Expectations and Macroeconomics

ECS574 Expectations and Macroeconomics

Spring 2024

  • Topics

    This module covers some recent advances in the macroeconomics literature, which depart from rational expectations modeling and Bayesian learning. We will cover three topics: (1) ambiguity (on which we will focus mostly), (2) bounded rationality, (3) diagnostic expectations. We will review the main concepts and cover some applications, which include asset pricing, business cycles, heterogeneous beliefs, and incomplete markets. For each application, we emphasize the specific economic question as well as the associated methodological aspects. Throughout the applications, we will encounter and analyze additional specific concepts and issues pertaining to that literature.

  • Learning outcome

    Upon completion of the course, students can..


    • model choices under ambiguity, bounded rationality and diagnostic expectations.
    • investigate the impact of deviations from rationality in economic models.
    • interpret the limitations of full information rational expectations models
    • explain deviations from rationality: bounded rationality and diagnostic expectations.


    • expand asset pricing, and business cycle models beyond full information and rational expectations
    • assess the role of heterogeneous beliefs in incomplete markets.
    • evaluate and apply advanced topics in macroeconomic theory in their own research
    • characterize optimal decisions under ambiguity

    General competence

    • validate the suitability of models to explain stylized facts of elicited expectations
    • formulate research proposals in an academic setting
    • communicate and discuss the relevant research with a peer audience.

  • Teaching

    The course consists of four days of lectures plus time for the students to present their own research. 

  • Restricted access

    • PhD candidates at NHH.
    • PhD candidates from other Norwegian institutions.
    • PhD candidates from other higher educational institutions.
    • PhD candidates from the ENGAGE.EU alliance.
    • Motivated master's students at NHH may be admitted after application, but are subject to the approval from the course responsible on a case by case basis.

    Application deadline: 1 June 2024.

    For more information about the application process, please visit our webpage: https://www.nhh.no/en/study-programmes/phd-programme-at-nhh/phd-courses/become-a-visiting-student-at-a- phd-course-at-nhh/ (copy link)

  • Recommended prerequisites


  • Required prerequisites


  • Compulsory Activity

    Course attendance and participation in discussions.

  • Assessment

    Individual written term paper due 2 weeks after the last lecture. The assignment must be written in English.

  • Grading Scale



ECTS Credits
Teaching language

Spring. Offered 24-28 June 2024.

Course responsible

Professor Cosmin Ilut, Duke (main course responsible)

Associate Professor Krisztina Molnár, Department of Economics