Economics 510A
GENERAL ECONOMIC THEORY: MACROECONOMICS
Part I: Robert Shiller
Fall, 2003, Mon & Wed 10:3011:50, Room
B8, 28 Hillhouse
Robert Shiller
robert.shiller@yale.edu
30 Hillhouse Ave., Room 23a, 432-3708
http://www.econ.yale.edu/~shiller
Administrative Assistant: carol.copeland@yale.edu, 432-3726, 30 Hillhouse
Ave., Room 11a
Economics 510a is the first semester of the macroeconomic theory sequence
for economics Ph.D. students.
Textbook: Romer, David, Advanced Macroeconomics,
2nd Ed., McGraw Hill, New York, 2001.
Xeroxed packet: available from Audubon Copy, 48 Whitney
Ave., 865-3115 (call in advance).
On reserve at SSL:
Blanchard, Olivier J., and Fischer, Stanley, Lectures on Macroeconomics,
M. I. T. Press, Cambridge MA, 1989.
Robert Barro and and Xavier Sala-i-Martin, Economic Growth, McGraw Hill, 1995.
Outline of Part I (First Half of Semester)
I. |
Macroeconomic Phenomena: Stylized Facts and
Objectives, History of Thought Lecture 1, September 3 |
II. |
Inflation and Unemployment Lecture 2,
September 8 |
III. |
Growth Models Lecture 3, and 4, September
10 and 12 |
IV. |
Overlapping Generations Models Lectures 5
and 6, September 15 and 17 |
V. |
Some Alternative Paradigms in Macroeconomics |
|
A. Keynes - IS-LM Mundell-Fleming - Overshooting Lecture
7, September 19
B. Macroeconometric Models Lecture 8, September 29
C. Rational Expectations Lecture 9, October 1
D. Staggered Wage Setting, Sticky Prices and New Keynesian Economics Lecture 10, October 6
E. Efficiency Wage Theory Lecture 11, October 8 |
IV. |
Midterm Exam October 13, Review
Exam October 15 |
*Required readings, in xeroxed packet or in the
required textbook
I. |
Introduction, History of Thought, Macroeconomic Phenomena |
|
*Romer, Introduction |
|
*Colander, David, "Conversations with James Tobin and
Robert Shiller on the 'Yale Tradition' in Macroeconomics," Macroeconomic Dynamics,
3(1):116143, March 1999 |
|
*Kydland, Finn E., and Edward C. Prescott, "Business
Cycles: Real Facts and a Monetary Myth," Federal Reserve Bank of Minneapolis
Quarterly Review, 14: 317, Spring 1990 |
|
Blanchard and Fischer, Chapter 1 |
|
Barro and Sala-i-Martin, Chapter 10 |
|
Campbell, John Y., and N. Gregory Mankiw, "Permanent
and Transitory Components of Macroeconomic Fluctuations," American Economic Review,
May 1987, 111117. http://www.jstor.org/ |
|
Nordhaus, William D., "Do Real-Output and
Real-Wage Measures Capture Reality? The History of Lighting Suggests Not," in
Timothy F. Breshahan and Robert J., Gordon, editors, The Economics of New Goods,
Volume 58, 1997, Cowles Foundation Paper #957, 1998 |
|
Delong, J. Bradford, and Lawrence H. Summers, "The
Changing Cyclical Variability of Economic Activity in the United States," in R.
Gordon, Ed., The American Business Cycle: Continuity and Change, NBER, Chicago,
1986 |
|
Lilien, David M., "Sectoral Shifts and Cyclical
Employment," Journal of Political Economy, 90(3): 777793, Aug.
1982. http://www.jstor.org/ |
|
Pigou, Arthur C., Industrial Fluctuations, 2nd Ed.,
1929, Chapter I, "The General Characteristics of Industrial Fluctuations in pp.
