Università Bocconi – PhD in Economics Academic Year 2013‐14 MACROECONOMICS II Lecturer: Professor Antonella Trigari Teaching Assistant: Alexey Gorn BASIC REFERENCES: (LS) Lars Ljungqvist and Thomas Sargent, Recursive Macroeconomic Theory. MIT Press, 2nd ed. (DK) Dirk Krueger, Macroeconomic Theory, teaching manuscript, January 2010 version. (AT) Antonella Trigari, Search Models of the Labor Market, lecture notes, September 2010 version. PRELIMINARY SYLLABUS Part I DYNAMIC STOCHASTIC GENERAL EQUILIBRIUM 1. Equilibrium with complete markets  Pareto allocation; Arrow‐Debreu complete markets; Arrow sequential markets  References: LS Chapter 8, DK chapter 2 and 6 2. Recursive competitive equilibrium  Recursivity; Bellman equation  References: LS Chapter 8, DK chapter 2 and 6 3. Basic stochastic growth model  Planning problem; Arrow‐Debreu complete markets; Arrow sequential markets; Recursive formulation; Mapping the model to the data: calibration  References: LS Chapter 12, DK Chapter 3 and 6 Part II SEARCH MODELS OF THE LABOR MARKET 1. Search theory under partial equilibrium  Mc Call’s model of intertemporal job search; Jovanovic’s matching model  Basic references: AT part I; LS Chapter 6; Rogerson, Shimer and Wright (2005)  Additional references: McCall (1970); Jovanovic (1979) 2. Equilibrium search models  Indivisible labor models of Hansen (1985) and Rogerson (1988); Island model of Lucas and Prescott (1974); Search and matching models as in Diamond (1982), Mortensen (1982), and Pissarides (1990); Search in the Real Business Cycle model  Basic references: LS Chapter 26; AT part II  Additional references: Lucas and Prescott (1974); Hansen (1985); Rogerson (1988) Part III MODELS WITH HETEROGENEOUS AGENTS 1. Introduction  Introduction to heterogeneous agents models  References: Heathcote, Storesletten, and Violante (2009) 2. Exogenously incomplete market models (Bewley models)  The standard incomplete market model  Basic reference: LS Chapter 17, DK Chapter 10  Additional references: LS Chapter 16; Huggett (1993); Aiyagari (1994); Krussell and Smith (1998) REFERENCES AIYAGARI, S. R. (1993): “Uninsured Idiosyncratic Risk and Aggregate Savings,” Quarterly Journal of Economic 109(3), pp.659‐684. HANSEN, G. D. (1985): “Indivisible Labor and the Business Cycle,” Journal of Monetary Economics 16, pp. 309‐
327. HEATHCOTE, J., K. STORESLETTEN AND G. VIOLANTE (2009). “Quantitative Macroeconomics with Heterogeneous Households,” Annual Review of Economics 1, pp. 319‐354. HUGGETT, M. (1993): “The Risk Free Rate in Heterogeneous‐Agent, Incomplete Insurance Economics,” Journal of Economic Dynamics and Control 17(5‐6), pp. 953‐969. JOVANOVIC, B. (1979): “Job Matching and the Theory of Turnover,” Journal of Political Economy 87(5), pp. 972‐990. KRUSSEL, P. AND A. SMITH (1998): “Income and Wealth Heterogeneity in the Macroeconomy,” Journal of Political Economy 105(5), pp. 867‐896. LUCAS, R. E. AND E. C. PRESCOTT (1974): “Equilibrium Search and Unemployment,” Journal of Economic Theory 7 (2), pp.188‐209. MCCALL, J. J. (1970). “Economics of Information and Job Search,” Quarterly Journal of Economics 84 (1), pp. 113‐126. MORTENSEN, D. T. (1982). “The Matching Process as a Noncooperative Bargaining Game.” In J. J. McCall (ed.), The Economics of Information and Uncertainty. Chicago: University of Chicago Press, pp. 233‐258. PISSARIDES, C. A. (1990). Equilibrium Unemployment Theory. Cambridge, U.K.: Basil Blackwell. ROGERSON, R., R. SHIMER AND R. WRIGHT (2005). “Search‐Theoretic Models of the Labor Market: A Survey,” Journal of Economic Literature. ROGERSON, R. (1988). “Indivisible Labor, Lotteries, and Equilibrium,” Journal of Monetary Economics 21, pp. 3‐16.