Economics 100B - Fall 2003

Kenneth Kletzer

Professor of Economics

Department of Economics

University of California

Santa Cruz, CA 95064

Office: 461 Engineering 2

Phone: 831-459-3407 begin_of_the_skype_highlighting 831-459-3407 end_of_the_skype_highlighting begin_of_the_skype_highlighting 831-459-3407 begin_of_the_skype_highlighting 831-459-3407 end_of_the_skype_highlighting end_of_the_skype_highlighting end_of_the_skype_highlighting begin_of_the_skype_highlighting end_of_the_skype_highlighting

Fax: 831-459-5077

E-mail: kkletzer@ucsc.edu

Economics 105: Topics in Macroeconomics

Spring 2011

ANNOUNCEMENTS

For the rest of the term, I am changing my office hour from Fridays to Wednesdays because the Friday does not seem to be convenient for most students.

Office hours will be Monday 3:30-4:30 and Wednesday 2:00-3:00 (starting this week).

New Assignment – due June 2 (see below). This is a summary of the article, “Activist Fiscal Policy,” by Auerbach, Gale and Harris.

Handouts and Assignments:

Handout 1

Handout 2

Homework Assignment 1

Homework Assignment 2

Homework Assignment 3

Homework Assignment 4

Study Guide for Second Midterm

Midterms and answer keys:

Midterm 1

Sample answers for midterm 1

Lectures: Earth and Marine Sciences B214, TTh 12:00 to 1:45

Important Dates

First Midterm: Thursday, April 21, 12:00 noon

Second Midterm: Thursday, May 19, 12:00 noon

Final Exam: Monday, June 6 at 8:00am

Professor Kletzer’s Office Hours

When: Monday 3:30-4:30 and Friday 10-11, or by appointment

Where: Engineering 2, Room 461.

Other ways to contact me:

by phone, 459-3407, and by email, kkletzer@ucsc.edu

Print out copy of Course Syllabus (pdf)

Readings and Preliminary Lecture Schedule

Most of the links below are open to the public. The links to JSTOR require a subscription – access is free for registered UC students using a campus computer or logged into the library from elsewhere.

1. Macroeconomics Review (and extension) (1^st week)

Blanchard, Chapters 7-9 and 14 and 17, or Jones, Chapters 9-12

Jones, Chapters 3-6, or Blanchard, Chapters 11-13.

2. Stabilization Policy (2^rd week)

David Romer, “Keynesian Macroeconomics without the LM Curve,” The Journal of Economic Perspectives, 14 (2), Spring 2000, pp. 149-169. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.14.2.149

Jeffrey Lacker and John, Weinberg, “Inflation and Unemployment: A Layperson's Guide to the Phillips Curve,” Federal Reserve Bank of Richmond Economic Quarterly, 93(3), Summer 2007, pp. 201–227.

http://www.richmondfed.org/publications/research/economic_quarterly/2007/summer/pdf/lacker_weinberg.pdf

*Gadi Barlevy, “The cost of business cycles and the benefits of stabilization,” Federal Reserve Bank of Chicago Economic Perspectives, 29(1), February 2005, pp. 32-49. http://www.chicagofed.org/digital_assets/publications/economic_perspectives/2005/ep_1qtr2005_part3_barlevy.pdf

*Robert Barsky and Lutz Kilian, “Oil and the Macroeconomy Since the

1970s,” Journal of Economic Perspective 18(4), Fall 2004, pp. 115–134.

http://pubs.aeaweb.org/doi/pdfplus/10.1257/0895330042632708

3. How is Monetary Policy Made? (3rd week)

Jordi Galı´ and Mark Gertler, “Macroeconomic Modeling for Monetary Policy Evaluation,” Journal of Economic Perspectives, 21(4), Fall 2007, pp. 25–45. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.21.4.25

Robert Hetzel, “The Taylor Rule: Is It a Useful Guide to Understanding Monetary Policy?” Federal Reserve Bank of Richmond Economic Quarterly, 86(2), Spring 2000, pp. 1-33. http://www.richmondfed.org/publications/research/economic_quarterly/2000/spring/pdf/hetzel.pdf

Carl Walsh, “Teaching Inflation Targeting: An Analysis for Intermediate Macro,” Journal of Economic Education, 33(4), Fall 2002, pp. 333-347. http://www.jstor.org/stable/1183135

4. Monetary Policy before the Crisis (4^th week)

Marvin Goodfriend, “How the World Achieved Consensus on Monetary Policy,” Journal of Economic Perspectives, 21(4), Fall 2007, pp. 47-68. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.21.4.47

Ben S. Bernanke, "What Have We Learned Since October 1979?” Federal Reserve Bank of St Louis Review, March/April 2005, 87 (2, part 2), pp. 277-282. http://research.stlouisfed.org/publications/review/05/03/part2/PanelDiscussion1.pdf

Allan Meltzer, “Origins of the Great Inflation,” Federal Reserve Bank of St Louis Review, March/April 2005, 87 (2, part 2), pp. 145-176. http://research.stlouisfed.org/publications/review/05/03/part2/Meltzer.pdf

Christina Romer, “Commentary [on Meltzer],” Federal Reserve Bank of St Louis Review, March/April 2005, 87 (2, part 2), pp. 177-185. http://research.stlouisfed.org/publications/review/05/03/part2/Romer.pdf

*Peter Summers, “What Caused the Great Moderation: Some Cross-Country Evidence” Federal Reserve of Kansas City Economic Review, 3rd Quarter 2005, pp. 5-32.

http://www.kansascityfed.org/publicat/econrev/pdf/3q05summ.pdf

5. Financial Markets in the Macroeconomy (5^th week)

Blanchard, Chapters 15, Jones, Chapter 13

Douglas Diamond, “Banks and Liquidity Creation: A Simple Exposition of the

Diamond-Dybvig Model,” Federal Reserve Bank of Richmond Economic Quarterly, 93(2), Spring 2007, pp. 189–200. http://www.richmondfed.org/publications/research/economic_quarterly/2007/spring/pdf/diamond.pdf

Michael Woodford, “Financial Intermediation and Macroeconomic Analysis,” Journal of Economic Perspectives, 24(4), Fall 2010, pp. 21–44. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.4.21

6. The Financial Crisis (5^th – 6^th week)

Jones, Chapter 14 (available on line here).

