The goal of the course is to study the sources of short run economic fluctuations and the main transmission mechanisms in small open economies, with an emphasis on developing countries. After introducing the prototype RBC framework for a small open economy, the course will extend it in several dimensions to account for relevant features in emerging economies, as interest rate and terms of trade shocks, financial frictions, sovereign default, and labor market frictions. For each topic, the theoretical framework will be developed together with the tools to solve the models numerically and a review of the empirical evidence.

You can find here the syllabus (pdf) - final update (28/11)

Slides:

Part 1 - Business cycle models for small open economies

• Session 1 (pdf) - some typos corrected (19/9)

• Session 2 (pdf)

• Session 3 (pdf) - some typos corrected (17/10)

Part 2 - Accounting for business cycles in emerging economies

• Session 4 (pdf)

• Session 5 (pdf) - some typos corrected (7/11)

Part 3 - Labor market frictions and the business cycle

• Session 6 (pdf) - some typos corrected (14/11)

• Session 7 (pdf)

Part 4 - Financial frictions and the business cycle

• Session 8 (pdf) - some typos corrected (28/11)

Matlab Codes:

Part 1 - Business cycle models for small open economies

• Local methods (zip)

• Global methods (zip)

Part 2 - Accounting for business cycles in emerging economies

• Basic SOE model (zip)

Part 3 - Labor market frictions and the business cycle

• Labor Search Model (zip)

• Model with Informality (zip) - includes calibration routine

Part 4 - Financial frictions and the business cycle

• Models with financial frictions (zip)

Take-Home Exams:

• Take Home Exam 1 (pdf) - Due date: 31/10

  • • Some answers (pdf)

• Take Home Exam 2 (pdf) / Includes replication exercise - Due date: 5/12