Macroeconomic Theory I

Readings

Required Texts

Acemoglu, D. Introduction to Modern Economic Growth. Cambridge, MA: Massachusetts Institute of Technology, 2007.

Barro, R. J., and X. Sala-i-Martin. Economic Growth. New York, NY: McGraw-Hill, 1995. ISBN: 0070036977.

Readings by Session

SES #	TOPICS	READINGS
I. An Introduction to Growth Models and Growth Facts
L1-L2	Syllabus, Introduction Economic Growth and Economic Development The Solow Growth Model The Solow Growth Model and the Data	Required Readings Acemoglu, D. Introduction to Modern Economic Growth, 2007, chapters 1-3. Barro, R. J., and X. Sala-i-Martin. Economic Growth, 1995, chapters 1 and 12. Lecture notes, chapters 1-2. Recommended Readings Barro, R. Determinants of Economic Growth: A Cross-Country Empirical Study. Cambridge, MA: MIT Press, 1997. ISBN: 0262024217. Hall, R., and C. Jones. “Why Do Some Countries Produce So Much More Output than Others?” Quarterly Journal of Economics 114 (1999): 83-116. Jones, C. “On the Evolution of the World Income Distribution.” Journal of Economic Perspectives 11 (1997): 19-36. Klenow, P., and A. Rodríguez-Clare. “The Neoclassical Revival in Growth Economics: Has It Gone Too Far?” Chapter 2 in NBER Macroeconomics Annual 1997. Edited by Ben S. Bernanke and Julio Rotemberg. Cambridge, MA: MIT Press, 1997. ISBN: 026252242X. Klenow, P., and M. Bils. “Does Schooling Cause Growth?” American Economic Review 90 (2000): 1160-1183. Mankiw, N. G., D. Romer, and D. Weil. “A Contribution to the Empirics of Economic Growth.” Quarterly Journal of Economics 107 (1992): 401-437. Solow, R. M. “A Contribution to the Theory of Economic Growth.” Quarterly Journal of Economics 70 (1956): 65-94. ———. Growth Theory: An Exposition. 2nd ed. New York, NY: Oxford University Press, 2000. ISBN: 0195109031.
R1	Empirics of Economic Growth (PDF) (Courtesy of Suman Basu. Used with permission.)
II. The Neoclassical Growth Model
L3-L6	Foundations of Neoclassical Growth Dynamic Programming and Optimal Growth Review of the Theory of Optimal Control The Neoclassical Growth Model	Required Readings Acemoglu, D. Introduction to Modern Economic Growth, 2007, chapters 5-8. Barro, R. J., and X. Sala-i-Martin. Economic Growth, 1995, chapters 2-3. Lecture notes, chapter 3. Recommended Readings Blanchard, O., and S. Fischer. Lectures on Macroeconomics. Cambridge, MA: MIT Press, 1989. chapter 3. ISBN: 0262022834. Cass, D. “Optimum Growth in an Aggregative Model of Capital Accumulation: A Turnpike Theorem.” Econometrica 34 (1966): 833-850. Lucas, R. E., Jr. “Why Doesn’t Capital Flow from Rich to Poor Countries?” American Economic Review 80 (1990): 92-96. Ramsey, F. P. “A Mathematical Theory of Saving.” Economic Journal 38 (1928): 543-559. Skiba, A. K. “Optimal Growth with a Convex-Concave Production Function.” Econometrica 46 (1978): 527-539.
R2	The Neoclassical Growth Model
III. Using the Neoclassical Growth Model Beyond Growth: Asset Pricing, Public Finance, Overlapping Generations
L7-L8	Growth with Overlapping Generations	Required Readings Acemoglu, D. Introduction to Modern Economic Growth, chapter 9. Atkeson, A., V. V. Chari, and P. Kehoe. “Taxing Capital Income: A Bad Idea.” Federal Reserve Bank of Minneapolis Quarterly Review 23, no. 3 (Summer 1999): 3-17. Lucas, R. E., Jr. “Asset Prices in an Exchange Economy.” Econometrica 46 (1978): 1429-1445. Barro, R. J. “Are Government Bonds Net Wealth?” Journal of Political Economy 82 (1974): 1095-1117. ———. “On the Determination of the Public Debt.” Journal of Political Economy 87 (1979): 940-71. Blanchard, O. “Debt, Deficits and Finite Horizons.” Journal of Political Economy 93 (1985): 223-247. Lecture notes, chapter 4. Recommended Readings Abel, A., and O. Blanchard. “An Intertemporal Equilibrium Model of Saving and Investment.” Econometrica 51 (1983): 675-692. Barro, R. J., and X. Sala-i-Martin. Economic Growth, chapter 3 and appendix to chapter 3. Barro, R. “Ramsey Meets Laibson in the Neoclassical Growth Model.” Quarterly Journal of Economics 114 (1999): 1125-1152. Baxter, M., and R. King. “Fiscal Policy in General Equilibrium.” American Economic Review 78 (1988): 315-334. Blanchard, O., and S. Fischer. Lectures on Macroeconomics. Cambridge, MA: MIT Press, 