Macroeconomic Theory I Professor George Alogoskoufis Winter Semester Course Structure

Transcription

1 Athens University of Economics and Business Department of Economics M.Sc Program in Economic Theory Macroeconomic Theory I Professor George Alogoskoufis Winter Semester Course Structure This is the first part of the compulsory graduate course in Macroeconomics. It assumes some familiarity with undergraduate macroeconomics and basic mathematical tools. We focus on the theory of economic growth, consumption and investment, the theory of money and alternative theories of aggregate fluctuations, unemployment and inflation. The course aims to present the main models used in modern macroeconomic analysis and research, and to familiarize students with them as well as with current analytical methods and techniques. The course covers the following topics: 1. Models of exogenous and endogenous growth. 2. Models of consumption and investment under uncertainty. 3. Models of the money market, the price level and inflation. 4. New Classical models of aggregate fluctuations. 5. New Keynesian models of aggregate fluctuations, unemployment and inflation. The detailed notes of lectures and exercises, communications and the supplementary material are posted on the course's website, This website is also accessible through,

2 Basic Texts Romer David (2012), Advanced Macroeconomics, (4th Edition), London, McGraw Hill Irwin. Benassy Jean-Pascal (2011), Macroeconomic Theory, Oxford, Oxford University Press. Gali Jordi (2008), Monetary Policy, Inflation and the Business Cycle, Princeton N.J., Princeton University Press Alogoskoufis George (2015), Dynamic Macroeconomic Theory, (unpublished manuscript, forthcoming). Supplementary Texts Taylor John B. and Woodford Michael (1999), Handbook of Macroeconomics, (Volumes IA, IB, IC), Amsterdam, North-Holland. Blanchard Olivier J. and Fischer Stanley (1989), Lectures on Macroeconomics, Cambridge Mass, MIT Press. Ljungqvist Lars and Sargent Thomas J. (2012), Recursive Macroeconomic Theory, (3rd ed), Cambridge Mass, MIT Press. Sargent Thomas J. (1987), Macroeconomic Theory, (2nd ed), New York, Academic Press. Stokey Nancy L. and Lucas Robert E. Jr (1989), Recursive Models of Economic Dynamics, Cambridge Mass, Harvard University Press. Acemoglou Daron (2009), Introduction to Modern Economic Growth, Princeton N.J., Princeton University Press. Barro Robert J. and Sala-i-Martin Xavier (2004), Economic Growth, (2nd ed), Cambridge Mass, MIT Press. Walsh Carl E. (2010), Monetary Theory and Policy, Cambridge Mass., MIT Press. Woodford Michael (2003), Interest and Prices: Foundations of a Theory of Monetary Policy, Princeton N.J., Princeton University Press Pissarides Cristopher (2000), Equilibrium Unemployment Theory, (2nd Edition), Cambridge Mass, MIT Press.!2

3 Course Structure and Readings 1. Savings, Investment and Economic Growth: The Solow Model. Romer (Ch. 1), Benassy (Ch. 1), Alogoskoufis (Ch. 2). Jones C. (2002), Introduction to Economic Growth, New York, Norton. Mankiw G., Romer D. and Weil D. (1992), A Contribution to the Empirics of Economic Growth, Quarterly Journal of Economics, 107, pp Solow R.M. (1956), A Contribution to the Theory of Economic Growth, Quarterly Journal of Economics, 70, pp Swan T.W. (1956), Economic Growth and Capital Accumulation, Economic Record, 32, pp The Representative Household Model. Romer (Ch. 2.Α), Benassy (Ch. 4.2, ), Alogoskoufis (Ch. 3). Cass D. (1965), Optimum Growth in an Aggregative Model of Capital Accumulation, Review of Economic Studies, 32, pp Koopmans T. (1965), On the Concept of Optimal Economic Growth, in The Economic Approach to Development Planning, Amsterdam, Elsevier. Ramsey F. (1928), A Mathematical Theory of Saving, Economic Journal, 38, pp Models of Overlapping Generations. Romer (Ch. 2.Β), Benassy (Ch , 8), Alogoskoufis (Ch. 4). Blanchard O.J. (1985), Debts, Deficits and Finite Horizons, Journal of Political Economy, 93, pp Diamond P. (1965), National Debt in a Neoclassical Growth Model, American Economic Review, 55, pp Samuelson P.A. (1958), An Exact Consumption-Loan Model of Interest, with or without the Social Contrivance of Money, Journal of Political Economy, 66, pp Weil P. (1989), Overlapping Families of Infinitely-Lived Agents, Journal of Public Economics, 38, pp Fiscal Policy and Economic Growth. Romer (Ch. 11), Benassy (Ch ), Alogoskoufis (Ch. 5) Barro R.J. (1974), Are Government Bonds Net Wealth, Journal of Political Economy, 82, pp Blanchard O.J. (1985), Debts, Deficits and Finite Horizons, Journal of Political Economy, 93, pp !3

