Advanced Macroeconomics: Business Cycles

Course content

The course builds upon the macroeconomics courses in the undergraduate program and presupposes corresponding qualifications. The course extends models from these courses in different directions and introduces new models. The main focus is on the theoretical underpinning, solution, and empirical validation of dynamic stochastic general equilibrium (DSGE) models. 


The course combines theory, computation and empirics: Along with theoretical models of the business cycle, students will be introduced to the computational tools needed to solve and simulate such models. In addition, a selection of empirical tools will be covered in order to enable students to carry out similar analyses on their own. A number of lectures will take the form of computer lab sessions, where students are asked to carry out computational tasks.


Specific topics in the course include:

  • Introduction to DSGE models: The Real Business Cycle model and the New Keynesian model. Introduction to Matlab and Dynare.
  • Calibration and estimation of DSGE models using different empirical strategies, including Bayesian estimation.
  • Precautionary savings and the buffer-stock model of consumption.
  • Introduction to structural vector autoregressive (SVAR) models with applications to monetary and fiscal policy.
  • The effects of fiscal policy in DSGE models and the connection with SVAR evidence.
  • The macroeconomic implications of financial frictions at the household and/or firm level, the role of occasionally binding credit constraints, and the scope for macroprudential policy.



MSc programme in Economics – elective course


The PhD Programme in Economics at the Department of Economics:

  • The course is an elective course with research module. In order to register for the research module and to be able to write the research assignment, the PhD students must contact the study administration AND the lecturer.
  • The course is a part of the admission requirements for the 5+3 PhD Programme. Please consult the 5+3 PhD admission requirements.


The course cannot be taken if the summerschool "Theoretical and Empirical Foundations of DSGE Modeling" (AØKA08207U) has been taken due to an overlapping syllabus of the two courses.


The course is open to:

  • Exchange and Guest students from abroad
  • Credit students from Danish Universities
  • Open University students
Learning outcome

After completing the course the student is expected to be able to:



  • Define and reflect on the theoretical concepts, mathematical methods and models of modern macroeconomics.
  • Identify and account for the key building blocks of DSGE models.
  • Discuss the main empirical methodologies used to validate DSGE models.



  • Select the relevant computational tools necessary for solving, simulating and estimating DSGE models.
  • Master the concepts, methods, tools and models learned during the course.
  • Analyze and assess the models from a theoretical as well as an empirical point of view.
  • Interpret formal results obtained from the analytical and numerical analysis of DSGE models, discussing them in economic and intuitive terms, and putting them into the perspective of the related literature.



  • Plan and carry out an independent theoretical, computational and/or empirical analysis of one or more aspects of modern business cycles in advanced economies.
  • Be responsible for combining the aforementioned ingredients in order to validate a theoretical model and its qualitative and quantitative implications.


Abilities along these lines are essential for being qualified to work in the economic research and analysis divisions of companies, organisations and government institutions.


Most of the lectures will take the form of theoretical lectures on the topics described above. In addition, a number of lectures will take the form of computer sessions where students are asked to bring their laptop, download some codes and/or data, and solve various exercises under supervision.

The course material will consist primarily of journal articles. A tentative and non-exhaustive list of key papers on the topics covered in the course is given below, but a final reading list will be made available as the course progresses. In addition, the course will build on material from the following textbook:

  • Jordi Galí (2015): Monetary Policy, Inflation, and the Business Cycle. Second Edition, Princeton University Press.


List of relevant papers:

  • Blanchard, O.J., and R. Perotti 2002, An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output, Quarterly Journal of Economics 117, p. 1329-1368.
  • Fernandez-Villaverde, J., J.F. Rubio-Ramirez, and F. Schorfheide 2016, Solution and Estimation Methods for DSGE Models, Handbook of Macroeconomics 2, p. 527-724.
  • Galí, J., J.D. López-Salido, and J. Vallés, 2007, Understanding the Effects of Government Spending on Consumption, Journal of the European Economic Association 5, p. 227-270.
  • Iacoviello, M., 2005, House Prices, Borrowing Constraints, and Monetary Policy in the Business Cycle, American Economic Review 95, p. 739-764.
  • Jensen, H., I. Petrella, S. Ravn, and E. Santoro, 2020, Leverage and Deepening Business-Cycle Skewness, American Economic Journal: Macroeconomics 12, p. 245-281.


