Syllabus

ECON 309 - 01: MACROECONOMICS I
Fall 2005

Prof. Steven R. Cunningham
Mondays and Wednesdays, 10:30 - 11:45 AM
Classroom: 200 Whetton Building

Office hours: Tuesdays and Thursdays, 9:00 - 11:00 AM
Office: 418 Monteith Building
Tel.: 486-3550

E-Mail: Steven.R.Cunningham@uconn.edu

Course Summary

The course is a survey of modern macroeconomic theory and policy, its historical foundations and development, and current debates. The methods, models, and insights of the various competing schools are compared and contrasted. Focuses primarily on short-run, static macroeconomic analysis of closed economies, with some applications to forecasting. Core requirement for the M.A. degree in Economics.

Texts and Readings

A suggested textbook for the course is:

• Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall.

The book is not required. This is an excellent undergraduate level treatment of the same topics that we'll treat at a more advanced level. Students who need or want a textbook that will help them fill in gaps in their backgrounds should find this book very useful. There are other excellent textbooks at the same level which you may want to use for the same purposes. 

Students looking for guidance in formatting term papers, M.A. papers, Theses, and Dissertations should consult:

•  Kate Turabian's A Manual for Writers of Term Papers, Theses, and Dissertations, 5th edition, Chicago: University of Chicago Press, 1987. (A later edition may be available.)
  

Term Paper (Literature Review)

All students are required to write a publication-length literature review. The paper will be 20-30 pages in length, of quality and substance suitable for publication. Provide a thorough literature review of a research topic in macroeconomics. To receive an "A" or a "B", the paper must analyze and synthesize the material, sorting it out, recognizing similarities and contrasts. The literature must be organized by commonalities other than time. (I will explain this more in class.) Depending on the topic, you will have 20-100 citations.

All papers should be typed, double-spaced, with one-inch margins and a cover sheet containing a title for the paper, the author's (student's) name, professional affiliation, the date, and a brief abstract. Pages in the body of the paper will have page numbers at the bottom of each page. Papers marred by numerous grammatical and/or spelling errors may be either downgraded or refused (graded "F"). This should be prepared as if to submit to a journal or book editor. Style instructions will be provided in class. The paper forms 20% of the final course grade. With the addition of original research, this may be extended later to an Extended M.A. Paper or Thesis.

So many articles to read! What do I focus on?

There are certain things you should learn and remember about the articles you will be asked to read in the graduate program in Economics. Often you need to learn and remember more, but this is the minimum:

• The citation - the name of the article, the author(s), the date, and the journal;
• What is the basic economic issue being addressed? In what debate is the paper engaged?
• What is the point of the paper? What is its conclusion? What is the central contribution that the paper makes to this debate? Is an important result of another researcher overturned or extended?
• From the author(s)'s name(s), affiliation(s), the journal, etc., can you determine if the author(s) have a particular bias? Is the result consistent with this bias?
• What is the basis of the arguments made? Is empirical evidence supplied? Are theoretical models used? Both?
• If the supporting arguments are empirical, what is the frequency of the data and the sample period? Are these special in some way that limits the applicability of the arguments or results? What econometric techniques are used to evaluate these data? Are these techniques reliable under the conditions given? [It is best if you can remember the specification exactly, but often a sense of how the model is laid out is enough.]
• If the supporting arguments are theoretical, what assumptions are made, and what model (another assumption) is used? Does the model or the assumptions have anything to do with the real world? [It is best if you can remember the model exactly, but any knowledge of the model structure is helpful.] How is the model solved? What role does the model structure and/or its method of solution play in producing the result? [Obviously, the answer is that these factors are always the determinants of the result, but what, specifically, in the model or its solution is pivotal in achieving the result?]

Important Dates and Grade Computation

A schedule of "deliverables" for the course is given below along with the weights used for grade computation. All examinations are made up of essay questions.

Course Organization
(Subject to Change; Still Being Updated)

Week 1: August 29 & 31, 2005 [2]
Discussion of course organization

Equilibrium: End States vs. Process
Justice and Distribution
Economics and Ideology: A Conflict of Visions

Powerpoint Slides in Acrobat Format

Optional Readings:

Nozick, Robert. "Distributive Justice," Philosophy and Public Affairs, Vol. 3, No. 1. (Autumn, 1973), pp. 45-126.

Dahrendorf, Ralf. "Liberalism," in The New Palgrave, Eatwell et al., eds. Stockton Press (1987), 183-187.

