1.Macroeconomics from Keynes to RBCs


Oct 28, 2013 (3 years and 5 months ago)


Gilles Saint-Paul
Macroeconomics 14.452
Reading list

1. Macroeconomics from Keynes to RBCs

*Blanchard, Olivier, ”What do we know about macroeconomics that Fisher and Wicksell
did not ?”, Quarterly Journal of Economics v115, n4 (November 2000): 1375-1409

*Taylor, John, ”A core of practical macroeconomics”, American Economic Review, May
1997, 233-235

*Romer, David, Advanced Macroeconomics, ch. 5

2. De-trending and stylized facts

*Sargent, T., Macroeconomic Theory, Chapter 11

*Stock, J. and M. Watson, “Business Cycle Fluctuations in US macroeconomic time
series” in Taylor and Woodford, eds, Handbook of Macroeconomics, vol 1A, 1999, 5-64

Hodrick, R, and E.C. Prescott, “Post-war US Business cycles: an empirical investigation”,
Journal of Money, Credit and Banking 29:1-16

King, R. G., and Rebelo, S. T. (1993). “Low frequency filtering and real business cycles.”
Journal of Economic Dynamics and Control, 17: 207–231.

3. The RBC model : Explaining business cycles with productivity shocks and
competitive markets

Kydland and Prescott (1982), “Time to build and aggregate fluctuations”, Econometrica
50, 1345-1370, 1982

Long, J. and C. Plosser “Real Business Cycles”, Journal of Political Economy 91: 39-69,

*King, R. and S. Rebelo, “Rescuscitating Real Business Cycles” , in Handbook of

*Cooley, T. and E. Prescott, “Economic Growth and Business Cycles”, in T. Cooley, eds,
Frontier of Business Cycle Research

Burnside, C., M. Eichenbaum and S. Rebelo, “Labor Hoarding and the Business Cycle”,
Journal of Political Economy, 101: 245-73, 1993

*Romer, David, Advanced Macroeconomics, ch. 4

4. Critiques of the RBC model

4a. Intertemporal substitution


Summers, Lawrence H. (1986): "Some Skeptical Observations on Real Business Cycle
Theory." Federal Reserve Bank of Minneapolis Quarterly Review, 10: (Fall). Reprinted in
Preston J. Miller, ed., The Rational Expectations Revolution. Readings from the Front Line.
Cambridge, MA: MIT Press (1994).

Mankiw, N. Gregory, Rotemberg, Julio and Lawrence Summers, 1985, Intertemporal
Substitution in Macroeconomics, Quarterly Journal of Economics 100, 225-252

4b. Demand Shocks

*Blanchard, Olivier, and Danny Quah (1989), “the dynamic effects of aggregate demand
and supply shocks”, American Economic Review

4c. Revisionism

Basu, Susanto, John Fernald, and Miles Kimble, "Are Technology Improvements
Contractionary?" Manuscript, December 30, 1999.

Gali, Jordi, 1999, “Technology, employment, and the business cycle: Do technology
shocks explain aggregate fluctuations?” American Economic Review 89 (March), 249-271.

5. The new IS-LM (with applications to expectations, optimal monetary policy, and
liquidity traps)

5a. Foundations

*Krugman, Paul, « It’s baack : Japan and the liquidity trap”

Fischer, Stanley, “Long-term contracts, rational expectations, and the optimal money
supply rule”, Journal of Political Economy, 85, 1977, 191-205

Taylor, John, “Aggregate dynamics and staggered contracts”, Journal of Political
Economy, 1980, 1-23

Calvo, Guillermo, “Staggered Prices in a Utility Maximizing framework”, Journal of
Monetary Economics, 12:3, 383—398

Blanchard O., Kiyotaki N., “Monopolistic competition and the effects of aggregate
demand”, American Economic Review, 77, 647-666, 1987

Bénassy, J-P, “The disequilibrium approach to monopolisatic price-setting and general
monopolistic equilibrium”, Review of Economic Studies, 43, 69-81, 1976

*Romer, David, Advanced Macroeconomics, Ch. 6

5b. Specification

*King, Robert, “The New IS-LM Model: Language, Logic, and Limits”, Federal Reserve
Bank of Richmond Economic Quarterly Volume 86/3 Summer 2000

6. Money

6a. Monetary policy in the New ISLM

*Clarida, Richard, Jordi Gali, and Mark Gertler. “The Science of Monetary Policy: A New
Keynesian Perspective,” Journal of Economic Literature, vol. 37 (December 1999), pp. 1661–

6b. Liquidity effects

*Christiano and Eichenbaum, “Liquidity Effects and the Monetary Transmission
Mechanism”, American Economic Review v82, n2 (May 1992): 346-53

---------------------------------- “Liquidity Effects, Monetary Policy, and the Business
Cycle”, Journal of Money, Credit, and Banking v27, n4 (Part 1 Nov. 1995): 1113-36

*Fuerst, T.S. “Liquidity, Loanable Funds, and Real Activity”, Journal of Monetary
Economics v29, n1 (February 1992): 3-24

6c. New International Economics

Obstfeld, M. and K. Rogoff, “Exchange rate dynamics redux”, Journal of Political
Economy, 103, 1995, 624-660

Corsetti, Pesenti, “Welfare and Macroeconomic Interdependence”, Quarterly Journal of
Economics v116, n2 (May 2001): 421-45

*Lane, P.R. “The new open economy macroeconomics: A survey”, Journal of
International Economics, 54, 235-266, 2001

7. RBC and real rigidities

*Danthine, J.P., Donaldson, “Efficiency Wages and the Business Cycle Puzzle”,
European Economic Review v34, n7 (November 1990): 1275-1301

Collard, F.C. and D. Delacroix, “Gift Exchange and the Business Cycle: The Fair
Wage Strikes Back”, Review of Economic Dynamics v3, n1 (January 2000): 166-93