It is strongly recommended to have followed the courses Econometrics II and Macroeconomics III at the study of Economics, University of Copenhagen, prior to taking this course.

Familiarity with intertemporal optimization, the analysis of static and dynamic systems under rational expectations and basic multivariate econometrics (subjects covered in the course Macroeconomics III).

3 hours of lectures every week from week 6 to 20.
2 hours of exercise classes every second week from 6 to 20.

The overall schema can be seen at KUnet:
MSc in Economics => "courses and teaching" => "Planning and overview" => "Your timetable"
KA i Økonomi => "Kurser og undervisning" => "Planlægning og overblik" => "Dit skema"

Timetable and venue:
To see the time and location of lectures please press the link under "Timetable"/​"Se skema" at the right side of this page. F means Spring.

You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-F23; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Forår/Spring”
Press: “ View Timetable”

Please be aware:
- The study administration allocates the students to the exercise classes according to the principles stated in the KUnet.
- If too many students have wished a specific class, students will be registered randomly at another class.
- It is not possible to change class after the second registration period has expired.
- If there is not enough registered students or available teachers, the exercise classes may be jointed.
- The student is not allowed to participate in an exercise class not registered.
- All exercise classes are taught in English and it is expected that the students ask questions in English, so foreign students are included in the dialog.
- The schedule of the lectures and the exercise classes can change without the participants´ acceptance. If this occure, you can see the new schedule in your personal timetable at KUnet, in the app myUCPH and through the links in the right side of this course description and the link above.
- It is the students´s own responsibility continuously throughout the study to stay informed about their study, their teaching, their schedule, their exams etc. through the curriculum of the study programme, the study pages at KUnet, student messages, the course description, the Digital Exam portal, Absalon, the personal schema at KUnet and myUCPH app etc.

7,5 ECTS
Type of assessment
Written assignment, 72 hours
Type of assessment details
Individual take-home exam.
It is not allowed to collaborate on the assignment with anyone.
The exam assignment is in English and must be answered in English.
Exam registration requirements

There are no requirements that the student has to fulfill during the course to be able to sit the exam.


All aids allowed

for the written assignment.

Information about allowed aids for the re-examination, please go to the section "Re-exam".

Marking scale
7-point grading scale
Censorship form
No external censorship
for the written exam.
An oral re-examination may be with external assessment.
Exam period


Exam information:

More information is available in Digital Exam from the middle of the semester. In special cases decided by the Department, the exam can change to another day and/or time than announced. 

More information about examination, rules, aids etc. at Master (UK) and Master (DK).


The reexam takes place:

20 min. oral examination with 20 min. preparation time.

Written aids allowed during the preparation time.

No aids allowed at the oral examination.

External assessment. 


Reexam information:

More information in Digital Exam in August. In special cases decided by the Department, the re-sit can change to another day, and/or time than announced.

More information at Master UK) and Master DK).

Criteria for exam assessment

Students are assessed on the extent to which they master the learning outcome for the course.


In order to obtain the top grade “12”, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.


In order to obtain the passing grade “02”, the student must in a satisfactory way be able to demonstrate a minimal acceptable level of  the knowledge, skills and competencies listed in the learning outcomes.

Single subject courses (day)

  • Category
  • Hours
  • Lectures
  • 42
  • Preparation
  • 92
  • Exam
  • 72
  • English
  • 206


Course number
7,5 ECTS
Programme level
Full Degree Master

1 semester

- Go to 'Signup' for information about registration and enrollment.

Information about admission and tuition fee: Master and Exchange Programme, credit students and guest students (Open University)

and venue:
- For teaching: Go to 'Remarks'.
- For exam and re-sits: Go to 'Exam'.
Department of Economics, Study Council
Contracting department
  • Department of Economics
Contracting faculty
  • Faculty of Social Sciences
Course Coordinator
  • Søren Hove Ravn   (15-7773766972326c737a693276657a724469677372326f7932686f)

See 'Course Coordinators'

Teacher of the exercise classes:
Ex. class 1:

Please read "Remarks" regarding the schedule of the teaching.

Saved on the 30-04-2024

Are you BA- or KA-student?

Are you bachelor- or kandidat-student, then find the course in the course catalog for students:

Courseinformation of students