Friedman, Milton. Capitalism and Freedom. Chicago: University of Chicago Press (1962/1982), 1-36.

McKenzie, R. B. "The Primacy of the Individual," in Bound to Be Free. Hoover Institution Press (1982), 47-74.

Nutter, G. Warren. "Markets Without Property: A Grand Illusion," in Political Economy and Freedom: A Collection of Essays. Indianapolis: LibertyPress (1983), Chapter 13, 94-102.

Sowell, Thomas. A Conflict of Visions. New York: William Morrow (1987).

Week 2: September 7, 2005 [1]
Labor Day holiday on Monday, September 5--No class
Overview of Macroeconomics
The Classical/Neoclassical Vision
What is equilibrium? General equilibrium?
Powerpoint Slides in Acrobat Format

Required Readings:

Bell, Daniel. "Models and Reality in Economic Discourse," The Public Interest, Special Edition (1980), 46-80.

Hahn, Frank. "General Equilibrium Theory," The Public Interest, Special Edition (1980), 123-138.

Optional Readings:

Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall. Chapters 1-2.

Taylor, John B. "A Core of Practical Macroeconomics (in Is There a Core of Practical Macroeconomics That We Should All Believe?)," The American Economic Review, Vol. 87, No. 2 (May, 1997), pp. 233-235.

Week 3: September 12 & 14, 2005 [2]
Methodological Issues
Neoclassical Model
Firm and Household Optimization
Labor Market: Voluntary vs. Involuntary Unemployment, Unemployment from Wage Rigidity
The Classical (Real) Theory of the Interest Rate (Loanable Funds Market)
Powerpoint Slides in Acrobat Format

Required Readings:

Hausman, Daniel M. "Economic Methodology in a Nutshell," Journal of Economic Perspectives vol. 3 no. 2 (Spring 1989), 115-127.

Brems, Hans. "Reality and Neoclassical Theory," Journal of Economic Literature 15 (March 1977), 72-83.

Optional Readings:

Bordo, Michael D. "Equation of Exchange" in The New Palgrave, John Eatwell, Murray Milgate, and Peter Newman, eds. New York: W. W. Norton (1989), 151-156.

Eichner, Alfred S. and J. A. Kregel. "Reality and Neoclassical Theory: A Reply," Journal of Economic Literature 15 (March 1977), 83-84.

Friedman, Milton. "The Methodology of Positive Economics," in Essays in Positive Economics. Chicago: University of Chicago Press (1953), 3-46.

Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall. Chapter 3.

Lucas, Robert E., Jr. "Nobel Lecture: Monetary Neutrality," Journal of Political Economy vol. 104 no. 4 (1996), 661-682.

Metzler, L. "Wealth, Saving, and the Rate of Interest," Journal of Political Economy vol. 59 no. 2 (April 1951), 93-116.

Miller, M., and C. W. Upton. Macroeconomics: A Neoclassical Introduction. Univ. of Chicago Press (1974/1986).

Week 4: September 19 & 21, 2005 [2]
The Quantity Theory of Money, Money Neutrality and Dichotomy
Wicksell's Criticisms
Say's Law and Walras' Law
The Comparative Statics of the Neoclassical Model
Powerpoint Slides in Acrobat Format
Comparative Statics Powerpoint Slides in Acrobat Format

Required Readings:

Friedman, Milton. "Quantity Theory of Money" in The New Palgrave, John Eatwell, Murray Milgate, and Peter Newman, eds. New York: W. W. Norton (1989), 1-40.

McCandless, George T., Jr., and Warren E. Weber. "Some Monetary Facts," Review of the Federal Reserve Bank of Minneapolis Vol. 19 No. 3 (Summer 1995).

Optional Readings:

Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall. Chapter 4.

Patinkin, Don. Money, Interest, and Prices, 2nd edition. Cambridge: MIT Press (1965), Chapters 8-12, 15.

__________. "Neutrality of Money" in The New Palgrave, John Eatwell, Murray Milgate, and Peter Newman, eds. New York: W. W. Norton (1989), 273-287.