4 Diamond P. (1965), National Debt in a Neoclassical Growth Model, American Economic Review, 55, pp Money, Inflation and Economic Growth Benassy (Ch. 11), Alogoskoufis (Ch. 6). Brock W. (1974), Money and Growth: The Case of Long Run Perfect Foresight, International Economic Review, 15, pp Sidrauski M. (1967), Rational Choice and Patterns of Growth in a Monetary Economy, American Economic Review, 57, pp Weil P. (1987), Permanent Budget Deficits and Inflation, Journal of Monetary Economics, 20, pp Weil P. (1991), Is Money Net Wealth, International Economic Review, 32, pp Externalities, Human Capital and Endogenous Growth. Romer (Ch. 3), Benassy (Ch. 9), Alogoskoufis (Ch. 7). Arrow K.J. (1962), The Economic Implications of Learning by Doing, Review of Economic Studies, 29, pp Lucas R.E. Jr (1988), On the Mechanics of Economic Development, Journal of Monetary Economics, 22, pp Romer Paul (1986), Increasing Returns and Long Run Growth, Journal of Political Economy, 94, pp Alogoskoufis G. (2014), Endogenous Growth and External Balance in a Small Open Economy, Open Economies Review, 25, pp van der Ploeg F. and Alogoskoufis G. (1994) Money and Endogenous Growth, Journal of Money, Credit and Banking, 26, pp Consumption and Investment under Uncertainty Romer (Ch. 8, 9), Benassy, (Ch. 14), Alogoskoufis (Ch. 8, 9). Abel A. (1982), Dynamic Effects of Permanent and Temporary Tax Policies in a q model of Investment, Journal of Monetary Economics, 9, pp Abel A. (1990), Consumption and Investment, in Friedman B. and Hahn F. (eds), Handbook of Monetary Economics, Amsterdam, North Holland. Friedman M. (1957), A Theory of the Consumption Function, Princeton N.J., Princeton University Press. Gould J. (1968), Adjustment Costs in the Theory of Investment of the Firm, Review of Economic Studies, 35, pp Hall R. (1978), Stochastic Implications of the life cycle permanent income hypothesis: Theory and Evidence, Journal of Political Economy, 86, pp Hall R. and Jorgenson D. (1967), Tax Policy and Investment Behavior, American Economic Review, 57, pp Hayashi F. (1982), Tobin s marginal q and average q: A neoclassical interpretation, Econometrica, 50, pp Lucas R. (1967), Adjustment Costs and the Theory of Supply, Journal of Political Economy, 75, pp !4

