LECTURES IN ADVANCED MACROECONOMICS

FALL 2016.      LECTURER:    CHRISTIAN GROTH    In: CSS 35-0-12

The course material (chapter drafts and short notes) is under revision and updating. In the form of one or two chapters each time the material will become available through the semester. You are supposed to download and print out this material. Additional material is accessible via this site or via Faculty Library of the Social Sciences. Please, let me know of errors, confusions, and limitations in the lecture notes and exercise problems. I very much welcome comments and suggestions. Link to exercise class.

Date Topic (ex ante as planned, ex post as realized) Read                       Comments
        before        after
6/9 General overview of the course. The Great Slump.
The government budget, fiscal sustainability. Debt arithmetic.
 
Chapter 6.1-4.1.

 
 

Some background material for the course (about terminology and similar) can be found in Chapter 1 and Ch. 2.1-3 of my Lecture notes in macroeconomics (draft).  

 Slides (on the Great Recession) postponed to 13/9.
13/9 Finish debt arithmetic; self-fulfilling expectations of default.
SGP of the EMU. NPG condition and GIBC. A proper accounting of public investment.		 Slides.
Ch. 6.4-6.
   The shown slides are here. Link to Jones' "Useful Macro Graphs" here. We let Ch. 6.6 be cursory reading and start with Ch. 6.7 at next lecture.
20/9 Ricardian equivalence or non-equivalence? Ch. 6.7-8, is here. The whole Ch. 6 in one file: here.
   We came to Ch. 7.
Errata
Follow-up.
Some data.
27/9 Barro's dynasty model (cursory).
Continuos time analysis. Blanchard's OLG model (demography, consumption/saving decision, aggregation)		 Ch. 7.1-3 cursory.
Ch. 9.3 (only this section from Ch. 9 is in syllabus). The whole Ch. 9 (on dynamic optimization in discrete and continuous time) is here.
Ch. 12.1-2.1.		   Some of you have requested Ch.8 (not in syllabus). Here it is.
4/10 Aggregation. Dynamics. Phase diagram. Adding retirement.  Ch. 12.2-3.
    
11/10 Follow-up on the OLG model with retirement. The rate of return in the long run. Cursory on small open economy.
Ricardian non-equivalence. GE analysis of public debt. Public and foreign debt in a SOE. Twin deficits.		 Follow-up on Ch. 12.3-4. (12.5 only cursory).
Ch. 13.1-2 (13.3-7 only cursory).
   Follow-up
Errata to Ch. 12 and 13.

Errata incl. comment on the national income accounting in Elmendorf & Mankiw.
13/10 Midterm paper problem is here.
Erratum of relevance for Question 2b.		 14/10 Two remarks: 1) To hand in as a group means that all authors' names and study numbers are on the front page, but only one of the authors should upload in Absalon. 2) Contrary to my expectation, exam is already at 19/12-2016.    
18/10 Autumn break. No lecture.      
25/10 Quantification of effects of public debt. Issues in public debt policy.
Tobin's q-theory of investment.
 Special Note 1 (belongs to 11/10, self-tution).
Elmendorf & Mankiw, Ch. 25, § 5, in Handbook of Macroecon., vol. 1C, 1999, online from library directly or via Absalon (§1-4 only cursory).
Ch. 14.1. Data. 		  Errata to Ch. 14.
1/11 Tobin's q-theory of investment, cont'd. Application to a small open economy.
 Ch. 14.
Data.		   The dynamic housing market model postponed to 8/11. The exposition of p. 650-51 in Ch. 15.2 has been changed to make the economic logic clearer. See 8/11.
8/11 Dynamic housing market model.
Uncertainty, expectations, and speculative bubbles.		 1/11 at 00:15: here is the new version of Ch. 15.2 (the whole of the "new" Ch. 15 is here, but 15.1 is not in syllabus). The change is that the new ... (see next column)
Special Note 2 (§1-2 is a refresher and self-tuition).   		p. 650-52 replaces the old p. 650-51 and that the new p. 662-64 of Appendix C replaces the old p. 661-63 of Appendix C. Here are the new p. 650-52 and p. 662-64 in a separate small pdf-file if you want. Data Errata to Ch. 15.2.
15/11 Transition to short-run theory:
Money. Theory of the level of interest rates.
Why does aggregate demand matter? Monopolistic competition, nominal rigidities, and effective demand.
Intro to IS-LM dynamics.		 Ch. 16, a refresher and self-tuition.
Special Note 1 again (see 25/10, self-tuition).
Ch. 19.1-3 (19.4-5 cursory), forthcoming.
Cursory: Yellen (1984).
Ch. 22.1-2.2.1.		 Ch. 21 (on the static IS-LM model, a refresher for those interested, not in syllabus). Errata to Ch. 19.
The US treasury yield curve.
On "differentials" and  "total differentiation", see follow-up 18/11.
22/11 SOE: Short-run dynamics under a fixed exchange rate.
Monetary transmission mechanisms.
The bank lending channel - the IS-BL model.
IS-MP medium-run dynamics under passive monetary policy: The corridor and liquidity trap.		 Ch. 23.1-2 (23.1 a refresher and cursory, 23.3-4 not in syllabus). The whole of Ch. 23 here.
Mishkin (1995).
Special Note 3 (now with labels to Fig. 2). Cursory: Bernanke & Blinder (1988).
Groth (1993).		 Errata to Mishkin.
For those interested: an overview of a PhD course (2005) and a recent discussion of  macroeconomic modeling, both by Blanchard. 		The IS-BL model: slides shown are here.
Errata.
Follow-up.
29/11 IS-MP medium-run dynamics under active monetary policy: Taylor rule and the liquidity trap.
 		 Special Note 4 (now, 28/11 at 4 p.m., the graphs are in place; previously, among other things, Fig. 6, 7, and 8 had wrong numbering and had pi instead of pi_dot on the vertical axis). 

You may take a look at Problem 3 from Exam, Jan. 11, 2016.
Follow-up concerning Problem 3 in Midterm paper problem set.		 Errata.
Midterm papers were returned and discussed.
Erratum of relevance for Question 2b.
On "differentials" and  "total differentiation", see follow-up 18/11.
6/12 Hysteresis.
Mian and Sufi: What explains the 2007-09 drop in employment?
Business cycle fluctuations and theory.
Briefing about the RBC theory. Solving the household's problem.		 Delong & Summers (2012) is replaced by the shorter paper by Delong et al. (2014).
Mian and Sufi: Analytical part (slides). Cursory: Empirical part (slides).
Ch. 29. Ch. 30.1 
Data		 For those interested (not in syllabus): 1) Mian and Sufi, What Explains...?, Econometrica, Nov. 2014, 2114-2223;
2) a VAR model of IS-LM dynamics, by Gali (1992).
Cuts in syllabus.		 We came to Ch. 30, p. 1092.
13/12 Discussion of the RBC theory.
Keynesian perspectives on bus. cycles. Precautionary saving.		 Ch. 30.1 and 30.4-5. Solow (2001), cursory.
Ch. 31 (31.1 cursory, 31.4 not in syllabus).		   Questions and answers related to the exam (deadline for questions: Dec. 17 at 8 a.m.).
The "new final" course plan and syllabus (the previous one was not precise regarding inside and outside syllabus).
    To ease use of "Find", here are the lecture notes for this course in one PDF file.   16/12: New errata, marked by yellow.
         
19/12 Exam      
         
         
         
         

Link to exercise class
Link to Supplementary material and debate
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