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Hkust Study Notes Part 2

This course provides students with a foundational understanding of macroeconomic growth and fluctuations, utilizing analytical tools and methods from modern macroeconomic theory. It covers key topics such as the Solow Model, microeconomic foundations, and macroeconomic policy analysis, including responses to financial crises. The objective is to equip students with the skills to analyze current macroeconomic events and their implications for the economy and business environment, while preparing them for advanced studies in economics.

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(Simran) SIDHU Kaur Simran De
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21 views1 page

Hkust Study Notes Part 2

This course provides students with a foundational understanding of macroeconomic growth and fluctuations, utilizing analytical tools and methods from modern macroeconomic theory. It covers key topics such as the Solow Model, microeconomic foundations, and macroeconomic policy analysis, including responses to financial crises. The objective is to equip students with the skills to analyze current macroeconomic events and their implications for the economy and business environment, while preparing them for advanced studies in economics.

Uploaded by

(Simran) SIDHU Kaur Simran De
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

After studying this course, students will have a general knowledge about the main questions

(growth and fluctuations) in macroeconomics and understand the analytical tools and methods
used in modern macroeconomic theory, which will help students to analyze the current
macroeconomic events and policies and their impact on the business environment and the
economy. It will also provide a bridge between UG-level macroeconomics and Master/PhD level
macroeconomics and lay solid foundation for students who are interested in pursuing graduate
studies in economics.

We will start with the economic growth, which determines the living standard in the long run. We
will first explore the facts of growth, and then investigate the determinants of long-term
economic growth, such as the role of capital formation and technological progress (Solow
Model). Then we use the basic Solow model to study the large differences in standards of living
across countries. We will find that to understand the observed facts, endogenous saving decisions
should be considered, which provides a nice bridge to the following part of the course-the
microfoundation of macroeconomic models.

A major achievement in economics over the last forty years has been to incorporate these
microeconomic fundamentals into models designed to answer macroeconomic questions. We will
first introduce some basic tools, including the general equilibrium and simple 2-period dynamic
models where consumers, workers and firms optimize. Then we will use this framework to
analyze macroeconomic fluctuations (real business cycle theory) and the drivers of business
cycles. We will also explore whether or not predictions from the neoclassical model can produce
business cycles observe in the data.

A treatment of the microeconomic foundations consumption and investment prepares the ground
for a detailed analysis of macroeconomic policies. We will then go back to policy analysis, and
use the micro-founded IS-LM-AD-AS framework to analyze yield curve, zero lower bound,
fiscal stimulus and unconventional monetary policy that have been used by policy makers in the
recent 2008 financial crisis.

Finally, we can use the dynamic general equilibrium approach to study some important questions
in the real world, including the relationship between yield curve, macroeconomy and the
monetary policy, and the policy response to financial crisis.

Course Objective:

This course aims

(i) to give formal examination of main macroeconomic questions by introducing the dynamic
general equilibrium model and the microfoundation of macroeconomic analysis.
(ii) to help students to develop the necessary analytical concepts and tools to analyze the
current macroeconomic events and its impact on the business environment and the
economy; and help students to lay solid foundation for graduate studies in economics.
(iii) to enable students to understand and evaluate the effects of various government policies
on the business environment and the economy;

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