717 and Chapter XXII, "The Comparative Importance of Various Factors in
Determining the Amplitude of Industrial Fluctuations," pp. 20726 |
|
Shiller, Robert J., "Ultimate Sources of Aggregate
Variability," American Economic Review, May 1987. http://www.jstor.org/ |
|
Sims, Christopher, "Macroeconomics and Reality," Econometrica,
48(1), January, 1980. http://www.jstor.org/ |
|
Solow, Robert, Growth Theory: An Exposition, Oxford
University Press, 1970, Chapter 1, "Characteristics of Steady States" |
|
Tobin, James, "Macroeconomics," Essays in
Economics I, viixiv |
II. |
Inflation and Unemployment |
|
*Akerlof, George A., and Robert J. Shiller,
"Introduction and Survey," from George A. Akerlof and Robert J. Shiller, Behavioral
Macroeconomics, 2004. |
|
*Fisher, Irving, The Money Illusion, Adelphi Company,
New York, 1928, pp. 318 |
|
*Bewley, Truman, "A Depressed Labor
Market as Explained by Participants," American Economic Review, 85:
250254, 1995. http://www.jstor.org/ |
|
*Fuhrer, Jeffrey C., "The Phillips Curve is Alive and
Well," New England Economic Review, March/April, 1995, 4156 |
|
*Shiller, Robert J., "Why Do People Dislike
Inflation?" in Christina Romer and David Romer, eds., Reducing Inflation:
Motivation and Strategy, National Bureau of Economic Research and University of
Chicago Press, 1997, pp. 1369. (Also, at Shiller Home Page http://www.econ.yale.edu/~shiller) |
|
*Shafir, Eldar, Peter Diamond, and Amos Tversky, "Money
Illusion," Quarterly Journal of Economics, 112(2): 341374, May 1997. http://www.jstor.org/ |
|
Phillips, A.W., "The Relation between Unemployment and
the Rate of Change of Money Wages in the United Kingdom," Economica, 25:
283299, 1958. http://www.jstor.org/ |
|
Moscarini, Giuseppe, "Excess Worker Reallocation,"
Review of Economic Studies, 2002, http://www.econ.yale.edu/~mosca/excess.pdf
|
|
Mankiw, N. Gregory, and Ricardo Reis, "Sticky
Information vs. Sticky Prices: A Proposal to Replace the New Keynesian Phillips
Curve," National Bureau of Economics Research Working Paper No. W8290, 2001. http://papers.nber.org/papers/W8290 |
III. |
Growth Models: Solow and Ramsey-Cass-Koopmans Models |
|
*Romer, Chapter 1 |
|
*Basu, Susanto, John G. Fernald and Matthew D. Shapiro,
"Productivity Growth in the 1990s: Technology, Utilization or Adjustment?"
National Bureau of Economic Research Working Paper No. 8359, July 2001. http://papers.nber.org/papers/W8359 |
|
*Bernanke, Benjamin, and Refet S. Gürkaynak, "Is
Growth Exogenous? Taking Mankiw, Romer and Weil Seriously," NBER Working Paper No.
8365, July 2001. http://papers.nber.org/papers/W8365
|
|
Blanchard and Fischer, Chapter 2 |
IV. |
Overlapping Generations Models |
|
*Samuelson, Paul A., "An Exact Consumption Loan Model
With or Without the Social Contrivance of Money," Journal of Political Economy,
66(6): 467482, December 1958. http://www.jstor.org/
|
|
*Romer, Chapter 2 |
|
*Geanakoplos, John, Michael Magill and Martine Quinzii,
"Demography
and the Long-Run Predictability of the Stock Market," unpublished paper, Cowles
Foundation, Yale University, 2002. |
|
Blanchard and Fischer, Chapter 3 |
|
Barro, Robert, "Are Government Bonds Net Wealth?",
Journal of Political Economy, December 1974. http://www.jstor.org/
|
|
Bernheim, B. Douglas, Andrei Shleifer and Lawrence H.
Summers, "The Strategic Bequest Motive," Journal of Political Economy,
93: 10451076, December 1985. http://www.jstor.org/
|
|
Diamond, Peter, "National Debt in a Neoclassical Growth
Model," American Economic Review, 55(5), Part I, 11261150, December
1965. http://www.jstor.org/ |
|
Fischer, Stanley, "Welfare Aspects of Government Issue
of Indexed Bonds," in R. Dornbusch and M.H. Simonsen, eds., Inflation, Debt and
Indexation, MIT Press, Cambridge MA, 1983 |
|
Kotlikoff, Lawrence and Lawrence Summers, "The Role of
Intergenerational Transfers in Aggregate Capital Formation," Journal of Political
Economy, 89(4): 70632, 1981. http://www.jstor.org/
|
V. |
Some Basic Paradigms |
|
A. IS-LM, Mundell-Fleming, Overshooting, and the Phillips
Curve |
|
*Romer, Chapter 5 sections 5.1 and 5.2, pp. 217234 |
|
*Krugman, Paul, "There's Something about Macro," http://web.mit.edu/krugman/www.islm.html
|
|
Blanchard and Fischer, Chapter 10, Section 4 and 5, pp.
