ECON407-0101 Spring 2009 Syllabus

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Univ.ofMaryland,CollegePark JosA.TessadaDepartmentofEconomics Spring2009

AdvancedMacroeconomics(Econ407)Syllabus

CourseOverview

In this class we will explore at a deeper level some of the topics covered in Intermediate

Macroeconomics(Econ325).Wewillalsocoverandstudyotherresearchtopicsinmacroeconomics.

Attheendofthecourseeachstudentshouldbeabletomanageandunderstandhis/herknowledgeof:

1. EconomicGrowth2. OverlappingGenerationsModelandApplications3. Investment4. LaborMarkets5. MacroeconomicsandFinance

Inordertogainunderstandingoftheseconceptsandto improvethestudentsabilitytousethemthis

coursewillrelyonclassdiscussion,examsandawrittenessaywherethestudentswillexploreoneof

thetopicsoftheclassinfurtherdetail.

ClassroomandContactInformation

Lectures: Tuesdays and Thursdays, 9:30am10:45am in Tydings Hall room 0102 (section 0201) and

11:00am12:15pm in Tydings Hall room 2106 (section 0101). You MUST attend the section you

registeredfor;noauthorizationwillbegrantedtoattendtheothersectionofthiscourse.

CourseWebsite:http://sites.google.com/site/econ407/

Office:TydingsHall4106B

OfficeHours:Tuesday23pmorbyappointment.

Email: [email protected],please includeat thebeginningof thesubject fieldEcon407.This is

thebestwaytocontactme;IwilltrytoansweryourquestionsasquicklyasIcan,providedyouemail

meatareasonablehour.

TheUniversityhasadoptedemailastheprimarymeansofcommunicationoutsidetheclassroom,andI

willuseittoinformyouifandwhenclassneedstobecancelled.Studentsareresponsibleforupdating
http://sites.google.com/site/econ407/http://sites.google.com/site/econ407/mailto:[email protected]?subject=Econ407mailto:[email protected]?subject=Econ407mailto:[email protected]?subject=Econ407mailto:[email protected]?subject=Econ407http://sites.google.com/site/econ407/


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theircurrentemailaddressviatheappropriatelinkonhttp://www.testudo.umd.edu/Registrar.htmland

checkingthecoursewebsiteregularlyfornewinformation.

Prerequisites: You are responsible for having completed Econ 325, Intermediate Macroeconomics

before taking this course, and there will be no exceptions. We will also use calculus and other

mathematictools,

so

familiarity

with

the

usual

tools

used

in

economics

is

strongly

recommended.

Some

additionaltoolsmaybeintroducedduringthesemesterwhenneeded.

Textbooks

Themaintextbookforthisclassis:

Romer,David;AdvancedMacroeconomics,3rdEdition,McGrawHill,2006.(HenceforthRomer)Additionalsuggestedtextbooks:

Jones,Charles;IntroductiontoEconomicGrowth,2ndEdition,W.W.Norton,2002.(HenceforthJones)

Williamson, Stephen D.; Macroeconomics, 3rd Edition, AddisonWesley, 2007. (HenceforthWilliamson)

AdvancedMacroeconomicsbyRomeristherequiredtextbookandwewilluseitintensivelyduringmost

of the semester. Jones textbook is not required but I will use it when we cover economic growth.

Williamsonstextbook isnotrequiredand is intendedasareferenceonlyas itprovidesagood ideaof

(someof) the topicsyouprobablycovered inpreviousmacroeconomicscourses (thisalsomeans that

someofyoumayownitalready).Exactchaptersandadditionalreadingsareprovidedaftereachtopicin

theSchedule.Someadditional readings linkingthe topicswithcurrenteventsmaybeassignedduring

thesemester.

ExpectationsofStudents:Youare responsible for learning thematerialpresented inclassand for the

topicscovered ineverychapterassigned inthetextbook,even ifwedontdiscussaparticulartopic in

class.However, Iwillannounceduring lectures if there isanychangeon the required readings.Class

meetings will include lectures and discussion. Some topics for discussion will be distributed at the

beginningofaclassorinadvance,inanycaseyoushouldcometoclassreadytocontributeinorderto

earnpoints toward your grade, see thedescriptionof the gradingpolicy in the syllabus. If youhave

questions about topics covered in the textbook but not discussed in class, you should raise your

questionswiththeinstructorbyemailorinclassinatimelyfashion;askingthenightbeforethefinalis

muchtoo

late!

Even

if

not

explicitly

required

in

advance,

Istrongly

recommend

reading

the

required

materialsbeforetheclass.

GradesandAssignments

Your grade will be determined by your performance on the following assignments. The maximum

possiblepointsarelistedalongsideeachassignment.

