Outline - Part IIB Paper 2 Business Cycle Theory Dr Mauricio Prado([email protected] Lent Term 2011 weeks 5-8 Aim of the course The purpose of this

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Unformatted text preview: Part IIB, Paper 2: Business Cycle Theory Dr Mauricio Prado ([email protected]) Lent Term 2011, weeks 5-8 Aim of the course The purpose of this course is to introduce students to the main theories used by macroeconomists to explain short-run fluctuations in macroeconomic variables (e.g. output, aggregate consumption, aggregate investment, unemployment, etc.). The course will be divided into three parts. The first part will be devoted to the ‘New-Keynesian’ micro-foundations of Keynesian ideas such as the Keynesian multiplier, the non- neutrality of money, and the role of ‘animal spirits’ in macroeconomic dynamics. The second part will deal with the Lucas model of misperceptions, which provides an explanation for money non-neutrality compatible with flexible prices, which is thus an alternative to that favoured by the Keynesian tradition. Finally, the third part of the course will be devoted to the intertemporal “Real Business Cycle” approach to aggregate fluctuations, which emphasises optimal reactions of economic agents to exogenous technological...
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This note was uploaded on 06/04/2011 for the course ECONOMICS paper 2 taught by Professor Prado during the Spring '11 term at Cambridge.

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Outline - Part IIB Paper 2 Business Cycle Theory Dr Mauricio Prado([email protected] Lent Term 2011 weeks 5-8 Aim of the course The purpose of this

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