University of Toronto
Economic Theory -Macroeconomics (MA)
ECO2061H 2017 Winter
Announcements
Guest lecturer on March 28: Serdar Kabaca (Bank of Canada)
March 10: Baxter's Matlab Tutorial #2: VFI_DEMO.m and Exercise Solutions.m
March 9: Baxter's Matlab Tutorial #1: Exercises (NOT the 2nd Assignment)
Feb 12: Endogenous growth HW solutions
January 31: IMPORTANT! Tuesday classes will be held in BA 1200.
January 16: IMPORTANT: Room for Tuesday classes is changed to SS 2135. We're back to MS 4171.
January 9: Outline is posted.
Assignments
IMPORTANT! Assignment #2 deadline is extended: 24 April, Monday 5pm
March 21: Sample Business Cycle Questions
Assignment #2 Due on April, 21 April 2017 at 5pm.
Markov states and transition matrix for productivity shocks can be found here.
Matlab code that performs the value function iteration for neo-classical growth model.
February 3: Assignment #1 Due on March 1st.
February 2: Sample midterm exam and solutions.
Instructor
Serdar Ozkan: serdar.ozkan[at].utoronto.ca
Office Hours: Thursdays, 2-4pm or by appointment
Office: Max Gluskin House, Rm 230
Teaching Assistants
TA: Baxter Robinson baxter.robinson[at]mail.utoronto.ca
Office Hours: Wednesdays, 1-2pm, at GE 313
Grader: Xin Wang, jeffreyxin.wang[at]mail.utoronto.ca
Course Description
The objective of this course is to introduce you to the study of macroeconomics at the advanced level. This means that we will use rigorous models and employ (dynamic) optimization techniques to present and analyze macroeconomic theories. A common theme across the models we will study is that economic aggregates are the equilibrium result of the optimizing decisions made by rational agents at the individual level. We will employ this rigorous approach, not as an end in itself, but as a means to obtain disciplined insights into the important questions that trouble macroeconomists. The topics we will cover include economic growth, business fluctuations, employment and unemployment, and fiscal and monetary policy.
Textbooks
• Advanced Macroeconomics (4th Edition), by David Romer, McGraw Hill, 2012.
• Frontiers of Business Cycle Research, by Cooley, T. (1995), Princeton University Press.
• Big Ideas in Macroeconomics: A Nontechnical View, by Kartik B. Athreya (2014), MIT Press
Evaluation
• Scheme A: 2 Assignments: 10% + Midterm: 40% + Final: 50%
Scheme B: Assignment #1: 5% + Assignment #2: 10% + Midterm: 35% + Final: 50%
Total: Maximum of Scheme A and B.
• The assignments must be handed in on the pre-specified dates. No late submissions will be accepted. If a problem set is not handed in on time, for a justified and documented reason, the weight will shift to the final exam.
• The midterm test will be held during class time on Wednesday February 15th, 2017. There will be no make-up exam for the midterm test. If you provide appropriate and timely documentation for missing the midterm, the weight will be transferred to the 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.
Lecture Hours
Tutorials
• On alternate Wednesdays, 2-4pm, at BA 1230, starting on January 18.
(Preliminary and Tentative) List of Topics and Reading List
Week #1: Introduction and Modern Macroeconomics Framework
· Slides
· Prescott E.C., The Transformation of Macroeconomic Policy and Research, 2004 Nobel Prize Lecture.
· Jesus Fernandez-Villaverde and Dirk Krueger, Macroeconomics Notes: Chapter 4 and Chapter 5.
· Dirk Krueger, Macroeconomic Theory: Chapter 2
Week #2: Solow Growth Model
· Mankiw, Gregory, David Romer, and David Weil (1992) "A Contribution to the Empirics of Economic Growth," Quarterly Journal of Economics, vol. 107, pp. 407-437
Week #3: Neoclassical growth model and Overlapping Generations Model
· Neo-Classical Growth Model Slides
· David Romer, Advanced Macroeconomics: Chapter 2
· Dirk Krueger, Macroeconomic Theory: Chapter 3 and Chapter 8
Week #4: Overlapping Generations Model
· Jesus Fernandez-Villaverde and Dirk Krueger, Macroeconomics Notes: Chapter 9.
Week #5: Cross-country Income Differences
· David Romer, Advanced Macroeconomics: Chapter 4
· Mankiw, Gregory, David Romer, and David Weil (1992) "A Contribution to the Empirics of Economic Growth," Quarterly Journal of Economics, vol. 107, pp. 407-437
· Pritchett, Lant (1997), “Divergence, Big Time”, Journal of Economic Perspectives, 11(3), pp.3-17.
· Acemoglu, Daron, and Robinson, James A. 2000. “Political Losers as a Barrier to Economic Development.” American Economic Review 90 (May): 126–130.
· Albouy, David. 2008. “The Colonial Origins of ComparativeDevelopment: An Investigation of the Settler Mortality Data.” National Bureau of Economic Research Working Paper No. 14130.
· Caselli, Francesco, and Feyrer, James. 2007. “The Marginal Product of Capital.” Quarterly Journal of Economics 122 (May): 535–568.
· Hsieh, Chang-Tai, and Klenow, Peter J. 2009. “Misallocation and Manufacturing TFP in China and India.” Quarterly Journal of Economics, 124 (4): 1403-1448.
· Jones, Benjamin F., and Olken, Benjamin A. 2005. “Do LeadersMatter? National Leadership and Growth since World War II.” Quarterly Journal of Economics 120 (August): 835–864.
· David Lagakos 2013. “Explaining Cross-Country Productivity Differences in Retail Trade”, Journal of Political Economy
· Pritchett, Lant. 2000. “The Tyranny of Concepts: CUDIE (Cumulated, Depreciated, Investment Effort) is Not Capital.” Journal of Economic Growth 5 (December): 361–384.
· Schmitz, James A., Jr. 2005. “What Determines Productivity? Lessons from the Dramatic Recovery of the U.S. and Canadian Iron Ore Industries Following Their Early 1980s Crisis.” Journal of Political Economy 113 (June): 582–625.
Week #6: Review of midterm material and midterm exam.
· Sample midterm exam and solutions.
Week #7: Business cycle facts and theory.
· David Romer, Advanced Macroeconomics: Chapter 5
· Cooley, Thomas, and Edward Prescott (1995), “Economic Growth and Business Cycles,” Ch.1, in Frontiers of Business Cycle Research, by T.Cooley (ed), Princeton University Press.
Week #8,9: Real Business Cycle Theory
· Baxter's Matlab Tutorial: VFI_DEMO.m Exercises Exercise Solutions.m
· Dirk Krueger, Quantitative Macroeconomics: An Introduction
· David Romer, Advanced Macroeconomics: Chapter 5
· Cooley, Thomas, and Edward Prescott (1995), “Economic Growth and Business Cycles,” Ch.1, in Frontiers of Business Cycle Research, by T.Cooley (ed), Princeton University Press.
Week #10: Real Business Cycle Theory, Value function iteration
· There is a small sub-section on value function iteration here: Dirk Krueger, Macroeconomic Theory: Chapter 3
· Dirk Krueger, Quantitative Macroeconomics: An Introduction
Week #10 and #11: Monetary Business Cycle Models
· Cooley, Thomas F., and Gary D. Hansen (1995), “Money and the Business Cycle,” Ch.7, in Frontiers of Business Cycle Research, by T.Cooley (ed), Princeton University Press.
· David Romer, Advanced Macroeconomics: Chapter 6 & 7