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Classparticipation: 10points

Twoexams: 60points(30pointseach)

Paper: 30points(ofwhich10pointscorrespondtoroughdraft)

Total:

100points

DepartmentofEconomicspolicyongradingrequiresmetousethegradingsystem Iannounceatthe

beginningofthesemesterinallcases.Icannotmakeanyexceptions,andtherewillbenoopportunities

forextracredit.Moreinformationontheassignmentscanbefoundattheendofthesyllabus.

Paper:AfirstdraftofyourpaperisdueonThursdayMarch31st,inclass.Thisdraftwillbethebasison

which you can get feedback fromme.A firstdraft ishelpfulboth inwriting and getting feedback; a

seconddraftshouldalwaysbeatafirstdraft.ThefinalversionofyourpaperisdueonTuesdayApril28th

inclass.

Exams:The

first

exam

will

take

place

on

Tuesday

March

10th

in

class.

The

second

exam

will

be

held

in

accordtotheUniversityschedule(seetablebelow).Thetopicsarenotcumulative, i.e.eachexamwill

coverhalfthetopicsinthesyllabus.

Section(lectures) Secondexam

0101(TTh9:30am10:45am) FridayMay15th,8:0010:00am

0201(TTh11:00am12:15pm) ThursdayMay14th,8:0010:00am

Academic Integrity: The University of Maryland, College Park has a nationally recognized Code of

AcademicIntegrity,administeredbytheStudentHonorCouncil.ThisCodesetsstandardsapplicableto

allundergraduate

students,

and

you

are

responsible

for

upholding

these

standards

as

you

complete

assignments and take exams in this course. Please make yourself aware of the consequences of

cheating, fabrication, facilitation, and plagiarism. For more information visit the following webpage:

www.studenthonorcouncil.umd.edu.

Accommodations:Studentswhorequirespecialaccommodationsforexamsmustgetintouchwithme

withinthefirsttwoweeksofclasses.

OutlineandReadings

(*denotesarequiredreading)

A. EconomicGrowthA.1IntroductiontoGrowthandGrowthFacts

Jonesch.1 *Easterly,W.(2000).TheElusiveQuestforGrowth,ch.1.

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*Pritchett,L.(1997).Divergence,BigTime,JournalofEconomicPerspectives,11,Summer,pp.317.

A.2SolowSwanModel Romerch.1(particularlypages517,2935) Jonesch.2and3 *Young,A.(1994).LessonsfromtheEastAsianNICs:AContrarianView,EuropeanEconomicReview,38,April,pp.96473.

*Jones,C.(1997).OntheEvolutionoftheWorldIncomeDistribution,JournalofEconomicPerspectives,11,Summer,pp.1936.

*Krugman,P.(1994).TheMythofAsiasMiracle:ACautionaryTale,ForeignAffairs,73,Nov/Dec,pp.6278.

A.3NeoclassicalGrowthModel:RamseyModel Romerch.2A(particularlypages5666,7076)

A.4EndogenousGrowthModel Romerch.3(particularlypages100108,115122) Jonesch.4and5 *Kremer,M.(1993).PopulationGrowthandTechnologicalChange:OneMillionB.C.to1990,QuarterlyJournalofEconomics,108,August,pp.681716.

*Acemoglu,D.,S.Johnson,andJ.Robinson(2001).TheColonialOriginsofComparativeDevelopment:AnEmpiricalInvestigation,AmericanEconomicReview,91,December,1369

87.

B. MediumandShortRunB.1OverlappingGenerationsModelandSocialSecurity

*Romerch.2B(exceptpages8387) *Diamond,P.,andP.Orszag(2005).SavingSocialSecurity,JournalofEconomicPerspectives,19,Spring,pp.1132.

*Feldstein,M.,(2005).StructuralReformofSocialSecurity,JournalofEconomicPerspectives,19,Spring,pp.3355.

B.2Consumption(timepermitting) *Romerch.7 *Carroll,C.(2001).ATheoryoftheConsumptionFunction,WithandWithoutLiquidityConstraints,JournalofEconomicPerspectives,15,Summer,pp.2346.

B.3Investment *Romerch.8(onlypages386389and417432) Romerch.8(therestofthechapter)

B.4LaborMarkets *Romerch.9(exceptpages444448,460472) *Caballero,R.,andM.Hammour(1996).TheFundamentalTransformationinMacroeconomics,AmericanEconomicReview,86,May,pp.181186.

*Davis,S.,R.FabermanandJ.Haltiwanger(2006).TheFlowApproachtoLaborMarkets:NewDataSourcesandMicroMacroLinks,JournalofEconomicPerspectives,20,Summer,pp.

326.

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Romerch.9(therestofthechapter)C. Topics:MacroeconomicsandtheFinancialMarkets

C.1MacroeconomicsandFinance *Bernanke,B.,andM.Gertler(1995).InsidetheBlackBox:theCreditChannelofMonetaryPolicyTransmission,JournalofEconomicPerspectives,9,Fall,pp.2748.

