Macroeconomic Analysis III

This course is divided into two main sections, short- and long- run macro-economic analysis. In the first section, we discuss the solution of simple stochastic rational expectations models, and examine the main features of, and the key issues in the controversy between, the new classical, real business cycle, and Keynesian-New- Keynesian schools of thought. Topics covered include the Lucas, Sargent-Wallace and Fischer (overlapping wage contract) models, as well as the Shapiro-Stiglitz efficiency wage model and Romer's menu cost - coordination failure model. In the second section, various inter-temporal optimization models are analysed, and their salient economic lessons discussed. Topics covered include a two-period model, overlapping-generations models with certain and uncertain lifetimes, Hall's life-cycle-permanent-income model, as well as optimal control models of investment behaviour and endogenous growth. A lecture on some principal macroeconomic features of the Singapore Economy concludes the course.

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