Advanced macro (with Elisa Faraglia)
(this page will be update regularly during the term)
This is an advanced class taught together with Elisa Faraglia, alternating every two week, with 4 two-hour or two-1/2-hour lectures. The focus on my part is on building simple general equilibrium macro models under alternative exogenously given asset-market structures. The focus on open economy macro example buys us heterogeneity, both ex ante (preferences and technologies) and ex post (idiosyncratic shocks).
The four lectures will cover:
Transmission of shocks with flexible prices;
Transmission of shocks under nominal rigidities;
Derivation of micro-founded loss functions;
Derivation of targeting rules and analysis of equilibrium trade-offs among competing objectives for benevolent policymakers (under commitment).
At the end of the class, the exam will comprise feasible exercises, bringing some of the material discussed during lectures to the computer. However, for my four lectures, researchers will be asked to work mostly analytically.
Lecture notes are attached below, together with problem sets.
Lecture 1: Economic interdependence and the transmission mechanism
Assignment:
the material in class draws on the 2008 RESTUD paper, especially the analytical section.
read the handbook chapter
HW1
Lecture 2: Building a global monetary model. Stylized framework.
Assignment: handbook chapter, specification and log-linearization of the model.
Readings
Benigno P. and M. Woodford “Linear-Quadratic Approximation of Optimal Policy Problems,” with , revised August 2008
Corsetti G. L. Dedola and S. Leduc, Optimal monetary policy in open economies joint with , forthcoming in the Handbook of Monetary Economics, vol. III, Edited by Ben Friedman and Michael Woodford 2011
Corsetti G. L. Dedola and S. Leduc International Risk Sharing and the transmission of productivity shocks", with Luca Dedola and Sylvain Leduc .Review of Economic Studies, 2008. This is the web appendix.
Gali J, (2008) Monetary Policy, Inflation and the Business Cycle: An Introduction to the New Keynesian Framework, Princeton University Press
Woodford M. Interest and Prices: Foundations of a Theory of Monetary Policy, Princeton University Press, 2003.