Notes in Economic Growth and Fluctuations
1 Introduction
The purpose of these notes is to provide a comprehensive introduction to modern macroeconomics for Master’s students and researchers who may not be familiar with the field. Modern macroeconomics is characterized by the use of micro-founded behaviors of economic agents, such as households and firms, within dynamic environments. This analytical framework represents a significant departure from traditional models like IS-LM or AS-AD, which are typically studied at the undergraduate level. Given the substantial gap between undergraduate macroeconomics and more advanced, contemporary approaches, I deemed it necessary to prepare these notes. Additionally, this work is intended to facilitate my teaching responsibilities in the classroom.
These notes are organized around four main themes, which forms the building blocks of this document:
A quick guide for methods in deterministic dynamics (Part I: Methods in Dynamic Economics), covering tools like ordinary differentials equations, difference equations and dynamic optimization
An overview of the benchmark model and their applications in growth theory (Part II: Benchmark models) presenting key models in dynamic macroeconomics. The Solow model introduces fundamental concepts in macrodynamics, while the Ramsey-Cass-Koopmans model (often referred to as the Ramsey model) and the Overlapping Generations model (OLG) are among the most widely utilized models.
some notes on Endogenous Growth Theory (Part III: Endogenous Growth Theory) summarizing major contributions in this area, ranging from the AK model to models of technological change.
Topics in Aggregate Fluctuations (to be written).
Readers should bear in mind that a model is primarily a tool for understanding real-world problems. Just as a tool can vary in its sharpness, a model can be more or less suited to studying a particular issue. Theoretical developments aim to refine these tools, while empirical methods assess their effectiveness in explaining different types of problems. In these notes, my goal is to provide students with a solid foundation for theoretical work in economics. The applications are potentially infinite (a major conclusion of Endogenous Growth Theory). Although additional applications may be incorporated over time, I believe this volume is already sufficiently comprehensive and beneficial to students in its current form. This is an initial version, and it is likely to evolve, incorporating new contents (topics, code blocks …) or revised structures within chapters.
Many researchers and educators have contributed to the extensive literature on the topics covered here. While I have endeavored to write as accurately and originally as possible, I acknowledge that some formulations or sections may overlap with existing works. I apologize in advance for any such overlaps and will continue to refine this document until it reaches the desired standard. All errors are, of course, my own.