ECO610

Advanced Macroeconomic Theory

This course covers different macroeconomic research topics.

CLASS CONTENTS:

1. Sovereign debt crises and default

Aguiar and Gopinath (2006), “Defaultable Debt, Interest Rates and the Current Account”

Arellano (2008), "Default risk and income fluctuations in emerging economics"

Mendoza and Yue (2012), "A general equilibrium model of sovereign default and business cycles" (*)

Cole and Kehoe (2000), "Self-fulfilling debt crises"

Conesa and Kehoe (2015), "Gambling for redemption and self-fulfilling debt crises"

Conesa, Kehoe and Ruhl (2016), "Optimal austerity"

Bocola (2016), "The pass-through of sovereign risk" (*)

Bocola and Dovis (2015), "Indeterminacy in sovereign debt markets: A quantitative analysis" (*)

Mihalache (2016), "Sovereign default resolution through maturity extension"

Tomz and Wright (2012), "Empirical research on sovereign debt and default"

2. Inequality, heterogeneity and taxation

Aiyagari, Marcet, Sargent and Seppala (2002), "Optimal taxation without state contingent debt" (*)

Badel and Huggett (2015), "Taxing top earners: A human capital perspective" (*)

Bhandari, Evans, Golosov and Sargent (2013), "Taxes, debts and redistributions with aggregate shocks" (*)

Conesa, Kitao and Krueger (2009), "Taxing capital? Not a bad idea after all!"

Conesa and Krueger (2006), "On the optimal progressivity of the income tax code"

Erosa and Gervais (2002), "Optimal taxation in life-cycle economies"

Fahri and Werning (2012), "Insurance and taxation over the life cycle"

Golosov, Kocherlakota and Tsyvinski (2003), "Optimal indirect and capital taxation" (*)

Guner, Lopez-Danieri and Ventura (2016), "Heterogeneity and government revenues: Higher taxes at the top?"

Krueger and Kinderman (2015), "High marginal tax rates on the top 1%? Lessons from a life cycle model with idiosyncratic income risk"

3. Pensions and health care expenditures

Attanasio, Kitao and Violante (2008), "Financing Medicare: A general equilibrium analysis"

Cole, Kim and Krueger (2014), "Analyzing the effects of insuring health risks"

Conesa and Garriga (2008), "Optimal fiscal policy in the design of social security reforms"

Conesa and Krueger (1999), "Social security reform with heterogeneous agents"

Conesa, Costa, Kamali, Kehoe, Nygaard, Raveendranathan and Saxena (2016), "Macroeconomic effects of Medicare"

De Nardi, French and Jones (2015), "Savings after retirement: A survey"

De Nardi, French, Jones and McCauley (2015), "Medical spending of the US elderly" (*)

Jung and Tran (2014), "Market inefficiency, insurance mandate and welfare: US Health Care Reform 2010" (*)

4. Taxation of firms

Chetty and Saez (2005), "Dividend taxes and corporate behavior: evidence from the 2003 dividend tax cut" (*)

Conesa and Dominguez (2013), "Intangible capital and Ramsey capital taxation"

Trabandt and Uhlig (2011), "The Laffer curve revisited"

Strulig and Trimborn (2012), "Laffer strikes again: dynamic scoring of capital taxes" (*)

SCHEDULE:

08/29: Presentation of the course. Basic structure of sovereign default models.

08/31: Two prototype models: Solvency and bad shocks vs Rollover risk.

09/05: No class because of LABOR DAY

09/07: Gambling for redemption and self-fulfilling debt crisis: The basic setup and equilibrium definition.

09/12: Computation, calibration and discussion of results.

09/14: Extension to endogenous taxes.

09/19: Runhua presents Aguiar-Gopinath. Yifan presents Mendoza-Yue.

09/21: Xiaohan presents Bocola. Nirvana presents Bocola-Dovis.

09/26: Optimal austerity.

09/28: Heterogeneity and incomplete markets.

10/03: Basic setup and computation of Social security reforms with heterogeneous agents.

10/05: Results and discussion. Introduction to tax progressivity.

10/10: Optimal tax progressivity.