_________. "The Indeterminacy of Absolute Prices in Classical Economic Theory," Econometrica 17 (January 1949), 1-27.

Week 5: September 26 - 28, 2005 [2]
The Keynesian Vision
The Elements of Keynes' Model
The General Theory: The Labor Market, Production, Aggregate Supply
The General Theory: Money, Interest, and Investment
The Aggregate Expenditure Model
First Lecture Powerpoint Slides in Acrobat Format
Second Lecture Powerpoint Slides in Acrobat Format

Required Readings:

Keynes, J. M. "The General Theory of Employment," Quarterly Journal of Economics LI (Feb. 1937), 209-223.

Kohn, Meir. "Monetary Analysis, the Equilibrium Method, and Keynes' 'General Theory'," Journal of Political Economy 94 (February 1986), 1191-1224.

Leontief, Wassily. "The Fundamental Assumption of Mr. Keynes' Monetary Theory of Unemployment," Quarterly Journal of Economics vol. 50 No. 4 (August 1936), 192-197.

Optional Readings:

Crotty, J. R. "On Keynes and Capital Flight," Journal of Economic Literature XXI (March 1983), 59-65.

Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall. Chapter 6.

Hansen, Alvin H. A Guide to Keynes. New York: McGraw-Hill (1953).

Keynes, John Maynard. A Treatise on Money. London: MacMillan (1930), Chapters 16-19, 27-29, 37.

__________. The General Theory of Employment, Interest, and Money. New York: Harvest/HBJ (1936).

Krugman, P. "Differences in Income Elasticities and Trends in Real Exchange Rates," American Economic Review (May 1989).

Leijonhufvud, Axel. On Keynesian Economics and the Economics of Keynes. Oxford University Press (1968).

Meltzer, Allan H. "Keynes's General Theory: A Different Perspective," Journal of Economic Literature 19 (March 1981), 34-64.

__________. "Interpreting Keynes's General Theory: A Different Perspective," Journal of Economic Literature 21 (March 1983), 66-78.

Patinkin, Don. "On different interpretations of the General Theory," Journal of Monetary Economics 26 (October 1990), 205-244.

Pigou, A. C. Keynes' 'General Theory': A Retrospective View. London: MacMillan & Co., Ltd. (1950).

Robertson, D. H. "Some Notes on Mr. Keynes' General Theory of Employment," Quarterly Journal of Economics vol. 50 no. 4 (August 1936), 168-191.

Sargent, T. J. Macroeconomic Theory, 2nd edition. Orlando: Academic Press (1987), Chapters I and IV.

Solomon, Robert. The International Monetary System: 1945-1976. New York: Harper & Row (1977).

Taussig, F. W. "Employment and the National Dividend," Quarterly Journal of Economics vol. 50 no. 4 (August 1936), 198-203.

Viner, J. "Mr. Keynes on the Causes of Unemployment," Quarterly Journal of Economics vol. 50, No. 4 (August 1936), 147-167.

Week 6: October 2 & 5, 2005 [2]
More Keynes: Neoclassical Synthesis and IS-LM
Explaining Unemployment: Traps and Stickiness
Relationship to Wicksellian Theory
The Keynesian Dichotomy: Interest Rates and the  MEC
Policy Implications of the modern Keynesian Theory
Problems in Keynesian Paradise - Real Balance Effects
Powerpoint Slides in Acrobat Format #1
Powerpoint Slides in Acrobat Format #2


Required Readings:

Darity, William A., Jr., and Allin F. Cottrell. "Meade's General Theory Model: A Geometric Reprise," Journal of Money, Credit, and Banking 19 (May 1987), 210-221.

Hicks, John. "Mr Keynes and the Classics: A Suggested Interpretation," Econometrica 5 (April 1937), 147-59.

Optional Readings:

Asimakopulos, A. Keynes's General Theory and Accumulation. Cambridge: Cambridge Univ. Press (1991).

Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall. Chapters 7-8.

Froyen, Richard T. "The Aggregative Structure of Keynes' General Theory," Quarterly Journal of Economics 90 (August 1976), 369-87.

Hicks, John. A Contribution to the Theory of the Trade Cycle. Clarendon Press (1950). Esp. chapters 5-10.

Meade, J. E. "A Simplified Model of Mr. Keynes' System," Review of Economic Studies 4 (Feb. 1937), 98-107.

Week 7: October 10 & 12, 2005 [2]
AD & AS; Explaining Inflation
Comparative Statics of IS-LM
Powerpoint Slides in Acrobat Format
Powerpoint Slides for Comparative Statics of the Keynesian Model in Acrobat

Optional Readings:

Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall. Chapters 9.

