Dr. Andrzej Cieślik
44/50 Długa St.
00-241 Warsaw
email: cieslik@wne.uw.edu.pl
Advanced Macroeconomics:
Microfoundations, Growth and
Business Cycles
This is a 45-hour graduate course in advanced macroeconomics that focuses on real macroeconomics. The topics cover microeconomic foundations of macroeconomics, growth theories and business cycles. This course is designed mainly for Master of Arts in International Economics Program, however foreign students visiting the Department of Economics at Warsaw University are also welcome to participate. Polish students with good knowledge of English from other specialization fields can enroll subject to instructor’s approval. The course is offered in the spring term. The class meets twice a week on Mondays and Wednesdays for two hours (9.45-11.20).
2. Objectives:
The main objective of this course is to familiarize students with key analytical models in real macroeconomics. The course consists of three parts. The first part is devoted to microfoundations of macroeconomic models such as consumption, investment and the government sector. The second part focuses on exogenous and endogenous growth theories and covers neoclassical models such as Solow-Swan, Ramsey and OLG models as well as more recent models such as AK, Lucas-Uzawa, Romer and Grossman-Helpman models. The third part concentrates on business cycles and covers real business cycle and new Keynesian theories.
3. Detailed program:
Snowdon B., Vane H., Wynarczyk
P., 1995, A Modern Guide to Macroeconomics: An introduction to competing
schools of thought, Edward Elgar, ch. 1, Visions of the macroeconomy, 1-31,
ch. 9, Conclusions and reflections, 408-419.
Barro R.J., 1997, Macroeconomics, MIT Press, ch. 2, Work effort, production and consumption –
The economics of Robinson Crusoe, 59-83, ch. 3, The behavior of households with
markets for commodities and credit, 92-123.
Class 3. Consumption
Romer D., 2001, ch. 7, Consumption, 331-362.
Romer D., 2001, ch. 8.,
Investment, 367-409.
Sala-i-Martin X., 2000,
Internal and external adjustment costs in the theory of fixed investment,
lecture notes.
Hall R., Jorgenson D., 1967,
Tax policy and investment behavior, American
Economic Review 57, 391-414.
Hayashi F., 1982, Tobin's
marginal q and average q: A neoclassical interpretation, Econometrica 50, 213-224.
Romer D., 2001, ch.
11, Budget deficits and fiscal policy, 531-582.
Part II. Growth Theory
Class 6. Solow-Swan model
Barro
R.J., Sala-i-Martin X., 2004, ch. 1, Growth models with exogenous saving rates,
The neoclassical model of Solow and Swan, 23-59.
Romer D., 2001, ch. 1,
The Solow growth model, 5-43.
Class 7. Convergence debate
Barro
R.J., Sala-i-Martin X., 2004, ch. 11,
Empirical analysis of regional datasets, 461-496.
Islam N., 1995, Growth empirics: A panel data approach, Quarterly
Journal of Economics 110, 1127-1170.
Mankiw N.G., Romer D., Weil
D.N., 1992, A contribution to the empirics of economic growth, Quarterly
Journal of Economics 107, 407-437.
Class 8. Ramsey-Cass-Koopmans (RCK) model
Barro
R.J., Sala-i-Martin X., 2004, ch. 2, Growth models with consumer optimization,
85-133.
Romer D., 2001, ch. 2,
Infinite horizon and overlapping generation models, Part A: The
Ramsey-Cass-Koopmans model, 47-74.
Blanchard O.J., Fischer S.,
1989, Lectures on Macroeconomics, ch. 2, Consumption and investment:
Basic infinite horizon models, section 2.3, Government in the decentralized
economy, 52-58.
Blanchard O.J., Fischer S.,
1989, Lectures on Macroeconomics, ch. 3, The overlapping generations
model, section 3.2, Social security and capital accumulation, 110-114.
Samuelson
P.A., 1958, An exact consumption-loan model of interest with or without the
social contrivance of money, Journal of Political Economy 66, 467-482.
Abel A., Mankiw N.G.,
Summers L., Zeckhauser R., 1989, Assessing dynamic inefficiency: Theory and
evidence, Review of Economic Studies 56, 1-20.
Romer
P., 1986, Increasing returns and long run growth, Journal of Political
Economy 94, 1002-1037.
Romer D., 2001, ch. 3, New growth theory, Part B, Cross-country
income differences, 120-122.