1989, chapter 3, sections 5.1-5.2, sections 10.1, and 11.3. ISBN: 0262022834. Chamley, C. “Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives.” Econometrica 54 (1986): 607-622. Chari, V. V., and P. Kehoe. “Optimal Fiscal and Monetary Policy.” National Bureau of Economic Research Working Paper no. 6891, 1999, pp. 1-119. Diamond, P. “National Debt in a Neoclassical Growth Model.” American Economic Review 55 (1965): 1126-1150. Kydland, F., and E. C. Prescott. “Time to Build and Aggregate Fluctuations.” Econometrica 50 (1982): 1345-1370. Lucas, R. E, Jr., and N. L. Stokey. “Optimal Fiscal and Monetary Policy in an Economy without Capital.” Journal of Monetary Economics 12 (1983): 55-93. Modigliani, F. “Life Cycle, Individual Thrift, and the Wealth of Nations.” American Economic Review 76 (1986): 297-313. Samuelson, P. A. “An Exact Consumption Loan Model of Interest with and without the Social Contrivance of Money.” Journal of Political Economy 1958 (1958): 467-482. Sidrausky, M. “Rational Choice and Patterns of Growth in a Monetary Economy.” American Economic Review 77 (1967): 534-544.
R3	Applications of the Neoclassical Growth Model
IV. Endogenous Growth I: AK, Spillovers, Human Capital
L9-L10	Human Capital and Economic Growth First-Generation Models of Endogenous Growth	Required Readings Acemoglu, D. Introduction to Modern Economic Growth, 2007, chapters 10-11. Barro, R. J., and X. Sala-i-Martin. Economic Growth, 1995, chapters 4-5. Lecture notes, chapter 6. Recommended Readings Aghion, P., P. Howitt, M. Brant-Collett, and C. Garcia-Peñalosa. Endogenous Growth Theory. Cambridge, MA: MIT Press, 1998, chapter 10. ISBN: 0262011662. Barro, R. J. “Government Spending in a Simple Model of Endogenous Growth.” Journal of Political Economy 98 (1990): S103-S125. Caballero, R., and A. Jaffe. “How High Are the Giants Shoulders?” In NBER Macroeconomics Annual 1993. Edited by Olivier Blanchard and Stanley Fischer. Cambridge, MA: MIT Press, 1993. ISBN: 0262023644. Lucas, R. E., Jr. “Making a Miracle.” Econometrica 61 (1993): 251-272. ———. “On the Mechanics of Economic Development.” Journal of Monetary Economics 22 (1988): 3-42. Jones, L. and R. Manuelli. “A Convex Model of Equilibrium Growth.” Journal of Political Economy 98 (1990): 1008-1038. Rebelo, S. “Long-Run Policy Analysis and Growth.” Journal of Political Economy 99 (1991): 500-521. Romer, P. M. “Increasing Returns and Long-Run Growth.” Journal of Political Economy 94 (1986): S1002-S1037. Young, A. “Invention and Bounded Learning by Doing.” Journal of Political Economy 101 (1993): 443-472.
R4	Optimization Methods (PDF) (Courtesy of Suman Basu. Used with permission.)
V. Endogenous Growth II: R&D, Varieties vs. Quality, Directed Technological Change
L11-L12	Expanding Variety Models Models of Competitive Innovations Directed Technological Change	Required Readings Acemoglu, D. Introduction to Modern Economic Growth, 2007, chapters 13-15. Aghion, P., and P. Howitt. “A Model of Growth through Creative Destruction.” Econometrica 60 (1992), 323-351. Barro, R. J., and X. Sala-i-Martin. Economic Growth, 1995, chapters 6-7. Romer, P. M. “Endogenous Technological Change.” Journal of Political Economy 98 (1990): 71-102. Lecture notes, chapter 7. Recommended Readings Acemoglu, D. “Directed Technical Change.” Review of Economic Studies 69 (2001): 781-810. Aghion, P., P. Howitt, M. Brant-Collett, and C. Garcia-Peñalosa. Endogenous Growth Theory. Cambridge, MA: MIT Press, 1998, chapters 1-3. ISBN: 0262011662. Barro, R., and X. Sala-i-Martin. “Public Finance in Models of Economic Growth.” Review of Economic Studies 59 (1992): 645-662. Brezis, E., P. R. Krugman, and D. Tsiddon. “Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership.” American Economic Review 83 (1993): 1211-1219. Grossman, G. M. and E. Helpman. “Quality Ladders in the Theory of Economic Growth.” Review of Economic Studies 58 (1991): 43-61. Jones, C. “R&D-Based Models of Economic Growth.” Journal of Political Economy 103 (1995): 759-784. Parente, S. L., and E. C. Prescott. “Barriers to Technology Adoption and Development.” Journal of Political Economy 102 (1994): 298-321.
R5	Expanding Variety Models (PDF) (Courtesy of Suman Basu. Used with permission.)
L13	Summary