This course focus on the role of expectations in macroeconomic models, showing that it is only in certain economic environments that changes in economic outcomes can be obtained merely due to changes in expectations that are consistent with those outcomes. Along the course, students learn about Overlapping Generations Models with Market Imperfections and focus on equilibrium driven by self-fulfilling expectations. Some concepts and relevant mathematical tools are developed, enabling students to write equilibrium equations in terms of relevant economic parameters (such as elasticities of labour supply, tax rate, markups, capital share of output, the elasticity of substitution between capital and labour) and to characterize in a meaningful way the equilibrium (local) stability.

Prerequisites: Yes (see syllabus)