Course description

Business Cycles

Introduction

This course is a graduate level course in macroeconomics, allowing theory to meet data. More particularly, this course emphasizes economic fluctuations and policies motivated by business cycle fluctuations. Key questions regard whether swings in economic growth and employment are associated with a sustainable use of economic resources over time. Specific attention will be devoted to the macroeconomic effects of swings in oil prices and oil production, both nationally and internationally.

The approach adopted in this course emphasizes the dynamic dimension of interesting applied macroeconomic problems. Participants will be introduced to digital tools used in modern quantitative macroeconomics.

Course content

1. Stylized facts of business cycles

  • Measuring business cycles (trend - cycles)
  • The role of leading indicators
  • Sources of business cycles, different shocks
  • Using facts to discipline and distinguish models

2. Introduction to advanced theories of business cycles - quantitative macroeconomics

  • Real Business Cycle models
  • Solving models numerically (with a computer)

3. New Keynesian models and monetary policy

  • Nominal rigidities
  • New Keynesian Phillips curve
  • Taylor rules

4.  Fiscal policy

  • Ricardian equivalence
  • Neo-classical fiscal multiplier
  • New Keynesian fiscal multiplier
  • Empirical estimates of the fiscal multiplier

5. Commodities and macroeconomics

  • The role of oil price shocks for oil importing and exporting countries
  • Optimal policy for resource rich economies

Learning outcome knowledge

This course is organized in a sequence of topics, where we address each topic in detail using both theory and applied methods. The empirical relevance of the different theories will be critically assessed. The course focuses on macroeconomic fluctuations, covering topics such as (i) the stylized facts of business cycles and the role of different shocks in the cycle, (ii) advanced theories of the business cycles, in particular real business cycle models and new Keynesian models (iii) the role of monetary and fiscal policy with respect to the business cycle, (iv) oil and macroeconomics

Exam organisation

  • Presentation: 20%
  • Written exam: 80%