Reading list for EC590: Applications of Advanced Macroeconomic Theory


Week 1  

Introduction: Why do we need monetary policy?


Monetary policy and dynamic consistency


* Obstfeld and Rogoff, p. 638-648 (distributed in class)


* Romer, Ch. 10 (distributed in class)


Barro, Rober J. and David Gordon (1983). “Rules, Discretion and Reputation in a Model of Monetary Policy.” Journal of Monetary Economics 12 (July): p. 101-121.


Week 2

Monetary policy and dynamic consistency , continued


April 12 (Thus.), 6pm, Nina Marini’s lecture “Competing in the Japanese Online Market: The Challenge of Balancing Global and Local ResourcesSmith Center, Room 327/8


Week 3

Monetary policy and dynamic consistency , continued


The Taylor rule and inflation targeting


* Bernanke, Ben and Fredric Mishkin (1997) Inflation Targeting: A New Framework for Monetary Policy?”, The Journal of Economic Perspectives, Vol. 11, No. 2. (Spring), pp. 97-116.


* Mishkin, F. S. and K. Schmidt-Hebbel (2001) “One Decade of Inflation Targeting in the World: What Do We Know and What Do We Need to Know?” NBER Working Paper No. 8397 (July).


* Svensson, Lars E.O. (1997) Monetary Policy and Inflation Targeting,” NBER Reporter Winter 1997/98


Taylor, John (1993). “Discretion versus Policy Rules in Practice.” Carnegie Rochester Conference Series on Public Policy 39 (December): p. 195-214.



Week 4

Uncertainty and international financial markets


* Obstfeld and Rogoff, Ch. 5 (distributed in class)


* Sill, Keith (2001). The Gains from International Risk Sharing,” Business Review, Federal Reserve Bank of Philadelphia (Q3).



Week 5

Uncertainty and international financial markets, continued


May 5, 12am (May 4, midnight) The take-home exam is available here.

It will be due at 9am on May 9 (Wednesday).


Week 6

May 8, Tuesday     No class.

May 9, 9am      The take-home exam is due.


May 10 (Thurs.), 6pm, Ulrike Schaede’s lecture “Japan’s Corporate Renewal: Business Strategies in the 21st Century”, Smith Center, Room 327/8


Week 7


Asset markets and monetary policy


Erika: Bernanke, Ben and Mark Gertler, Monetary policy and asset price volatility,” Federal Reserve Bank of Kansas City, Economic Review, Fourth Quarter 1999, 84(4), pp. 17-52.


James: Cecchetti, Stephen G (2003), “What the FOMC Says and Does When the Stock Market Booms,” presented at Reserve Bank of Australia 2003 Conference (August 18-19).


Liquidity trap


Josh: Krugman, Paul, 2000. “Thinking About the Liquidity Trap,” Journal of the Japanese and International Economies 14, 221–237. Read also Krugman (1998), “It’s baaack: Japan’s Slump and the Return of the Liquidity Trap,” Brookings Papers on Economic Activity, 2, 137 – 187.


Brien: Goodfriend, Marvin, 2000, “Overcoming the Zero Bound on Interest Rate Policy,” Journal of Money, Credit and Banking, Vol. 32, No. 4 (November).



Week 8




Anna: Rogoff, Kenneth (2003). “Globalization and Global Disinflation,” mimeo, IMF.


Monique: Sinn, Hans-Werner (2007). “The Welfare State and the Forces of Globalization,” NBER Working Paper No. 12946


International risk sharing


Basil: Backus, D., Kehoe, P., and Kydland, F., (1992). “International Real Business Cycles,” Journal of Political Economy, 100: 745-775.


Tim: Mélitz, Jacques and Frédéric Zumer (1999), “Interregional and international risk-sharing and lessons for EMU,” Carnegie-Rochester Conference Series on Public Policy, Volume 51, Pages 149-188 (December)



Week 9


The first round of write-ups (on two papers) are due!


Transmissions of international shocks


James: Ehrmann, Michael and Marcel Fratzscher (2006). Global financial transmission of monetary policy shocks,” European Central Bank Working Paper series, No. 616 (April).


Basil: Connolly, R. and Wang, A. F. (2003), “International Equity Market Comovements: Economic Fundamentals or Contagion?Pacific-Basin Finance Journal, 11, 23-43.



Unemployment issues


Brien: Oswald, Andrew J. (1996). “A Conjecture on the Explanation for High Unemployment in the Industrialized Nations: Part I,” mimeo, University of Warwick, along with Oswald, Andrew J. (1997). “The Missing Piece of the Unemployment PuzzleAn Inaugural Lecture,” mimeo, University of Warwick.


Josh: Blanchard, Olivier and Justin Wolfers (2000). The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence,” The Economic Journal, Vol. 110, No. 462, Conference Papers. (Mar., 2000), pp. C1-C33.



Week 10


Economic growth


Erica and Tim: Barro, Robert J. (1996). Determinants of Economic Growth: A Cross-Country Empirical Study,” NBER Working Paper No. 5698.

                   This is a long paper, so let us have two people presenting this jointly.



Globalization 2


Monique: Bailliu, J. N., 2000. “Private Capital Flows, Financial Development, and Economic Growth in Developing Countries,” Working Papers 00-15, Bank of Canada.



Anna: Rajan, Raghuram G., Luigi Zingales (2003). “The Great Reversals: The Politics of Financial Development in the 20th Century,” Journal of Financial Economics 69.