Barro
R.J., Sala-i-Martin X., 2004, ch. 1, Growth models with exogenous saving rates,
Models of endogenous growth, 61-71.
Barro
R.J., Sala-i-Martin X., 2004, ch. 4, One sector model of endogenous growth,
205-232.
Rebelo S., 1991, Long-run policy analysis and long-run growth, Journal
of Political Economy 99, 500-521.
Class
13. Lucas-Uzawa model
Barro
R.J., Sala-i-Martin X., 2004, ch. 5., Two-sector models of endogenous growth,
239-271.
Romer D., 2001, ch.
3, New growth theory, Part A, Research and development models, 98-160.
Lucas R.E., 1988, On the
mechanics of economic development, Journal
of Monetary Economics 22, 3-42.
Barro
R.J., Sala-i-Martin X., 2004, ch. 6, Technological change: Models with an
expanding product variety, 285-313.
Grossman G., Helpman E., 1993, Innovation and growth in the global economy,
MIT Press, Cambridge MA, ch. 3, Expanding product variety, 45-76.
Barro
R.J., Sala-i-Martin X., 2004, ch. 7, Technological change: Models with
improvements in the quality of products, 317-343.
Grossman G., Helpman E., 1993, Innovation and growth in the global economy,
MIT Press, Cambridge MA, ch. 4, Rising product quality, 86-109.
Barro
R.J., Sala-i-Martin X., 2004, ch. 10, Growth accounting, 433-460.
Barro
R.J., Sala-i-Martin X., 2004, ch. 11, Empirical analysis of regional datasets,
461-496.
Barro R.J., Sala-i-Martin X., 2004, ch. 9, Labor supply and population,
9.3, Labor/Leisure choice, 422-428.
Romer D., 2001, ch. 4, Real business cycle theory, 168-212.
Campbell J.M., 1994, Inspecting
the mechanism: An analytical approach to the stochastic growth model, Journal of Monetary Economics 33, 463-506.
Ritter J.A., 1995, An
outsider’s guide to real cycle modeling, Federal
Reserve Bank of St. Louis Review, 49-60.
Christiano L., Eichenbaum
M., 1992, Current real business cycle theories and aggregate labor market
fluctuations, American Economic Review 82, 430-450.
Cooper R., 1999, Coordination
games: Complementarities and Macroeconomics, Cambridge University press,
Cambridge.
Cooper R., John A., 1988,
Coordinating coordination failures in Keynesian models, Quarterly Journal of Economics 103, 441-463.
Diamond P., 1982, Aggregate demand management in search
equilibrium, Journal of Political Economy 90, 881-894.
Romer D., 2001, ch.
6, Microeconomic foundations of incomplete nominal adjustment, Part B,
Staggered price adjustment, 279-324.
Blanchard O., Kiyotaki N.,
1987, Monopolistic competition and the effects of aggregate demand, American Economic Review 77, 647-666.
Rotemberg J.J., Saloner G.,
1986, A supergame-theoretic model of price wars during booms, American
Economic Review 76, 390-407.
Sheshinski E., Weiss Y., 1977,
Inflation and the costs of price adjustment, Review of Economic Studies 44,
287-303.
Weitzman M., 1982, Increasing returns and the foundations of
unemployment theory, Economic Journal 92, 787-804.
Romer D., 2001, ch. 9, Unemployment, 410-461.
Yellen J.L., 1984,
Efficiency-wage models of unemployment, American Economic Review 74,
200-205.
Shapiro C., Stiglitz J.E.,
1984, Equilibrium unemployment as a worker-discipline device, American
Economic Review 74, 433-444.
4. Required reading:
There
is no single textbook for this course. Materials for this course come from
various textbooks and articles. All assigned readings are required readings.
Most often reference is made to the following two books:
[1] Barro R.J., Sala-i-Martin
X., 2004, Economic Growth, Second
Edition, The MIT Press, Cambridge, M.A.,
[2] Romer D., 2001, Advanced Macroeconomics, Second Edition,
McGraw-Hill, New York.
5.Prerequisites:
The
main prerequisite for this course is knowledge of macro and microeconomics at
the undergraduate level and mathematical methods in economics at the graduate
level.
6. Exam:
Grading will be based on one, final written exam given at the end of the course that will count for 100% of the final grade.