Macroeconomics, International and Development Economics
Macroeconomics is the study of growth, unemployment, inflation, budget deficits and surpluses, exchange rates, stock market fluctuations, and related economic issues. International economics is the study of the effects of international trade and finance on national economies. Development economics is the study of the macroeconomic and microeconomic questions confronting less developed nations. In many cases, the central issues in international economics and development economics have roots in macroeconomics, so these three fields are closely inter-connected.
The MIT Economics Department has a long tradition of active interest in current macroeconomic issues, both in closed and open economies. This tradition is exemplified by the work of MIT’s Nobel laureates. The current macroeconomics and international group includes Daron Acemoglu, George-Marios Angeletos, Olivier Blanchard, Ricardo Caballero, Mikhail Golosov, Guido Lorenzoni, Lester Thurow, and Iván Werning. In addition to this core group, several other faculty members teach and do research on macroeconomic topics. They include David Autor, Abhijit Banerjee, Peter Diamond, Bengt Holmström, James Poterba, and Peter Temin.
Since modern macroeconomics draws heavily on “microfoundations” in neoclassical microeconomic theory, there is much interaction among students and faculty interested in macroeconomics,international economics, and other fields. Students who plan to carry out research in these areas often find that course work in economic theory is extremely helpful in identifying research topics and in providing analytical tools for potential dissertation research.
The Department offers four undergraduate and six graduate macroeconomics courses. The undergraduate courses range from the introductory level to advanced seminars in which students assess and participate in current research. MIT’s advanced undergraduate macroeconomics course is comparable to the graduate macroeconomics offering at many economics
departments.
All Ph.D. students must take four of the six graduate macroeconomics courses. The remaining two are field courses that cover current research and prepare students to write dissertations. An undergraduate course in international economics introduces students to the theory of international trade and finance, investigating exchange rate restrictions, economic development, and foreign aid. Two graduate courses cover traditional and modern theories of international trade and finance.
The faculty in macroeconomics and international economics maintain a very active research program. Daron Acemoglu carries out research on labor markets and macroeconomic activity. He has also worked on models of the determinants of the rate of technological change and the development of political institutions, and he is currently writing a graduate macroeconomics textbook. The wide range of issues that he studies have made Acemoglu a popular dissertation advisor. George-Marios Angeletos works on understanding the roles of private and public information about the economy in driving economic cycles. Olivier Blanchard is studying high unemployment in Western Europe and the transition to market economies in Eastern Europe. His graduate text, Lectures in Macroeconomics, co-authored with Stanley Fischer, is a standard reference. Ricardo Caballero is exploring a range of issues linking asset markets, investment, and economic growth. He has recently focused on asset market crises in the developing world. His current work develops models that explore the role of monetary policy, private financial markets, and other factors in contributing to “country crises.” Mikhail Golosov works on issues in optimal fiscal policy design, and his work overlaps with public finance and political economy. Guido Lorenzoni investigates open-economy macroeconomics and the sources of business cycles. Lester Thurow is carrying out ongoing work in international competition and labor markets. Iván Werning is an expert on dynamic consumerbehavior and its implications for the design of social policies such as unemployment insurance. In addition to these Economics faculty, Roberto Rigobon of the Sloan School is actively involved in research and thesis supervision in the area of international economics.