In case of conflicting information consider the Sisu/Courses/Moodle pages the primary source of information.

The course starts with an introduction to business cycle facts and methods. Then we present the main theoretical concepts and methods for solving and calibrating linear stochastic dynamic general equilibrium (DSGE) models with aggregate shocks. We use the basic real business cycle model as the workhorse model to demonstrate the methods. Then we study why the monetary policy is neutral in the classical, RBC-type macro models. The classical model is augmented with imperfect competition and price rigidities, leading to the canonical new Keynesian model. Next, various monetary policy rules are studied in this framework. We also study the zero lower bound restriction of nominal interest rates on monetary policy and the resulting extensions to the basic framework. This builds a bridge to study the interaction of fiscal and monetary policies. We also study the open economy dimension of monetary policy. Finally, topic(s) concerning current economic policy issues may be covered.

Please note that the course former name was Advanced Macroeconomics 3: Monetary Policy Models (and still is in Sisu if you use DPE-9319 PhD level code)

  • Completion method: contact teaching
    • Streaming will be only available to the FDPE students, for more infromation please contact Jenni Rytkonen, jenni.rytkonen [at] aalto.fi
  • Schedule: can be found in Courses Page and Sisu
  • Study materials: can be found in Moodle
    • A link and a Moodle course key will be sent by email before the course starts and/or they will be provided on the Courses page: you can view the information on this site without logging in or registering, but some of the content added by teachers to course pages may be available to course participants only, for example Moodle course enrolment key.
    • Log in with your UH username to be able to use all the features of the course workspace
  • Self study material to be studied before the course starts (link to be added here later)

Please register for the course in the UH Sisu with your UH username. Further instructions (link to be added here later).

    • Code: ECON-L3300

    • Target groups: PhD / rMSc / MSc

    • Credit points: 5

    • Credit transfer: apply for substitution in Sisu

    Further instructions (link to be added here later)

    • Code: 26051

    • Target groups: PhD / rMSc / MSc

    • Credit points: 5

    • Credit transfer: apply for substitution in Sisu

    Further instructions (link to be added here later)

    • Code: ECOM-R319 (rMSc) / DPE-9319 (PhD)

    • Target groups: PhD / rMSc

    • Credit points: 5

    • Target groups: PhD

    • Credit points: please check your curriculum

    • Credit transfer: please apply for credit transfer according to your home university's procedures

    Further instructions (link to be added here later).

After the course, the student should:

  • Be able to compute stylised facts using macroeconomic data
  • Be able to linearise and solve linear dynamic models
  • Understand and master the real business cycle model (RBC)
  • Be able to augment the RBC model with other economic features and shocks
  • Be able to derive and solve the New Keynesian model and compare the welfare effects of alternative monetary policy rules
  • Understand optimal monetary policy in the basic New-Keynesian framework
  • Be able to describe how the open-economy setting alters the previous results
  • Be able to apply and alter the DSGE models for topical economic policy issues