Intermediate Macroeconomics
Fall 2014
Jeffrey Parker
Course Outline and Reading List
Note: Dates shown below are a rational forecast of our progress in the course. Depending on our actual progress, exams and assignment dues dates may change.
Readings with authors listed in bold face are required. Those in regular type are optional readings that may be read by those with strong interests in the subject. Additional readings maybe added as the course progresses. Be sure to check the Web site regularly in order to keep up with any changes; don't just print this page at the beginning of the course and rely on that for the entire semester.
Course Outline (Links)
1. Introduction to macro; measurement of macro variables
2. Economic growth
3. Equilibrium in the long run
4. Expenditures in the short run
5. Money and short-run equilibrium in a closed economy
6. Aggregate supply and the Phillips curve
7. Short-run and long-run equilibrium in an open economy
8. Asset markets and exchange rates
9. Macroeconomic policy
1. Introduction to Macro; Measurement of Macro Variables
September 3: Introduction. No reading assigned.
September 5 and 8: Macroeconomic Variables
- Burda, Michael, and Charles Wyplosz, Macroeconomics: A European Text, 6th ed., Oxford University Press, 2013, Chapters 1 and 2.
- Easterlin, Richard A. 2001. Income and Happiness: Towards a Unified Theory. Economic Journal 111 (473), 465-484.
- Henderson, J. Vernon, Adam Storeygard, and David N. Weil. 2012. Measuring Economic Growth from Outer Space. American Economic Review 102 (2):994-1028.
- Leonhardt, David. 2014. A New Reason to Question the Official Unemployment Rate. New York Times Upshot Blog, August 24, 2014.
- Frey, Bruno S. 2008. Happiness: A Revolution in Economics. Cambridge, Mass.: MIT Press. (A comprehensive overview of the happiness literature.)
- Boskin, Michael J., Ellen R. Dulberger, Robert J. Gordon, Zvi Griliches, and Dale W. Jorgenson. 1997. The CPI Commission: Findings and Recommendations. American Economic Review 87 (2):78-83. (A useful reading on sources of inaccuracy in the most widely cited price index for the United States.)
- Summers, Robert, and Alan Heston. 1991. The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988. Quarterly Journal of Economics 106 (2):327-68. (A summary of the most widely used set of international data on GDP. We will use these data in project assignments).
2. Economic Growth
September 10 and 12: Solow Growth Model
- Burda and Wyplosz, Chapter 3.
September 15 and 17: Convergence and Endogenous Growth: Theory and Evidence
- Burda and Wyplosz, Chapter 4.
- Sala-i-Martin, Xavier. 1997. I Just Ran Two Million Regressions. American Economic Review 87 (2):178-83.
- Acemoglu, Daron, David Autor, David Dorn, Gordon H. Hanson, and Brendan Price. 2014. Return of the Solow Paradox? IT, Productivity, and Employment in US Manufacturing. American Economic Review 104 (5):394-99.
- Fernald, John G., and Charles I. Jones. 2014. The Future of US Economic Growth. American Economic Review 104 (5):44-49.
- Gordon, Robert J. 2014. The Demise of U.S. Economic Growth: Restatement, Rebuttal, and Reflections. National Bureau of Economic Research Working Paper Series No. 19895.
3. Equilibrium in the Long Run
September 19, 22, and 24: The Aggregate Labor Market and Unemployment
- Burda and Wyplosz, Chapter 5.
- Ritter, Joseph A., and Lowell J. Taylor. 1997. Economic Models of Employee Motivation. Federal Reserve Bank of St. Louis Review 79 (5):3-21.
- Rocheteau, Guillaume. 2006. Understanding Unemployment. Federal Reserve Bank of Cleveland Economic Commentary, October 15.
- Nickell, Stephen, Luca Nunziata, and Wolfgang Ochel. 2005. Unemployment in the OECD since the 1960s: What Do We Know? Economic Journal 115 (500):1-27.
September 26 and 29: Money and Prices in the Long Run
- Burda and Wyplosz, Chapter 6.
- Tutino, Antonella, and Carlos E. J. M. Zarazaga. 2014. Inflation Is Not Always and Everywhere a Monetary Phenomenon. Federal Reserve Bank of Dallas Economic Letter 9 (6).