Week 8: October 17 & 19, 2005 [2]
Problems in Keynesian Paradise - The Fall of the Keynesian Consumption Theory
Short-Run vs. Long-Run Consumption [Smithies (1945)]
Habit Persistence Theories [Duesenberry (1948), Brown (1952)]
The Life Cycle and Permanent Income Theories [Friedman & Modigliani]
Investment and Accelerators
Powerpoint Slides in Acrobat Format
Mid-Term Exam on Monday, October 17, 2005

Required Readings:

Ando, A., and F. Modigliani. "The 'Life Cycle' Hypothesis of Saving: Aggregate Implications and Tests," American Economic Review 53 (March 1963), 55-84.

Ludvigson, Sydney, and Charles Steindel. "How Important is the Stock Market Effect on Consumption?" Economic Policy Review of the Federal Reserve Bank of New York vol. 5 no. 2 (July 1999), 29-52.

Optional Readings:

Ball, R. J., and P. S. Drake. "The Relationship Between Aggregate Consumption and Wealth," International Economic Review 5 (January 1964).

Branson, W. H., and A. K. Klevorick. "Money Illusion and the Aggregate Consumption Function," American Economic Review 59 (December 1969).

Brown, T. M. "Habit Persistence and Lags in Consumer Behavior," Econometrica 20 (July 1952).

Deaton, A. (1986) "Life-Cycle Models of Consumption: Is the Evidence Consistent with the Theory?" Working Paper 1910, National Bureau of Economic Research.

Duesenberry, James S. "Income-Consumption Relations and Their Implications," in Income, Employment, and Public Policy: Essays in Honor of Alvin H. Hansen. New York: W. W. Norton & Company (1948).

Ferber, R. "Consumer Economics: A Survey," Journal of Economic Literature 11 (December 1973).

Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall. Chapter 21.

Hamburger, W. "Determinants of Aggregate Consumption," Review of Economic Studies 22 (October 1954).

Miron, J. A. "Seasonal Fluctuations and the Life Cycle-Permanent Income Model of Consumption," Journal of Political Economy 94 (December 1986), 1258-79.

Modigliani, Franco. "Life Cycle, Individual Thrift and the Wealth of Nations," American Economic Review 76 (June 1986), 297-313.

Smithies, Arthur. "Forecasting Postwar Demand: I," Econometrica 13 (January 1945).

Thomas, J.J. "The Early Econometric History of the Consumption Function (in Applied Studies)," Oxford Economic Papers, Vol. 41, No. 1 (Jan., 1989), pp. 131-149.

Week 9: October 24 & 26, 2005 [2]
Monetary Policy and Policy Rules
Neoclassicalism Reincarnate I-Monetarism
The Monetarist Vision: Overview of Monetarism
The Relationship of the Permanent Income Hypothesis to Monetarist Theory
Friedman's Restatement of the Quantity Theory
Empirical Evidence and Critiques of Monetarism
Monetarist Policy Recommendations
Powerpoint Slides in Acrobat Format
Powerpoint Slides in Acrobat Format

Required Readings:

Kozicki, Sharon. "How Useful Are Taylor Rules for Monetary Policy?" Federal Reserve Bank of Kansas City Economic Review vol. 84 no. 2 (Second Quarter 1999), 5-33.

Laidler, D. "Monetarism: An Interpretation and An Assessment," Economic Journal 91 (March 1981), 1-28.

Poole, William. "Monetary Policy Rules?" Review of the Federal Reserve Bank of St. Louis vol. 81 no. 2 (March/April 1999), 3-12.

Tobin, James. "The Monetarist Counter-Revolution Today-An Appraisal," Economic Journal 91 (March 1981), 29-42.

Optional Readings:

Akerlof, G. "Irving Fisher on His Head: The Consequences of Constant Threshold-Target Monitoring of Money Holdings," Quarterly Journal of Economics 93 (1979), 169-187.

Carlstrom, Charles T., and Edward N. Gamber. "Why We Don't Know Whether Money Causes Output," Economic Review of the Federal Reserve Bank of Cleveland 25 (1989 Quarter 3), 27-39.

Cunningham, Steven R. "The Relationship of Opportunity Costs to the Interest Elasticity of Money Demand," Eastern Economic Journal (Summer 1993), 309-319.

Darby, Michael R., William Poole, David E. Lindsey, Milton Friedman, and Michael J. Bazdarich. "Recent Behavior of the Velocity of Money," Contemporary Policy Issues 5 (January 1987), 1-33.

