Teaching

Created 3/7/1997
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Economics 202a, Spring 1998

 Class 1:
  • Introduction
  • What we are going to do--facts; fluctuations; real business cycles; neo-Keynesianism; some policy.
  • Next semester--Antonio Ciccone will do growth; Roger Craine will do dynamic models.
  • Some facts: growth, fluctuations, prices, quantities, sectors.
Avinash Dixit, Optimization in Economic Theory (New York: Oxford University Press, 1990), review pp. 1-144.
David Romer, Advanced Macroeconomics, pp. 146-50.
Robert Barsky and Jeffrey Miron, "The Seasonal Cycle and the Business Cycle," Journal of Political Economy 97 (1989): 503-34.
Steven Sheffrin, "Have Economic Fluctuations Been Dampened? A Look at Evidence Outside the United States," Journal of Monetary Economics 21 (1988): 73-83.
Christina Romer, "Spurious Volatility in Historical Unemployment Data," Journal of Political Economy 94 (1986): 1-37.
Christina Romer, "Remeasuring Business Cycles," Journal of Economic History 54 (1994): 19-39.
Olivier Blanchard, "What Is Left of the Multiplier Accelerator?" American Economic Review 71 (1981): 150-4.
 Class 2:
  • Introduction to real business cycles.
  • The Ramsey-Cass-Koopmans model.
  • Households and firms.
  • The dynamics of the economy.
  • Welfare.
  • The balanced growth path.
David Romer, Advanced Macroeconomics, pp. 39-53.
Avinash Dixit, Optimization in Economic Theory (New York: Oxford University Press, 1990), pp. 145-80.
 Class 3:
  • The Ramsey model continued
  • Effects of the discount rate; the saddle path; speed of adjustment.
  • Adding government to the model; changes in government purchases
  • Bond and tax finance; Ricardian equivalence
David Romer, Advanced Macroeconomics, pp. 53-72.
Robert Barro, "Are Government Bonds Net Wealth?" Journal of Political Economy 82 (1974): 1095-1117.
B. Douglas Bernheim and Kyle Bagwell, "Is Everything Neutral?" Journal of Political Economy 96 (1988): 308-38.
 Class 4:
  • No capital rbc models
  • Theories of fluctuations.
  • The baseline rbc model.
  • Households.
  • A special case.
David Romer, Advanced Macroeconomics, pp. 150-64.
Finn Kydland and Edward Prescott, "Time to Build and Aggregate Fluctuations," Econometrica 50 (1982): 1345-70.
Bennett McCallum, "Real Business Cycle Models," in Robert Barro, ed., Modern Business Cycle Theory (Cambridge: Harvard University Press, 1989): 16-50.
 Class 5:
  • rbc: the general case.
  • Implications: technology shocks; government purchases
  • The persistence of output fluctuations.
  • Calibration.
David Romer, Advanced Macroeconomics, pp. 164-83.
John Campbell, "Inspecting the Mechanism: An Analytical Approach to the Stochastic Growth Model," Journal of Monetary Economics 33 (1994): 463-506.
Timothy Cogley, "International Evidence on the Size of the Random Walk in Output," Journal of Political Economy 98 (1990): 501-18.
John Cochrane, "Permanent and Transitory Components of GNP and Stock Prices," Quarterly Journal of Economics 109 (1994): 241-65.
 Class 6:
  • Extensions and limitations to rbc.
  • How might rbc theory be rescued?
David Romer, Advanced Macroeconomics, pp. 183-90.
Paul Krugman, The Self-Organizing Economy (Malden, MA:Blackwell, 1996), pp. v-vi, 1-8, 47-116.
 Class 7:
  • Introduction to neo-Keynesian models.
  • IS-LM.
David Romer, Advanced Macroeconomics, pp. 195-205.
John Hicks, Mr. Keynes and the 'Classics': A Suggested Interpretation,"
J.M. Keynes, The General Theory of Employment, Interest and Money
J.M. Keynes, A Tract on Monetary Reform
 Class 8:
  • Open economy IS-LM.
David Romer, Advanced Macroeconomics, pp. 205-14.
Rudiger Dornbusch,"Expectations and Exchange Rate Dynamics," Journal of Political Economy 84 (1976): 1161-76.
 Class 9:
  • The "classical" model and the "Keynesian" model.
  • Imperfect wage flexibility.
  • A permanent output-inflation tradeoff?
David Romer, Advanced Macroeconomics, pp. 214-25.
Franco Modigliani,
A.W. Phillips, "The Relationship between Unemployment and the Rate of Change of Money Wages in the United Kingdom, 1861-1957," Economica 25 (1958): 283-99.
Paul Samuelson and Robert Solow, "Analytical Aspects of Anti-Inflation Policy," American Economic Review 50 (1960): 177-94.
 Class 10:
  • The Phillips curve.
  • Money and output.
  • The Great Depression and destabilizing price flexibility.
  • Referee report due.
David Romer, Advanced Macroeconomics, pp. 225-36.
