically the results of such literature, and infer its main implications in terms of economic policy prescriptions.
Dynamic Macroeconomics, Module 2: Investment and Labour Market Theories
By attending this course students will be able to: (1) Master the fundamental techniques of modern dynamic macroeconomics; (2) Learn the main determinants of a firm's investment decisions, analyzed from an explicitly dynamic perspective; (3) Fully understand the effects of important labour market institutions, such as employment protection legislation, minimum wages and unemployment benefits.
At the end of this course students will be able to: (1) Further investigate the fundamental techniques of modern dynamic macroeconomics (such as the analysis of a model's phase diagram and transitional dynamics); (2) Read autonomously the fundamental literature on modern fully- and semi-endogenous growth theory; (3) To interpret economically the results of such literature, and infer its main implications in terms of economic policy prescriptions.
Dynamic Macroeconomics, Module 2: Investment and Labour Market Theories
By attending this course students will be able to: (1) Master the fundamental techniques of modern dynamic macroeconomics; (2) Learn the main determinants of a firm's investment decisions, analyzed from an explicitly dynamic perspective; (3) Fully understand the effects of important labour market institutions, such as employment protection legislation, minimum wages and unemployment benefits.
Lesson period: Second trimester
Assessment methods: Esame
Assessment result: voto verbalizzato in trentesimi
Single course
This course can be attended as a single course.
Course syllabus and organization
Single session
Responsible
Lesson period
Second trimester
Prerequisites for admission
Before taking this course, students should have already completed and passed Mathematical Methods for Finance and Advanced Microeconomics and Macroeconomics. Deep knowledge of such concepts as those of function in one or several variable(s); derivative of a function; logarithmic and exponential functions; difference and differential equations; systems of difference and differential equations does represent a minimal requirement for attending and taking this course.
Assessment methods and Criteria
For all students the exam is written. The aim of the written exam is to make sure that students have fully understood the basic concepts discussed during the course and are able to properly apply them in describing real phenomena. The written exam is composed of theoretical questions and/or numerical exercises. Every question/exercise may, in turn, be composed of different sub-questions. Some exercises/questions might be formulated in a 'multiple-choice' format. In such case, students must clearly indicate the option they consider the correct one. Generally, a wrong answer implies zero points, however there could be penalties (the presence of possible penalties for wrong answers will be explicitly indicated in the instructions that students will receive before taking the exam and/or in the syllabus of the course).
Module I, Growth Theory
Course syllabus
The basic one-sector growth model with human and physical capital accumulation (WITHOUT inequality constraints)
The basic one-sector growth model with human and physical capital accumulation (WITH inequality constraints)
The two-sector growth model with human and physical capital accumulation (Lucas, 1988)
Research and Development (R&D) and economic growth:
- The semi-endogenous growth model by Jones (1995)
- The fully-endogenous growth model by Romer (1990)
Alternative theories of economic growth
The basic one-sector growth model with human and physical capital accumulation (WITH inequality constraints)
The two-sector growth model with human and physical capital accumulation (Lucas, 1988)
Research and Development (R&D) and economic growth:
- The semi-endogenous growth model by Jones (1995)
- The fully-endogenous growth model by Romer (1990)
Alternative theories of economic growth
Teaching methods
The course is composed of theoretical, as well as practical classes. The aim of the practical classes is to show students how they can concretely (e.g., in view of the resolution of mathematical exercises) use the theory learnt during the theoretical section of the course.
