Instructors: Marco Dardi and Alessandro Gioffrè
The DGE model in a deterministic environment: intertemporal optimality, dynamics, long-run convergence to steady state. Equilibrium and growth with increasing population and/or exogenous technical progress. Methods of intertemporal optimization derived from optimal control theory. Fiscal policy in DGE and in OLG models. Uncertainty, basic notions for macroeconomic analysis. Bayesian expectations in general. Dynamics with rational expectations and with adaptive expectations, a comparison. Price stickiness and equilibrium dynamics. Optimal control in stochastic environments. Applications to optimal portfolio choice: CAPM, Utility-based and consumption-based. The contingent claims approach to financial markets. Complete markets and efficiency in risk allocation.