ECO2061: Economic Theory-Macroeconomics (MA)

University of Toronto, 2020 Fall

Announcements


Assignments

Instructor

  • Serdar Ozkan: serdar.ozkan[at]utoronto.ca

  • Lectures: Lectures are delivered both in-person in BA 1130 and streamed online via Zoom synchronously. They are alternate Mondays, 2-4pm (starting on Sept 14) and all Wednesdays, 2-4pm.

  • Office Hours: W 4-5pm or by appointment online via Zoom (or possibly in person).

Teaching Assistants

  • Jeremy (Guangbin) Hong: g.hong[at]mail.utoronto.ca

  • Office Hours: Thursdays 4-5pm online.

  • Tutorials: Alternate Mondays, 2-4pm, starting on September 21st. Again tutorials will be streamed online via Zoom synchronously.

Course Description

The objective of this course is to introduce you to the study of macroeconomics at the advanced level. This means that we will use rigorous models and employ (dynamic) optimization techniques to present and analyze macroeconomic theories. A common theme across the models we will study is that economic aggregates are the equilibrium result of the optimizing decisions made by rational agents at the individual level. We will employ this rigorous approach, not as an end in itself, but as a means to obtain disciplined insights into the important questions that trouble macroeconomists. The topics we will cover include economic growth, business cycle fluctuations, employment and unemployment, and fiscal and monetary policy.

Remote Learners

If you are a citizen of another country, and/or accessing your courses at the University of Toronto from a jurisdiction outside of Canada, please note that you may be subject to the laws of the country in which you are residing, or any country of which you have citizenship. The University of Toronto has a long-established commitment to freedom of expression, with this right enabled by an environment valuing respect, diversity, and inclusion. In your classes, you may be assigned readings, or discuss topics that are against the law in other jurisdictions. I encourage you to become familiar with any local laws that may apply to you and any potential impact on you if course content and information could be considered illegal, controversial, or politically sensitive. If you have any concerns about these issues, please contact me directly to discuss with them.

Textbooks and Papers

  • Advanced Macroeconomics (4th Edition), by David Romer, McGraw Hill, 2012.

  • Frontiers of Business Cycle Research, by Cooley, T. (1995), Princeton University Press.

  • Big Ideas in Macroeconomics: A Nontechnical View, by Kartik B. Athreya (2014), MIT Press

Evaluation

  • Scheme A: 2 Assignments: 10% + Midterm: 40% + Final: 50%

Scheme B: Assignment #1: 5% 10%+ Assignment #2: 10% + Midterm: 35% 30%+ Final: 50%

Total: Maximum of Scheme A and B.

  • The assignments must be handed in on the pre-specified dates. No late submissions will be accepted. If a problem set is not handed in on time, for a justified and documented reason, the weight will shift to the final exam.

  • The midterm test will be held on October 21 26 during class time. There will be no make-up exam for the midterm test. If you provide appropriate and timely documentation for missing the midterm, the weight will be transferred to the final exam.

  • The final exam will be held at a date to be set by the University. The final exam will include all the material covered in the course.

Tentative List of Topics, Reading List and Slides


Week #1: Introduction and Modern Macroeconomics Framework


Week #2: Solow Growth Model


Week #3: Neoclassical growth model and Overlapping Generations Model


Week #4: Overlapping Generations Model


Week #5: Endogenous Growth Models: The AK Model, Human Capital Model, R&D Model


Week #5: Cross-country Income Differences


Week #6: Review of midterm material and midterm exam.

  • Sample midterm exam and solutions.


Week #7: Business cycle facts and theory.

  • RBC Slides

  • David Romer, Advanced Macroeconomics: Chapter 5

  • Cooley, Thomas, and Edward Prescott (1995), “Economic Growth and Business Cycles,” Ch.1, in Frontiers of Business Cycle Research, by T.Cooley (ed), Princeton University Press.


Week #8,9: Real Business Cycle Theory

  • RBC Slides

  • Dirk Krueger, Quantitative Macroeconomics: An Introduction

  • David Romer, Advanced Macroeconomics: Chapter 5

  • Cooley, Thomas, and Edward Prescott (1995), “Economic Growth and Business Cycles,” Ch.1, in Frontiers of Business Cycle Research, by T.Cooley (ed), Princeton University Press.


Week #10: Real Business Cycle Theory, Value function iteration


Week #10: Cash-In-Advance Model

  • Cash-In-Advance Slides

  • Cooley, Thomas F., and Gary D. Hansen (1995), “Money and the Business Cycle,” Ch.7, in Frontiers of Business Cycle Research, by T.Cooley (ed), Princeton University Press.

  • David Romer, Advanced Macroeconomics: Chapter 6 & 7


Week #10 and #11 : 3 Equation New Keynesian Model


Week #12: Covid 19 and the Economy