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J. Bradford DeLong
Office Hours: W 10-12 Evans 601
643-4027 (W); 283-2709 (H)
delong@econ.berkeley.edu
http://www.j-bradford-delong.net
As always seems to happen, the Econ 202a Syllabus page has become the most up-to-date and current page on this course.
Tuesday Jan 20: Introduction
What this course is:
- Economics 202A is required of Ph.D. students in economics.
- Graduate students in other degree programs with a strong undergraduate background in economic theory may enroll.
- Subject to the availability of space and with the permission of the instructor. It looks like space is available, and the instructor will give permission.
- The instructor, however, wants you to know what you are doing.
- The course is designed to provide an introduction to modern macroeconomics for Econ Ph.D. students.
- Its purpose is threefold:
- to teach first-year graduate students in economics their way around the professional, highly technical literature
- to provide a sketch of approaches and positions on issues of macroeconomic policy and theory
- to provide as thorough a grounding as can be provided in a single semester to the models and tools macroeconomists use.
- No concessions will be made to non-Econ Ph.D. students.
- Thus if you want a sketch of approaches and positions on issues of macroeconomic policy and theory, you are probably in the wrong place
- If you want to learn how to read the--professional, technical, abstruse--economics journal literature, you are probably in the right place
- If you are an undergraduate who wants to figure out if you want to be an economist, this might be the right place; but it might not
How this course works:
- Class meetings will normally consist of a lecture to explain and assess one or more journal articles or sections of David Romer's Advanced Macroeconomics textbook
- Important to place the article or section in modern macroeconomics
- Also important to figure out how the article works
- A lot of dissection of models
- I think the reader is good, and I think that David Romer's textbook is amazing.
- Readings should be completed before class
- Lecture will make more sense,
- The process of trying to learn how to constructively read modern economics journal articles is an important professional skill.
- Course readings consist of:
- David Romer's Advanced Macroeconomics textbook, on sale at the ASUC store
- a large reader full of xeroxed articles that is available at Copy Central (southside, on Bancroft)
- It's hard to contribute to the class discussion if you haven't done the reading
- Problem sets must be attempted--in groups if you wish, alone if you wish.
- One of the major points of the course is to give the students familiarity with the analytical tools that modern macroeconomists use.
- The only way to become proficient in their use is to use them.
- Hence the problem sets.
- Problem sets will be graded on a binary {check, zero} scale, depending on whether a serious attempt was made to solve the assigned problems.
Student grades will be based on:
- an (early) midterm examination in class on February 19.
- The early date for the midterm was chosen because I always hated having four midterms in a two-week period
- the early date for the midterm also allows me to gauge just how much the class is learning
- the early date for the midterm is now set in stone because it has been incorporated into my spring travel plans.
- seven problem sets.
- The problem sets will be graded, and answers distributed, by Chang-Tai Hsieh--not by your section leader, Petra Geraats--because of the details of U.S. government immigration policy
- a data assignment, to be distributed later (a draft of it is up on the www)
- a referee report on Carl Walsh's 1995 article, "Optimal Contracts for Central Bankers," American Economic Review 85: pp. 150-67.
- Up to 1000 words.
- This assignment will be distributed later. (a draft of it is up on the www)
- class participation and general alertness.
- an in-class final exam at a place to be determined
- One argument: have the final at the assigned time, during finals period
- A second argument: have the final at the last class, during so-called "dead week"
- Arguments for the first and second; recapitulation of material as valuable (is it really?); bringing the course to a close and allowing people to get on with their summers.
- I oscillate; this is Berkeley; let's vote
Course People
- J. Bradford DeLong, professor; delong@econ.berkeley.edu
- Petra Geraats, section leader; geraats@econ.berkeley.edu
- Chang-Tai Hsieh, grader; cth@econ.berkeley.edu (10 minutes)
The World Wide Web
- Files for this course will be up on the world wide web at http://www.j-bradford-delong.net/Teaching_Folder/Econ_202a/Econ_202a.html.
- I at least am finding the www useful--not so much for web-based distribution of materials, but certainly for web-based archiving.
- If you find it useful, let me know.
- If you don't find it useful, let me know.
- I love JSTOR, Econlit on-line, the IMF website, the BLS and the BEA websites...
- This semester I want to try three additional web-based experiments.
- The first is an Econ 202a "people page". So could everyone in the class please send me an e-mail message with:
- their name
- their e-mail address
- any other contact information that they want publicized
- a link to a .gif or .jpeg picture (or a .gif attachment) of themselves.
- I will then put all e-mail addresses and pictures up on the web
- The second will be an Econ 202a lecture errata service: anytime I think that I have said something wrong in lecture, I want to send out an e-mail message to the entire class. Hence it is important that everyone send me their e-mail address.
