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EKN 813: First Semester, 2014

Course Related Materials

(A) Growth Models:

(i) The Basic Solow Growth Model (References: (i)  Slides I  and Slides  II    [Courtsey: Indroducing
Advanced Macroeconomics: Growth and Business Cycles by Peter Birch Sorensen and Hans Jorgen
Whitta-Jacobsen]; (ii) 2007 Boot Camp Lecture Notes: 3 and 5; 2012 Boot Camp Lecture Notes: 1.)

Journal Article(s):

(1) A Contribution to the Theory of Economic Growth (Robert M. Solow)

(ii) The Solow Growth Model with Technological Progress (Reference: Slides III and Slides
IV [Courtsey: Indroducing Advanced Macroeconomics: Growth and Business Cycles by Peter Birch
Sorensen and Hans Jorgen Whitta-Jacobsen]; (ii) 2007 Boot Camp Lecture Notes: 3 and 5; 2012 Boot
Camp Lecture Notes: 1)  

(iii) Research and Development (R & D) Model  (Reference: Chapter 3, Sections 3.1-3.4, Advanced
Macroeconomics by David Romer; (ii) 2007 Boot Camp Lecture Note: 5; 2012 Boot Camp Lecture Notes:
1)

Journal Article(s):

(1) A Contribution to the Empirics of Economic Growth (Gregory N. Mankiw, David Romer and David N.
Weil)

(v) Revisiting the Solow Growth Model Using Dynamic Optimization in a Continuous Time
Framework (Ramsey-Cass-Koopmans Model)   (References: (i) Chapter 2, Sections 2.1-2.7, Advanced
Macroeconomics by David Romer; (ii) 2007 Boot Camp Lecture Note: 10; 2012 Boot Camp Lecture
Notes: 2.)

Practice Assignment I [Solution]

(B) Endogenous Growth Models:

(i) Increasing Returns and Long-Run Growth (References: (i) Chapter 4, Section 4.1 to Subsection
4.4.1, Economic Growth by Robert J. Barro and Xavier Sala-i-Martin; (ii) 2007 Boot Camp Lecture Note:
10; 2012 Boot Camp Lecture Notes: 2.)
Journal Article(s): Increasing Returns and Endogenous Growth Theory

(1) Increasing Returns and Long-Run Growth  (Paul M. Romer)

(2) Neoclassical vs. Endogenous Growth Theory (Bennett T. McCallum)

(ii) Productive Public Expenditure and Long-Run Growth (References: (i) Chapter 4, Section 4.1 to
Subsection 4.4.1, Economic Growth by Robert J. Barro and Xavier Sala-i-Martin; (ii) 2007 Boot Camp
Lecture Note: 10; 2012 Boot Camp Lecture Notes: 2.)

Journal Article(s): Government Spending and Endogenous Growth Theory

(1)  Government Spending in a Simple Model of Endogenous Growth (Robert J. Barro)

(2) Neoclassical vs. Endogenous Growth Theory (Bennett T. McCallum)

(3) Public Finance in Models of Economic Growth (Robert J. Barro and Xavier Sala-i-Martin)

(iii) Human capital and Long-Run Growth (References: (i) On the Mechanics of Economic Development,
by Robert E. Lucas, Jr., Journal of Monetary Economics, Volume 22, pp. 3-42, 1988 (Re-printed in the
Lectures on Economics Growth by Robert E. Lucas, Jr. Chapter 1.); (ii) Chapter 4, Section 4.1 to
Subsection 4.4.1, Economic Growth by Robert J. Barro and Xavier Sala-i-Martin; (iii) 2007 Boot Camp
Lecture Note: 10; 2012 Boot Camp Lecture Notes: 2.)

Journal Article(s): Human Capital and Endogenous Growth Theory

(1) Why Doesn't Capital Flow from Rich to Poor Countries? (Robert E. Lucas, Jr.) (Re-printed in the
Lectures on Economics Growth by Robert E. Lucas, Jr. Chapter 2.)

(2) Why doesn't Capital flow from Rich to Poor Countries? An Empirical Investigation (Laura Alfaro and
Sebnem Kalemli-Ozcan)

(C) Lucas Critique and Econometric Policy Evaluation (References: (i)  Econometric Policy Evaluation: A
Critique, by Robert E. Lucas Jr., in Studies in Business Cycle Theory by Robert E. Lucas Jr.; (ii) Class Notes
on Lucas Critique by Leigh Tesfatsion.)