Teaching Resources
Text-books will include:
D. Acemoglu, "Introduction to Modern Economic Growth", 2009, Princeton: Princeton University Press
P. Aghion and P. Howitt, "The Economics of Growth", 2009, Cambridge, Massachusetts: MIT Press
G. Alogoskoufis, "Dynamic Macroeconomics", 2019, Cambridge, Massachusetts: MIT Press
S. Altug, J.S. Chadha, and C. Nolan (Ed. by), "Dynamic Macroeconomic Analysis", 2003, Cambridge, UK: Cambridge University Press
F.-C. Bagliano, and G. Bertola: "Models for Dynamic Macroeconomics", Oxford: Oxford University Press, 2007 (First Edition in paperback)
R.J. Barro and X. Sala-i-Martin, "Economic Growth", Second Edition, 2004, Cambridge, Massachusetts: MIT Press
A. Bucci, K. Prettner, and A. Prskawetz: "Human Capital and Economic Growth: The Impact of Health, Education, and Demographic Change", Basingstoke, UK: Palgrave-MacMillan, 2019
C.I. Jones, and D. Vollrath: "Introduction to Economic Growth", New York: W.W. Norton & Co., 2013 (Third Edition)
Further details (for example, the specific text-book and chapter(s) to be used for any specific topic) will be indicated in the syllabus of the course.
D. Acemoglu, "Introduction to Modern Economic Growth", 2009, Princeton: Princeton University Press
P. Aghion and P. Howitt, "The Economics of Growth", 2009, Cambridge, Massachusetts: MIT Press
G. Alogoskoufis, "Dynamic Macroeconomics", 2019, Cambridge, Massachusetts: MIT Press
S. Altug, J.S. Chadha, and C. Nolan (Ed. by), "Dynamic Macroeconomic Analysis", 2003, Cambridge, UK: Cambridge University Press
F.-C. Bagliano, and G. Bertola: "Models for Dynamic Macroeconomics", Oxford: Oxford University Press, 2007 (First Edition in paperback)
R.J. Barro and X. Sala-i-Martin, "Economic Growth", Second Edition, 2004, Cambridge, Massachusetts: MIT Press
A. Bucci, K. Prettner, and A. Prskawetz: "Human Capital and Economic Growth: The Impact of Health, Education, and Demographic Change", Basingstoke, UK: Palgrave-MacMillan, 2019
C.I. Jones, and D. Vollrath: "Introduction to Economic Growth", New York: W.W. Norton & Co., 2013 (Third Edition)
Further details (for example, the specific text-book and chapter(s) to be used for any specific topic) will be indicated in the syllabus of the course.
Module II, Investment and Labour Markets Theory
Course syllabus
Dynamic Theory of Investment with convex adjustment costs: Analysis and Policy-implications
Dynamic Theory of Unemployment (the 'Matching Theory of the Labour Market'): Analysis and Policy-implications
Dynamic Theory of Unemployment (the 'Matching Theory of the Labour Market'): Analysis and Policy-implications
Teaching methods
The course is composed of theoretical, as well as practical classes. The aim of the practical classes is to show students how they can concretely (e.g., in view of the resolution of mathematical exercises) use the theory learnt during the theoretical section of the course.
Teaching Resources
G. Alogoskoufis, "Dynamic Macroeconomics", 2019, Cambridge, Massachusetts: MIT Press
S. Altug, J.S. Chadha, and C. Nolan (Ed. by), "Dynamic Macroeconomic Analysis", 2003, Cambridge, UK: Cambridge University Press
F.-C. Bagliano and G. Berola: "Models for Dynamic Macroeconomics", Oxford: Oxford University Press, 2007 (First Edition in paperback)
C.A. Pissarides: "Equilibrium Unemployment Theory", Cambridge, Massachusetts: MIT Press, 2000 (Second Edition)
S. Altug, J.S. Chadha, and C. Nolan (Ed. by), "Dynamic Macroeconomic Analysis", 2003, Cambridge, UK: Cambridge University Press
F.-C. Bagliano and G. Berola: "Models for Dynamic Macroeconomics", Oxford: Oxford University Press, 2007 (First Edition in paperback)
C.A. Pissarides: "Equilibrium Unemployment Theory", Cambridge, Massachusetts: MIT Press, 2000 (Second Edition)
Module I, Growth Theory
SECS-P/01 - ECONOMICS - University credits: 6
Lessons: 40 hours
Professor:
Bucci Alberto
Module II, Investment and Labour Markets Theory
SECS-P/01 - ECONOMICS - University credits: 6
Lessons: 40 hours
Professor:
Bucci Alberto
Educational website(s)
Professor(s)