Teaching Research on Advanced Macroeconomic Modeling from the Perspective of “Solving Equations”

Abstract

In the study of economics, advanced macroeconomic modeling has a high learning threshold due to its difficulty and the breadth of knowledge required. This paper uses the thread of "solving equations" to "connect" the main theoretical models of advanced macroeconomics from simple to complex, from the Solow model to the New Keynesian model. It is clear that when new endogenous variables are introduced into the basic model, new equations can be introduced either through the first-order conditions of optimal planning or through market clearing methods, ensuring that the number of endogenous variables is equal to the number of equations. Mastering the above expansion methods not only effectively reduces the threshold for learning advanced macroeconomic theory modeling but also helps students to form new model designs based on research backgrounds in future economic research, thereby improving the theoretical depth of research.