Introduction to Modern Macro I, Winter 2020
This is the first course in the macroeconomics sequence of the master program. Main goal of this course is to introduce dynamic general equilibrium models developed during last 50 years in order to better understand behavior of aggregate economies. Models in this course are based on strong microeconomic foundations, which is in contrast to traditional Keynesian approach. We follow Romer’s textbook and start with the study of economies in long term. After rigorously studding growth economics, we delve into fluctuations of economy in short run and we introduce the real business cycle theory.
Up to this point of the course we have ignored any nominal rigidity such as price or wage rigidity. In the remainder of the course, we first introduce models with nominal rigidity, then we study the whole economy in a general equilibrium framework. Our final goal is to introduce DSGE models as the workhorse of many quantitative models of central banks and governments to study the effects of different monetary and fiscal policies on the real economy. For more info read the syllabus.
To keep it simple we will use the following books as the only textbooks for this course:
- David Romer, Advanced Macroeconomics, fifth edition. 2019.
- Doepke, Lehnert and Sellgren, Macroeconomics. 1999.
- Solow growth model
- Ramsey-Cass-Koopmans model
- Endogenous growth
- Cross country income differences
- Real business cycle theory
- Nominal Rigidity
- Monetary Policy and the NK Model
- Problem set 1: Solow model part 1, due on February 10, 10:00am.
- Problem set 2: Solow model part 2, due on February 17, 10:00am.
- Problem set 3: Ramsey-Cass-Koopmans model, due on February 24, 10:00am.
- Problem set 4: Neo Classical Growth Model and the Speed of Convergence, due on March 2, 10:00am.
- Problem set 5: Endogenous Growth Models, due on March 7th, 10:00am.
- Problem set 6: Endogenous Growth Models, due on March 23rd, 10:00am.
- Problem set 7: Endogenous Growth Models, due on April 13th, 10:00am.
- Problem set 8: Real Business Cycles, due on April 20th, 10:00am.
- Problem set 9: Real Business Cycles, due on May 2nd, 10:00am.
- Problem set 10: Exogenous Nominal Rigidity, due on May 18th, 10:00am.
- Problem set 11: Frisch Elasticity , due on June 1st, 10:00am.
- Problem set 12: New Keynesian Model, due on June 15th, 10:00am.
- Due Feb 8th: Uhlig, Harald. “Economics and reality.” Journal of Macroeconomics 34.1 (2012): 29-41.
- Due Feb 15th: Fernald, John, and Brent Neiman. “Growth accounting with misallocation: Or, doing less with more in Singapore.” American Economic Journal: Macroeconomics 3.2 (2011): 29-74.
- Due Feb 15th: Jones, Charles I. “The facts of economic growth.” Handbook of macroeconomics. Vol. 2. Elsevier, 2016. 3-69.
- Due Feb 22nd: Hall, R., and C. Jones. “Why do some countries produce so much more output per worker than others?, QJE, 114.” (1999).
- Due Feb 22nd: Hsieh, Chang-Tai, and Peter J. Klenow. “Misallocation and manufacturing TFP in China and India.” The Quarterly journal of economics 124.4 (2009): 1403-1448.
- Due Feb 29th: Bollard, Albert, Peter J. Klenow, and Gunjan Sharma. “Indiaʼs mysterious manufacturing miracle.” Review of Economic Dynamics 16.1 (2013): 59-85.
- Due Feb 29th: Adamopoulos, Tasso, and Diego Restuccia. “The size distribution of farms and international productivity differences.” American Economic Review 104.6 (2014): 1667-97.
- Due Mar 7th: Asker, John, Allan Collard-Wexler, and Jan De Loecker. “Dynamic inputs and resource (mis) allocation.” Journal of Political Economy 122.5 (2014): 1013-1063.
- Due Mar 14th: David, Joel M., Hugo A. Hopenhayn, and Venky Venkateswaran. “Information, misallocation, and aggregate productivity.” The Quarterly Journal of Economics 131.2 (2016): 943-1005.
- Due April 4th: De Loecker, Jan, Jan Eeckhout, and Gabriel Unger. “The rise of market power and the macroeconomic implications.” The Quarterly Journal of Economics (2020).
- Due April 4th: David, Joel M., and Venky Venkateswaran. “The sources of capital misallocation.” American Economic Review 109.7 (2019): 2531-67.
- Due April 4th: Restuccia, Diego, and Richard Rogerson. “The causes and costs of misallocation.” Journal of Economic Perspectives 31.3 (2017): 151-74.
- Due April 4th: Eberly, Janice, and Michael Woodford. “Emi Nakamura: 2019 John Bates Clark Medalist.” Journal of Economic Perspectives 34.1 (2020): 222-39. Slides
- Due April 11th: Bloom, N., Jones, C.I., Van Reenen, J. and Webb, M., Are Ideas Getting Harder to Find?. American Economic Review.
- Due May 2nd: Christiano, L.J., Eichenbaum, M.S. and Trabandt, M., 2018. On DSGE models. Journal of Economic Perspectives, 32(3), pp.113-40.
- Due June 13th: Christiano, Lawrence J., Martin Eichenbaum, and Charles L. Evans. “Nominal rigidities and the dynamic effects of a shock to monetary policy.” Journal of political Economy 113.1 (2005): 1-45.
Emi Nakamura’s Papers and Slides
Here are few papers and lecture slides by Emi Nakamura that are related to our class:
- Nakamura and Steinsson (2008) QJE, Five Facts about Prices
- Nakamura and Steinsson (2019) Slides, Evidence for Monetary Non Neutrality
- Nakamura and Steinsson (2018) Slides, Emprical Assessment of the Phillips Curve 1
- Nakamura and Steinsson (2018) Slides, Emprical Assessment of the Phillips Curve 2
You may find more papers and lecture notes on her website.
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