*Bernanke,B.,andM.Gertler(1989).AgencyCosts,NetWorth,andBusinessFluctuations,AmericanEconomicReview,79,March,pp.1431.

*Braun,M.,andB.Larrain(2005).FinanceandtheBusinessCycle:International,InterindustryEvidence,JournalofFinance,pp.10971128.

*Rajan,R.,andL.Zingales(1998).FinancialDependenceandGrowth,AmericanEconomicReview,88,June,pp.559586.

C.2FinancialFrictionsinEmergingMarkets:SuddenStops(timepermitting) *Romerch.5,pages222241only. *Caballero,R.,andA.Krishnamurthy(2002).ADualLiquidityModelofEmergingMarkets,AmericanEconomicReview,92,May,pp.3337.

*Calvo,G.(1998).CapitalFlowsandCapitalMarketsCrises:TheSimpleEconomicsofSuddenStops,JournalofAppliedEconomics,1(1),pp.3554.

*Calvo,G.,A.Izquierdo,andE.Talvi(2006).PhoenixMiraclesinEmergingMarkets:RecoveringwithoutCreditinSystemicFinancialMarkets,NBERWorkingPaper12101,March.

ExaminationsandPaperDueDates

Midterm:TuesdayMarch10th,inclass.

FinalExam:

Section(lectures) Secondexam

0101(TTh9:30am10:45am) FridayMay15th,8:0010:00am

0201(TTh11:00am12:15pm) ThursdayMay14th,8:0010:00am

RoughDraftofPaper:TuesdayMarch21st,attheendoftheclass.

FinalDraftofPaper:TuesdayApril28th,attheendoftheclass.

Descriptionof

the

Assignments

Practice Exercises: There will be 3 or 4 handouts with practice exercises that will not be graded;

however, I strongly recommend you todo them as theyprovide thebestpractice for exams and to

masterthematerials.Ahandoutwithanswerswillbepostedonthecoursewebsiteoneweekafterthe

exerciseswerehandedout. Ifyouwanttoreceivefeedbackonyouranswers,youmusthandthem in

before the answer key is posted online. You are allowed and even encouraged towork together in

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groups to complete the practice exercises.Up to four people can submit one setof answers (and I

stronglyencourageyoutosubmitgroupanswers).

Paper: This paper should be a research paper of no more than 20 pages long, doublespaced (on

numbered pages), standard 12 point font, and 1 inch margins, including tables and figures. It must

includeabibliography

of

works

consulted.

It

should

demonstrate

your

understanding

of

the

subject

and

yourabilitytocommunicatetheconceptslearntintheclass.

Inthepaperyoushoulddescribeandanalyzeeconomicgrowth intwocountries inthe lasthalfofthe

20thcentury.Onecountryshouldbeoneyouarefamiliarwith;theothercountryshouldbechosento

provideagoodcontrastwiththefirstone.Assoonasyouhaveselectedthecountriesyoumustsendme

anemaildetailing thecountriesyouhavepickedand the reasons for thatparticular selectionbefore

February21st (noexceptions).The aimof thepaper shouldbe touse theeconomic growth theorieslearnedinEcon407toexplaintheeventsyouchoose.Comparingandcontrastingtwocountriesshould

provideenoughvariationforyoutoapplythetheorieswehavestudied.Moredetailswillbeprovided

duringthesemester.

Exams:Examquestionswillrequirethatyouwriteshortanswersofoneortwoparagraphsand longer

exercisesthatmayrequiremoreanalyticalanswers;someexamplesofbothtypesofquestionswillbe

included inthepracticeexercises.Makeupexams forthe finalwillbegrantedonlytothosestudents

whoseexcusecomplieswithUniversitypolicy.ThefourvalidexcusesaccordingtoUniversitypolicyare

medicalconditions,religiousobservances,participationinUniversityeventsattherequestofUniversity

authorities, and compelling circumstances beyond your control. If you believe you need amakeup,

pleaseinformmeassoonaspossible,attheveryleasttwoweeksinadvanceforreligiousobservances

and participation in University events. Formedical conditions and compelling circumstances beyond

your control you should alertme in advanceof theexam, if at allpossible,by email, and youmust

provideappropriate

documentation

in

order

to

take

amake

up.

Class Participation: As noted before, class meetings will include some discussion organized around

questionsthat Imaydistribute inadvance,howeverquestions fromstudentsarestronglyencouraged

too. Over the course of the semester each student is expected to contribute to the discussion.

Contributionalso includessuggesting interesting topicsorquestions related to the topicswecover in

theclass.Ifyoubelievethatyoucannotpossiblytalkoutloudinclass,pleaseseemewithinthefirsttwo

weeksofclasstomakealternativearrangements.

Documents

ECON407-0101 Spring 2009 Syllabus