- Third, I would like to see whether it makes sense to establish what I call "virtual office hours": that is:
- you send us questions
- we send you back answers
- we broadcast the questions and answers to the rest of the class
- we then post them in a neatly-archieved form.
- These experiments might produce something useful and interesting; they might not; I'm curious to see.
Questions, comments, complaints so far?
- Things that I should copy from Econ 201a?
- Things that I should definitely not copy from Econ 201a? (15 minutes)
A word from Petra Geraats
A further note
- It looks like I'm going to be teaching you this stuff for a semester and a half; then Maury Obstfeld for the second half of 202b.
So let's get started...
What we are going to do
- Run through David Romer's book as far as we get this semester
- Focus on domestic macro: leave as many open-economy issues as possible until the second half of 202b, when Maury Obstfeld will be teaching
- Start with aggregate economic growth
- Very interesting and important substantive topic
- A topic still in flux, so it will give you a window into how research is done, and how economics progresses (or fails to progress)
- Also teaches a great many models that are good building blocks for later on.
- Three chapters on growth
- The aggregate Solow model
- Semi-microfoundations: the Ramsey model
- Peter Diamond's overlapping generations model
- The importance of "incomplete markets" in driving models' conclusions
- Then we go into Paul Romer land
- Models of research and development
- Models of education and investment in human capital
- Then go on to Real Business Cycle theory
- A natural extension of the neoclassical direction of the growth-theory part of the course (23)
- An interesting baseline to use to assess other views of business cycles
- A proving and testing ground for tools
- An important line of theoretical development which is believed (and is being developed) by a large chunk of the profession
- To say that I'm skeptical would be an understatement
- To say that I think in 30 years people are likely to conclude that RBC work was a complete waste of time--I give it odds of only 1 in 5 of turning into a progressive research program.
- This is the "MIT view"
- After real business cycle theory, we jump back to the kind of macroeconomics you probably learned as undergradutes
- Then we will investigate the "microfoundations" of "Keynesian economics"
- If our investigation of RBC theory led to what I would characterize as pessimistic conclusions, our investigation of the microfoundations of New Keynesian theory will lead to almost as pessimistic conclusions.
- We don't understand "aggregate supply."
- (But I think we do understand aggregate demand pretty well.
- I hope to finish with a fairly detailed look at the theory of monetary policy
- David Romer thinks that we won't get this far
- I want to get this far, but I also want to get to unemployment as well.
- Topics in Romer's Advanced Macroeconomics not covered this spring will be covered this fall, in the first half of 202b.
- Productivity, asset markets, investment, consumption, "irrational" aggregate supply--a bunch of other topics that I would like to cover, especially considering that 202b will be the last macro course a bunch of you take
- I do want to leave the international topics for Maury, who knows them vastly better than I do.
David Romer's Discourse on Modelling
- What's a model for?
- This is the first of many that we will see, so time to think about model building
- This model is grossly oversimplified
- one good
- no government
- no employment fluctuations
- "aggregate production function"
- constant rates of labor-augmenting productivity growth, population growth, saving, depreciation, technological progress
- Are these oversimplifications defects?
- To the claim that a "model" is unrealistic, one possible response is that we already have a completely realistic model--the world itself
- the problem is that we do not understand the world
- so we want something that we can understand and analyze, and that also gives us trustworthy insight into the world
- simplify as much as possible, but not too much
- keep track of robustness: when are "artificial" features of the model incorporated to create simplicity driving your results?
- Milton Friedman's "methodology" paper
- leaf maximization example
- Himalayas and the stock market example
- "as if" position
- is there a difference between understanding and prediction?
- but we have no confidence in predictions that we can't understand--and we are right to have no confidence in predictions that we can't understand.
- But this is not philosophy: this is a group activity; a model is a good model if our peers like it...
- Two unanswered questions:
- How do we tell a good model?
- How do we know which model to use in which situation?
Thursday Jan 22: The Solow Growth Model
The Solow Growth Model
- Not an exaggeration to say that economic growth is the only important subject in all of economics
- A field that is truly the creation of one guy--Robert Solow.
- Lecture 2 Solow model handout
A Note on Robert Solow's Article
A Note on the Problem Set
Lecture 3 handout
Lecture 4 handout; Hamiltonian handout
Lecture 5 Lecture Notes
Tuesday Feb 24: Introduction to New Growth Theory
Tuesday Mar 10: Facts About Economic Fluctuations
Tuesday Mar 31: Introduction to Neo-Keynesian Models
Thursday Apr 9: The Lucas Model
Tuesday Apr 21: Inflation
Thursday Apr 23: Central Banking
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Professor of Economics J. Bradford DeLong, 601 Evans, #3880 This document: http://www.j-bradford-delong.net/Teaching_Folder/Econ_202a/Econ_202a_Outlines.html |