Friedman, Milton. "The Quantity Theory of Money--A Restatement," in Milton Friedman, ed., Studies in the Quantity Theory of Money. Chicago: University of Chicago Press (1956).

Friedman, Milton. "The Role of Monetary Policy," American Economic Review 58 (March 1968), 1-17.

Friedman, Milton, and Anna J. Schwartz. A Monetary History of the United States, 1867-1960. Princeton: Princeton University Press for NBER (1963).

__________ and __________. Monetary Trends in the United States and the United Kingdom. Chicago: University of Chicago Press for NBER (1982).

Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall. Chapters 17, 18 and 10.

Isaac, Alan G. "Is there a natural rate?" Journal of Post Keynesian Economics 15 (Summer 1993), 453-470.

Litterman, R. B., and L. Weiss. "Money, Real Interest Rates, and Output: A Reinterpretation of Postwar U. S. Data," Econometrica 53 (January 1985), 129-156.

Macesich, George. The Politics of Monetarism. Rowman and Allanheld (1984), Chapters 1-3.

Mayer, Thomas. "The Twilight of the Monetarist Debate," Working Paper Series #64, Research Program in Applied Macroeconomics and Macro Policy, Institute of Governmental Affairs, University of California, Davis (September 1989).

Mayer, Thomas. "Modigliani on Monetarism: A Rejoinder," Contemporary Policy Issues 6 (Oct. 1988), 19-24.

Modigliani, Franco. "The Monetarist Controversy Revisited," Contemporary Policy Issues 6 (Oct. 1988), 3-18.

Modigliani, Franco. "The Monetarist Controversy, or Should We Foresake Stabilization Policies?" American Economic Review 67 (March 1977).

Sims, C. A. "Money, Income and Causality," American Economic Review (September 1972).

Tobin, James. "Money and Income: Post Hoc Ergo Propter Hoc?" Quarterly Journal of Economics 84 (1970), 301-317.

Week 10: October 31 & November 2, 2005 [2]
More Problems in Keynesian Paradise -The Missing Equation
Natural Rate Theory, NAIRU, and the Phillips Curve
Adaptive and Rational Expectations
Consumption: PIH/LCH Under Rational Expectations
Powerpoint Slides in Acrobat Format--Phillips Curve
Powerpoint Slides in Acrobat Format--REH & Hall

Required Readings:

Flavin, Marjorie. "The Adjustment of Consumption to Changing Expectations About Future Income," The Journal of Political Economy, Vol. 89, No. 5. (Oct., 1981), pp. 974-1009.

Galbraith, James K. "Time to Ditch the NAIRU" The Journal of Economic Perspectives, Vol. 11, No. 1 (Winter, 1997), pp. 93-108.

Hall, Robert E. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," The Journal of Political Economy, Vol. 86, No. 6. (Dec., 1978), pp. 971-987.

Maddock, R., and M. Carter. "A Child's Guide to Rational Expectations," Journal of Economic Literature 20 (March 1982).

Optional Readings:

Figlewski, S., and P. Wachtel. "The Formation of Inflationary Expectations," Review of Economics and Statistics 63 (February 1981).

Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall. Chapter 11.

Ludvigson, Sydney, and Charles Steindel. "How Important is the Stock Market Effect on Consumption?" Economic Policy Review of the Federal Reserve Bank of New York vol. 5 no. 2 (July 1999), 29-52.

Muth, John. "Rational Expectations and the Theory of Price Movements," Econometrica vol. 29 (July 1961).

Phelps, E. S. "Money-Wage Dynamics and Labor Market Equilibrium," Journal of Political Economy vol 76 (July/August 1968).

Phillips, A. W. "The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957," Economica 25 (November 1958).

Lipsey, R. G. "The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957: A Further Analysis," Economica 27 (February 1960).

Roberts, Paul Craig. "The Breakdown of the Keynesian Model," The Public Interest 52 (Summer 1978), 20-33.

Samuelson, P. A., and R. M. Solow. "Analytical Aspects of Anti-Inflation Policy," American Economic Review 50 (May 1960).

Santomero, Anthony, and John Seater. "The Inflation-Unemployment Trade-off: A Critique of the Literature," Journal of Economic Literature 16 (June 1978), 499-544.

