TrainingsMasterEconomicsCoursesMacroeconomics III

Master EconomicsUE Macroeconomics III


The aim of the course is to present advanced macroeconomic topics related to the analysis of aggregate consumption, aggregate investment and modern business cycle analysis with the Real Business Cycle model.

Course outline :

Chap. I : Consumption theory

1. Consumption over the life cycle : the life-cycle/permanent income models

2. Introducing uncertainty – The random walk hypothesis

3. Market imperfections : the role of liquidity constraints

4. Extensions : risk aversion, precautionary savings

Chap. 2 : Investment theory

1. The neoclassical model of capital demand

2. Investment with and without capital adjustment costs : Q-theory models

3. Role of shocks : real shocks, news shocks, noise shocks

Chap. 3 : Real Business Cycles

1. Measuring business cycles : trend-cycle decompositions and stylized facts

2. The canonical RBC model

3. Evaluation of the model

Professional skills

  • Understanding the microeconomic foundations of individual consumption decisions and their aggregate implications
  • Understanding the microeconomic foundations of firms’ investment decisions and their macroeconomic implications
  • Analysing the canonical Real Business Cycle model

Languages used

Main languages used by this course:

  • Français
  • Anglais


  • Romer D., Advanced Macroeconomics, McGraw-Hill, 4th Edition

Recommended prerequisites

Standard undergraduate courses in macroeconomics. Basic knowledge of optimization theory (constrained optimization, method of Lagrange multipliers).

Structure and organisation

The course will be shared among models’ description and exercises.

Volume of teachings

  • Lectures: 24 hours