Macroeconomic Theory II

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Oct 28, 2013 (4 years and 2 months ago)

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Macroeconomic Theory II

Economics 306


Spring 2009

In
Mon

250

on
Wednesday
, at
06:10pm
-
08:00pm

In
Mon 250

on
Wednesday
, at
08:10pm
-
10:00pm

George Washington University


Professor Chao Wei

Office:
Monroe 317

Phone: (202) 994
-
2374

Email:
cdwei@gwu.edu

Office Hours: Wednesday
s


10:00


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Course Description


This is a second course in macroeconomics. We w
ill cover range of topics including 1)
Introduc
tion
to dynamic programming in a

deterministic
,

and
then a
stochastic
environment; 2) Consumption and asset pricing; 3) Real business cycle

models
. Time
permitting;

we may be able to cover some of the followin
g topics:

Production
-
based
asset pricing models; New
-
Keynesian models and their business cycle

and asset pricing
implications, and etc.


Suggested Readings


We will have two main sources of readings in the course. The first is lecture notes written
by me,

which can be downloaded from the course website.
The lecture notes will be
under constant revisions.
You are encouraged to
read the relevant journal articles or bo
ok
excerpts cited in the notes

for extra clarifications
.
The second is material from the lec
ture
notes written by Steve Williamson. These notes are available at Steve Williamson’s
website at the University of Iowa. The website is


http://www.artsci.wustl.edu/~swilliam/courses/notes06.pdf


Some
chapters of Williamson’s notes follow our teaching cl
osely.


The books below may be helpful at various p
o
ints in the semester, your graduate studies
and your career. I do not recommend you rush out to buy these books, although at a later
date you may consider purchasing one or two of them.




Romer, David,
A
dvanced Macroeconomics
. New York
: McGraw
-
Hill. Third
edition, 2006
.



Ljungqvist, Lars and Thomas Sargent,
Recursive Macroeconomic Theory
, MIT
Press, 2004.



Lucas and Stokey with Prescott,
Recursive M
e
thods in Economic Dynamics
,
Harvard University Press, 198
9.



Blanchard and Fischer,
Lectures on Macroeconomics
, MIT, 1989.



Handbook of Macroeconomics
, edited by John Taylor and Michael Woodford.



Course Requirements


There will be approximately 4

problem sets over the semester
, a midterm exam

and
a
final exam.
Problem sets are worth 20% of your grade, the midterm is worth 30% of the
grade and the comprehensive final is worth 50%. The midterm is

required
.
Tentative
date for the midterm exam is

March 11
.
There will be no makeup

exam if you miss the
midterm for any

reason. In this case, the final exam will be worth 80% of the grade
.


The problem sets will not be accepted late. Studying in pairs or groups is highly
encouraged. If you work on the problem sets in a group, please turn in a single copy of
the answers wi
th the names of the contributors. Each person will receive the same score.
(Personally I think that the optimal number of group members should be either 2 or 3. )


Any student who feels s/he may need an accommodation based on the impact of a
disability sho
uld contact Disability Support Services, Marvin Center 242, 202
-
994
-
8250.
The disability will be documented and I will support reasonable accommodations worked
out between that office and you.


Course Outline


1.

Deterministic
Dynamic Programming


Williamson

notes Chapter 3.

Ljungqvist and Sargent (henceforth LS
), Chapter
1,
3

Stokey and Lucas (with Prescott
)
, Chapter
2.1,
5


2.

Stochastic Dynamic Programming


Williamson notes Chapter 5.

Romer Chapter 4

LS Chapter 3

Stokey and Lucas (with Prescott
)
, Chapter
2.2
,
2.3


3.

Searching, Matching and Unemployment


LS Chapter 6


4.

Consumption and Asset Pricing


Williamson notes Chapter 6
.1.1

Romer Chapter 7

Blanchard and Fischer, Chapter 6
, 10.1

Ljungqvist and Sargent (henceforth LS), Chapter 10.2
, 16

Handbook of Macroeconomic
s Chapter 19


5.

Real Business Cycle Models


Campbell,
1994, “Inspecting the Mechanism: An Analytical Approach to the
Stochastic Growth Model,” Journal of Monetary Economics 33, 463
-
506.


Hansen, Gary and Randall Wright,
“The

Labor Market in Real Business Cyc
le
Theory”.


Burnside, Craig and Martin Eichenbaum,
1996,
“Factor
-
Hoarding and the
Propagation of Business
-
Cycle Models,”
the American Economic Review, Vol
86, No. 5, 1154
-
1174.


Rebelo, Sergio, 2005, “Real Business Cycle Models: Past, Present and Future.”


Romer, Chapter 4.


Handbook of Macroeconomics Chapter 14


6.

Production
-
Based Asset Pricing Models


Jermann, JME 1998


7.

New
-
Keynesian Models and Their Business Cycle and Asset Pricing Implications.