Week 11: November 7 & 9, 2005 [2]
Neoclassicalism Reincarnate II-The Supply-Side Economics
Growth vs. Redistribution
The Laffer Curve
A Critique of Supply-Side Economics
Powerpoint Slides in Acrobat Format

Neoclassicalism Reincarnate III-New Classical Economics
The Phillips' Curve and the Policy Ineffectiveness Proposition
The Lucas Critique
Time Inconsistency
Powerpoint Slides in Acrobat Format

Required Readings:

Bartlett, Bruce. "The Supply-Side Economics: 'Voodoo Economics' or Lasting Contribution?", Laffer Associates, November 2003.

Buiter, W. H. "The Macroeconomics of Dr. Pangloss: A Critical Survey of the New Classical Economics," Economic Journal (March 1980).

Feldstein, M. "Supply-Side Economics: Old Truths and New Claims," American Economic Review 76 (May 1986), 26-30.

Hoover, K. D. "Two Types of Monetarism," Journal of Economic Literature 22 (March 1984), 58-76.

Klein, Lawrence. "The Supply Side," American Economic Review, Vol. 68, No. 1 (March 1978), 1-7.

Sargent, T. J., and N. Wallace. " 'Rational' Expectations, the Optimal Monetary Instrument, and the Optimal Money Supply Rule," Journal of Political Economy 83 (April 1975), 241-254.

Taylor, John B. "Monetary Policy and the Stability of Macroeconomic Relationships," Journal of Applied Econometrics, Vol. 4, Supplement: Special Issue on Topics in Applied Econometrics. (Dec., 1989), pp. S161-S178.

Optional Readings:

Burgess, R., and N. Stern. "Taxation and Development," Journal of Economic Literature 31 (June 1993), 762-830.

Chari, V. V. "Nobel Laureate Robert E. Lucas, Jr.: Architect of Modern Macroeconomics," Federal Reserve Bank of Minneapolis Quarterly Review (Spring 1999), 2-12.

Christiano, Lawrence J., and Christopher Gust. "The expectations trap hypothesis," Economic Perspectives of the Federal Reserve Bank of Chicago (Second Quarter, 2000), 21-39.

Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall. Chapters 20 and 12.

King, R., and C. Plosser. "Money, Credit and Prices in a Real Business Cycle," American Economic Review (June 1984), 363-380.

King, R. G., and B. Trehan. "Money: Endogeneity and Neutrality," Journal of Monetary Economics (Nov. 1984), 385-394.

Kydland, F. E., and E. C. Prescott. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy (June 1977).

Lucas, R. E. "Real Wages, Employment, and Inflation," Journal of Political Economy 77 (Sept./October 1969).

__________. "Some International Evidence on Output-Inflation Tradeoffs," American Economic Review 63 (June 1973), 326-334.

__________. "Econometric Policy Evaluation: A Critique," in The Phillips Curve and Labor Markets, Journal of Monetary Economics Supplement, K. Brunner and A. Meltzer, eds. (1976).

Lucas, R. E., and L. A. Rapping. "Price Expectations and the Phillips Curve," American Economic Review 59 (June 1969).

Marquis, Milton H., and Steven R. Cunningham. "Is There a Role for Commodity Prices in the Design of Monetary Policy? Some Empirical Evidence," Southern Economic Journal 57 (October 1990), 394-412.

Mishkin, F. S. "Does Anticipated Money Matter? An Econometric Investigation," Journal of Political Economy (Feb. 1982).

Sargent, T.J., and N. Wallace. "Rational Expectations and the Theory of Economic Policy," Journal of Monetary Economics 2, 169-183.

von Furstenberg, George M., and R. Jeffrey Green. "Supply-side Modeling from Bits and Pieces," American Economic Review vol. 76 no. 2 (May 1986), 37-42.  

Weintraub, Sidney. "Keynesian Demand Serendipity in Supply-Side Economics," Journal of Post Keynesian Economics 4 (Winter 1981-1982), 181-191.

Week 12: November 14 & 16, 2005 [2]
The New Classicals and the Anticipated/Unanticipated Money Dichotomy
The Real Business Cycle Model/Time Series Approach to Macroeconomics
Time Series Approach to Macroeconomics
New Classical Powerpoint Slides in Acrobat Format
RBC Powerpoint Slides in Acrobat Format

Required Readings:

Plosser, C. J. "Understanding Real Business Cycles," Journal of Economic Perspectives 3 (Summer '89), 51-78.

Stadler, George W. "Real Business Cycles," Journal of Economic Literature 32 (December 1994), 1750-1783.

