Syllabus for SSE 506 Macroeconomics-I

Master of Arts in Economics
Department of Economics, School of Social Sciences
DOON UNIVERSITY
SSE 506 Macroeconomics-I
Credits-04
Winter Semester 2012
Course Instructor: Siba Sankar Mohanty

Evaluation Process
The evaluation of progress of students shall be made as per the distribution below

Written examinations : 85 marks
Seminars and Class Performance: 5 marks
Assignments /Term Papers: 10 marks


Purpose of teaching Macroeconomics is to acquaint students with the broad paradigms of Macroeconomic Theory with a focus on contemporary models and provide an exposure to international perspectives. The entire course is to be covered in two semesters. In Winter 2012, SSE 506 Macroeconomics-I will cover the topics outlined below.

Unit-1: Aggregate Demand and Aggregate Supply

Introduction to aggregate supply and demand,
wages prices and unemployment,
Equilibrium output, consumption function and multiplier
IS-LM model-Money Interest and Income
Open Economy, Balance of Payment, Mundell-Fleming Model

Ref: Textbook Chapters- 5, 6, 9, 10, 12 of  Dornbusch, Fischer and Startz

Unit-2: Economic Growth and Policy Issues
Growth Theories- Neoclassical and Endogenous growth models
Economic policies- monetary and fiscal
Effects of Policies-Expectations and Reactions

Ref: Textbook Chapters- 3, 4, 8, 11 of  Dornbusch, Fischer and Startz

Unit-3: Behavioral Foundations in Macroeconomics

Consumption and Saving
Investment
Demand for Money
Money and Credit
Financial Markets and Asset Markets

Ref: Textbook Chapters- 13, 14, 15, 16, 17 of  Dornbusch, Fischer and Startz

Unit-4: Advanced Topics in Macroeconomics

Rational Expectations
Imperfect Information Aggregate Supply Curve
Random Walk of GDP
Real Business Cycle Theory
New Keynesian Model

Ref: Textbook Chapter 20 of  Dornbusch, Fischer and Startz



Textbook: Rudiger Dornbusch, Stanley Fischer and Richard  Startz; “Macroeconomics”, Tata McGraw-Hill, Ninth Edition
Books Recommended:

Carl E. Walsh, Monetary Theory and Policy (3nd ed., MIT Press, 2010).

David Romer, Advanced Macroeconomics (3rd ed.)

Dejong, D. N. and C. Dave, Structural macroeconometrics, Princeton Univ. Press 2007

Ljungqvist and Sargent, Recursuve Macroeconomic Theory, (2nd ed. MIT Press 2004)

Lucas, R. and N. Stokey, Recursive Methods in Economic Dynamics, Harvard University Press, 1989

Reading List

Campbell, J. Y., “Inspecting the mechanism: An analytical approach to the stochastic growth model,” Journal of Monetary Economics (June 1994, 33(3): 463‐506.

King, R. G. and S. T. Rebelo, “Resuscitating Real Business Cycles,” in J. Taylor and M. Woodford (eds.), Handbook of Macroeconomics, Chapter 14, vol. 1B, 1999, 927‐1007 (also NBER working paper 7534, Feb. 2000). 

Kydland, F. and E. Prescott, “Time‐to‐build and aggregate fluctuations,” Econometrica,  50(6), 1982, 1345‐1370. 

Hall, R. E., “Stochastic implications of the life cycle‐permanent income hypothesis: Theory and evidence,” Journal of Political Economy Dec. 1978, 86(6): 971‐987.

Carroll, C. D. “Precautionary saving and the marginal propensity to consume out of   permanent income,” Journal of Monetary Economics Sept. 2009, 

Hansen, G., “Indivisible labor and the business cycle,” Journal of Monetary Economics16(3), 1985, 309‐321. 

Fisher, J. D., “The dynamic effects of neutral and investment‐specific technology shocks,” Journal of Political Economy, 114 (3), 2006, 413‐451

Burnside, C., M. Eichenbaum, and S. Rebelo, “Labor Hoarding and the Business Cycle,”  Journal of Political Economy, 1993, 101, 245‐273. 

Ríos‐Rull, J‐V., F. Schorfheide, C. Fuentes‐Albero, M. Kryshko, and R. Santaeulália‐Llopis,  “Methods versus Substance: Measuring the Effects of Technology Shocks on Hours,” NBER  Working Paper 15375, Sept. 2009, Section 1‐3 only (pages 1‐16).

Rogerson, R., “Indivisible labor lotteries and equilibrium,” Journal of Monetary Economics, 21, 1988, 3‐16.

Backus, D. K. and P. J. Kehoe, and F. E. Kydland, “International Real Business Cycles,” Journal of Political Economy, 100 (4), Aug. 1992, 745‐775. 

Stockman, A. and L. Tesar, “Tastes and Technology in a Two‐Country Model of the Business Cycle: Explaining International Comovements,” American Economic Review, 85(1), March 1995, 168‐185.

Backus, D.K. and P.J. Kehoe, “International Evidence on the Historical Properties of  Business Cycles,” American Economic Review, 82 (4), Sept. 1992, 864‐ 888.

Sidrauski, M., “Rational Choice and Patterns of Growth in a Monetary Economy,” American Economic Review, 57(2), May 1967, 534‐544.

Gali,. J. and P. Rabanal, “Technology Shocks and Aggregate Fluctuations: How Well Does the RBC Model Fit the Postwar U.S. Data?” NBER Macroeconomic Annual, 2004. Pp. 1‐27 only.

Basu, Susanto, John G. Fernald, and Miles Kimball, "Are Technology Improvements Contractionary?" American Economic Review 96(5), Dec. 2006, 1418‐1448. 

Nakamura, E. and J. Steinsson, “Five Facts about Prices: An Evaluation of Menu Cost Models,” Quarterly Journal of Economics, 123(4), Nov. 2008, 1415‐1464. 

Klenow, Peter J. and Oleksiy Kryvtsov, “State‐Dependent or Time‐Dependent Pricing: Does it Matter for Recent U.S. Inflation?” Quarterly Journal of Economics, 123(3), Aug. 2008, 863‐904.

Svensson, L. E. O., “Optimization under Commitment and Discretion, the Recursive Saddlepoint Method, and Targeting Rules and Instrument Rules: Lecture Notes,” January 2010, http://people.su.se/~leosven/papers/CommDiscTRIR.pdf 

Clarida, R., J. Galí, and M. Gertler, “The Science of Monetary Policy: A New Keynesian Perspective,” Journal of Economic Perspectives, 37(4), 1999, 1661‐1707.

Chari, V. V., P. J. Kehoe and E. R. McGrattan. 2009. “New Keynesian Models: Not Yet Useful for Policy Analysis,” American Economic Journal Macroeconomics, 1(1): 242‐266.

Ravenna, F. and C.E. Walsh, “Welfare‐based optimal monetary policy with unemployment and sticky prices: A linear‐quadratic framework (with Federico Ravenna), American Economic Journal