COURSE INTRODUCTION AND APPLICATION INFORMATION


Course Name
Macroeconomic Theory I
Code
Semester
Theory
(hour/week)
Application/Lab
(hour/week)
Local Credits
ECTS
ECON 603
Spring
3
0
3
10
Prerequisites
None
Course Language
English
Course Type
Required
Course Level
Third Cycle
Course Coordinator -
Course Lecturer(s) -
Assistant(s) -
Course Objectives This course is designed to develop the theoretical building blocks and tools of dynamic macroeconomics at advanced level. The course methodologically acknowledges the microeconomic foundations of macroeconomics, which is the basis for NeoClassical/ New Classical macroeconomics. Starting from oneperiod and twoperiod general equilibrium models, the course covers several modeling approaches ranging from overlapping generations to infinite period deterministic dynamic general equilibrium modeling. In addition to this, all our modeling examples present both competitive equilibrium and social planner’s solution. Hence, the course builds up a complete sense of macroeconomic modeling.
Learning Outcomes The students who succeeded in this course;
  • To learn macroeconomic modeling through using advanced macroeconomic theories and concepts.
  • To make policy analysis through macroeconomic modeling in a theoretical context.
  • To use macroeconomics knowledge at advanced level and to comment on actual (practical) macroeconomic issues by using this advanced framework.
  • To analyze new and complex ideas in macroeconomics critically.
  • To compare and contrast results of different macroeconomic frameworks.
Course Content The course begins by introducing to students the oneperiod general equilibrium models. Next, twoperiod partial and general equilibrium macroeconomic modeling is developed. Third, overlapping generations models are covered in general equilibrium setup. Finally, deterministic dynamic general equilibrium modeling is studied through reviewing economic growth literature. In that scope, difference equations, differential equations and optimal control theory are covered in the course at sufficient detail.

 



Course Category

Core Courses
Major Area Courses
Supportive Courses
Media and Managment Skills Courses
Transferable Skill Courses

 

WEEKLY SUBJECTS AND RELATED PREPARATION STUDIES

Week Subjects Related Preparation
1 One period General equilibrium Chapter 1 in HY and other sources
2 One period General equilibrium Chapter 1 in HY and other sources
3 One period General equilibrium Chapter 1 in HY and other sources
4 Two period General equilibrium Chapter 2 in HY and other sources
5 Two period General equilibrium Chapter 2 in HY and other sources
6 Two period General equilibrium Chapter 2 in HY and other sources
7 Difference Equations Appendix 1 in HY and other sources
8 Differential Equations \ Midterm
9 Overlapping GenerationsModeling Chapter 3 in HY and other sources
10 Overlapping GenerationsModeling Chapter 3 in HY and other sources
11 Neoclassical growth theory Chapter 1 in HY2 and other sources
12 Neoclassical growth theory Chapter 2 in HY2 and other sources
13 Neoclassical growth theory Chapter 3 in HY2 and other sources
14 Neoclassical growth theory Chapter 4 in HY2 and other sources
15 Review
16 Review of the Semester  
Course Textbooks David Romer (DR), Advanced Macroeconomics McGrawHill Irwin, Third Edition 2006; FabioCesare Bagliano and Giuseppe Bertola (FG), Models for Dynamic Macroeconomics Oxford University Press, First Edition 2007; Peter Birch Sorensen and Hans Jorgen WhittaJacobsen (SW), Introducing Advanced Macroeconomics: Growth and Business Cycles Mc Graw Hill Education, 2005; Hakan Yetkiner (HY), Advanced Macroeconomics, unpublished manuscript.
References Attanasio, O. P. “Consumption,” Chapter 11 in J. Taylor and M. Woodford, (eds.) Handbook of Macroeconomics, Elsevier, Amsterdam, 1999. / Ando, A. and F. Modigliani, "The LifeCycle Hypothesis of Savings: Aggregate Implications and Tests," American Economic Review, 1963. / Friedman, M., A Theory of the Consumption Function, Chapters 13, Princeton University Press, 1963. / Hall, R.E., "Stochastic Implications of the Life CyclePermanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, 1978. / Carroll, Christopher D, Kimball, Miles S, 1996. "On the Concavity of the Consumption Function," Econometrica, Econometric Society, vol. 64(4), pages 98192, July. / Campbell, J.Y. and A. Deaton, "Why is Consumption so Smooth?" Review of Economic Studies, 1987. / Campbell, J.Y. and N.G. Mankiw, "Consumption, Income, and Interest Rates: Reinterpreting the Time Series Evidence," NBER Macroeconomics Annual, 1989. / Fuhrer, J.C., “Habit formation in Consumption and its Implications for Monetary Policy Models,” American Economic Review, 2000. / Krueger D. and FernandezVillaverde J. (2002), Consumption over the Life Cycle: Some Facts from Consumer Expenditure Survey Data. / Caballero, R.J., “Aggregate Investment,” Chapter 12 in Taylor and Woodford. Jorgenson, D.W., "Capital Theory and Investment Behavior," American Economic Review, 1963. / Lucas, R.E., "Adjustment Costs and the Theory of Supply," Journal of Political Economy, 1967. / Gould, J.P., "Adjustment Costs in the Theory of Investment of the Firm," Review of Economic Studies, 1968. / Hayashi, F., "Tobin's Marginal and Average q: A Neoclassical Interpretation," Econometrica, 50, 1982. / Abel, A., "Dynamic Effects of Permanent and Temporary Tax Policies in a q Model of Investment," Journal of Monetary Economics, 1982. / Dixit, A.K. and R.S. Pindyck, Investment Under Uncertainty, Chapters 1 and 2, 1994. / Sargent, T.J. and N. Wallace, "Rational Expectations and the Theory of Economic Policy," Journal of Monetary Economics, 1976. / McCallum, B.T., "Rational Expectations and Macroeconomic Stabilization Policy," Journal of Money, Credit, and Banking, 1980. / Taylor, J.B., "Conditions for Unique Solutions in Stochastic Macroeconomic Models with Rational Expectations," Econometrica, 1977

