Portland State University Department of Economics

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1 Portland State University Department of Economics Syllabus 1 (Spring 2013) Course No.: EC 582 Course Title: Advanced Macroeconomics Credits: 4 Section No.: 001 Class Hours: MW 4:40-6:30 pm CRN: Instructor: Kenneth S. Kim Kenneth.Kim@pdx.edu Room: SRTC 166 Office: Cramer Hall 241-R Office Hours: MW 3:30-4:30 pm Tel. (503) SPRING CALENDAR Spring Quarter Classes Begin April 1 Last day to drop classes w/out a grade W April 14 Last day to withdraw from classes w/ a grade W May 19 Memorial Day (No Class) May 27 Last Day of Class Instruction June 9 Final Examinations June Prerequisites: EC 480/580 (Mathematical Economics) & EC 581 (Advanced Microeconomics) Required Textbooks: Jones, Charles (2002), Introduction to Economic Growth, Second Edition, W.W. Norton & Company, Inc., New York Romer, David (2012), Advanced Macroeconomics, 4th Edition, April 2011, McGraw Hill/Irwin, New York Course Descriptions and Goals: This course provides an introduction to some of the important theories, debates, and paradigms in macroeconomic theory at an advanced level. We will cover both the long-run (economic growth), and the short-run (business cycle) behavior of output. We will explore some of the important factors that impact macroeconomic behavior that may include imperfect information, imperfect competition, technology shocks, fiscal and monetary policy, and institutional factors. It is required that students have some background in calculus, statistics, and intermediate macroeconomics. Grading Policy: Grades will be determined by each student s performance on assigned homework problems, exams and a group presentation. Care should be taken to respond to all assignment directives Home Assignments: 15% 2. Group Presentation (Asterisked Article of Choice List of Readings): 15% 3. Midterm Exam (April 29): 30% 4. Final Exam (June 10) 40% Total 100% 1 Syllabus is subject to change as required by unforeseen circumstances. 1

2 Grades reflect the following criteria: A B C D F Outstanding superior knowledge and skill. Above average more than adequate knowledge and skill. Average basic knowledge and skill. Below average confusion and inability to recall knowledge and/or perform skills. Unacceptable absence of knowledge and inability to perform skills. Academic Integrity Statement: An F grade may be given for the course in cases of cheating or plagiarism. Academic honesty is expected and required of students enrolled in this course. Suspected academic dishonesty in this course will be handled according to the procedures set out in the Student Code of Conduct. Disability Resources at PSU: Students with accommodations approved through the Disability Resource Center are responsible for contacting the faculty member prior to, or during, the first week of term to discuss accommodations. Students who believe they are eligible for accommodations but who have not yet obtained approval should contact the DRC immediately. Reasonable and appropriate accommodations will be provided for students with documented disabilities. For more information on the Disability Resource Center, please see Affirmative Action Portland State University supports equal opportunity for all, regardless of age, color, disability, marital status, national origin, race, religion or creed, sex or gender, sexual or gender identity, sexual orientation, veteran status, or any other basis in law. 2

3 Course Outline - List of Assigned Readings 2 This is the list of topics. The list of readings is still incomplete. Some new readings will be added, and compulsory readings will be indicated with an asterisk (*). 1. Growth and Development (Weeks 1-5) The Solow Growth Model and Extensions (Week 1) *Romer, Chapter 1. *Jones (2 nd Edition): Chapters 1 3. *Romer, Chapter 2 (pp.77-92) Part B: The Diamond Model *Mankiw, Gregory, David Romer, and David Weil. A Contribution to the Empirics of Economic Growth. Quarterly Journal of Economics, May 1992: Diamond, Peter. National Debt in a Neoclassical Growth Model. American Economic Review, Dec. 1965: Ramsey, Frank, A Mathematical Theory of Saving. Economic Journal, Dec. 1928: First Generation Endogenous Growth Models (Week 2) *Jones (2 nd Edition): Chapter 8 (pp ). *Arrow, Ken. The Economic Implications of Learning by Doing. Review of Economic Studies, June 1962: *Romer, Paul. Increasing Returns and Long-Run Growth. Journal of Political Economy, Oct. 1986: Lucas, Robert. On the Mechanics of Economic Development. Journal of Monetary Economics, July 1988: Second Generation Endogenous Growth Models (Week 3) *Romer, Paul. Endogenous Technological Change. Journal of Political Economy, Oct. 1990: S71- S102. Grossman, Gene and Elhanan Helpman. Quality Ladders in the Theory of Growth. Review of Economic Studies, Jan. 1991: Aghion, Philippe and Peter Howitt. A Model of Growth Through Creative Destruction Econometrica, Mar. 1992: If necessary, some chapters may be dropped, when the instructor believes more time is needed for other topics. Any change will be announced in class by the instructor. 3

