Instructor
• Serdar Ozkan: serdar.ozkan[at].utoronto.ca
• Office Hours: Thursdays, 2-4pm or by appointment
• Office: Max Gluskin House, Rm 230
Course Description
This course is the fourth and the last in 1st year PhD macroeconomics sequence and complements its predecessors, ECO2030 and the first half of the ECO2031. The ultimate goal of this course is to learn how to develop a variety of quantitate models (that can be used generate artificial data of both allocations and prices which can be meaningfully mapped to actual data) to give answers to macroeconomic questions. In this course most (if not all) of the material will be studied from the strict theoretical point of view and the emphasis is on economic rigor. So we will neither look at data in any serious manner nor computationally solve the models. Furthermore this course is not a survey of topics in macroeconomics: The objective is not to give a review of known results of a specific topic but rather to give an example of how to use modern macroeconomic tools to tackle questions.
Textbooks and Papers
• Frontiers of Business Cycle Research, by Cooley, T. (1995), Princeton University Press.
• Recursive Methods in Economic Dynamics, by Stokey and Lucas with Prescott, Harvard University Press.
• Recursive Macroeconomic Theory, by Ljungqvist and Sargent, The MIT Press.
• None of these books are required. I will post my slides and I will benefit from teaching material of Victor Rios-Rull, Dirk Krueger, Chris Carroll, Fabrizio Perri in my slides.
• The papers that I will cite (in a very incomplete form below) are not to be read in general, although some students may find them useful.
Evaluation
• Final exam will be held on Friday, 10 April 2015 between 9am-12noon at Wordsworth College Room WW120.
• There will be a final exam. The final exam will be held at a date and location to be set by the University. The final exam will include all the material covered in the course.
• In the context of the course, I will occasionally assign some homework questions. But these are not required.
• Class participation may affect your final grade in some special circumstances.
Lecture Hours
• Tuesdays and Wednesdays, 9-11am, at GE100
Tutorials
• April 9, 2-4pm
Teaching Assistant
• Erhao Xie: erhao.xie@mail.utoronto.ca
• Office Hours: Mondays, 2-3pm at GE313
Tentative List of Topics and Slides
Week #1: Introduction, Modern Macroeconomics Framework, Exogenous Growth Models (Solow and Neo-classical growth models)
• Exogenous Growth Models Slides
• Prescott E.C., The Transformation of Macroeconomic Policy and Research, 2004 Nobel Prize Lecture.
Week #2: Exogenous Growth Model, Endogenous Growth Models (AK Model, Human Capital Model, Romer's R&D Model)
• Exogenous Growth Models Slides
• Endogenous Growth Models Slides
• Robert E. Lucas, Jr., Why Doesn't Capital Flow from Rich to Poor Countries? The American Economic Review Vol. 80, No. 2
• PM Romer, Endogenous Technological Change, Journal of Political Economy, 1990
Week #3 and #4: Business Cycle Facts, real business cycle theory, variants of the neo-classical growth model.
• Dirk Krueger, Quantitative Macroeconomics: An Introduction
• Gary D. Hansen, "Indivisible labor and the business cycle", JME 1985
• Nicholas Bloom, "THE IMPACT OF UNCERTAINTY SHOCKS", Econometrica, 2009
Week #4: Lucas tree
• Chris Carroll's notes on Lucas tree
Week #5: Economies with Heterogenous Agents: Measure Theory and Industry equilibrium
• Chapter 11 and 12: Recursive Methods in Economic Dynamics, by Stokey and Lucas with Prescott, Harvard University Press.
• Hugo A. Hopenhayn, "Entry, Exit, and firm Dynamics in Long Run Equilibrium", Econometrica 1992
Week #6: Life-Cycle models with heterogeneous agents and standard incomplete markets (SIM) model, consumption insurance, idiosyncratic labor income risk.
• Endogenous Credit Constraints
• Sample exams from my Penn era (circa mid 2000s): 2004 Prelim 2005 Prelim 2006 Prelim
• Fatih Guvenen, "Macroeconomics with Heterogeneity: A Practical Guide", Economic Quarterly, 2011
• Jonathan Heathcote, Kjetil Storesletten and Gianluca Violante, "Quantitative Macroeconomics with Heterogeneous Households", Annual Review of Economics, 2009
• Grey Gordon, "Optimal Bankruptcy Code: A Fresh Start for Some", 2015
• Chatterjee, Corbae, Nakajima and Ríos-Rull, "A Quantitative Theory of Unsecured Consumer Credit with Risk of Default", Econometrica, 2015
• Fabrizio Perri and Krueger, "Does Income Inequality Lead to Consumption Inequality? Evidence and Theory", 2006, ReStud