Graduate macroeconomics 2 - Syllabus 2012


28 Οκτ 2013 (πριν από 3 χρόνια και 5 μήνες)

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Graduate macroeconomics 2

Syllabus 2012

Topic 1


lecture 1, problem sets 1 & 2

Business cycle facts, basic model, equivalence of centralized and decentralized economy, solution
methods: special cases, log
linearizing, stochastic dynamic


Stock and Watson (1999):
Business Cycle Fluctutations in US Macroeconomics Time Series
, in Taylor
and Woodford, Handbook of Macroeconomics, Vol 1A, Ch1, Section 3.

Campbell (1994):
Inspecting the Mechanism: An Analytical Approach to t
he Stochastic Growth
, Journal of Monetary Economics, 33, 463

*Ljungqvist and Sargent (2000):
Recursive Macroeconomic Theory
, MIT Press, Chapter 2 and 3

*Stokey, Lucas and Prescott (1989):
Recursive Methods in Economic Dynamics
, Harvard University

Press, parts of Chapter 5 and 10

*Blanchard and Fisher (1989):
Lectures on Macroeconomics
, MIT Press, Chapter 2

Topic 2



lectures 2 & 3, problem sets 3, 4 & 5

The labor
leisure choice


Romer (2001):
Advanced Macroeconomics
, second ed
ition, Chapter 4.

King and Rebelo (1999):
Resuscitating Real Business Cycles
, in Taylor and Woodford, Handbook of
Macroeconomics, Vol 1B, Ch14

*Uhlig (1999):
A Toolkit for Analyzing Nonlinear Stochastic Models Easily,

in Marimon

and Scott,
Computational Methods for the Study of Dynamic Economies, Oxford

*Prescott (1986):
Theory Ahead of Business Cycle Measurement
, Quarterly Review, Federal Reserve
Bank of Minneapolis, Fall 1986, 9

*Basu and Fernald (2000):

Why is Productivity
Procyclical? Why Do We Care?
, NBER W7940,
October 2000

Topic 3


Covered in

lecture 4

Introducing money, cash in advance model, money in utility model


Walsh (2010):
Monetary Policy and Theory,

Chapter 2 and 3

Blanchard and Fisher (1989):

on Macroeconomics
, MIT Press, section 4.3
4.7 and 10.2

Topic 4


Covered in lectures 5 & 6, problem sets 6 & 7

New Keynesian business cycles, markups, imperfect competition, sunspot equilibria, sticky prices,
Calvo pricing


Rotemberg and Woodford

Dynamic General Equilibrium Modesl with Imperfectly
Competitive Product Markets,

in Cooley, Fronties of Business Cycle research, Chapter 9

Dotsey and King (2006):
Pricing, Production, and Persistence
, Journal of the European Economic
MIT Press, vol. 4(5), pages 893
928, 09

Christiano, Eichenbaum and Evans (2005):
Nominal Rigidities and the Dynamic Effects of a Shock to
Monetary Policy
, Journal of Political Economy, vol 113, no 1

Clarida, Gali, and Gertler (1999):
The Science of
Monetary Policy: A New Keynesian Perspective
Journal of Economic Literature, vol. 37, pp. 1661

*Chari, Kehoe, and McGrattan (2000),
Sticky Price Models of the Business Cycle: Can the Contract
Multiplier Solve the Persistence Problem
, Econometrica,
vol. 68, pp. 1151

*Calvo (1983):
Staggered Prices in a Utility
Maximizing Framework
, Journal of Monetary
Economics, vol. 12, pp. 383

Topic 5


Covered in lecture 7, problem set 8

Consumption, aggregation, idiosyncratic shocks, autarky, complete mark
ets, permanent income
hypothesis, certainty equivalence, precautionary savings, prudence, borrowing constraints, natural debt


Mace (1991):
Full Insurance in the Presence of Aggregate Uncertainty
, Journal of Political Economy

Cochrane (1991)
A Simple Test of Consumption Insurance
, Journal of Political Economy

Hall (1978):
Stochastic Implications of the Life Cycle
Permanent Income Hypothesis: Theory and
, Journal of Political Economy

Deaton (1991):
Saving and Liquidity Constraints
, Ec

Carroll (1997):
Stock Saving and the Life Cycle/Permanent Income Hypothesis
Journal of Economics

*Blundell and Preston (1998):
Consumption Inequality and Income Uncertainty
, Quarterly Journal of

Topic 6


Covered in

lecture 8, problem set 9

Equilibrium with agents facing heterogeneous labor income risk, risk
free asset and borrowing
constraints, Consumption, invariant distribution of wealth, magnitude of precautionary savings, wealth
inequality, efficiency and constr
ained efficiency, aggregate uncertainty


Aiyigari (1994):
Uninsured Idiosyncratic Risk and Aggregate Saving
, Quarterly Journal of Economics

Huggett (1993): The Risk
free Rate in Heterogeneous
agent Incomplete
insurance Economies, Journal
of Econo
mic Dynamics and Control

Topic 7

Covered in lecture 9

Dynamic taxation, Ramsey taxation, zero capital income tax, Mirrlees taxation, informational
problems, new dynamic public finance, inverse Euler equation


Chamley (1986):
Optimal Taxation
Capital Income in General Equilibrium with Infinite Lives,

Atkeson, Chari, and Kehoe (1999):
Taxing Capital Income: A Bad Idea
, Federal reserve Bank of
Minneapolis Quarterly Review

Conesa, Kitao, and Krueger (2009):
Taxing Capital? Not a Bad
Idea after All!
, American Economic

Golosov, Tsyvinski, and Werning (2006):
New Dynamic Public Finance: A User's Guide