Journal Article(s): Lucas Critique

(1) An Empirical Critique of Lucas Critique (T.D. Stanley )

(2) Assessing the Lucas Critique in Monetary Policy Models (Glen D. Rudebusch)

(3) Testing for the Lucas Critique: A Quantitative Investigation (Jesper Lindé )

(4) Are 'Deep' Parameters Stable? The Lucas Critique as an Empirical Hypothesis (Arturo Estrella and
Jeffrey C. Fuhrer)
(4) The Lucas Critique and the Stability of Empirical Models (Thomas A. Lubik and Paolo Surico)

(5) Nobel Laureate Robert E. Lucas, Jr.: Architect of Modern Macroeconomics (V. V. Chari)

(D) Expectations

(i)  Lucas's Misperceptions Theory (References: (i) Some International evidence on Output-Inflation

Tradeoffs  (Robert E. Lucas, Jr.); (ii) Section 9.4, Chapter 9, Monetary Economics: Theory and Policy, by
Bennett T. McCallum.)

Journal Article(s): The Lucas Supply Curve

(i) Econometric Testing of the Natural Rate Hypothesis (Robert E. Lucas, Jr., in The Econometrics of
Price Determination, O. Eckstein, ed. Washington: Board of Governors of the Federal Reserve System,
1972. Also published in the Studies in Business Cycle Theory by Robert E. Lucas Jr., Chapter 5, 90-
103.)

(ii) Expectation Formulations and its Policy Implications

(a) Adaptive Versus Rational Expectations (Reference: Chapter 8, Monetary Economics: Theory and
Policy, by Bennett T. McCallum.) 

Journal Article(s): Lucas Supply Curve and Policy Irrelevance

(1) Rational Expectations and the Theory of Price Movements (John F. Muth)

(2) Expectations and the Neutrality of Money (Robert E. Lucs, Jr. , Journal of Economic Theory, Vol. 4
(April), pp. 103-24, 1972.)

(3) Rational Expectations, the Real Rate of Interest and the Natural Rate of Unemployment (Thomas J.
Sargent)

(4) Unanticipated Money Growth and Unemployment in the United States (Robert J. Barro)

(5) Rational Expectations and the Role of Monetary Policy (by Robert J. Barro, Journal of Monetary
Economics, Vol. 2 (January), pp. 1-32, 1976.)

(6) Unanticipated Money, Output, and the Price Level in the United States (Robert J. Barro)

(7) A Linearized Version of Lucas's Neutrality Model (Bennett T. McCallum)

(iii) Solution of Rational Expectations Models and Policy Neutrality

(a) Solving Rational Expectation Models (McCallum's Minimum State Variable (MSV) Approach)
(References: (i) Chapters 8 and 11, Monetary Economics: Theory and Policy, by Bennett T. McCallum; (ii)
2007 Boot Camp Lecture Note: 7.)

Journal Article(s): Solving Rational Expectations Models

(1) On Non-Uniqueness of Rational Expectations Models: An Attempt at Perspective (Bennett T.

McCallum) (NBER Working Paper Version) (Published as: On Non-Uniqueness of Rational Expectations
Models: An Attempt at Perspective, Journal of Monetary Economics, Vol. 11 (March), pp.139-168,
1983.) 

(iv) Wage Rigidities and Rational Expectations Models  

(i) Staggered Wage Contracts (Reference: Chapter 9, Section: 9.6, Monetay Economics: Theory and
Policy, by Bennett T. McCallum.)

Journal Article(s): Wage Stickiness

(a) Long-Term Contracts, Rational Expectations, and the Optimal Money Supply Rule (Stanley Fischer)

(b) Staggered Wage Setting in a Macro Model (John B. Taylor)

Practice Assignment II [Solution]

(E) Business Cycles

(i) Business Cycle Facts (References: (1) Class Notes on Business Cycle by Christian Zimmermann , (2)
Economic Growth and Business Cycles, by Thomas F. Cooley and Edward C. Prescott, in Thomas F.
Cooley edited, Frontiers of Business Cycle Research, Chapter-1. )

Journal Article(s): Business Cycle Facts

(a) Time to Build and Aggregate Fluctuations (Finn E. Kydland and Edward C. Prescott) - (The article
that started it all.)

(b) Indivisible Labor and the Business Cycle (Gary D. Hansen, Journal of Monetary Economics, 1985,
vol. 16, 309-327. (In Reserve Section of the Library))

(c) Macroeconomic Fluctuations in Developing Countries: Some Stylized Facts (Pierr-Richard Agénor,
C. John McDermott and Eswar S. Prasad)

(ii) Learning to Solve Dynamic Stochastic General Equilibrium Model: An Introduction Using DYNARE
(To be covered by Professor Nicola Viegi)
Contact Details:
Room 2-04, Tukkiewerf Building, Department of Economics,
University of Pretoria,
Pretoria 0002, South Africa.
Tel: +27 12 420 3460, E-mail: Rangan dot Gupta () up () ac () za.