Makro-Pic Business Cycle Economics

Tuesday 12:45 - 14:15 in I-063
Lecture number: 72001
Main text: The course is based on selected parts from these books: Alfred Mausser, 1994, Konjunkturtheorie, Springer, Berlin; Peter Birch Sorensen and Hans Jorgen Whitta-Jacobsen, 2010, Introducing Advanced Macroeconomics: Growth and Business Cycles, McGraw-Hill, New York; Jordi Gali, 2008, Monetary Policy, Inflation, and the Business Cycle, Princeton University Press
Course material for participants is available at the course material webpage

Course Plan

1. Introduction: Measuring Business Cycles

References: Maussner 1-24; Sorensen Ch. 13.

2. Multiplier-Accelerator Mechanisms

Reference: Maussner 113-132.

3. A New View on the AS-AD Model

References: Sorensen Ch. 18.1-18.3.

Excursion: Solving First- and Second-Order Difference Equations

Reference: Maussner 203-219.

4. Monetarism and Policy Rules

Reference: Sorensen Ch. 16.3 and 20.2

5. Economic Policy and the Recession of 2007-2009

Recap: Blanchard and Illing, Chapter 22; Sorensen Ch. 20.3.

6. Intertemporal Optimization and Business Cycle Theory

References: Sorensen Ch. 15 (for a more technical exposition see Romer, Ch. 7.1-4 and 11.1-3)
Robert E. Hall, 2009, By how much does GDP rise if the government buys more output?, Brookings Papers on Economic Activity, Fall 2009, 184-201

7. The Basic New Keynesian Macro-Model

Reference: Gali, Chapter 3.

8. Business Cycles and Policy in the New Keynesian Paradigm

Reference: Gali, Chapter 3.

9. Real Business Cycles

Reference: Robert G. King and Sergio T. Rebelo, 1999, Rescuscitating Real Business Cycles, in: Handbook of Macroeconomics, North-Holland.

10. Real Business Cycles Theory and the Great Depression

References: Timothy J. Kehoe and Edward C. Prescott, 2002, Great depressions of the 20th Century, Review of Economic Dynamics 5, 1-18.
V.V, Chari, Patrick, J. Kehoe, and Ellen R. McGrattan, 2002, Accounting for the Great Depression, American Economic Review 92(2), 22-27.

11. Fiscal Stimulus

References: Harald Uhlig, 2010, Some fiscal calculus, American Economic Review 100(2), 30-34.
Holger Strulik and Timo Trimborn, 2011, The dark side of fiscal stimulus, Discussion paper, Hannover University.