1 UNIVERSITY OF CALIFORNIA FALL SEMESTER 2009 DEPARTMENT OF ECONOMICS PROF. MAURICE OBSTFELD ECONOMICS 202A Main Textbook: David Romer, Advanced Macroeconomics, Third Edition (New York: McGraw-Hill, 2005). GSIs and Instructor Office Hours: Johannes Wieland (first half), Oleksa Shvets (second half). All office hours TBA; or by appointment. READING LIST I. Long-Run Growth: The Solow Model and Growth Accounting David Romer, Third Edition, Chapter 1. Robert E. Hall and Charles I. Jones, “Why Do Some Countries Produce So Much More Output per Worker than Others?” Quarterly Journal of Economics, February 1999, pp. 83-116. Maurice Obstfeld and Kenneth Rogoff, Foundations of International Macroeconomics (Cambridge: MIT Press, 1996), pp. 430-440. Edmund S. Phelps, “The Golden Rule of Accumulation: A Fable for Growthmen,” American Economic Review, September 1961, pp. 638-643. Robert M. Solow, “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics, February 1956, pp. 65-94. II. Long-Run Growth: The Ramsey-Cass-Koopmans Model David Romer, Third Edition, Chapter 2, Part A. Robert J. Barro and Xavier Sala-i-Martin, Economic Growth, Second Edition (Cambridge: MIT Press, 2004), Chapter 2 and Appendix A.3 (at end of book). Robert J. Barro. “Laibson Meets Ramsey in the Neoclassical Growth Model.” Quarterly Journal of Economics, November 1999, pp. 1125–1152. Olivier J. Blanchard and Charles M. Kahn, “The Solution of Linear Difference Models under Rational Expectations,” Econometrica, September 1980, pp. 1305-1311.2 Maurice Obstfeld, “Dynamic Optimization in Continuous-Time Models (A Guide for the Perplexed),” manuscript, UC Berkeley, April 1992. Available at: http://www.econ.berkeley.edu/~obstfeld/ftp/perplexed/cts4a.pdf Maurice Obstfeld and Kenneth Rogoff, Foundations of International Macroeconomics (Cambridge: MIT Press, 1996), pp. 440-445. Martin Weitzman, Income, Wealth, and the Maximum Principle (Cambridge, MA: Harvard University Press, 2003). III. Overlapping Generations: Growth, Dynamic Efficiency, and Public Debt David Romer, Third Edition, Chapter 2, Part B. Andrew B. Abel, N, Gregory Mankiw, Lawrence H. Summers, and Richard J. Zeckhauser, “Assessing Dynamic Efficiency: Theory and Evidence,” Review of Economic Studies, January 1989, pp. 1-19. Robert J. Barro, “Are Government Bonds Net Wealth?” Journal of Political Economy, November/December 1974, pp. 1095-1117. Olivier J. Blanchard, “Debts, Deficits, and Finite Horizons,” Journal of Political Economy, April 1985, pp. 223-247. Peter A. Diamond, “National Debt in a Neoclassical Growth Model,” American Economic Review, December 1965, pp. 1126-1150. Maurice Obstfeld and Kenneth Rogoff, Foundations of International Macroeconomics (Cambridge: MIT Press, 1996), pp. 445-448. Paul A. Samuelson, “An Exact Consumption Loan Model of Interest with or without the Social Contrivance of Money,” Journal of Political Economy, December 1958, pp. 467-482. Jean Tirole, “Asset Bubbles and Overlapping Generations,” Econometrica, November 1985, pp. 1499-1528. IV. Long-Run Growth: Endogenous Growth Theory David Romer, Third Edition, Chapter 3, Part A.3 Charles I. Jones, “Growth and Ideas,” in Handbook of Economic Growth, Volume 1B, edited by Philippe Aghion and Steven Durlauf (Amsterdam: Elsevier, 2005), pp. 1063-1111. Michael Kremer, “Population Growth and Technical Change: One Million B.C. to 1990,” Quarterly Journal of Economics, August 1993, pp. 681-716. Robert E. Lucas, Jr., “On the Mechanics of Economic Development,” Journal of Monetary Economics, July 1988, pp. 3-42. Maurice Obstfeld and Kenneth Rogoff, Foundations of International Macroeconomics (Cambridge: MIT Press, 1996), pp. 473-496. Paul M. Romer, “Endogenous Technical Change,” Journal of Political Economy, October 1990 (Part 2), pp. S71-S102. V. Consumption David Romer, Third Edition, Chapter 7, "Consumption," Sections 7.1-7.4, and 7.6, pp. 346-365 and pp. 370-385. George-Marios Angeletos, David Laibson, Andrea Repetto, Jeremy Tobacman, and Steven Weinberg, "The Hyperbolic Consumption Model: Calibration, Simulation, and Empirical Evaluation," Journal of Economic Perspectives, Summer 2001, pp. 47-68. Gary Becker and Kevin Murphy, "A Theory of Rational Addiction," Journal of Political Economy, August 1988, pp. 675-700. Angus Deaton, Understanding Consumption (Oxford: Oxford University Press, 1992). Milton Friedman, A Theory of The Consumption Function (Princeton: Princeton University Press, 1957), Chapters I, II, and III, pp. 3-37. David Gross and Nicholas Souleles, "Do Liquidity Constraints and Interest Rates Matter for Consumer Behavior? Evidence from Credit Card Data," Quarterly Journal of Economics, February 2002, pp. 149-185. Robert E. Hall, "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, December 1978, pp. 971-987.4 Chang-Tai Hsieh, "Do Consumers React to Anticipated Income Changes? Evidence from the Alaska Permanent Fund," American Economic Review, March 2003, pp. 397-405. David Laibson, Andrea Repetto and Jeremy Tobacman, "Self-Control and Saving for Retirement," Brookings Papers on Economic Activity, 1998:1, 91-196. Lars Ljungqvist and Thomas J. Sargent, Recursive Macroeconomic Theory, Second Edition (Cambridge: MIT Press, 2004), Chapter 3 and pp. 109-118. VI. The Stock Market David Romer, Third Edition, Chapter 7, Sections 7.5, "Consumption and Risky Assets," pp. 366-370. John Campbell and Robert Shiller, "Cointegration and Tests of Present Value Models," Journal of Political Economy, October 1987, pp. 1062-1088. J. Bradford DeLong, Andrei Shleifer, Lawrence H. Summers, and Robert J. Waldmann, "Noise Trader Risk in Financial Markets," Journal of Political Economy, August 1990, pp. 703-738. Robert E. Lucas, Jr., "Asset Prices in an Exchange Economy," Econometrica, December 1978, pp. 1429-1445. Rajnish Mehra and Edward C. Prescott, "The Equity Premium: A Puzzle," Journal of Monetary Economics, March 1985, pp. 145-161. Robert J. Shiller, "Do Stock Prices Move Too Much to be Justified by Subsequent Changes in Dividends?" American Economic Review, June 1981, pp. 421-436. Lawrence H. Summers, "Does the Stock Market Rationally Reflect Fundamental Values?" Journal of Finance, July 1985, pp. 591-601. VII. Investment, Financial Markets, and Financial Frictions David