Teaching

47-802 MACROECONOMICS I

Announcements:

Your TA Hakki Ozdenoren will be holding office hours every week on Wednesdays from 2.30 pm to 3.30 pm at GSIA 317B.

Problem Set 1 is out (see below)! You have to turn it in beginning of class Nov. 17th. Not graded problems are for you to study, please do not turn your answers to those in. You can always come to me to discuss the solutions to those though.

Midterm date is Dec. 1st.

Coming Thursday, we will start discussing Dynamic Programming. It is a good idea to skim Chapters 1-3 of Stokey, Lucas, and Prescott until then.

Course materials:

Syllabus

First lecture

Larry Jones’s Lecture Notes:

Part 1

Part 2

Part 3 and 4

Calibrating the Growth Model

Tim Kehoe’s calibration notes

Problem Sets:

Problem Set 1 (due Nov 17)

PS 1 Solutions

Problem Set 2 (due Nov 24)

PS 2 Solutions

Problem Set 2B (Ungraded)

Problem Set 3 (due Dec 15)

PS3_solution

Exams:

Midterm

Midterm Solutions

Final

Final Solutions

What are we doing, class by class?

L1 (Oct 29) – Introduction, macro model, and (Arrow-Debreu) Competitive Equilibrium definition

L2 (Nov 3) – Some properties of CE and First Welfare Theorem

L3 (Nov 5) – Second Welfare Theorem and Equivalence of AD and Sequential Markets Competitive Equilibria

L4 (Nov 10) – Aggregation and stating the Optimal Growth Problem

L5 (Nov 12) – Dynamic Programming I: Canonical form and Principle of Optimality (SLP Theorems 4.2 – 4.5)

L6 (Nov 17) – Dynamic Programming II: Methods to solve the Functional Equation, Convergence of  value functions (SLP Theorem 4.6)

L7 (Nov 19) – Dynamic Programming III: Analytical properties of value and policy functions and the Euler Equations approach (SLP Theorems 4.7-4.11 and Theorem 4.15).

L8 (Nov 24) – Application of Dynamic Programming to One-sector growth model, Steady-state of the growth model, Balanced growth path, Recursive Competitive Equilibrium

L9 (Dec 1) – Midterm

L10 (Dec 3) – Calibrating the Growth Model, and Discussion of the following papers on growth

  1. On declining labor share: Karabarbounis and Neiman, QJE, 2014, “The Global Decline of the Labor Share”
  2. On the rise of the skill premium: Krusell et al., Ecta, 2000, “Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis”
  3. On the rise of the skill premium and Directed Technical Change: Acemoglu, ReStud, 2002, “Directed Technical Change”

L11 (Dec 8) – Fiscal Policy in the growth model

L12 (Dec 10) – Optimal Fiscal Policy in the growth model (Ramsey problem)

L13 (Dec 15) – Competitive equilibrium under uncertainty and the RBC model (Sargent and Ljungqvist Chapter 8 and 12)

L14 (Dec 17) – Final

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