Optional Readings:

Barro, Robert J. "Unanticipated Money, Output, and the Price Level in the United States," Journal of Political Economy (August 1978).

King, R., and C. Plosser. "Money, Credit and Prices in a Real Business Cycle," American Economic Review (June 1984), 363-380.

King, R. G., and B. Trehan. "Money: Endogeneity and Neutrality," Journal of Monetary Economics (Nov. 1984), 385-394.

Mishkin, F. S. "Does Anticipated Money Matter? An Econometric Investigation," Journal of Political Economy (Feb. 1982).

Week 13: November 21 - 23, 2005
Thanksgiving Recess 

Thanksgiving Holiday Break. No Class this week!

Week 14: November 28 & 30, 2005 [2]
The Phoenix Rises from the Ashes-Keynesian Economics Resurrected
New Keynesian & Structuralist Economics
Reconstructing the Microfoundations of Macroeconomics
New Keynesian Powerpoint Slides in Acrobat Format

Required Readings:

Dittmar, Robert, and William T. Gavin. "What Do New Keynesian Phillips Curves Imply for Price-Level Targeting?" Review of the Federal Reserve Bank of St. Louis vol. 82 no. 2 (March/April 2000), 21-27.

Gordon, R. J. "What is New-Keynesian Economics?" Journal of Economic Literature 28 (Sept. 1990), 1115-71.

Greenwald, Bruce, and Joseph E. Stiglitz. "New and Old Keynesians," Journal of Economic Perspectives 7 (Winter 1993), 23-44.

Romer, David. "The New Keynesian Synthesis," Journal of Economic Perspectives 7 (Winter 1993), 5-22.

Optional Readings:

Akerlof, G., and J. Yellin. "Rational Models of Irrational Behavior," American Economic Review 77 (May 1987), 137-142.

Ball, Laurence N., and Gregory Mankiw, "The New Keynesian Economics and the Output-Inflation Trade-Off," Brookings Papers on Economic Activity, Vol. 1988, No. 1. (1988), pp. 1-65.

Clower, Robert W. "The Keynesian Counter-Revolution: A Theoretical Appraisal," in The Theory of Interest Rates, F. H. Hahn and F. Brechling, eds., MacMillan. Reprinted with corrections in R. W. Clower, ed., Monetary Theory. New York: Penquin Books (1965), 270-97.

Colander, D. "New Keynesian Economics in Perspective," Eastern Economic Journal 18 (Fall 1992), 437-48.

Davidson, Paul. "Would Keynes Be a New Keynesian?" Eastern Economic Journal 18 (Fall 1992), 449-464.

Eichner, Alfred S., and J. A. Kregel. "An Essay on Post-Keynesian Theory: A New Paradigm in Economics," Journal of Economic Literature 13 (December 1975), 1293-1314.

Fischer, Stanley. "Long-Term Contracts, Rational Expectations, and the Optimal Money Supply Rule," Journal of Political Economy 85 (February 1977), 191-205.

Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall. Chapter 13.

Greenwald, Bruce C., and Joseph E. Stiglitz. "Examining Alternative Macroeconomic Theories," Brookings Papers on Economic Activity, Vol. 1988, No. 1 (1988), pp. 207-260.

Howitt, P. "Activist Monetary Policy Under Rational Expectations," Journal of Political Economy 89 (April 1981).

Katz, Lawrence. "Some Recent Developments in Labor Economics and Their Implications for Macroeconomics," Journal of Money, Credit, and Banking 20 (August 1988, Part 2), 507-22.

King, Robert G. "Will the New Keynesian Macroeconomics Resurrect the IS-LM Model?" Journal of Economic Perspectives 7 (Winter 1993), 67-82.

Leijonhufvud, Axel. Information and Coordination: Essays in Macroeconomic Theory. Oxford: Oxford University Press (1981), chapters 1-6, 3-130.

Muellbauer, J., and R. Portes. "Macroeconomic Models with Quantity Rationing," Economic Journal 88 (1978), 788-821.

Phelps, Edmund S. "A Review of Unemployment," Journal of Economic Literature 30 (Sept. 1992), 1476-90.

Phelps, E. S., and J. B. Taylor. "Stabilizing Powers of Monetary Policy under Rational Expectations," Journal of Political Economy 85 (February 1977), 163-190.

Rosen, S. "Implicit Contracts: A Survey," Journal of Economic Literature (September 1985), 1144-1175.

