Econ 390 Syllabus in PDF file

Economics 390-015 Fall 2013 University of Wisconsin-Madison

Menzie D. Chinn Social Sciences 7418

Topics in Macroeconomics (provisional, subject to revision) 1. INTRODUCTION This course will address current issues in modern macroeconomic policymaking, including: (1) The causes of the financial crisis; (2) the efficacy of fiscal policy, (3) conventional and unconventional monetary policy at the zero lower bound, (4) post balance sheet crisis recoveries, (5) the global saving glut and global imbalances, (6) determinants of sovereign debt crises, and (7) the euro area crisis. A portion of the course will address the analysis and implications of financial regulation or nonregulation, especially in regard to the financial crisis of 2008. Prerequisites: Econ 301/311 and 302/312, Econ 310. If you have completed Econ 410 with a prior statistics course other than 310, you can enroll with my authorization. 2. OFFICE HOURS Prof. Menzie Chinn: M 1-2, W 4-5 7418 Social Sciences Bldg., 262-7397 e-mail: [email protected] Updated information will be posted on the course website, http://www.ssc.wisc.edu/~mchinn/web390_f13.html. 3. SCHEDULE AND READINGS The required textbook is Blanchard and Johnson, Macroeconomics, 6th Edition (Prentice-Hall) (abbreviated BJMa below). A Required readings are listed below, and additional required and optional readings will be assigned during the semester from the Web. You will also be expected to refer to the following weblog for current macroeconomic commentary: http://www.econbrowser.com . Two books (Mishkin, Economics of Money, Banking and Financial Markets; Hester, The Evolution of Monetary Policy and Banking in the US) are placed on reserve as reference resources. LEC. 1 2-4 5 6-7 8-9 10-12

DATES 9/4 9/9-16 9/18 9/23-25 9/30-10/2 10/7-14

13-17

10/16-30

BJMa

READING

3-5

ISLM IMF10 ADAS CC-LM,BB BBS,GHKS BGG 4SQE

6-7 9

1

TOPICS Introduction IS-LM Fiscal policy AS-AD Credit channel Balance sheet recessions, Financial accelerator Conventional, unconventional Monetary policies

LEC.

DATES

BJMa

18-21 19 22-26 25 27-29

11/4-11/13 11/6 11/18-12/2 11/27 12/4-11

18-20 BM-F

         

     

READING

23

KC, IMF12

21

Sh

TOPICS Global imbalances Midterm Debt and debt crises No meeting Euro crisis

ISLM: Notes on IS-LM IMF10: IMF, World Economic Outlook, Oct 2010, Chapter 3. http://www.imf.org/external/pubs/ft/weo/2010/02/pdf/c3.pdf ADAS: Notes on Aggregate Demand/Aggregate Supply BBS: Notes on Bank Balance Sheets MSP: Notes on Money Supply Process Ru: Glenn Rudebusch, “The Fed’s Monetary Policy Response to the Current Crisis,” FRBSF Economic Letter 2009-17, May 22, 2009. http://www.frbsf.org/publications/economics/letter/2009/el2009-17.html Ham.: James Hamilton, “Concerns about the Fed's New Balance Sheet, in The Road Ahead for the Fed,” edited by John D. Ciorciari and John B. Taylor, Stanford: Hoover Institution Press, 2009. http://dss.ucsd.edu/~jhamilto/fed_concerns.pdf BB: Ben Bernanke, Alan Blinder, “Credit, Money and Aggregate Demand,” American Economic Review 78(2) (May, 1988), pp. 435-439. http://www.ssc.wisc.edu/~mchinn/bernanke_blinder_AEAPP1988.pdf BGG: Bernanke, Gertler and Gilchrist, "The Financial Accelerator and the Flight to Quality," The Review of Economics and Statistics 78(1). (Feb., 1996): 1-15. http://www.ssc.wisc.edu/~mchinn/bernanke_etal_restat96.pdf GHKS: David Greenlaw, Jan Hatzius, Anil K Kashyap, Hyun Song Shin, “Leveraged Losses: Lessons from the Mortgage Market Meltdown,” paper presented at US Monetary Policy Forum Conference, February 29, 2008. http://www.chicagobooth.edu/usmpf/docs/usmpf2008confdraft.pdf 4SQE: Brett Fawley and Christopher Neely, “Four Stories of Quantitative Easing,” Federal Reserve Bank of St. Louis Review 95(1) (2013). http://research.stlouisfed.org/publications/review/13/01/Fawley.pdf KS: John Kitchen and Menzie Chinn, Financing U.S. Debt: Is There Enough Money in the World – and At What Cost?" International Finance (2012). Sh: Jay Shambaugh, “The Euro’s Three Crises,” Brookings Papers on Economic Activity 2012:1. http://www.brookings.edu/~/media/Projects/BPEA/Spring%202012/2012a_Shambaugh.pdf BM-F: Olivier Blanchard and Gian Maria Milesi-Ferretti, “Global Imbalances: In Midstream?” Staff Position Note 09-29 (Dec. 2009). http://www.imf.org/external/pubs/ft/spn/2009/spn0929.pdf IMF10: "Will It Hurt? Macroeconomic Effects of Fiscal Consolidation," Chapter 3 in World Economic Outlook (October 2010). http://www.imf.org/external/pubs/ft/weo/2010/02/pdf/c3.pdf IMF12: “The Good, the Bad, and the Ugly: 100 Years of Dealing with Public Debt Overhangs,” Chapter 3 in World Economic Outlook (October 2012). 2

http://www.imf.org/external/pubs/ft/weo/2012/02/pdf/c3.pdf 4. GRADING Letter grading is determined as follows: 20% Problem sets (×3) 40% Midterm (×1) 40% Term paper Late assignments will not be accepted for credit. Although the problem sets do not constitute a large portion of the grade, I strongly encourage you to do the assignments in a timely and serious fashion. The problem sets provide valuable information regarding your grasp of the concepts. 5. THE TERM PAPER A 10 page term paper, double-spaced, will be due at the end of the semester (page length pertains to text; cover page, figures and tables and reference list do not count against limit). You will select a paper topic from a list of assigned subjects. Additional details regarding this assignment, along with suggested readings, will be provided later in the term.

30.8.2013 rev 5.9.2013 E390syllabus_f13.docx

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