EC417: Advanced Macroeconomics (MT 2017)

Instructor: Petr Sedlacek (in Michaelmas)

Teaching Assistant: Tiancheng Sun (t.sun3@lse.ac.uk)
Office: 32L.4.15
Office Hours: 1pm-2pm on Wednesday

Course Outline

In Michaelmas, we cover dynamic optimization techniques and some of their applications to

macroeconomics. The focus will be in familiarizing you with the tools, and applying the tools to
some applied problems. We will cover discrete time dynamic programming, in both deterministic
and stochastic settings. The applications will be to models of business cycles.

Syllabus

1. Dynamic programming and Bellman Equation, Iterative methods in dynamic programming.

2. Euler Equations.
3. Competitive Equilibria.
4. Application to RBC model
5. Money in RBC, Fiscal Policy in RBC.
6. Monetary Economics

Optional Textbooks

1. Romer, D. (2001), Advanced Macroeconomics, McGraw-Hill.

2. Ljungqvist, Lars, and Thomas J. Sargent (2012).Recursive macroeconomic theory. MIT press.
3. Stokey, Nancy, and R. Lucas. with E. Prescott (1989): Recursive Methods in Economic Dynamics.
4. Galí, Jordi (2015). Monetary policy, inflation, and the business cycle: an introduction to the new Keynesian
framework and its applications. Princeton University Press.

Teaching

Lectures: 10 two-hours.
Class: 10 one-hour. The seminars cover similar topics as the lectures. Teaching assistant will go
through pre-assigned problems and explain the lecture material in more detail.