Download ECON 6080-001 Applied Macroeconomic Theory

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Economics 6080
Applied Macroeconomic Theory
Fall 1992
JoAnne Feeney
Office Hours: T,R 2: 00-3:00
Office: Econ 148
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 will 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 Tuesday, Dec. 15 at 7:30pm-10:30pm.
Abbreviations:
AER
CJE
EMA
JEP
JET
JME
JPE
QJE
RES
American Economic Review
Canadian Journal 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
*Supplemental 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 .
IV. Investment, Growth, and Public Policy
A. Investment, Capital Accumulation, and Growth
*Barro, Chs. 9, 10
*Supplemental Notes
*Solow, "A Contribution to the Theory of Economic Growth," QJE, Feb. 1956
*Barro, "The Neoclassical Approach to Fiscal Policy, " (Section 1), Ch. 5 in
MBCT .
*Stockman, "Anticipated Inflation and the Capital Stock in a
Cash- in-Advance Economy," JME, 1981, 387-393.
Arrow and Kurz, "Methods of Optimization over Time," Ch. 2 in Public
Investment, the Rate of Return, and Optimal Fiscal Policy, 1970.
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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," Ch. 10 in Barro, Money, Expectations, and
Business Cycles, Academic Press, 1981.
*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. Equilibrium Models of Business Cycles
*Long and Plosser, "Real Business Cycles," JPE 91, 1983.
*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.
Cooley and Hansen, "The Inflation Tax in a Real Business Cycle Model,"
AER, 1989, 733-748 .
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?"