Syllabus for ECO 441 / Waters
Advanced Macroeconomics
Spring, 2013
Instructor: George Waters
Office: Stevenson 426J
Email address: gawater@ilstu.edu
Office Hours: MW 3:30 – 5:00
or by appointment
Phone: 8-7301
Overview and Objectives:
This class covers core issues in macroeconomics at an advanced level. It may serve as a
basis for further study and research in macroeconomics or may provide breadth to the background
of students who intend to do work in other areas of economics.
The class will cover long term growth, short term fluctuations and policy issues. The
discipline of macroeconomics has many different approaches that both complement and compete
with each other. The overall goal is to gain a broad and critical understanding of models that can
help to analyze specific policy issues.
Another specific objective of the class is to develop an analytic (algebra and calculus
based) approach to macroeconomic modeling in addition to using graphs. Another goal is to
show the relationship between economic theory and empirical applications. Students should have
taken intermediate macroeconomics, calculus I-III and statistics or be familiar with that material.
Texts and Readings:
There is no perfect textbook for this class. Most graduate level books are very
mathematically sophisticated while intermediate level books try to do everything with simple
graphs. For our class we will use
Romer, David, Advanced Macroeconomics, McGraw-Hill,
which is very well written but is relatively advanced. The class lectures will often be
modifications of the material in this text. I’ll use the 3rd edition, which is on reserve in the
library, but you could use and earlier edition if you check for changes in the problems. The will
be additional readings from academic journal articles, mostly focusing on empirical results
related to the class material.
Another graduate level book is on reserve at the library to supplement the class. The
material is not required but may be quite helpful.
Heijdra, Ben and Frederick van der Ploeg, Foundations of Modern Macroeconomics
Romer is the standard text for many Ph.D. level courses. Heijdra and van der Ploeg is rather
eclectric in its choices of topics but is well written. Blanchard and Fisher is a classic graduate
textbook but is somewhat out of date in its focus on money. In addition, there are many other
intermediate level books (DeLong, Mankiw, Blanchard, Abel and Bernanke, Barro) that some
students might find helpful.
The material in this class is quite relevant to current economic issues, and students should
use a source such as the Economist, the Wall Street Journal or CNBC.com to keep up with day-to
day events.
Grading:
Final exam: 25%
Midterms (2): 20% each
Homework: 20% total
Seminar Presentation: 15%
Seminar:
The seminar will give students a chance to investigate one of his or her particular
interests and the empirical approaches to macroeconomics issues. Each student will review
summarize and present a paper to the class. The presentations will be given toward the end of
class and will be approximately 25 minutes in length.
Your first task is to find three possible articles for your presentation. This task is more
difficult than it might seem. The papers should have both theoretical section, meaning a
mathematical model, and an empirical section. You should look for articles on topics that interest
you and are at a level you will be able to understand and explain.
Copies of these are due by Friday, March 8 and may be submitted electronically. Any
academic, economics journal may be used as a source. An excellent resource is the journals online at www.JSTOR.org. The Journal of Economic Perspectives is another good place to start. It
has relatively non-technical surveys that reference other important papers in a particular area.
Topics for Advanced Macroeconomics:
I. Introduction
Heijdra and van der Ploeg: Chapter 1
II. Flexible vs. Sticky-Price (Keynesian) Macro
Romer: Sections 5.1 and 5.4 (3rd edition), sections 6.2 and 6.4 (4th edition)
Fuhrer, J. [1995], “The Phillips Curve is Alive and Well”, New England Economic
Review
Heijdra and van der Ploeg: Chapter 1
III. Inflation, Unemployment and Monetary Policy
Romer, Chapter 10 section 10.1, 10.6-10.7
Judd, J. and G. Rudebusch [1998], “Taylor’s Rule and the Fed: 1970-1997”, Federal
Reserve Bank of San Francisco Economic Review
Midterm 1
IV. Consumption & Government Budget
Romer: Chapter 7.1-7.4, Chapter 11.1-11.3
Campbell, J. and N. Mankiw [1989], “Consumption, Income and Interest Rates:
Reinterpreting the Time Series Evidence”, NBER Macroeconomics Annual
V. DSGE Modeling and the Liquidity Trap
Bullard, J [2009], “Seven Faces of the Peri”
VI. Long-Run Growth
Romer: Chapter 1, sections 1.1-1.7
Mankiw, N., Romer, D. and D. Weil [1992], “A Contribution to the Empirics of
Economic Growth”, QJE 107(2)
Heijdra and van der Ploeg: Chapter 14
Midterm 2
VII. Real Business Cycles, sections 4.1, 4.2, 4.8
Romer: Chapter 4
VIII. Financial Fragility