A comprehensive study of of modern macroeconomic theory.
Modern macroeconomics studies aggregate economic phenomena that are generated by the interaction of consumers, firms and government. For example, it tries to explain why some countries are rich while others are poor, and why economies experience business cycle fluctuations. In attempting to answer such questions, it is crucial to understand the underlying micro foundations of an economy--issues such as the consumption-savings behavior of households or the investment and hiring decisions of firms. In this class we will therefore document the various characteristics of macroeconomic aggregates, and then build models of consumer and firm behavior to explain them. Having models that are capable of capturing the way a part of the economy works will then help us to evaluate government policies and consider their consequences. The main goal of the class is to make you familiar with modern macroeconomic theory. We will build on many of the concepts that you learned in your introductory economics courses, but will employ more rigor by using mathematical analysis in addition to graphical analysis.
Prerequisite: EC 150 (or 151 and 152) and Math 126