Milton Friedman, "The Role of Monetary Policy," American Economic Review 58 (1968): 1-17.
Edmund Phelps, "Money Wage Dynamics and Labor Market Equilibrium," Journal of Political Economy 76 (1968): 678-711.
Ben Bernanke, "Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression," American Economic Review 73 (1983): 257-76.
Irving Fisher, "The Debt-Deflation Theory of Great Depressions," Econometrica 1 (1933): 337-57.
 Class 11:
  • The Lucas model.
  • Overview.
  • perfect information.
  • imperfect information.
  • implications.
David Romer, Advanced Macroeconomics, pp. 241-55.
John Muth, "Optimal Properties of Exponentially-Weighted Forecasts," Journal of the American Statistical Association 55 (1960): 290-306.
Robert Lucas, "Expectations and the Neutrality of Money," Journal of Economic Theory 4 (1972): 103-24.
Robert Lucas, "Econometric Policy Evaluation: A Critique," Carnegie-Rochester Conference Series on Public Policy 1 (1976): 19-46.
Robert Luca and Thomas Sargent, "After Keynesian Macroeconomics," in After the Phillips Curve: The Persisence of High Inflation and HIgh Unemployment (Boston: Federal Reserve Bank of Boston), chapter 19.
 Class 12:
  • Old Keynesianism.
  • Staggered price adjustment.
  • Predetermined prices.
  • Fixed prices.
David Romer, Advanced Macroeconomics, pp. 255-76.
Laurence Ball and Stephen Cecchetti, "Imperfect Information and Staggered Price Setting," American Economic Review 78 (1988): 999-1018.*
Stanley Fischer, "Long-Term Contracts, Rational Expectations, and the Optimal Money Supply Rule, Journal of Political Economy 85 (1977): 191-205.*
 Class 13:
  • New Keynesianism.
  • Small frictions.
  • Real rigidity.
  • Empirical applications.
  • Limitations
David Romer, Advanced Macroeconomics, pp. 276-302.
George Akerlof and Janet Yellen, "A Near-Rational Model of the Business Cycle, with Wage and Price Inertia," Quarterly Journal of Economics 100 (1985): 823-38.*
N. Gregory Mankiw, "Small Menu Costs and Large Business Cycles," Quarterly Journal of Economics100 (1985): 529-39.*
Laurence Ball and David Romer, "Real Rigidities and the Non-Neutrality of Money," Review of Economic Studies 57 (1990): 183-203.*
Olivier Blanchard and Nobuhiro Kiyotaki, "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review 77 (1987): 647-66.*
Laurence Ball, N. Gregory Mankiw, and David Romer, "The New Keynesian Economics and the Output-Inflation Tradeoff," Brookings Papers on Economic Activity 1988 1 (1988): 1-65.
Andrew Caplin and John Leahy, "State-Dependent Pricing and the Dynamics of Money and Output," Quarterly Journal of Economics (August 1991): 683-708.
 Class 14:
  • Microfoundations of the consumption function.
  • Life cycle and permanent income.
  • Random walk consumption.
David Romer, Advanced Macroeconomics, pp. 309-41.
Milton Friedman, A Theory of the Consumption Function, pp. 3-37.
Marjorie Flavin, "The Adjustment of Consumption to Changing Expectations about Future Income," Journal of Political Economy 89 (1981): 974-1009.
Angus Deaton, "Saving and Liquidity Constraints," Econometrica 59 (1991): 1221-48.
 Class 15:
  • Consumption and asset prices.
  • Consumption and interest.
  • Consumption and risk.
  • The equity premium.
John Campbell and N. Gregory Mankiw, "Consumption, Income, and Interest Rates: Reinterpreting the Time Series Evidence," NBER Macroeconomics Annual 4 (1989): 185-216.
Rajneesh Mehra and Edward Prescott, "The Equity Premium: A Puzzle," Journal of Monetary Economics 15 (1985): 145-61.
N. Gregory Mankiw and Steven Zeldes, "The Consumption of Stockholders and Nonstockholder," Journal of Financial Economics 29 (1991): 97-112.
 Class 16:
  • Other theories of consumption.
  • Precaution.
  • Liquidity constraints.
  • Buffer stocks.
Christopher Carroll, "The Buffer-Stock Theory of Saving," BPEA 1992:2, pp. 61-156
Richard Thaler and H.M. Sheffrin, "An Economic Theory of Self Control," Journal of Political Economy, April 1981, pp. 392-406.
 Class 17:
  • Microfoundations of investment.
  • The firm and the cost of capital.
  • Adjustment costs.
  • Tobin's q.
  • Dynamics.
David Romer, Advanced Macroeconomics, pp. 345-84.
Lawrence H. Summers, "Taxation and Corporate Investment: A q-Theory Approach," Brookings Papers on Economic Activity 1981 1 (1981): 67-127.
Franco Modigliani and Merton Miller, "The Cost of Capital, Corporate Finance, and the Theory of Investment," American Economic Review (June 1958): 261-97.
