I'm a first year PhD student with mathematical finance background, and am not quite familiar with all the assumptions/setup for macroeconomics. During study I found the math relatively easy but I'm having hard time to grasp the often critical relation between variables. For example capital market clearing implies that the total capital that firms have equal to the total assets that households have. First of all, I didn't even know there's a market clearing until I ask my TA, secondly, there are too many such assumptions I don't know. My professor would probably think it's too dumb to tell students about these because most of my classmates have an Econ background, but I don't and it's really killing me. Is there any good reference I can read, open courses I can watch that could help me with this? Given limited amount of time, I hope it won't take as much time as a full course. Thanks in advance.

  • $\begingroup$ Look up undergraduate microeconomics and macroeconomics textbooks. They are more about basic economic concepts (which is what you say you are unfamiliar with), rather than mathematized models. $\endgroup$ – Alecos Papadopoulos Oct 23 '15 at 11:38
  • $\begingroup$ The answers by Lasse and HRecon are right on. Don't be afraid to ask questions. You're a first year PhD student, no one will remember that you asked questions that "seemed dumb" (one can debate whether they are actually dumb questions or not). Undergraduate economics is not anything like graduate level economics in the US (can't comment on abroad as well), so there is a very high chance you're not the only one with the questions you have. Best advice I got for the first year was "Don't skip steps" -- Which includes the step of making sure you understand the primitives. $\endgroup$ – cc7768 Oct 23 '15 at 15:27

Surprisingly, I think the best way would be to read a Microeconomics textbook. You described difficulties with concepts like market clearing conditions. Macroeconomic models are usually based on general equilibrium models which students of Macroeconomics learn in their Microeconomics education. Consider reading the relevant parts of an intermediate Microeconomics textbook or Mas-Colell, Whinston + Green's classic Micro textbook for PhD students.

With this background knowledge, you can start reading Macroeconomics textbooks, e.g., Ljunquist/Sargent which teach you about the Macro-specific variations and applications.

You should also think about the quality of your program. A descent Economics PhD program will most certainly offer/require courses in Micro, Macro, and Econometrics.

  • $\begingroup$ We are going to learn General Equilibrium in Micro very soon, I heard it from my Micro Professor a few times. Good to know that's where all the set up come from, I guess I'll read it. $\endgroup$ – Kenneth Chen Oct 23 '15 at 15:05
  • $\begingroup$ The general rule of thumb is that no one can buy anything unless someone else is selling it (for example firms rent capital which means that they must be renting it from someone -- this is the assets the households own in your example, same thing would apply to Arrow-Debreu securities or bonds or any other asset). This is also a good question to ask if it isn't clear where it is coming from (there are partial-equilibrium models which may ignore market clearing, but for general equilibrium models you can expect to have market clearing for any market in the model) $\endgroup$ – cc7768 Oct 23 '15 at 15:33
  • $\begingroup$ If you want something a little less hefty with the math as well to get through the intuition faster, you could also use Hal R Varian's book on Intermediate Economics $\endgroup$ – Kitsune Cavalry Oct 23 '15 at 16:05

Sorry if this sounds harsh, but:

You need to start asking more. You're not stupid for asking questions - you're stupid for not asking questions. Be upfront about your different background and ask away.

Of course you should try to research things by yourself, but a lot of assumptions are next to impossible to know or find out in a reasonable amount of time. I've got a 5 years of university economics - primarily in macro and I still struggle with assumptions. So, if you can't find it - ask! And ask your professor about some relevant books / articles.

  • $\begingroup$ How is this harsh? $\endgroup$ – Giskard Oct 23 '15 at 12:31
  • $\begingroup$ @denesp It is, for Scandinavian standards ;) $\endgroup$ – FooBar Dec 9 '15 at 10:00

Ahh, that's what I felt and was in the same situation for a year or so. What to do? I have accounting and finance degrees, BA and MSc, but continued education on a phd in econ. I started watching micro and macro lectures on Youtube, i.e. opencourseware channels, now, four year on, I record my own econ videos for my econ students. You just need to ask your fellows, many of my fellows, though they had econ degrees, were not able to answer simple econ questions. But I had to do my homework of watching videos and reading books. The steepest learning curve plotted when I started teaching as TA undergrad econ modules. You should get a part time TA job if you can, helps a lot.

  • $\begingroup$ That sounds like a possible way to be better in Econ $\endgroup$ – Kenneth Chen Oct 24 '15 at 20:24

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