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Download ECON 6080-001 Applied Macroeconomic Theory
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r .... Economics 6080 Applied Macroeconomic Theory Fall 1991 JoAnne Feeney Office Hours: T,R 3:00-4:30 Office: Econ 14B Course Information Textbooks Required: . Robert Barro, Macroeconomics, 3rd Edition, Wiley, 1990. Readings from Barro will form the backbone of the course. The remainder of the reading comes from journal articles and working papers. Recommended: Mark Rush, Study Guide to Macroeconomics, 3rd Edition. Robert Lucas, Studies in Business Cycle Theory, MIT, 1981 Avinash Dixit, Optimization in Economic Theory, Oxford University Press, 2nd Edition, 1990. Robert Barro, Modern Business Cycle Theory, Harvard Univ. Press, 1989. Course Requirements Readings Required readings are marked with an asterisk. Homework Problem sets wil l be assigned on occassion. I encourage you to work together on these assignments, however, each person must submit his or her own set of answers. Exams There will be a midterm exam and a final exam. Make-up exams will be given only under extremely extenuating circumstances. Notification and arrangements must be made before the exam. The final exam is scheduled for Friday, Dec. 13, 7:30pm-10:30pm. Abbreviations: AER CJE EMA JEP JET JME JPE QJE RES American Economic Review Canadian Journa l of Economics Econometrica Journal of Economic Perspectives Journal of Economic Theory Journal of Monetary Economics Journal of Political Economy Quarterly Journal of Economics Review of Economics and Statistics Course Outline and Reading List I. Introduction *Barro, Ch. 1 II . Microeconomic Foundations and the Basic Market-Clearing Model *Barro, Chs. 2-5 *Notes *Denslow and Rush, "Supply Shocks and the Interest Rate," Economic Inquiry, 1989, pp. 501-510. Dixit, Chs. 1, 2. III. Money and Inflation *Barro, Chs.7,8 *Barro and Fischer, "Recent Developments in Monetary Theory," JME, April 1976. Sections 3,4 *Friedman, "The Optimum Quantity of Money," in The Optimum Quantity of Money and Other Essays . Cagan, "The Monetary Dynamics of a Hyperinflation," in M. Friedman, Studies in the Quantity Theory of Money. Sargent, "The Ends of Four Big Inflations," in R. Hall, Inflation: Causes and Effects. Bailey, "The Welfare Cost of Inflationary Finance," JPE, April 1956. Calvo, "Optimal Seigniorage from Money Creation," JME, August 1978. Barro, "Inflationary Finance under Discretion and Rules," CJE, January 1983. Kydland and Prescott, "Rules Rather than Discretion: The Inconsistency of Optimal Plans," JPE 85, 1977. r r •' IV. Investment, Growth, and Public Policy A. Investment, Capital Accumulation, and Growth *Barro, Chs. 9,10 *Notes Arrow and Kurz, Ch. 2, "Methods of Optimization over Time" *Solow, "A Contribution to the Theory of Economic Growth," QJE, Feb. 1956 Solow, "Technical Change and the Aggregate Production Function," RES 39, 1957. B. Government Expenditures, Taxes, and Debt *Barro, Chs. 12-14 *Barro, "Public Debt and Taxes," *Barro, "Output Effects of Government Purchases," JPE, December 1981. *Barro, "The Neoclassical Approach to Fiscal Policy," Ch. 5 in Barro MBCT. Benjamin and Kochin, "War, Prices, and Interest Rates: A Martial Solution to Gibson's Paradox," in Bardo and Schwartz, A Retrospective on the Classical Gold Standard, University of Chicago Press, 1984. Barro, "Are Government Bonds Net Wealth?" JPE, November 1974. Barro, "On the Determination of the Public Debt," JPE, October 1979. Plosser, "Government Financing Decisions and Asset Returns," JME May 1982 C. Rational Expectations and Policy Evaluation *Lucas, "Econometric Policy Evaluation: A Critique," in The Phillips Curve and Labor Markets, eds. K. Brunner and A. Meltzer, Carnegie-Rochester Conference Series on Public Policy, vol. 1, North-Holland, 1976, pg. 19-46. Reprinted in Robert Lucas, Studies in Business Cycle Theory, MIT Press, 1981. *Lucas, "Rules, Discretion, and the Role of the Economic Advisor," in Rational Expectations and Economic Policy, ed. Stanley Fischer, University of Chicago Press, 1980. Reprinted in Lucas (1981). V. Money and Bank.l_.0 *Fama, "What's Different About Banks?" JME 15, 1985, p. 29- 39. *Diamond and Dybvig, "Bank Runs, Deposit Insurance,and Liquidity," JPE 1983 VI. Equilibrium Models of Business Cycles - An Introduction *McCallum, "Real Business Cycle Models," Ch. 1 in Barro MBCT. *Lucas, "Understanding Business Cycles," Carnegie-Rochester Series on Public Policy, 1977. *Plosser, "Understanding Real Business Cycles," JEP, Summer 1989. Long and Plosser, "Real Business Cycles," JPE 91, 1983. Kydland and Prescott, "Time to Build and Aggregate Fluctuations," EMA 50, 1982. Nelson and Plosser, "Trends and Random Walks in Macroeconomic Time Series," JME 10, 1982. Barro, Ch. 19 Barro, . "The Equilibrium Approach to Business Cycles," Ch. 2 in Barro, Money, Expectations, and Business Cycles, Academic Press, 1981. Lucas, "Some International Evidence on Output-Inflation Tradeoffs," AER, June 1973. *Eichenbaum and Singleton, "Postwar Money, Output, and Interest Rate Correlations: Is there a Compelling Case Against Real Business Cycle Theories?" working paper, 1986. *Eichenbaum and Singleton, "Do Equilibrium Real Business Cycle Theories Explain Postwar U.S. Business Cycles?"
