Teaching
General equilibrium modelling
Spring semester 2011.
This course aims at teaching students how to build general equilibrium models both in a closed and open economy setting. Starting from a simple framework of national accounting, we will first introduce static models. This will allow us to focus on the roots of general equilibrium.
The course will then focus on the dynamics. More in particular, we'll introduce a baseline RBC model, both in a perfect competition and monopolistic competition setting. During the course, students will also learn to simulate simple stochastic dynamic general equilibrium models using standard computational tools and softwares. Finally, we will introduce a formal framework to analyze the dynamics of open economies in a stochastic environment; lectures will thus focus on RBC models including a specific treatment of external debt dynamics and debt limits.
The course is taught in English and focuses on four main topics -- that are listed here in the following. Lectures will follow the structure of lecture notes -- that will be provided to students. All material will be either distributed in class or uploaded in the following. ( preliminary syllabus)
Draft of the program
· From national accounting to general equilibrium
- National accounting, closed and open economy.
- Theory and data, do they fit?
· Building and solving a GE model
- The general framework: assumption and main ingredients
- A standard RBC model with perfect competition
- A standard RBC model with imperfect competition
- The current crisis: can our models explain it?
· A standard RBC model
- Application:Basics of Dynare on Matlab
- Problem set. Solutions: dowload PDF here. Download example1 and example2 in: Codes.
· A standard RBC small open economy
- Complete markets and risk sharing
- Closing small open economies
- Assignment (due by Thursday the 7th of April!!). If you are absent, send it to me by email.
Suggested Textbooks:
· Obstfeld and Rogoff (1996), Foundations of international macroeconomics, MIT Press.
· Wickens (2008), Macroeconomic Theory: a general equilibrium approach, Princeton University Press.