Macroeconomics Honours

First Semester 2018



Prof. Nicola Viegi

nicola.viegi@up.ac.za

 

 

Book

·         There is no prescribed text for the course. We will use a few chapters from David Romer Advanced Macroeconomics.

·         Read this from the Bank of England: Money in a Modern Economy  

·         Lecturers, handouts, and web resources will be provided during the course.

 

Schedule

Office and consultation hours: 2-05 Tukkiewerf Building, Mondays @ 10:00-12:00. or by appointment

 

World Bank Internship Slides

 

First Class Test Questions (Deadline 10th of April)

 

Lectures and Readings

no.

Title

Lectures and References

1

Introduction

Lecture 1 [pdf]: Introduction - Macroeconomic Methodology Macroeconomic in the Long Run vs Macroeconomic In the Short Run. A First Structural Model

Readings :

 

Rodrik Economists vs Economics

Mankiw The Macroeconomist as Scientist and Engineer

Krugman Two cheers for formalism

 

A First Model – The Inter-temporal Theory of Current Account

2-3

Growth

Lecture 2 [pdf]: Review of Growth Theory – Solow and all the rest.

! To be read before the lecture!

Easterly “The Elusive Quest for Growth” Chapter 1 and 2

Readings:

 

Solow (1956) “A Contribution to the Theory of Economic Growth”

Mankiw et al. (1990) “A contribution to the empirics of economic growth

Howitt (2004) “Endogenous Growth, Productivity and Economic Policy: A Progress Report”

Jones “R&D models of endogenous growth”

Exercise:

Education and Growth (Class Activity)

Technical Exercise (to submit on the 14th of February)

4

Growth

Lecture 3 [pdf]: Growth Policies

The Growth Report Strategies for Sustained Growth and Inclusive Development

 

Sandile Hlatshwayo and Magnus Saxegaard  (2016) “The Consequences of Policy Uncertainty: Disconnects and Dilutions in the South African Real Effective Exchange Rate-Export Relationship” IMF Working Paper 113

5

Institutions

Lecture 4 [pdf] Institutions and economic growth

 

Readings

 

Acemoglu, Daron, Simon Johnson, and James A. Robinson. "Institutions as a fundamental cause of long-run growth." Handbook of economic growth 1 (2005): 385-472.

 

Easterly, William. "Benevolent autocrats." Preliminary draft. NYU (2011).

 

Acemoglu, Daron, Simon Johnson, and James A. Robinson. "The colonial origins of comparative development: An empirical investigation." American economic review 91.5 (2001): 1369-1401

6

Unemployment

Lecture 5 [pdf]: Unemployment

Readings:

 

Janet L. Yellen (1984) “Efficiency Wage Models of Unemployment

Shapiro and Stiglitz     Equilibrium Unemployment as a Worker Discipline Device” - extended derivations [pdf]

Blanchard and Summers (1987) “Hysteresis in Unemployment

7

Unemployment

Workshop: Unemployment in South Africa

 

Minimum Wage Notes

8

Crisis 1

 

Lecture 6 [pdf] Introduction: The genesis and development of financial crisis

Readings:

 

Markus Brunnermeier "Deciphering the 2007-08 Liquidity and Credit Crunch"

Ross Levine "An Autopsy of the U.S. financial System"

John Taylor "The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong"

 

VOXEU  E-publication The First Global Financial Crisis of the 21st Century

Lecture 6.1 [pdf] The Economics of Financial Crisis

Readings:

 

Oliver Blanchard “The Crisis: basic mechanism and appropriate policies”

Ben S. Bernanke and Alan S. Blinder  Credit, Money, and Aggregate Demand

Paul De Grauwe "Keynes' Savings Paradox, Fisher's Debt Deflation and the Banking Crisis"

9

Monetary Policy 1

 

Lecture 7 [pdf] Targets and Instruments of Monetary Policy and the Monetary Transmission Mechanism

Readings:

 

Alan Blinder (1997) What Central bankers could learn from Academics and Viceversa

William Poole (1970) Optimal Choice of Monetary Instruments in a Simple Stochastic Macromodel

Frederic Mishkin (1996) The Channels of Monetary Policy

10

Monetary Policy 2

 

Lecture 8 [pdf] The Theory of Central Bank Independence

Readings:

 

Romer – Advanced Macroeconomics – Chapter 9

Barro and Gordon (1981) “A Positive Theory of Monetary Policy in a Natural Rate Model

Notes: The Barro-Gordon Model

12

Monetary Policy 3

 

Lecture 9 [pdf] Monetary Policy in Practice : Instruments and Targeting Rules

Readings:

 

Milton Friedman (1968) “The Role of Monetary Policy

John Taylor (1993  ) “Discretion versus Policy Rules in Practice

Lars Svensson (1997) "Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets"

Frederic Mishkin (2001) “Inflation Targeting

13

Fiscal Policy 1

 

Lecture 10 [pdf] Fiscal Policy: Ricardian Equivalence

 

Readings:

 Basic Derivation here

Barro (1985) “A Ricardian Approach to Fiscal Policy”

Tanner (2013) "Fiscal sustainability: A 21st century guide for the perplexed"

        Dornbusch,, and Edwards.(1990)  "Macroeconomic populism." Journal of Development Economics 32.2: 247-277