Spring 2014
Room 450 B&E
E-mail: snowden@uncg.edu
Professor Ken Snowden
Office: MW 3:30-4:30PM
ECONOMICS 646
Advanced Macroeconomic Theory (3 credits)
The purpose of this course is to provide a contemporary view of the state of macroeconomic
theory, and to expose students to empirical applications of that theory. Topics include economic
growth, the business cycle and macroeconomic policy. The prerequisites are undergraduate
courses in intermediate macroeconomics and ECO 619 and ECO 641.
The required text for the course is Advanced Macroeconomics (4th edition) by David Romer
which is available at the bookstore. This book has been written at a level between standard
intermediate-level texts (such as the texts by Abel & Bernanke or Mankiw that you might have
already used) and more advanced doctoral-level treatments. In style and choice of topics, the
Romer text is actually closer to the latter. Each chapter is built around explicit formal models of
the economy, although these are presented in a relatively simple and concise manner. At first,
some of the material may appear to be unfamiliar, but be patient. As you work through the text
carefully, you will find that his models speak to topics that you are familiar with. We will rely on
the Romer text throughout the course, but you will find it helpful to refer frequently to an
intermediate macroeconomics text as background.
I have chosen Romer’s book because he incorporates empirical applications of the theory
throughout the discussion. I think the approach is valuable for two reasons. First, it provides an
opportunity to reinforce the empirical methodology you have learned, or are currently learning,
in your econometrics courses. Second, I believe this approach helps the theory “come alive” and
provides a much better feel about the current state of our macroeconomic knowledge.
Modern macroeconomics is a large and diverse field which cannot be adequately surveyed in a full
semester. We will cope with the time constraint by restricting our choice of topics rather than by trying
to rush through too much material. My goal is to familiarize you with how macro is actually done
these days, and how tools are applied in some of the most central issues under debate. The hope is that
you will become comfortable enough with the Romer text so that in the future you can use it as a
starting point to examine topics that we will not have time to cover.
Course Objectives – The course is organized around two themes—economic growth and economic
fluctuations. By the end of the semester you should be able to:
 Explain the central theoretical and empirical implications of the Solow growth model.
 Explain the differences that arise when the savings decision is endogenized in the Solow model.
 Identify the determinants of variations in per capita income and per capita income growth.
 Identify the characteristics of the modern business cycle and the alternative theoretical approaches
that are used to understand these characteristics.
 Articulate the role that nominal rigidities play in determining aggregate output and employment.
 Explain the role that individual behavior and expectations play in assessing the impacts of
monetary and fiscal policy.
Spring 2013
ECO 646 - Syllabus
Page 2
Course Requirements
Your grade for the course will be based on three activities:
1) 7 Problem Sets (50 total points—16.67% of course grade).
a. You may work together on these as they will be graded for effort and completeness.
Answers sheets will be provided and it is your responsibility to correct your own work.
Late problem sets will not be accepted.
2) Short Paper. (50 total points— 16.67% of course grade).
You will complete a short paper (6-8 double-spaced pages) to be turned in on March 19,
2014. You will work independently on these. The paper will be based on two journal
articles that extend class material. Instructions for the paper will be handed out 2/11/14.
3) Two Examinations (200 points—100 points 66.66% of course grade)
Wednesday 3/6: 2 PM – 4 PM
Thursday 5/08: 12-2 PM
Additional Student Responsibilities
Students are expected to be prepared for class each day. The next page gives a detailed course
schedule of text readings and due dates for problem sets and your paper. To help you work
through your reading each problem set will also include study questions which you should work
on before starting the problem set. Finally, there are Required Supplementary Readings for the
course that are included to amplify and make current the material in the text. All are available on
the course blackboard site, and through the Journal Finder on the library web page.
Charles I. Jones and Paul M. Romer, “The New Kaldor Facts: Ideas, Institutions, Population,
and Human Capital,” American Economic Journal: Macroeconomics 2010, 2:1, 224–245.
Craig P. Aubuchon, Juan C. Conesa, and Carlos Garriga, “A Primer on Social Security
Systems and Reforms,” Federal Reserve Bank of St. Louis Review, January/February 2011,
93(1), pp. 19-35.
Christina D. Romer. 1999. “Changes in Business Cycles: Evidence and Explanations.”
Journal of Economic Perspectives, Vol. 13:2, pp. 23-44.
Gregory Mankiw, “The Macroeconomist as Scientist and Engineer,” Journal of Economic
Perspectives, Fall 2006, 20:4,29-46.
Paul Krugman, “IS LMentary “ New York Times, October 9, 2011 and “Macro During Crisis,”
March 5, 2012.
Alan J. Auerbach and William G. Gale, “ The Federal Budget Outlook: No News Is Bad
News,’ unpublished working paper, 2012.
Daniel L. Thornton, “The U.S. Deficit/Debt Problem: A Longer-Run Perspective,” Federal
Reserve Bank of St. Louis Review, November/December 2012.
ECO 646 – Course Schedule
Spring 2014
Lecture/Date
Topic
Professor Snowden
Reading / Assignment Due
I. Growth
1. (01/14)
Intro and Solow Growth Model.
1-10
2. (01/16)
Solow Basics
10-18
3. (01/21)
Savings in Solow
18-23
4. (01/23)
Analytic Results
23-27, PS1 Due 1/23
5. (01/28)
Growth & Level Accounting, Convergence 27-37, 150-61
6. (01/30)
New Growth & Social Infrastructure
Jones&Romer (2010), 162-78
7. (02/04)
Consumption: Permanent Income
365-75, PS2 Due 2/4
8. (02/06)
Consumption: Euler Condition
380-84
9. (02/11)
Augmented Growth Model I
57-65, (Skim 49-57)
Paper Assigned (Due 3/19)
10. (02/13)
Augmented Growth Model I
65-77, PS3 Due 2/13
11. (02/18 )
Augmented Growth Model II
77-88
Augmented Growth Model II
Aubocon et al (2011), 88-93
14. (02/27 )
Wrap-Up
PS4 Due 2/27
15. (03/04 )
In-Class Exam I
12-13. (02/20-02/25 )
(33.5%)
II. Fluctuations
16. (03/06-
)
Cycles/RBC/Old-IS-LM
189-201, Romer (1999)
(03/11-03/13) Spring Break
17. (
-03/18)
Cycles/RBC/Old-IS-LM
189-201, Krugman (2011/2),
Mankiw (2006)
Old IS-LM/paper discussion
Papers Due 3/19
19-20. (03/25-03/27)
Dynamic AD
238-44
21-22. (04/01-04/03)
AS, Nominal Rigidities & Phillips Curve
244-67, PS5 Due 4/3
23-24. (04/08-04/10)
Lucas' Aggregate Supply
292-306
25-26. (04/15 -04/17)
Interest Rate Rules & Dynamic
542-67, PS6 Due 4/17
18. (03/20)
Inconsistency, Delegation
27-28. (04/22- 04/24)
Budget Deficits & Fiscal Policy
584-604, Auerbach&Gale,
Thornton (both 2012)
Tuesday, May 6, 2014 12-3 PM FINAL EXAM II (33.5%) Room 456