 

EVALUATION SYSTEM

Semester Requirements Number Percentage
Participation
Laboratory / Application
Field Work
Quizzes / Studio Critiques
Homework / Assignments
Presentation / Jury
Project
Seminar / Workshop
Midterms / Oral Exams
1
50
Final / Oral Exam
1
50
Total

Contribution of Semester Work to Final Grade
50
Contribution of Final Work to Final Grade
50
Total

ECTS / WORKLOAD TABLE

Activities Number Duration (Hours) Workload
Course Hours
Including exam week: 16 x total hours
16
3
48
Laboratory / Application Hours
Including exam week: 16 x total hours
16
Study Hours Out of Class
16
6
Field Work
Quizzes / Studio Critiques
Homework / Assignments
Presentation / Jury
Project
Seminar / Workshop
Midterms / Oral Exams
1
40
Final / Oral Exam
1
40
    Total
224

 

COURSE LEARNING OUTCOMES AND PROGRAM QUALIFICATIONS RELATIONSHIP

#
Program Qualifications / Outcomes
* Level of Contribution
1
2
3
4
5
1 Developing scientific expertise and capabilities in the field of finance through using creative and critical thinking and research skills; innovatively contribute to the discipline by new ideas and definitions based on the graduate level qualifications.
2 Comprehending the interaction across various disciplines related to the field of finance, reaching at original conclusions by using new and complex analysis, synthesis and evaluation skills.
3 Developing and championing new approaches to contribute the field of finance through apprehending the research methods.
4 Contributing to the science of finance through developing new methods or implementing an existing method to a different field through investigating, comprehending, designing original topics.
5 Conducting independent research, analyzing scientific phenomenon through broad, deep and critical perspective, arriving at new syntheses and evaluations in the discipline of finance.
6 Publishing scientific articles in reputable refereed national and international journals, presenting papers in scientific conferences in the field of finance and its sub-disciplines.
7 Following, attending and organizing national and international events such as conferences, seminars and panels to keep up with developments and create new solutions to the problems in the field of finance.
8 Following pioneering and innovative theories and methods in the field of finance and implementing them in analysis and research.
9 Developing creative solutions to the social, scientific and ethical issues within the scope of finance and business life and extending values that supports these solutions.
10 Being able to use English fluently for both comprehending and publishing scientific publications and developing proper communication.

*1 Lowest, 2 Low, 3 Average, 4 High, 5 Highest

 

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