Lecture 1st semester
Master in International Economics & Public Policy (MIEPP)
Lecturer: Klaus Wälde
The Master lecture on advanced macroeconomics teaches macroeconomic topics whereby ’advanced’ carries two meanings. First, more emphasis is put on model building and formal backgrounds of economic models than in Bachelor lectures. Students will learn about dynamic programming as a tool to solve maximization problems, will get a feeling for the role uncertainty plays in economic decision making and macroeconomics, and will learn some basics about stochastic processes required to understand e.g. the dynamics of innovation and growth or the dynamics of hiring and firing on labour markets.
Second, advanced is also understood in the sense of psychologically better founded decision processes of individuals. It has long been recognized that standard assumptions about preferences, which inter alia exclude conflicting motivations of an individual, time inconsistencies or emotions, are an obstacle to fully understanding human behaviour. This lecture will therefore teach classic models of macroeconomics and occasionally discuss extensions which take a more psychological approach to human behaviour.
The lecture will cover three macroeconomic topics: Economic growth, business cylces and unemployment. From the perspective of behavioural macroeconomics, we will discuss the role of conflicting motivations (dual-self models) for economic growth, of time-inconsistencies for understanding business cycles and of stress for understanding the dynamics of unemployment.
The slides for the lecture will be available soon.