To equip learners with a deep analytical command of macroeconomic theory and fos ters the ability to apply it to real-world policy challenges through model-based analysis and empirical testing. It also sharpens academic communication, ethical reasoning, and collaborative leadership skills for impact across diverse institutional contexts.

ELO1: Apply dynamic dynamic optimization and recursive equilibrium methods using Euler, Bellman, envelope conditions, transversality conditions and recursive competitive equilibrium.  

ELO2: Analyse growth, consumption, investment, and business-cycle models within Solow, Ramsey, Real Business Cyclec(RBC), Bewley-Huggett-Aiyagari, user cost, Tobin’s q, adjustment-cost and Dynamic Stochastic General Equilibri umc(DSGE) frameworks. 

ELO3: Evaluate monetary, fiscal, and intergenerational policy using money demand, Money-in-the-Utility (MIU), Cash-in-Advance (CIA), seigniorage, Friedman rule, New Keynesian, government budget constraint, Ricardian equivalence, tax smoothing, Overlapping Generations (OLG), and pension models. 

ELO4: Integrate labour-market, financial-friction, and open-economy models to inter pret macroeconomic interactions and policy outcomes such as unemployment, credit constraints, macroprudential policy, current accounts, exchange rates, sudden stops, and capital-flow management.

Dynamic Optimization and Recursive Competitive Equilibrium 

The course begins with the analytical foundations of modern macroeconomics. Students study intertemporal optimization, Euler equations, transversality conditions, Bellman equations, value functions, policy functions, envelope conditions, and recursive methods. The module introduces the distinction between planner problems and decentralized equi libria, sequential and recursive competitive equilibria, and the welfare theorems used in dynamic macroeconomic analysis. 

Growth Foundations: Solow, Ramsey, Decentralization, and Wedges 

Students examine the foundations of long-run growth theory. The module covers the Solow growth model, steady states, transition dynamics, the golden rule, capital accumulation, technological progress, and convergence. It then introduces the Ramsey-Cass-Koopmans model, co-state variables, saddle-path dynamics, decentralized equilibrium, planner allo cations, and wedges. The module also provides a bridge to endogenous growth models, including AK, expanding-variety, and quality-ladder models. 

Real Business Cycles and DSGE Foundations 

This section introduces stochastic dynamic macroeconomics through Real Business Cycle theory and the broader Dynamic Stochastic General Equilibrium framework. Topics in clude representative households, representative firms, productivity shocks, labour-leisure choice, capital accumulation, calibration, log-linearization, impulse response functions, and the use of dynamic equilibrium models to explain business-cycle facts. 

Consumption I: Fisher, Permanent Income, Life-Cycle, Hall, and Aggregation 

Students study the core theory of intertemporal consumption. Topics include the two period Fisher model, the marginal rate of substitution-interest rate link, the permanent income hypothesis, life-cycle consumption, Hall’s random-walk result, the elasticity of intertemporal substitution, aggregation problems, habit formation, durable goods, and rule-of-thumb versus optimizing consumers. 

Consumption II: Incomplete Markets and Heterogeneous Households 

The course then moves from complete-market consumption smoothing to incomplete market macroeconomics. Students examine Bewley, Huggett, and Aiyagari models, nat ural borrowing limits, liquidity constraints, prudence, precautionary saving, buffer-stock saving, stationary wealth distributions, incomplete insurance, and the possibility of over accumulation in Aiyagari-type economies.