Robert B. Barsky and J. Bradford De Long, "Why Does the Stock Market Fluctuate?" Quarterly Journal of Economics 108: 2 (May 1993): 291-312.
Eugene Fama and Kenneth French,
 Class 18:
  • Investment II.
  • Uncertainty.
  • Cash flow and investment.
  • The accelerator.
Andrew Abel and Janice Eberly, "A Unified Model of Investment under Uncertainty," American Economic Review 84 (1994): 1369-84.
Steven Fazzari, Glenn Hubbard, and Bruce Petersen, "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity 1988 1 (1988): 141-95.
 Class 19:
  • Inflation.
  • Inflation and money growth.
  • Inflation and interest rates.
David Romer, Advanced Macroeconomics, pp. 388-412.
Milton Friedman, A Program for Monetary Stability (New York: Fordham University Press, 1960).
Stephen Goldfeld and Daniel Sichel, "The Demand for Money," in Benjamin Friedman and Frank Hahn, eds., Handbook of Monetary Economics (Amsterdam: North-Holland, 1990): I, 299-356.
Robert Shiller, "Why Do People Dislike Inflation?"
 Class 20:
  • Central banking.
  • The term structure of interest rates.
  • Dynamic inconsistency.
  • Institutions.
Carl Walsh, "Optimal Contracts for Central Bankers," American Economic Review 85 (1995): 150-67.
Alberto Alesina and Lawrence Summers, "Central Bank Independence and Macroeconomic Performance," Journal of Money, Credit, and Banking (May 1993).
Robert Shiller, "The Term Structure of Interest Rates," in Benjamin Friedman and Frank Hahn, eds., Handbook of Monetary Economics (Amsterdam: North-Holland, 1990): I, 627-722.
 Class 21:  Midterm exam  
 Class 22:
  • Monetary policy.
  • Targets, instruments, and indicators.
  • Leaning against the wind and pipeline effects.
David Romer, Advanced Macroeconomics, pp. 412-20.
Olivier Blanchard, "The Lucas Critique and the Volcker Deflation," American Economic Review 74 (1984): 211-15.
William Brainard, "Uncertainty and the Effectiveness of Policy," American Economic Review 57 (1967): 411-25.
Milton Friedman, "Stabilization Policy: A Theoretical Analysis," in Milton Friedman, Essays in Positive Economics (Chicago: Univerity of Chicago Press, 1953).
 Class 23:
  • Hyperinflation.
  • Seignorage.
David Romer, Advanced Macroeconomics, pp. 420-33.
Philip Cagan, "The Monetary Dynamics of Hyperinflation," in Milton Friedman, ed., Studies in the Quantity Theory of Money (Chicago: U. of Chicago, 1956): 25-117.
 Class 24:
  • Stabilization policy.
  • Credibility.
  • Disinflation.
  • Failed stabilizations.
  • The costs of inflation.
Finn Kydland and Edward Prescott, "Rules Rather than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy 87 (1977): 473-92.
Laurence Ball, "What Determines the Sacrifice Ratio?" in N. Gregory Mankiw, Monetary Policy (Chicago: University of Chicago Press, 1994): 155-82.
 Class 25:
  • Unemployment.
  • Efficiency wages.
David Romer, Advanced Macroeconomics, pp. 439-86.
Janet Yellen, "Efficiency Wage Models of Unemployment," American Economic Review 74 (1984): 200-05.*
Carl Shapiro and Joseph Stiglitz, "Equilibirum Unemployment as a Worker Discipline Device," American Economic Review74 (1984): 433-44.*
 Class 26:
  • Unemployment II.
  • Implicit contracts.
  • Insider-outsider models and hysteresis.
  • Testimony due.
Olivier Blanchard and Lawrence Summers, "Hysteresis in Unemployment," European Economic Review 31 (1987): 288-95.*
Martin Baily, "Wages and Unemployment under Uncertain Demand," Review of Economic Studies 41 (1974): 37-50.
 Class 27:
  • Job creation and destruction.
  • Search and matching models.
Lael Brainard and David Cutler, "Sectoral Shifts and Cyclical Unemployment Reconsidered," Quarterly Journal of Economics 108 (1993): 219-43.
Steven Davis and John Haltiwanger, "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," Quarterly Journal of Economics 107 (1992): 819-63.
Lawrence Katz and Kevin Murphy, "Changes in Relative Wages, 1963-87: Supply and Demand Factors," Quarterly Journal of Economics (February 1992): 35-78.
Alan Krueger, "How Computers Have Changed the Wage Structure: Evidence from Microdata, 1984-1989," Quarterly Journal of Economics (February 1993): 33-60.
 Class 28:
  • Summing up: what we know; what we do not know.
 
 Class 29:  Final exam  


Teaching

Created 3/7/1997
Go to
Brad De Long's Home Page


Associate Professor of Economics Brad De Long, 601 Evans
University of California at Berkeley; Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax
delong@econ.berkeley.edu
http://econ161.berkeley.edu/