BARCELONA MACROECONOMICS SUMMER SCHOOL 2007 (BMSS'07)

- The New Keynesian model with sticky prices and wages
- Real wage rigidities, inflation persistence and monetary policy trade-offs
- Labor market frictions, unemployment and monetary policy
- Labor markets, monetary policy and the Great Moderation

The object of the course is to analyze the best policy that the government can implement, given how the market reacts to each policy, and given various institutional constraints, such as partial or full commitment, participation constraints, default or political equilibrium. We will discuss the methodology to study optimal policy, focusing on fiscal policy applications, and we will review some relevant papers in this literature along the way.

- Fiscal policy analysis in dynamic models
- Sustainability of debt
- Effects of constraints on fiscal policy (debt limits, balanced budgets ...)
- Debt management
- Stabilization policies
- Interaction with monetary policy
- Commitment versus discretion

This course examines the workings of sovereign debt markets, focusing on theoretical approaches, key empirical regularities, as well as policy implications. We combine historical evidence, and detailed analyses of recent lending episodes to give students a clear sense of what phenomena modern theory can explain.

- Models of sovereign risk
- Reputation, default and retaliation
- Historical case studies: from gunboat diplomacy to the Argentine crisis
- Policy issues: sustainability and crisis resolution

- Economic integration and the location of economic activity
- The formation of cities: developers and self-organization
- The motives for agglomeration: what generates aggregate increasing returns?
- Specialization and diversifiction in cities
- The distribution of city sizes

- The world distribution of income
- Growth, poverty and inequality: the role of globalization
- Neoclassical growth theory: the power of diminishing returns
- The role of incentives
- Government, taxation, the Welfare State and growth
- Ideas and growth: R&D, patents. AIDS, malaria and generics
- The effectiveness of International Aid in promoting economic develpment. Randomized Field Experiments
- The tragedy of Africa: Diagnostics and setting priorities

- Entry regulation, finance, and economic growth
- Institutions, geography, and trade as deep deteminants of economic development
- Human capital, comparative advantage, and technological catch up
- Learning about growth from growth regressions
- Are the externalities to human capital accumulation?

450 euros

- Log-linear and second order approximations
- GMM and SMM
- Indirect Inference
- Maximum likelihood
- Bayesian methods

Lectures 17.00-19.00 h (10 hours)
Computer demonstrations: 19.00-20.00 h (5 hours)