4. Expenditures in the Short Run
October 1 and 3: Budget Constraints
- Burda and Wyplosz, Chapter 7.
- Barro, Robert J. 1974. Are Government Bonds Net Wealth? Journal of Political Economy 82 (6):1095-1117. (The original exposition of the Ricardian Equivalence Theorem.)
October 6 and 8: Consumption and Investment Spending
- Burda and Wyplosz, Chapter 8.
- Kellogg, Ryan. 2014. The Effect of Uncertainty on Investment: Evidence from Texas Oil Drilling. American Economic Review 104 (6):1698-1734. Read intro and Sections I and II only.
- Friedman, Milton. 1957. A Theory of the Consumption Function. Princeton, N.J.: Princeton University Press. (The original exposition of the permanent-income hypothesis.)
- Ando, Albert, and Franco Modigliani. 1963. The Life-Cycle Hypothesis of Saving: Aggregate Implications and Tests. American Economic Review 53 (1):55-84.
5. Money and Short-Run Equilibrium in a Closed Economy
October 10 and 13: Money and Monetary Policy
- Burda and Wyplosz, Chapter 9.
- O'Brien, Yueh-Yun C. 2007. Measurement of Monetary Aggregates across Countries. Washington, D.C.: Board of Governors of the Federal Reserve System, Finance and Economics Discussion Series, No. 2007-2. (Look at this to get an idea of how money is measured in many countries.)
October 15: Review and Catch Up
October 17: Mid-Term Exam (tentative)
5. Money and Short-Run Equilibrium in a Closed Economy (continued)
October 27 and 29: Demand-Side Short-Run Equilibrium
- Burda and Wyplosz, Chapter 10.
6. Aggregate Supply and the Phillips Curve
October 31 and November 3: Aggregate Supply in the Closed Economy
- Burda and Wyplosz, Chapter 12.
- Phillips, A.W. 1958. The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1961-1957. Economica 15 (99):283-299.
- Friedman, Milton. 1968. The Role of Monetary Policy. American Economic Review 58 (1):1-17.
- Murphy, Robert G. 2014. Explaining Inflation in the Aftermath of the Great Recession. Journal of Macroeconomics 40 (1):228-244.
7. Short-Run Equilibrium in an Open Economy
November 5, 7 and 10: Open-Economy Models
- Burda and Wyplosz, Chapter 11.
November 12 and 14: Aggregate Supply and Demand in the Open Economy
- Burda and Wyplosz, Chapter 13.
8. Asset Markets and Exchange Rates
November 17 and 19: Asset Markets
- Burda and Wyplosz, Chapter 14.
November 21: Exchange Rates
- Burda and Wyplosz, Chapter 15.
9. Macroeconomic Policy
November 24: Demand-Side Stabilization Policies
- Burda and Wyplosz, Chapter 16.
- Nakamura, Emi, and Jón Steinsson. 2014. Fiscal Stimulus in a Monetary Union: Evidence from US Regions. American Economic Review 104 (3):753-92. Omit Section III.
November 26 and December 1: Fiscal Policy, Deficits, and Debt
- Burda and Wyplosz, Chapter 17.
- Sargent, Thomas J. 1982. The Ends of Four Big Inflations. In Inflation: Causes and Effects, ed. by R. E. Hall, Chicago: National Bureau of Economic Research and University of Chicago Press.
December 3: Growth Policies
- Burda and Wyplosz, Chapter 18.
December 5: The International Monetary System
- Burda and Wyplosz, Chapter 19.
December 8 and 10: Macroeconomics since 2008
- Goodman, Peter S., and Gretchen Morgenson, "By Saying Yes, WaMu Built Empire on Shaky Loans," New York Times, December 28, 2008.
- Brunnermeier, Markus K., "Deciphering the Liquidity and Credit Crunch 2007-2008," Journal of Economic Perspectives 23 (1), Winter 2009, 77-100.
- Mishkin, Frederic S., "Over the Cliff: From the Subprime to the Global Financial Crisis," Journal of Economic Perspectives 25(1), Winter 2011, 49-70.
- Reinhart, Carmen M., and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly, Princeton, N.J.: Princeton University Press, 2009, Chapters 13, 14 and 15.
Final Exam: Thursday, December 18, 1-5pm.
Do not schedule a flight earlier than Thursday evening!