5 8. The Money Market, the Price Level and Inflation Romer (Ch. 11.9), Benassy (Ch. 11), Alogoskoufis (Ch. 10). Cagan P. (1956), The Monetary Dynamics of Hyperinflation, in Friedman M. (ed), Studies in the Quantity Theory of Money, Chicago, University of Chicago Press. Clower R.W. (1967), A Reconsideration of the Microfoundations of Monetary Theory, Western Economic Journal, 6, pp Fischer S., Sahay R. and Vegh C. (2002), Modern Hyper and High Inflations, Journal of Economic Literature, 40, pp Lucas R.E. Jr (1980), Equilibrium in a Pure Currency Economy, in Kareken J.H. and Wallace N. (eds), Models of Monetary Economies, Minnesota, Federal Reserve Bank of Minneapolis. Lucas R.E. Jr. (1982), Interest Rates and Currency Prices in a Two Country World, Journal of Monetary Economics, 10, pp Patinkin D. (1956), Money, Interest and Prices, (2nd Edition, 1965), New York, Haprer and Row. Samuelson P.A. (1958), An Exact Consumption-Loan Model of Interest, with or without the Social Contrivance of Money, Journal of Political Economy, 66, pp The New Classical Theory of Aggregate Fluctuations Romer (Ch. 5), Benassy (Ch. 10), Gali (Ch. 2), Alogoskoufis (Ch. 11). King R.E. and Rebelo S.T. (1999), Resuscitating Real Business Cycles, Ch. 14 in Taylor J. B. and Woodford M. (1999), Handbook of Macroeconomics, (Volumes IA, IB, IC), Amsterdam, North-Holland. Campbell John Y. (1994), Inspecting the Mechanism: An Analytical Approach to the Stochastic Growth Model, Journal of Monetary Economics, 33, pp Kydland F.E. and Prescott E.C. (1982), Time to Build and Aggregate Fluctuations, Econometrica, 50, pp Long J.B. and Plosser C.I. (1983), Real Business Cycles, Journal of Political Economy, 91, pp Lucas R.E. Jr and Rapping L. (1969), Real Wages, Employment and Inflation, Journal of Political Economy, 77, pp Prescott E.C. (1986), Theory Ahead of Business Cycle Measurement, Carnegie- Rochester Conference Series on Public Policy, 25, pp Alogoskoufis G. (1983), The Labor Market in an Equilibrium Business Cycle Model, Journal of Monetary Economics, 11, pp Alogoskoufis G. (1987), On Intertemporal Substitution and Aggregate Labor Supply, Journal of Political Economy, 95, pp The Keynesian Approach and the Inflation-Unemployment Tradeoff Romer (Ch. 6.Α), Benassy, (Ch. 2), Alogoskoufis (Ch. 12)!5

6 Friedman M. (1968), The Role of Monetary Policy, American Economic Review, 58, pp Hicks J.R. (1937), Mr Keynes and the Classics: A Suggested Interpretation, Econometrica, 5, pp Keynes J.M. (1936), The General Theory of Employment, Interest and Money, Macmillan, London. Phelps E.S. (1967), Phillips Curves, Expectations of Inflation and Optimal Unemployment over Time, Economica, 34, pp Phillips A.W. (1958), The Relationship between Unemployment and the Rate of Change of Money Wages in the United Kingdom, , Economica, 25, pp Samuelson P.A. and Solow R.M. (1960), Analytical Aspects of Anti-Inflation Policy, American Economic Review, 50, pp A New Keynesian Model with Periodic Wage Setting Romer (Ch. 6.Β, 7), Benassy (Ch. 13), Alogoskoufis (Ch. 13). Barro R.J. and D. Gordon (1983), A Positive Theory of Monetary Policy in a Natural Rate Setting, Journal of Political Economy, 91, pp Blanchard O.J. and Summers L.H. (1986), Hysteresis and the European Unemployment Problem, NBER Macroeconomics Annual, 1, pp Fischer S. (1977), Long Term Contracts, Rational Expectations and the Optimal Money Supply Rule, Journal of Political Economy, 85, pp Gray Jo-Anna (1976), Wage Indexation: A Macroeconomic Approach, Journal of Monetary Economics, 2, pp Lindbeck A. and Snower D. (1986), Wage Setting, Unemployment and Insider- Outsider Relations, American Economic Review, 76, pp Rogoff K. (1985), The Optimal Degree of Commitment to an Intermediate Monetary Target, Quarterly Journal of Economics, 100, pp Taylor J.B. (1993), Discretion versus Policy Rules in Practice, Carnegie-Rochester Conference Series on Public Policy, 39, pp Equilibrium Unemployment and Matching in the Labor Market Romer (Ch. 10), Benassy (Ch. 16.5), Alogoskoufis (Ch. 15) Hall R.E. (1999), Labor Market Frictions and Employment Fluctuations Ch. 17 in Taylor J. B. and Woodford M. (1999), Handbook of Macroeconomics, (Volumes IA, IB, IC), Amsterdam, North-Holland. Mortensen D.T. and Pissarides C.A. (1999), Job Reallocation, Employment Fluctuations and Unemployment, Ch. 18 in Taylor J. B. and Woodford M. (1999), Handbook of Macroeconomics, (Volumes IA, IB, IC), Amsterdam, North-Holland. Pissarides C. (1985), Short Run Dynamics of Unemployment, Vacancies and Real Wages, American Economic Review, 75, pp Pissarides C. (2000), Equilibrium Unemployment Theory, MIT Press, Cambridge Mass. Shimer R. (2005), The Cyclical Behavior of Equilibrium Unemployment and Vacancies, American Economic Review, 95, pp !6

7 Assessment Your final mark will be a weighted average of the average mark of your class assignments (30%) and the mark of your final exam (70%).!7