ECO2061: Economic Theory-Macroeconomics (MA)
University of Toronto, 2020 Winter
Outline PDF Version. Weekly Course Schedule
Announcements
March 24: The class agreed to change the final exam to be a take-home exam between April 9th, 9am to 10th, 9am.
March 15: Classes are moved to online due to Covid-19. Join the Zoom meeting during the regular class hours.
March 9: Sample Business Cycle Questions
March 6: Final exam is scheduled on April 9th, 9am-12pm at BA 1130.
February 25: 2020 Midterm with Jeremy's solutions
February 1: Midterm Exam is on February 13 in class.
January 5: Outline is posted.
Assignments
March 30: Sample final exam and solutions by Baxter Robinson.
Assignment #2 Due on April, 15 April 2017 at 5pm.
Markov states and transition matrix for productivity shocks can be found here.
Matlab code that performs the value function iteration for neo-classical growth model.
February 1: Assignment #1 Due on February 27.
February 1: Sample midterm exam and solutions by Baxter Robinson.
Instructor
Serdar Ozkan: serdar.ozkan[at]utoronto.ca
Lectures: Tuesdays, 1-3pm, @ES B149 and alternate Thursdays, 1-3pm, @MP 137, starting on January 9.
Office Hours: W 3-4pm or by appointment at GE230
Teaching Assistants
Dylan Gowans: Dylan.Gowans[at]mail.utoronto.ca
Office Hours: Thursdays 3-4pm @GE313.
Tutorials: Alternate Thursdays, 1-3pm, @MP 137, starting on January 16.
Grader: Jeremy (Guangbin) Hong: g.hong[at]mail.utoronto.ca
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.
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
Due to the cancellation of in-person exams we have agreed to change the syllabus as follows:
1. Take-home final exam: The final exam will be held over Crowdmark from 9am, April 9th to 9 am next day (April 10th) and it is an open-book exam. Students will upload their answers to Crowdmark no later than 9am, April 10th.
2. Adding a third option to the grading scheme, Scheme C:
Scheme A: 2 Assignments: 10% + Midterm: 40% + Final: 50%
Scheme B: Assignment #1: 5% + Assignment #2: 10% + Midterm: 35% + Final: 50%
Scheme C: Assignment #1: 15% + Assignment #2: 15% + Midterm: 35% + Final: 35%.
Total: Maximum of A, B and C.
Scheme A: 2 Assignments: 10% + Midterm: 40% + Final: 50%
Scheme B: Assignment #1: 5% + Assignment #2: 10% + Midterm: 35% + 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 February 13 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 and location 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
Prescott E.C., The Transformation of Macroeconomic Policy and Research, 2004 Nobel Prize Lecture.
Jesus Fernandez-Villaverde and Dirk Krueger, Macroeconomics Notes: Chapter 4 and Chapter 5.
Dirk Krueger, Macroeconomic Theory: Chapter 2
Week #2: Solow Growth Model
David Romer, Advanced Macroeconomics: Chapter 1
Mankiw, Gregory, David Romer, and David Weil (1992) "A Contribution to the Empirics of Economic Growth," Quarterly Journal of Economics, vol. 107, pp. 407-437
Week #3: Neoclassical growth model and Overlapping Generations Model
David Romer, Advanced Macroeconomics: Chapter 2
Week #4: Overlapping Generations Model
David Romer, Advanced Macroeconomics: Chapter 2
Week #5: Endogenous Growth Models: The AK Model, Human Capital Model, R&D Model
David Romer, Advanced Macroeconomics: Chapter 3
Jesus Fernandez-Villaverde and Dirk Krueger, Macroeconomics Notes: Chapter 9.
Week #5: Cross-country Income Differences
David Romer, Advanced Macroeconomics: Chapter 4
Mankiw, Gregory, David Romer, and David Weil (1992) "A Contribution to the Empirics of Economic Growth," Quarterly Journal of Economics, vol. 107, pp. 407-437
Pritchett, Lant (1997), “Divergence, Big Time”, Journal of Economic Perspectives, 11(3), pp.3-17.
Acemoglu, Daron, and Robinson, James A. 2000. “Political Losers as a Barrier to Economic Development.” American Economic Review 90 (May): 126–130.
Albouy, David. 2008. “The Colonial Origins of ComparativeDevelopment: An Investigation of the Settler Mortality Data.” National Bureau of Economic Research Working Paper No. 14130.
Caselli, Francesco, and Feyrer, James. 2007. “The Marginal Product of Capital.” Quarterly Journal of Economics 122 (May): 535–568.
Hsieh, Chang-Tai, and Klenow, Peter J. 2009. “Misallocation and Manufacturing TFP in China and India.” Quarterly Journal of Economics, 124 (4): 1403-1448.
Jones, Benjamin F., and Olken, Benjamin A. 2005. “Do LeadersMatter? National Leadership and Growth since World War II.” Quarterly Journal of Economics 120 (August): 835–864.
David Lagakos 2013. “Explaining Cross-Country Productivity Differences in Retail Trade”, Journal of Political Economy
Pritchett, Lant. 2000. “The Tyranny of Concepts: CUDIE (Cumulated, Depreciated, Investment Effort) is Not Capital.” Journal of Economic Growth 5 (December): 361–384.
Schmitz, James A., Jr. 2005. “What Determines Productivity? Lessons from the Dramatic Recovery of the U.S. and Canadian Iron Ore Industries Following Their Early 1980s Crisis.” Journal of Political Economy 113 (June): 582–625.
Week #6: Review of midterm material and midterm exam.
Sample midterm exam and solutions.
Week #7: Business cycle facts and theory.
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
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
There is a small sub-section on value function iteration here: Dirk Krueger, Macroeconomic Theory: Chapter 3
Dirk Krueger, Quantitative Macroeconomics: An Introduction
Week #10: Monetary Business Cycle Models
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 #11 and #12 : 3 Equation New Keynesian Model
David Romer, Advanced Macroeconomics: Chapter 6 & 7
Eichenbaum, Martin S., Sergio Rebelo, and Mathias Trabandt. The Macroeconomics of Epidemics. No. w26882. National Bureau of Economic Research, 2020.