David Romer Advanced Macroeconomics

[Cloris Sopha]

Iuse it for my second-year macroeconomics undergraduate courses. We have two streams in our economics degree, and I teach on the more technical one, the BSc in economics. The book is more technical, not only from a mathematical point of view, but also from a logical point of view. The intuitions are elaborated in detail and very precise and the book requires you to think at a level of abstraction that is far higher than what Mankiw requires.

All the concepts that he explains are derived from first principles and, in particular, from pure microeconomic theory. The topics are pretty similar. You could map them, roughly speaking, from one book onto the other. But Williamson is way more technical. Williamson deals more with dynamic problems. Read

Romer is very advanced undergraduate level or early postgraduate. If you study macroeconomics at an advanced level, you will come across this book. If you want to have a comprehensive and broad perspective of what macroeconomic theory is today, in the broadest and most concise form, this is the book.

One of the great things about the book is that, if you have a 15-week course, you can really go through the entire book. But if you have five weeks, you can just select five chapters. Each chapter is self-contained and can be studied in isolation. Read

It is a way of recasting any dynamic problem in macroeconomics in a specific analytical way, that is called a recurse. It is the book over which generations of PhD students in macroeconomics have sweated blood. And any good book for PhD students in macroeconomics should be stained with sweat and blood, because it needs to be highly technical. This book is.

Yes. And understanding how you can apply those tools in specific contexts and to particular problems. How, for example, if there are missing markets in insurance, and you cannot insure against a state of the world, you can use these recursive methods to find the solution to that.

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Raffaele Rossi is Senior Lecturer in economics at the University of Manchester. His research interests include applied macroeconomics, positive and normative aspects of taxation and interactions between monetary and fiscal policy.

Course objectives and main course elements:

1. The course will teach you the terminology used in empirical and theoretical macroeconomics.

2. The course will teach you the main empirical business cycle characteristics of developed economies and the main empirical findings regarding the growth of developed and less developed nations.

3. This course teaches you the main techniques used to analyse modern macroeconomics models. In particular, the course will focus on techniques such as dynamic programming, value function iteration, and the linearization of first-order conditions.

4. This course teaches you (prototype versions of) macroeconomic models used to analyse key questions related to business cycles and economic growth. Examples are New Keynesian models, Real Business Cycle models, Overlapping Generations models, the Solow growth model, and first-generation endogenous growth models.

5. The course will also discuss some more advanced models that have recently been developed to explain recent economic events.

Each week, students are assigned problem sets. These problem sets focus on key elements of the lectures, but they will also promote creativity and critical thinking by going beyond the material explicitly discussed in the lectures. There will also be computer assignments. The problem sets will be discussed by the class teachers.

This course presents macroeconomic modelling at an intermediate level. We will cover three core models that are the basis for many more advanced and complex models used in the field. A strong grasp of the benchmark models is a necessary preliminary step both to go to more advanced topics and maybe more importantly to fully understand the basic economic channels that are almost always present even in more complex models. The course also presents the mathematical methods that are used both to specify and to solve the benchmark models. These methods are interesting by themselves as they can be applied to many other questions and fields.

The syllabus is divided in three parts. Each of the part presents one of the model. The teaching material is based on one of the main intermediate macroeconomics leading textbook completed with class notes. There is a problem set for each of the three parts. That will be corrected in class (one class per each problem resolution).

The course covers the mainstream models used in macroeconomics: (1) the neoclassical growth model (Ramsey), (2) the overlapping generation model (Diamond) and (3) the new Keynesian business cycle model (Woodford). The neoclassical growth model requires an introduction in continuous time optimal control, the overlapping generation model requires an introduction in optimization and difference equations and the new Keynesian model requires an introduction in linear approximation and system of difference equations. We will not cover the theory behind the mathematical methods but we will learn how to use them in a recipe book manner.

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