529-55 |
|
Keynes, John M., The General Theory of Employment,
Interest and Money, 1936 |
|
Hicks, J. R., "Mr. Keynes and the Classics: A Suggested
Interpretation," Econometrica, 1937. http://www.jstor.org/
|
|
Mundell, Robert A., International Economics, New
York, Macmillan, 1968 |
|
Fleming, J. Marcus, "Domestic Financial Policies Under
Fixed and Under Floating Exchange Rates," IMF Staff Papers, 9: 36979,
1962 |
|
Dornbusch, Rudiger, "Expectations and Exchange Rate
Dynamics," Journal of Political Economy, 84: 11611176, 1976 http://www.jstor.org/ |
|
Fisher, I. (1930) The Theory of Interest, New York:
MacMillan |
|
B. Macroeconometric Models in the IS-LM Tradition |
|
*Fair Model: http://fairmodel.econ.yale.edu
|
|
*Fair, Ray C., and Robert J. Shiller, "Comparing
Information in Forecasts from Econometric Models," American Economic Review,
80(3): 375389, June 1990 |
|
*Cooley, Thomas F., and Stephen F. LeRoy,
"Identification and Estimation of Money Demand," American Economic Review,
71: 825844, December 1981. http://www.jstor.org/
|
|
*Gavin, William T. and Rachel J. Mandal,"
"Economic News and Monetary Policy," Federal Reserve Bank of St. Louis, July
2001 |
|
Fair, Ray C., Specification, Estimation, and Analysis of
Macroeconometric Models, Harvard University Press, 1984 |
|
Sims, Christopher A., Book Review (Fair book), Journal of
Money, Credit and Banking, 18: 121126, February 1986 |
|
Tobin, James, Asset Accumulation and Economic Activity,
Basil Blackwell, Oxford and University of Chicago Press, Chicago, 1980, Chapter 2 |
|
Leamer, Edward, "Let's Take the Con Out of
Econometrics," American Economic Review, 73: 3143, March 1983. http://www.jstor.org/ |
|
C. Rational Expectations Critiques of Macroeconometric
Models |
|
*Lucas, Robert E., "Econometric Policy Evaluation: A
Critique," in Brunner & Meltzer, eds., The Phillips Curve and Labor Markets.
Journal of Monetary Economics supplement, Jan. 1975, pp. 1946. Reprinted in
Lucas, Studies in Business Cycle Theory, MIT, 1981, pp. 10930 |
|
*Shiller, Robert J., "Rational Expectations and the
Dynamic Structure of Macroeconomic Models: A Critical Review," Journal of Monetary
Economics, 4(1): 144, Jan. 1978 |
|
D. Staggered Wage Setting, Sticky Prices and New
Keynesian Economics |
|
*Romer, Chapter 6 |
|
Sargent, Thomas J., "Observational Equivalence of
Natural and Unnatural Rate Theories of Macroeconomics," Journal of Political
Economy, 84(3), 1976. http://www.jstor.org/ |
|
Sargent, Thomas J. and Neil Wallace, "Rational
Expectations and the Theory of Economic Policy," Journal of Monetary Economics,
2(2): 169183, April 1976 |
|
Mankiw, N. Gregory, "Small Menu Costs and Large
Business Cycles: A Macroeconomic Model of Monopoly," Quarterly Journal of
Economics, 100: 529539, 1991. http://www.jstor.org/
|
|
Taylor, John B., "Staggered Wage Setting in a Macro
Model," American Economic Review, 69: 108113, May 1979, http://www.jstor.org/ |
|
E. Efficiency Wage Theory |
|
*Akerlof, George A., and Janet L. Yellen, "A
Near-Rational Model of the Business Cycle with Wage and Price Inertia," Quarterly
Journal of Economics, 100: 82338, 1985. http://www.jstor.org/
|
|
Blanchard and Fischer Chapter 9, Section 4 |
|
Bulow, Jeremy I. and Lawrence H. Summers, "A Theory of
Dual Labor Markets with Application to Industrial Policy, Discrimination, and Keynesian
Unemployment," Journal of Labor Economics July 1986. http://www.jstor.org/ |
|
Shapiro, C. and J. Stiglitz, "Involuntary Unemployment
as a Worker Discipline Device," American Economic Review, June 1984. http://www.jstor.org/ |
|
Weisskopf, Thomas, Bowles, Samuel and David Gordon,
"Hearts and Minds: A Social Model of Aggregate Productivity Growth in the United
States, 194879," Brookings Papers on Economic Activity, 2: 381441,
1983 |
|
Yellen, Janet L., "Efficiency Wage Models of
Unemployment," American Economic Review Papers and Proceedings, 74:
200205, May 1984. http://www.jstor.org/ |
|
Krueger, Alan B., and Lawrence H. Summers, "Efficiency
Wages and the Interindustry Wage Structure, Econometrica, 56: 259293, March
1988. http://www.jstor.org/ |
|