Economics 502, Macroeconomics II

Spring 2007

Instructor: Prof. Costas Azariadis (azariadi@wustl.edu)

Office Hours: Monday, Wednesday 3:00pm-4:00pm and by appointment (McMillan 256A)

Lectures: Monday, Wednesday 1:00pm-2:30pm (Eliot 103)



Teacher Assistant: Daniel Sanches (drsanche@artsci.wustl.edu)

Office Hours: Friday 2:00pm-4:00pm (McMillan 331)

Review Session: Friday 11:00am-12:30pm (Eliot 103)



Exams: First Mid-term (February 19); Second Mid-term (April 2); Pre-final Review (May 2); Final (May 8)



The Final Exam will take place on May 8 from 9:30am to 12:30pm in room 318 (Eliot Hall).



Syllabus



Readings:


Part 1


Azariadis, C. (2005), The theory of poverty traps: What have we learned?, chapter 2 in Poverty Traps.
Blanchard, O. and J. Simon (2001), The long and large decline in U.S. output volatility. Brooking Papers of Economic Activity, 1, 135-164.
Campbell, J. (2003), Consumption-based asset pricing, in Handbook of the Economics of Finance.
Diaz-Jimenez, V. Quadrini, S. Rodriguez and V. Rios-Rull (2002), Updated facts on the distribution of earnings, income, and wealth. Quarterly Review of the Federal Bank of Minneapolis.
Stock, J. and M. Watson (1990), Business cycle fluctuations in U.S. macroeconomic time series. chapter 1 in Handbook of Monetary Economics.

Intertemporal Macroeconomics: chapters 1-4 and 6-7.
Advanced Macroeconomics: pp. 48-62 and 76-87.
Lecture Notes on Stochastic Economic Dynamics: chapters 6, 7.1, and 8; 7.2 and 13.
Nishimura, K. and J. Stachurski (2004), Discrete time models in economic theory, CUBO, 6, 187-207.


Part 2


(a) Asset Pricing, John Cochrane
Lucas, R (1978), Asset prices in an exchange economy. Econometrica
Mehra, R. and E. Prescott (1985), The equity premium: a puzzle. Journal of Monetary Economics
Mankiw, G. and S. Zeldes (1991), The consumption of stockholders and non-stockholders. Journal of Financial Economics

(b) Intertemporal Macroeconomics: chapters 11.1, 24.1, 24.3, 12, and 15.1
Gottardi, P. (1996), Stationary monetary equilibria in overlapping generations models with incomplete markets, Journal of Economic Theory, 71, 75-89
Blanchard, O. (1985), Debts, deficits, and finite horizons, Journal of Political Economy, 93, 223-247.
Azariadis, C., J. Bullard, and L. Ohanian (2004), Trend-reverting fluctuations in the life-cycle model, Journal of Economic Theory, 119, 334-356.

(c) Advanced Macroeconomics: chapter 2 (except 2.11) and 3.1-3.6
Intertemporal Macroeconomics: 13.1-2, 13.4, and 19.1
Lucas, R. (1988), On the mechanics of economic development, Journal of Monetary Economics, 22, 3-42.
Aghion, P. and P. Howitt (1992), A model of growth through creative destruction, Econometrica, 60, 323-351.
Romer, P. (1990), Endogenous technological change, Journal of Political Economy, 98, S71-S102.
Azariadis, C. (1996), The economics of poverty traps, Journal of Economic Growth, 1, 449-486.
Acemoglu, D. (2002), Direct technical change, Review of Economic Studies, 69, 781-810.

(d) Advanced Macroeconomics: chapter 4
Cogley, T. and J. Nason (1995), Output dynamics in real business cycle models, American Economic Review, 85, 492-511.
Prescott, E. (1998), Needed: a theory of total factor productivity, International Economic Review, 39, 525-552.
Hsieh, C-T. and P. Klenow (2006), Misallocation and manufacturing TFP in China and India, Stanford W.P.


Part 3


(a) Bewley, T. (1986), Dynamic implications of the form of the budget constraint, in Models of Dynamics Economies.
Kiyotaki, N. (1998), Credit and business cycles, Japanese Economic Review, 18-35.
Kehoe, T., and D. Levine (1993), Debt-constrained asset markets, Review of Economic Studies, 60, 865-888
Azariadis, C., and L. Kaas (2006), Is dynamic general equilibrium a theory of everything?, sec. 1-3, forthcoming Economic Theory

(b) Kocherlakota, N. (1996), Implications of efficient risk sharing without commitment, Review of Economic Studies, 63, 595-609.
Alvarez, F., U. Jermann (2006), Efficiency, equilibrium and asset pricing with risk of default, Econometrica, 68, 775-797.

(c) Azariadis and Kaas (2006), sec. 4-8.


Homeworks:

Please, turn in your homeworks at the beginning of the Review Session on Friday.


Full problem set


problem set 1 (due 02/02)    solution

problem set 2 (due 02/09)    solution

problem set 3 (due 02/16)    solution

Exam 1    solution

problem set 4 (due 03/09)    solution

problem set 5 (due 03/23)    solution

problem set 6 (due 03/30)    solution

Exam 2    solution

Exam 2 (b)     solution

problem set 7 (due 04/13)    solution

problem set 8 (due 04/20)    solution

Final Exam    solution



updated: May 29, 2007 @ 10:31 am CST