ECON 582—Macroeconomic Theory II (Winter 2018)
Instructor: Dmytro (Dima) Hryshko Meeting Room: T1-108
Class Hours: TTh 14:00–15:20 PM My Office: Tory Building, 9-19
Office Hours: Thursday 3:30-4:30 PM, or by appointment e-mail: [email protected]
Course Description: This is the second course in a two-term sequence of the first- year graduate macroeconomic theory. We will focus on the theory of dynamic stochastic general and partial equilibrium models.
Recommended Books:
There is no required textbook for this course. Recommended texts are:
Daron Acemoglu [A] (2009). Introduction to Modern Economic Growth. Princeton Uni- versity Press.
Lars Ljungqvist and Thomas Sargent [LS] (2004). Recursive Macroeconomic Theory, 2nd Edition. The MIT Press.
Carl Walsh [W] (2003). Monetary Theory and Policy, 2nd Edition. The MIT Press.
Maurice Obstfeld and Kenneth Rogoff [OR] (1996). Foundations of International Macroe- conomics. The MIT Press.
David Romer [R] (2006). Advanced Macroeconomics, 3d Edition. McGraw-Hill Irwin.
Angus Deaton [D] (1993). Understanding Consumption. Oxford University Press.
Tullio Jappelli and Luigi Pistaferri [JP] (2017), The Economics of Consumption: Theory and Evidence, Oxford University Press.
You can access [LS] in the electronic format through the UofA library system.
Material Covered: My plan is to cover a subset of the material from chapters 2, 3, 5–10, 17 from [A], and 6, 8, 13, 16, 17, 26 from [LS]. In addition, we may cover the topics of the real business cycles theory, dynamic inconsistency of monetary policy, search and matching etc. The material from [A] emphasizes growth theory. The material from [LS]
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emphasizes general equilibrium models in complete and incomplete markets, and behavior of consumption/savings under self-insurance. This is what I covered last year:
1. The Solow growth model.
2. Foundations of neoclassical growth.
3. Introduction to optimal control.
4. First-generation endogenous growth models.
5. Second-generation endogenous growth models.
6. Growth with overlapping generations.
7. Human capital.
8. Decision making under risk.
9. Consumption and saving: perfect credit markets.
10. Consumption and saving: liquidity constraints.
11. Consumption when insurance markets are complete (Arrow-Debreu setup).
12. Consumption-based CAPM and the equity premium puzzle.
13. Permanent Income Hypothesis (PIH).
14. Inflation and monetary policy.
15. The Diamond-Dybvig model of banks and bank runs.
Grading: Evaluation will be based on your performance on an in-class midterm (30%), a final (45%) exam, and several problem sets (25%). Your final grade will be calculated as follows: 0.30·M + 0.45·F + 0.25·PS, where M is the percentage of correct answers on the midterm, F—same for the final, PS—same for the problem sets (each problem set weighted equally). Each numerical grade will be converted into a letter grade, ranging from F to
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A+. Your final grade depends on your absolute performance (i.e., on your raw grade calculated in accordance with the formula above), and on your relative performance (i.e., your standing in the class distribution of grades). You may work on your problem sets in groups.
Theminimumletter grade (your absolute performance) will be determined according to the table below:
Numerical Grade Letter Grade
90-100 A+
85-89 A
80-84 A–
75-79 B+
70-74 B
65-69 B–
60-64 C+
55-59 C
50-54 C–
45-49 D+
40-44 D
0-39 F
Notes:
1. I will distribute assignments as we proceed with the course work.
2. You will find sample midterm and final exams on my webpage.
3. In case you miss the midterm, its weight will be transferred to the final exam.
4. As per request of the University administration, please be aware of the following statement: “Policy about course outlines can be found in§23.4(2) of the University Calendar.” (GFC 29 SEP 2003).
5. As per request of the University administration, please familiarize yourself with the following statement: “The University of Alberta is committed to the high- est standards of academic integrity and honesty. Students are expected to be fa-
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miliar with these standards regarding academic honesty and to uphold the poli- cies of the University in this respect. Students are particularly urged to famil- iarize themselves with the provisions of the Code of Student Behaviour (online at www.ualberta.ca/secretariat/appeals.htm) and avoid any behaviour which could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.” (GFC 29 SEP 2003) 6. Audio or video recording of lectures, labs, seminars or any other teaching envi-
ronment by students is allowed only with the prior written consent of the instructor or as a part of an approved accommodation plan. Recorded material is to be used solely for personal study, and is not to be used or distributed for any other purpose without prior written consent from the instructor.
Important Dates:
Midterm Exam—Thursday, March 8 (tentative), in class
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