Advanced Macroeconomic Theory II

- Problem of the social planner
- Steady-state analysis
- Transitional dynamics
2. Equilibrium
- Rental market for capital
- Equilibrium with a financial market

1. Endogenous growth in the “AK” model
- Model Equilibrium
2. Knowledge externalities and public policy: example in the Frankel-Romer model
- The Micro-economic structure of the Model
- Optimum
- Equilibrium
- Public policy to implement the optimum
3. Government expenditures and public policy: Example in the Barro model
- 1 The Micro-economic structure of the Model
- 2 Optimum
- 3 Equilibrium and example of public policy

1. A simple model with human capital
- Microeconomic structure of the model
- Optimum
- Discussion and extension
2. Application: Introducing endogenous population growth
- Microeconomic structure of the model
- A social planner problem

1. Microeconomic structure of the model of expanding product variety of Romer (1990)
2. Optimum
3. Equilibrium
4. Innovations and example of public policy

- Sargentand Ljungqvist (2000),Recursive Macroeconomic Theory,MIT Press.
- Sargent(1987), Dynamic Macroeconomic Theory, Harvard University Press.
- Stokey and Lucas (1989),Recursive Methods in Economic Dynamics, Harvard University Press.

- Adda and Cooper (2003), Dynamic Economics: Quantitative Methods and Applications, MIT Press.
- Gali (2008),Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian
Framework, Princeton University Press
- Chiang(2000),Elements of Dynamic Optimization, Waveland Press, Inc.
- Blanchard and Fischer (1989), Lectures on Macroeconomics, MIT Press.
- Dixit (2009), Optimization in Economic Theory. Second Edition, Oxford University Press.
- Obstfeld and Rogoff (1996), Foundations of International Macroeconomics, MIT Press.
- Hamilton (1994), Time Series Analysis, Princeton University Press.
- Cooley (1995), Frontiers of Business Cycle Research, Princeton University Press.
- Wickens (2008), Macroeconomic Theory: A dynamic General Equilibrium Approach, Princeton University Press.
- Walsh (2003), Monetary Theory and Policy. Second Edition, MIT Press.

Lecture notes :

Lecture notes
- Muth, J.F., “Rational Expectations and the Theory of Price Movements,” Econometrica, Vol.29, no.3 (July 1961), pages 313-335.
- Lucas, R.E.,Jr., “Econometric Policy Evaluation:A Critique,” in The Phillips Curve and Labor Markets,‘The Phillips Curve and the Labour Market’ Carnegie-- - Rochester Series in Public Policy, Vol 1, North Holland, 1976.Repreinted in R. Lucas, Studies in Business CycleThoery, MIT Press, 1981, pp. 104-130.
- Wickens, Macroeconomic Theory: A dynamic General Equilibrium Approach, Ch 15
- Sargentand Ljungqvist, Recursive Macroeconomic Theory, Ch 1

Lecture notes and Handouts distributed in class(or e-mail)
- Blanchard, O.J., and C. Kahn, “ The Solution of Linear Difference Models Under Rational Expectations,” Econometrica, 45, July 1980, 1305-1311.
- King, R.G. and M.W. Watson, “The Solution of Singular Linear Difference Models Under Rational Expectations”, International Economic Review, 1998.
- King, R.G. and M.W. Watson, “System Reduction and Solution Algorithms for Singular Linear
Difference Systems Under Rational Expectations”, 1997.
- Anderson, G.S, “Solving Linear Rational Expectations Models: A Horse Race”, Finance and Economics Discussion Series, Federal Reserve Board, 2006-26
- Klein, P. “ Using the generalized schur form to solve a multivariate linear rational expectations model”,Journal of Economic Dynamics and Control, 1999.
- Sims,C.A. “ Solving linear rational expectations models”, Seminar paper, Yale University, 1996.
- Uhlig,H. “A toolkit for analyzing nonlinear dynamic stochastic models easily”, Working paper, University of Tilburg, 1999
- Anderson, G. and G. Moore. “A linear algebraic procedure for solving linear perfect foresight models”,Economics Letters, (3), 1985.
- Buiter,W.H. “Predetermined and Non Predetermined Variables in Rational Expectation Models” NBER Technical paper No.21,1982
- Wickens, Macroeconomic Theory: A dynamic General Equilibrium Approach, Ch 15

Lecture notes Handouts distributed in class(or e-mail)
- Chiang, Elements of Dynamic Optimization, Ch1,2 and 3
- Wickens, Macroeconomic Theory: A dynamic General Equilibrium Approach, Ch 15
- Parker, A.J, “Euler Equation” NBERworking paper, December 2007
- Dixit (2009), Optimization in Economic Theory, Ch 2
- Adda and Cooper, Dynamic Economics: Quantitative Methods and Applications, Ch 3,9

Lecture notes : Handouts distributed in class(or e-mail)

- Sargentand Ljungqvist, Recursive Macroeconomic Theory, Ch2,3 and 4
- Sargent, Dynamic Macroeconomic Theory, Chapter 1
- Stokey and Lucas, Recursive Methods in Economic Dynamics, Ch 4,5,6,8,9 and 10
- Bellman, R. (1957), “Dynamic Programming,” Princeton University Press.
- Bellman, R., and S.E.Dreyfus (1962), “Applied Dynamic Programming,” Princeton University Press.
- Wickens, Macroeconomic Theory: A dynamic General Equilibrium Approach, Ch15
- Dixit, Optimization in Economic Theory, Chapter 10, 11
- Adda and Cooper, Dynamic Economics: Quantitative Methods and Applications, Ch 2,3
- Chiang, Elements of Dynamic Optimization, Ch7,8

Lecture notes :

Lecture 1 : Basic Programing
Lecture 2 : Root Finding and Monte Carlo Simulation
Lecture 3 : Solving Finite Horizon Models
Lecture 4 : Log linearization
Lecture 5 : Numerical Dynamic Programing