The course is basically a survey of recent macroeconomic research. If it has an organizing principle, it is the consequences of two modern schools of economic thought, namely the Real Business Cycle and New Keynesian schools, for the theory and practice of macroeconomic policy.

Lectures on Macroeconomics (BF) (by Blanchard and Fischer) comes closest to being a textbook for this course. It is available in the University Bookstore.

For advanced reference you can consult the following two books

Lucas, Robert Jr. and Nancy Stokey, Recursive Methods in Economic Dynamics, Harvard, 1989

Sargent, Thomas, Dynamic Macroeconomic Theory, Harvard, 1987.

On modern growth theory two graduate texts are available:

Aghion, Philippe and Peter Howitt, Endogenous Growth Theory, MIT Press, 1998.

Barro, Robert and Xavier Sala-i-Martin, Economic Growth, McGraw Hill, 1995.
 
 

There will be two midterm exams and one final exam, with respective weights of 20%, 30%, and 40%. Occasional homeworks and class participation carry a weight of 10%.

Swan, Trevor (1956) "Economic growth and capital accumulation," Economic Record, 32: 334-361.

Von Neumann, John (1937) "Ueber ein Oekonomisches Gleichungssystem und eine Verallgemeinerung des Brouwerschen," Ergebnisse eines Mathematisches Kolloqiums, 8. (English translation by Karl Menger as "A model of general equilibrium," Review of Economic Studies (1945), 13: 1-9.)

Romer, Paul (1986) "Increasing returns and long-run growth," Journal of Political Economy, 94: 1002-1037.

Lucas, Robert Jr. (1988) "On the mechanics of economic development," Journal of Monetary Economics, 22: 3-42.

Romer, Paul (1987) "Growth based on increasing returns due to specialization," American Economic Review, 77:56-62.

Romer, Paul (1990) "Endogenous technological change," Journal of Political Economy, 98, part II, S71-S102.

Parente, Stephen and Edward Prescott (2000) Barriers to Riches, The MIT Press.

Acemoglu, D., S. Johnson, J. Robinson, Y. Taicharoen (2003) "Institutional Causes, Macroeconomic Symptoms: Volatility, Crises and Growth," Journal of Monetary Economics 50:
 
 

 II. Competitive Equilibrium Business Cycles

BF, ch. 7

King, R. and C.Plosser, "Money, Credit and Prices in a Real Business Cycle", AER, 1984

Kydland, F. and E. Prescott, "Time to Build and Aggregate Fluctuations", Econometrica, 1982

Long, J. and C.Plosser, "Real Business Cycles", JPE, 1983

Lucas, R. Models of Business Cycles, 1987, 32-48

Howitt, P. "Business Cycles with Costly Search and Recruiting," QJE, 1988.

III. New Keynesian Contributions

1. Contracts

Taylor, J. "Aggregate Dynamics and Staggered Contracts", JPE, 1980, 1-23

Fischer, S. "Long-Term Contracts, Rational Expectations and the Optimal Money Supply Rule", JPE, 1977

Azariadis, C. "Implicit Contracts and Underemployment Equilibiria", JPE, 1975, 1183-1202

Barro, R. "Long-Term Contracting, Sticky Prices and Monetary Policy", JME, 1977, 305-316

Gordon, D. "A Neo-classical Theory of Keynesian Unemployment", EI, 1974, 431-459

B. Efficiency Wages

BF ch. 9

Solow, R., "Another Possible Source of Wage Stickiness" Journal of Macroeconomics 11, 1979, 79-82.

Shapiro, C. and J. Stiglitz, "Equilibrium Unemployment as a Discipline Device", AER, 74, 1984, 433-444.

C. Credit Rationing

BF ch.9

Stiglitz, J. and A.Weiss., "Credit Rationing in Markets with Imperfect Information", AER, 1981, 393-410.

Mankiw, G., "The Allocation of Credit and Financial Collapse," QJE, 1986, 455-470

Bernanke, B. and A. Blinder, "Credit, Money, and Aggregate Demand," AER, 1988, 435-439.

D. Coordination Failures

Cooper, R. and A. John, "Coordinating Coordination Failures in Keynesian Models," QJE, 1988, 441-463.

Diamond, P., "Aggregate-Demand Management in Search Equilibrium," JPE, 1982, 881-894.

Shleifer, A., "Implementation Cycles," JPE, 1986, 1163-1190.

IV. Time Inconsistency

BF ch. 11

Barro, R. "Rules, Discretion and Reputation in a Model of Monetary Policy", JME, 1983

Calvo, G. "On the Time Consistency of Optimal Policy in a Monetary Economy", Econometrica, 1978

Kydland, F. and E. Prescott, "Rules Rather Than Discretion: The Inconsistency of Optimal Plans", JPE, 1977