4 The Jones Modification and an Application (Week 4) *Jones, Charles. R&D-Based Models of Economic Growth. Journal of Political Economy, Aug. 1995: *Kremer, Michael. Population Growth and Technological Change: One Million B.C. to Quarterly Journal of Economics, Aug. 1993: Klasen, Stephan and Thorsten Nestmann. Population, Population Density and Technological Change. Journal of Population Economics, July 2006: Jones, Charles. Time Series Tests of Endogenous Growth Models. Quarterly Journal of Economics, May 1995: ** Midterm Exam: Monday, April 29, 2013 (Tentative) ** Institutions, Culture, and Economic Growth: Property Rights and Contracts (Week 5) *Acemoglu, Daron and Simon Johnson. Unbundling Institutions. Journal of Political Economy, Oct. 2005: *North, Douglas. Chapter 11: Structure and Change in Early Modern Europe. in Structure and Change in Economic History. 1981, Norton: Acemoglu, Daron, Simon Johnson and James A. Robinson "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, 91 (5): Albouy, David The Colonial Origins of Comparative Development: An Empirical Investigation: Comment. American Economic Review, 102 (6): Acemoglu, Daron, Simon Johnson and James A. Robinson "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, 102 (6): Zak, Paul J. and Knack, Stephen. "Trust and Growth," Economic Journal, Royal Economic Society, April 2001, 111(470), pp Zak, Paul J. and Park, Kwang W. Population Genetics and Economic Growth, Journal of Bioeconomics, January 2002, 4(1), pp Traditional Keynesian Macroeconomics (Week 6) *Romer. Chapter *Friedman, Milton, The Role of Monetary Policy, American Economic Review, March 1968, Romer, David, Keynesian Macroeconomics without the LM Curve, Journal of Economic Perspectives, Spring 2000,

5 3. Rational Expectations and New Keynesian Models (Week 7) *Romer. Chapter , 6.5 *Lucas, Robert, Some International Evidence on Output-Inflation Tradeoffs, American Economic Review, June 1973, *Sargent, T.J. and Wallace, N., Rational Expectations and the Theory of Economic Policy, Journal of Monetary Economics, 1976, 2: Unemployment (Week 8) *Romer. Chapter *Yellen, Janet, Efficiency Wage Models of Unemployment, American Economic Review, May *Shapiro, Carl, and Joseph Stiglitz, Equilibrium Unemployment as a Worker Discipline Device, American Economic Review, 1984, 74, Akerlof, George A. and Yellen, Janet L. The Fair Wage-Effort Hypothesis and Unemployment. Quarterly Journal of Economics, May 1990, 105(2), pp Camerer, Colin, Linda Babcock, George Lowenstein, and Richard Thaler. Labor Supply of New York City Cab Drivers: One Day at a Time. Quarterly Journal of Economics, May 1997, 112(2), pp Monetary Theory and Policy (Weeks 9-10) Time Inconsistency: Rules versus Discretion (Week 9) *Romer. Chapter *Kydland, Finn and Edward Prescott, Rules Rather than Discretion: The Inconsistency of Optimal Plans, Journal of Political Economy, June 1977, Inflation Targeting (Week 10) *Bernanke, Ben S & Mishkin, Frederic S, "Inflation Targeting: A New Framework for Monetary Policy?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages , Spring. Svensson, Lars E. O., "Inflation forecast targeting: Implementing and monitoring inflation targets," European Economic Review, Elsevier, vol. 41(6), pages , June. ** Final Exam: Monday, June 10, 2013 (5:30-7:20 pm) ** 5