Spring 2015
Room 450 B&E
E-mail: snowden@uncg.edu
Professor Ken Snowden
Office: TTh 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 2015
ECO 646 - Syllabus
Page 2
Course Grades: Four Activities
1) 5 Problem Sets (30 total points—10% of course grade).
You may work together on these as they will be graded only 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 Papers and presentations. (50 total points— 16% of course grade).
You will complete two short papers. The first (worth 30 points) is due on February 17 and
will be 4-5 double-spaced pages summarizing and reacting to an assigned journal article.
You will present these papers in class on February 26. The second (worth 20 points) will be
2-3 double-spaced pages and is due on April 23 and will be presented in class at that time.
You will work independently on these and receive instructions for the first 1/26/15.
3) Group presentation. (20 total points— 7% of course grade). On March 17 you will be
divided into two groups to present one of the following papers to help us to understand some
important facts about business cycles and the Great Recession of 2008:
Kevin Kliesen, “A Guide to Tracking the U.S. Economy,” Federal Reserve Bank of St.
Louis Review First Quarter 2014.
Troy Davig and Michael Redmond, “Accounting for Changes in the U.S. Budget
Deficit,” Economic Review of the Kansas City Federal Reserve, forthcoming 2015.
3) Two Examinations (200 points—100 points each 67% of course grade)
Wednesday 2/24: 2 PM – 4 PM
Thursday 4/30: 3:30-5:30 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 understand
the material and prepare for class and exams, problem sets will also include study questions.
Some study questions will help you through Required Supplementary Readings for the course.
All are available on the course blackboard site, and most through Jackson Library.
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.
David Romer (2nd ed.), “Textbook Keyensian Model of Aggregate Demand,” copy.
Christina D. Romer. 1999. “Changes in Business Cycles: Evidence and Explanations.” Journal of
Economic Perspectives, Vol. 13:2, pp. 23-44.
Keith Sill, “Inflation Dynamics and the New Keynesian Phillips Curve,” Business Review,
Philadelphia Federal Reserve Bank, Q1 2011.
A. Sbordone, A.Tambalotti, K.Rao, and K.Walsh, “Policy Analysis Using DSGE Models: An
Introduction,” FRBNY Economic Policy Review / October 2010.
Sharon Kozinski, “How Useful Are Taylor Rules for Monetary Policy?” Economic Review Kansas
City Federal Reserve Banks, Second Quarter 1999.
Craig S. Hakkio and George A. Kahn, “Evaluating Monetary Policy at the Zero Lower Bound,”
Economic Review Kansas City Federal Reserve Banks, Second Quarter 2014.
Alan J. Auerbach and William G. Gale, “Forgotten but Not Gone: The Long-Term Fiscal Imbalance,
unpublished working paper, 2014.
ECO 646 – Course Schedule
Spring 2015
Lecture/Date
Topic
Professor Snowden
Reading / Assignment Due
I. Growth
1. (01/13)
2. (01/15)
3. (01/20)
4. (01/22)
5. (01/27)
6. (01/2)
7. (02/04)
8. (02/06)
9. (02/11)
10. (02/13)
11. (02/18)
12. (02/20)
Intro and Solow Growth Model.
Solow Basics
Savings in Solow
Analytic Results
Growth & Level Accounting, Convergence
Growth & Level Accounting, Convergence
Consumption: Permanent Income
Consumption: Permanent Income
Consumption: Euler Condition
Augmented Growth Model I
Augmented Growth Model II
Augmented Growth Model III
13. (02/25)
14. (02/27)
In-Class Exam I
(33.5%)
Paper I Presentation
1-10
10-18
18-23
23-27,
27-37, 178-83, PS1 Due 1/27
150-61, Jones&Romer (2010)
365-75
365-75, 380-4
PS2 Due 2/11
57-65, (Skim 49-57)
65-77
PS3 Due 2/20
II. Fluctuations
15. (03/03)
Cycles/RBC/Old-IS-LM
189-201, Romer 2nded IS-LM
16. (03/05)
Cycles/RBC/Old-IS-LM
189-201, Romer (1999)
(03/10-03/12) Spring Break
17. (03/17)
Cycles/RBC/Old-IS-LM
Group Presentations
18. (03/19)
21. (03/24)
AS, Nominal Rigidities & Phillips Curve
Lucas' Aggregate Supply
244-61
292-98, 302-6, PS4 Due 3/24
22. (03/26)
23. (03/31)
19. (04/02)
Lucas' Aggregate Supply
Lucas Critique
Dyanamic AS-AD
292-98, 302-6
298-301 Sill (2011)
238-44, 261-7
20. (04/07)
Dyanamic AS-AD
Spordone et al (2010)
24. (04/09)
25. (04/14)
26. (04/16)
27. (04/21)
Dynamic Inconsistency
Interest Rate Rules
Zero Lower Bound
Fiscal Policy
554-67, PS5 Due 4/07
542-53, Koziski (1999)
Hakio & Kahn (2014)
Auerbach et al (2014)
PS6 Due 4/21
28. (04/23)
Paper Presentation II
Thursday, April 30, 2015 3:30-6 PM FINAL EXAM II (33.5%) Room 456