Readings

The texts marked with (**) are of compulsory reading, and those with (*) are useful reading



Materials not covered in classes
  • Introduction to Matlab

    (**) David Griffiths (2005). An Introduction to Matlab.

    This is a short and very well done text for introducing Matlab to us. Read those parts that were discussed in classes.

    (*) Matlab Primer

    This is the original document from Mathworks (the Matlab creator) introducing the package to the reader. It's very large (214 pages), but you do not need to read it all. In those parts of my slides which you find more complicated, check this paper for help.

    Mark Gockenbach - A Practical Introduction to Matlab.


  • Two Period Economies: with exogenous and endogenous labor supply

    J.C. Conesa and C. Garriga (2011). Teoria Económica del Capital y la Renta, Universitat Autònoma de Barcelona. Chapter 4 .

    Section 4.3 of this chapter is not covered in this course.


    J.C. Conesa and C. Garriga (2011). Teoria Económica del Capital y la Renta, Universitat Autònoma de Barcelona (Chapter 5) .

    Section 5.3 of this chapter is not covered in this course..


    Martin Boileau (2001). "Two Period Economies: A Review", University of Colorado, Boulder.

    As an alternative to the two previous references; for those who have trouble in reading Spanish. If you choose this text, please use the slides as a reference point, so that you may skip parts that are not relevant for this course, without no loss of crucial information for later sections.


    Shouyong Shi (2009). "Two Period Economies: A Review", University of Toronto, Toronto.

    As an alternative to the two previous references; for those who have trouble in reading Spanish


    Shouyong Shi (2009). "General Equilibrium in a Two Period Economy", University of Toronto, Toronto.

    This deals with the case of endogenous labor supply. Is an alternative to Chapter 5 of Conesa and Garriga above. Follow my slides (and skip over any section that is not discussed in my slides).


  • Introduction to dynamic processes: fixed points and stability

    Use as much as possible the slides in your study.

    But if you feel like needing some further support from a textbook in order to consolidate your knowledge, please read the parts of Chapters 2 and 3 of Edward R. Scheinerman (1996). Invitation to Dynamical Systems, Prentice Hall. that are considered in the slides.

    Notice that the two chpaters cover continuous and discrete time, but in this course we just discuss discrete time.

    The entire book can also be downloaded from here, http://www.ams.jhu.edu/~ers/invite.html , where you can also find solutions to the end-chapters exercises.





    Main topics covered in classes

    1. The current state of macroeconomics

      No reading of the papers below is compulsory. You will not be evaluated on the basis of whether you have read these papers or not.
      If you are curious, and have time, you may read (in a light manner) the first three papers, to get an idea of the current state of macroeconomics.

      Ricardo Caballero (2010). "Macroeconomics after the Crisis: Time to Deal with the Pretense-of-Knowledge Syndrome", MIT, Department of Economics..

      Rogoff, K. (2010). "Three Challenges Facing Modern Macroeconomics," American Economic Association Grand Challenge White Papers for Future Research, September 21..

      Woodford, M. (2008). "Convergence in Macroeconomics: Elements of the New Synthesis", forthcoming in American Economic Journal - Macroeconomics, Vol. 1, (1)..

      Blanchard, O. (2008). "The State of Macro", NBER Working Paper 14259, Cambridge, Mass..


      There is also a very recent (and funny) entry in the "The Economist" about the current state of macro. However, it is a slide based presentation, not very easy reading for students. Not conpulsory reading, but if you are curious see:

      The Economist, Jan 21st 2013, "A Brief History of Macro", http://www.economist.com/blogs/freeexchange/2013/01/brief-history-macro

    2. Stylized facts about business cycles

      No really compulsory reading on this topic. As far as the points in the slides are concerned:

      (i) For points (1) to (3) students are advised (but not obliged) to read chapter 3 of: Stephen Williamson (2011), Macroeconomics, 4th Edition, Prentice Hall.

      (ii) For point (4), I hope the slides are self-suficient. But if you are very curious about filters, in particular about the Hodrick-Prescott filter, yoy can read:

      Dirk Krueger (2007). "Quantitative Macroeconomics: An Introduction" (Chapter 2), unpublished manuscript, Department of Economics University of Pennsylvania .

      It's a small text (12 pages), easy to read and very useful for the study of the stylized facts of business cycles, in particular, to understand how the Hodrick-Prescott filter is calculated.

      (iii) If you want to see how NBER dates the business cycles see the small paper

      Determination of the December 2007 Peak in Economic Activity, NBER, Mass., Cambridge .

      (iv) For point (5), no reading required. Slides are supposed to be self-sufficient.

      (iv) For point (6), no reading required. Slides are supposed to be self-sufficient. However, you may have doubts about this stuff. If so, you can read just two sections of the paper below by Antonio Fatás and Ilian Mihov:

      Section 1: "Introduction" (pages 1 and 2)

      Section 3: "Dating recoveries" (Pages 9--20

      Antonio Fatás and Ilian Mihov (2013) "Recoveries", CEPR, London .