Frederic S. Mishkin, “Over the Cliff: From the Subprime to the Global Financial Crisis,” Journal of Economic Perspectives, 25(1), Winter 2011, pp. 49–70. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.25.1.49

Robert E. Hall, “Why Does the Economy Fall to Pieces after a Financial Crisis?,” Journal of Economic Perspectives, 24(4), Fall 2010, pp. 3–20. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.4.3

Vincent Reinhart, “A Year of Living Dangerously: The Management of the Financial Crisis in 2008,” Journal of Economic Perspectives, 25(1), Winter 2011, pp. 71–90. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.25.1.71

*Lee E. Ohanian, “The Economic Crisis from a Neoclassical

Perspective,” Journal of Economic Perspectives, 24(4), Fall 2010, pp. 45–66. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.4.45

6. A Quick Look at the Past (6^th week)

Christina Romer, “The Nation in Depression,” Journal of Economic Perspectives, 7(2), Spring 1993, pp. 19-39. http://www.jstor.org/stable/2138198

*Christina Romer, “What Ended the Great Depression?” Journal of Economic History, 52, December 1992, pp. 757-784. http://www.jstor.org/stable/2123226

9. Monetary Policy at the Zero Lower Bound (7th week)

Paul Krugman, “It’s Baaack: Japan’s Slump and the Return of the Liquidity Trap,” Brookings Papers on Economic Activity, 2:1998, pp. 137-166 only. http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/1998_2_bpea_papers/1998b_bpea_krugman_dominquez_rogoff.pdf

Lars E.O. Svensson, “Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others,” Journal of Economic Perspectives, 17(4), Fall 2003, pp. 145–166. http://pubs.aeaweb.org/doi/pdfplus/10.1257/089533003772034934

Ricard Reis, “Interpreting the Unconventional U.S. Monetary Policy of 2007–09,” Brookings Papers on Economic Activity, Fall 2009, pp. 119-129 only. http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2009_fall_bpea_papers/2009b_bpea_reis.pdf

10. Does Fiscal Policy Help in a Recession? (8^th week)

Alan J. Auerbach, William G. Gale, and Benjamin H. Harris, “Activist Fiscal Policy,” Journal of Economic Perspectives, 24(4), Fall 2010, pp. 141–164. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.4.141

Robert E. Hall, “By How Much Does GDP Rise If the Government Buys More Output?” Brookings Papers on Economic Activity (Fall 2009), pp.183-195 only. http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2009_fall_bpea_papers/2009b_bpea_hall.pdf

*John Taylor, “The Lack of an Empirical Rationale for a Revival of Discretionary Fiscal Policy,” American Economic Review: Papers and Proceedings 99, May 2009, pp. 550-555. http://www.aeaweb.org/atypon.php?return_to=/doi/pdfplus/10.1257/aer.99.2.550

Antonio Spilimbergo, Steven Symansky, Olivier Blanchard, and Carlo Cottarellu, “Fiscal Policy for the Crisis.” http://www.voxeu.org/index.php?q=node/3055

Christian Broda and Jonathan Parker, “The Impact of the 2008 Tax Rebate.” http://www.voxeu.org/index.php?q=node/1541

11. The Labor Market in the Recession (9^th week)

Davis, Steven J., R. Jason Faberman, and John Haltiwanger. “The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links.” The Journal of Economic Perspectives. 20 (3), Summer 2006, pp. 3-26. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.20.3.3

Elsby, Michael, Bart Hobijn, and Aysegul Sahin. “The Labor Market in the Great Recession.” Brookings Panel on Economic Activity, Spring 2010, pp. 1-29 only. http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2010_spring_bpea_papers/2010a_bpea_eslby.pdf

12. Public Debt and Taxes (9^th week)

Economic Report of the President, 2010, Chapter 5, “Addressing the Long-Run Fiscal Challenge,” pp. 137-157 (Washington, DC: Government Printing Office, 2010). http://fraser.stlouisfed.org/publications/ERP/issue/5060/download/84662/ERP2010_Chapter5.pdf

*N. Gregory Mankiw, Matthew Weinzierl, and Danny Yagan. “Optimal Taxation in Theory and Practice.” The Journal of Economic Perspectives. 23 (4), Fall 2009, pp. 147-174. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.23.4.147

*Thomas Piketty and Emmanuel Saez, “How Progressive is the U.S. Federal Tax

System? A Historical and International Perspective,” Journal of Economic Perspectives, 21(1), Winter 2007, pp. 3–24. http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.21.1.3

13. Open Economy Policy Issues (10^th week)

Economic Report of the President, 2011, Chapter 5, “World Economy,” pp. 81-110 (Washington, DC: Government Printing Office, 2011) http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=2011_erp&docid=f:erp_c4.pdf

Ben S. Bernanke, “Global Imbalances: Recent Developments and Responses,” Bundesbank Lecture, September 2007.

http://www.federalreserve.gov/newsevents/speech/bernanke20070911a.htm

Charles Wyplosz, “European Monetary Union: the dark sides of a major success,” Economic Policy, 21(46), April 2006, pp. 207-261. (only select parts)

http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0327.2006.00158.x/pdf