Economics 306 – Spring 2007
In TBA on Wednesday , at 06:10pm-08:00pm
In TBA on Wednesday , at 08:10pm-10:00pm
George Washington University
Professor Chao Wei
Office: Old Main 213
Phone: (202) 994-2374
Email: cdwei@gwu.edu
Office Hours: Wednesday 4:15 – 5:15 pm and by appointment
Teaching Assistant: Pablo Vega-Garcia
Old Main 218
Phone: 202-994-6156
Email: pvega@gwu.edu
Office Hours: Tuesdays 4:00 – 6:00 pm and by appointment
This is a second course in macroeconomics. We will cover range of topics including 1)
Introduction to dynamic programming in a deterministic, and then a stochastic environment; 2) Consumption and asset pricing; 3) Real business cycle models. Time permitting; we may be able to cover some of the following topics: Production-based asset pricing models; New-Keynesian models and their business cycle and asset pricing implications, and etc.
We will have two main sources of readings in the course. The first is lecture notes written by me, which can be downloaded from the course website. The lecture notes will be under constant revisions. You are encouraged to read the relevant journal articles or book excerpts cited in the notes for extra clarifications. The second is material from the lecture notes written by Steve Williamson. These notes are available at Steve Williamson’s website at the University of Iowa. The website is http://www.biz.uiowa.edu/faculty/swilliamson/courses/2001/notes01.pdf
The first few chapters of Williamson’s notes follow our teaching closely.
The books below may be helpful at various points in the semester, your graduate studies and your career. I do not recommend you rush out to buy these books, although at a later date you may consider purchasing one or two of them.

Romer, David, Advanced Macroeconomics. New York: McGraw-Hill. Third edition, 2006.

Ljungqvist, Lars and Thomas Sargent, Recursive Macroeconomic Theory, MIT
Press, 2004.

Lucas and Stokey with Prescott, Recursive Methods in Economic Dynamics,
Harvard University Press, 1989.

Blanchard and Fischer, Lectures on Macroeconomics, MIT, 1989.


Handbook of Macroeconomics, edited by John Taylor and Michael Woodford.
I have ordered an advanced intermediate textbook, also by Steve Williamson. This book provides a simplified version of the basic macro model including both intuitive and graphical presentations. Depending upon your background, this book can serve as the transition from undergraduate to graduate analysis.
There will be approximately 4 problem sets over the semester, a midterm exam and a final exam. Problem sets are worth 20% of your grade, the midterm is worth 30% of the grade and the comprehensive final is worth 50%. The midterm is optional. Tentative date for the midterm exam is March 7. If you choose not to take it, the final exam is worth
80% of the grade. There will be no makeup. If you miss the midterm for any reason, the final will be worth 80% of the grade.
The problem sets will not be accepted late. Studying in pairs or groups is highly encouraged. If you work on the problem sets in a group, please turn in a single copy of the answers with the names of the contributors. Each person will receive the same score.
Any student who feels s/he may need an accommodation based on the impact of a disability should contact Disability Support Services, Marvin Center 242, 202-994-8250.
The disability will be documented and I will support reasonable accommodations worked out between that office and you.
1.
Deterministic Dynamic Programming
Williamson notes Chapter 3.
Ljungqvist and Sargent (henceforth LS), Chapter 1,3
Stokey and Lucas (with Prescott), Chapter 2.1, 5
2.
Stochastic Dynamic Programming
Williamson notes Chapter 5.
Romer Chapter 4
LS Chapter 3, 6
Stokey and Lucas (with Prescott), Chapter 2.2, 2.3
3.
Consumption and Asset Pricing
Williamson notes Chapter 6.1.1
Romer Chapter 7
Blanchard and Fischer, Chapter 6, 10.1

Ljungqvist and Sargent (henceforth LS), Chapter 10.2, 16
Handbook of Macroeconomics Chapter 19
4.
Real Business Cycle Models
Campbell, 1994, “Inspecting the Mechanism: An Analytical Approach to the
Stochastic Growth Model,” Journal of Monetary Economics 33, 463-506.
Hansen, Gary and Randall Wright, “The Labor Market in Real Business Cycle
Theory”.
Burnside, Craig and Martin Eichenbaum, 1996, “Factor-Hoarding and the
Propagation of Business-Cycle Models,” the American Economic Review, Vol
86, No. 5, 1154-1174.
Rebelo, Sergio, 2005, “Real Business Cycle Models: Past, Present and Future.”
Romer, Chapter 4.
Handbook of Macroeconomics Chapter 14
5.
Production-Based Asset Pricing Models
6.
New-Keynesian Models and Their Business Cycle and Asset Pricing Implications.
Jermann, JME 1998