      (iii) If you want to see how NBER dates the business cycles see the small paper

      Determination of the December 2007 Peak in Economic Activity, NBER, Mass., Cambridge .


    3. Solution to linear models with rational expectations

      (**) Karl E. Whelan (2007). "Solution Methods for Rational Expectations Models", Lecture Notes, University College Dublin .

      A small text very good for the study of this point. Notice that some parts of this text are not of compulsory reading.


      David Peel (2005). "Advanced Macroeconomics" (Chapter 2), unpublished manuscript, Lancaster University, UK .

      It's a long text that can be used as complementary studying material, but never as compulsory reading. .


    4. The Real Business Cycle Model

      The next text is destined to those that lack relevant knowledge about the Solow growth model, in terms of its basic results. Some of our students do not have a bachelar degree in economics, and so they need some extra help about some issues (or tools) that are of crucial importance for a more advanced study of macroeconomics.

      Long run growth 2: The Solow model by Fabrzio Perri, Lecture Notes,  Bocconi University, 2012.


      Very good for the study of the RBC model is the following text.

      (*) Dirk Krueger (2007). "Quantitative Macroeconomics: An Introduction" (Cap.3 and following), unpublished manuscript, Department of Economics University of Pennsylvania .

      It's a long text. Very useful for studying the Solow growth model with dynamic optimization. However, given its length, it is better if this text is used as complementary material.

      Use this text if you have doubts when reading the slides about the Solow growth model with dynamic optimization.


      ----------------------------------------------------------------------

      The next two texts contain almost any single detail about the Solow growth model (without dynamic optmimization). They are (sorry) in Portuguese, and in continuous time, not discrete time):

      Modelo de Solow: Equilíbrio de Longo Prazo, Vivaldo Mendes e Sofia Vale, Lecture Notes, ISCTE-IUL, 201l.

      Modelo de Solow: Processos de Transição Dinâmica, Vivaldo Mendes e Sofia Vale, Lecture Notes, ISCTE-IUL, 201l.


    5. Credibility and time consistency in economic policy

      (**) Cedric Tille (2012). "Effectiveness of policy and time inconsistency", Lecture Notes, The Graduate Institute Geneva.



      This is a small text which should be used to study the current problem of time inconsistency in economic policy (the inflation game) and also the topic coming next (the optimal choice of policy instruments: the Poole model).

      Notice that you should only read sections 2.1, 2.2, 2.3. and 2.4 for the current topic.

      Do not worry about sections 2.5 and 2.6 (material not covered in classes), and the same happening to the entire section 1.

      Section 3 (3.1, 3.2 and 3.3) should be studied for the next topic.


    6. The optimal choice of policy instruments (the Poole model)

      (**) Cedric Tille (2008). "Effectiveness of policy and time inconsistency", Lecture Notes, The Graduate Institute Geneva.


      The entire section 3 (3.1, 3.2 and 3.3) of this short paper should be studied for this part of the material.


    7. The New Keynesian Model and optimal monetary policy

      (**) Karl E. Whelan (2007). "The New Keynesian Phillips Curve", Lecture Notes, University College Dublin .

      A small text that is very good for studying the New Phillips Curve.

      Henrik Jensen (2006). "Monetary policy conduct in New Keynesian settings", Lecture Notes, Department of Economics University of Copenhagen

      A small text that can be used as complementary reading.


    8. Central banks, commitment, credibility and the financial crisis

      The following four references are entirely optional reading.

      Olivier Blanchard, Giovanni Dell'Ariccia, and Paolo Mauro (2013). Rethinking Macro Policy II: Getting Granular, IMF Working Paper, 15 April 2013 .

      A recent and comprehensive review of the major issues that are affecting the credibility of modern macro in the aftermath of the financial crisis. It covers mainly the problems of fiscal policy and monetary policy.

      Miles Kimbal and Noah Smith (2013). The shakeup at the Minneapolis Fed is a battle for the soul of macroeconomics, Quartz, November 25, 2013

      Discusses the story about the sacking of the top three economists at the FED Minneapolis. These three economists were well known skeptics of Keynesian ideas. It is the first time that such a movement is taken at the heart of the FED, which suggests that Classical macro may be loosing its ground at the core of applied macro.

      Willem Buiter (2013). Forward Guidance: More than Old Wine in New Bottles and Cheap Talk? Citi Research Economics, 25 September 2013.

      Modern macro is all about forward looking behavior and "forward guidance" as far as monetary and fiscal policies are concerned. In this short paper, Buiter shows the limitations of such an approach and what should be done in order to make (monetary) policy efficient. Its mainly about "time contingent" versus "state contingent" policies.

      Cardiff Garcia (2013). Buiter on forward guidance, or, paging Sumner/Krugman/Woodford/Eggertsson/Svensson, Financial Times, Sept 27 2013.

      This is a summary of the paper by Buiter above, made by the Financial Times in the section FT-Alphaville.