Rotemberg, Julio. "The New Keynesian Microfoundations," in Stanley Fischer, ed., NBER Macroeconomics Annual. Cambridge: MIT Press (1987).

Taylor, John. B. "Staggered Wage Setting in a Macro Model," American Economic Review vol. 69 no. 2 (May 1979), 108-113.

Tobin, James. "Price Flexibility and Output Stability: An Old Keynesian View," Journal of Economic Perspectives 7 (Winter 1993), 45-65.

Yellen, J. L. "Efficiency Wage Models of Unemployment," American Economic Review (May 1984), 200-20

Week 15: December 5 & 7, 2005 [2]
Fiscal Policy
National (Federal) Budget Deficits and National Debt: Do They Really Matter?
Is Demand Management Policy Still Viable?
Powerpoint Slides in Acrobat Format #1
Powerpoint Slides in Acrobat Format #2

Required Readings:

Barro, Robert J. "The Ricardian Approach to Budget Deficits," Journal of Economic Perspectives 3 (Spring 1989), 37-54.

Cunningham, Steven R., and Jon Vilasuso. "Is Keynesian Demand Management Policy Still Viable?" Journal of Post Keynesian Economics 17, (Winter 1994-1995), 187-210.

Fischer, Stanley. "Recent Developments in Macroeconomics," The Economic Journal, Vol. 98, No. 391 (Jun., 1988), pp. 294-339.

Optional Readings:

Barth, J. R., G. Iden, and F. S. Russek. "Do Federal Deficits Really Matter?," Contemporary Policy Issues 3 (Fall 1984-1985).

Barro, Robert J. "Are Government Bonds Net Wealth?" Journal of Political Economy 82 (Nov./Dec. 1979), 1095-1117.

Bhattacharya, Joydeep, and Joseph H. Haslag. "Monetary Policy Arithmetic: Some Recent Contributions," Economic and Financial Review of the Federal Reserve Bank of Dallas, Quarter 3, 1999, 26-36.

Bernheim, B. Douglas. "A Neoclassical Perspective on Budget Deficits," Journal of Economic Perspectives 3 (Spring 1989), 55-72.

Eisner, Robert. "Budget Deficits: Rhetoric and Reality," Journal of Economic Perspectives 3 (Spring 1989), 73-93.

Evans, P. "Do Large Deficits Produce High Interest Rates?" American Economic Review 75 (March 1985), 68-87.

Feldstein, Martin. "Government Deficits and Aggregate Demand," Journal of Monetary Economics (January 1982).

Feldstein, Martin, and Otto Eckstein. "The Fundamental Determinants of the Interest Rate," Review of Economics and Statistics 52 (November 1970), 363-375.

Friedman, B. M. "Crowding Out or Crowding In? Economic Consequences of Financing Government Deficits," Brookings Papers on Economic Activity 3 (1978).

Froyen, Richard T. Macroeconomics: Theories & Policies, 8th Edition. Prentice Hall. Chapter 19.

Kesslerm, Denis, and Andre Masson. "Bequest and Wealth Accumulation: Are Some Pieces of the Puzzle Missing?" Journal of Economic Perspectives 3 (Summer 1989), 141-52.

McCallum, B. "Are Bond-Financed Deficits Inflationary? A Ricardian Analysis," Journal of Political Economy 92 (February 1984), 123-135.

Miller, Stephen M., and Frank S. Russek. "Are the Twin Deficits Really Related?" Contemporary Policy Issues 7 (October 1989), 91-115.

__________ and __________. "Are the Twin Deficits Really Related? Further Comments," Contemporary Policy Issues (January 1992), 112-113.

__________ and __________. "The Temporal Causality Between Fiscal Deficits and Interest Rates," Contemporary Policy Issues 9 (July 1991), 12-23.

Placone, D., H. Ulbrich, and M. Wallace. "The Crowding Out Debate: Its Over When It's Over and It Isn't Over Yet," Journal of Post Keynesian Economics 8 (Fall 1985).

Poole, William, Robert Eisner, Allen L. Sinai, and Michael R. Darby. "Challenges of Macro Policy in the Open U.S. Economy," Contemporary Policy Issues 7 (January 1989), 1-34.

Seater, John J. "Ricardian Equivalence," Journal of Economic Literature 31 (March 1993), 142-90.

Week 16: December 12-17, 2005 

Final Exam Week