14.452
Economic Growth
Introduces the sources and modeling of economic growth and income differences across nations. Topics include an introduction to dynamic general equilibrium theory, the neoclassical growth model, overlapping generations, determinants of technological progress, endogenous growth models, measurement of technological progress, the role of human capital in economic growth, and growth in a global economy. Enrollment limited.
Fall 2016
This half semester class will present an introduction to macroeconomic modeling, particularly economic growth. It will focus both on models of economic growth and their empirical applications, and try to shed light on the mechanics of economic growth, technological change and sources of income and growth differences across countries.
Readings
- The main textbook for the course is:
- [IMEG] = Acemoglu, Daron. Introduction to Modern Economic Growth . Princeton University Press, 2009. ISBN: 9780691132921.
- [IMEG] Chapter 1.
- [IMEG] Chapter 2.
- Solow, Robert M. Growth Theory: An Exposition. Oxford University Press, 2000. ISBN: 9780195109030.
- [IMEG] Chapters 3 and 4.
- Diamond, Jared M. Guns, Germs and Steel: The Fates of Human Societies . W. W. Norton & Company, 1999. ISBN: 9780393317558.
- [IMEG] Chapters 5 and 6.
- Mas-Colell, Andreu, Michael D. Whinston, and Jerry R. Green. Chapters 4 and 16 in Microeconomic Theory . Oxford University Press, 1995. ISBN: 9780195073409.
- [IMEG] Chapters 5 and 9.
- Bewley, Truman F. General Equilibrium, Overlapping Generations Models, and Optimal Growth Theory . Harvard University Press, 2007. ISBN: 9780674022881.
- Jones, Larry. “Special Problems Arising in the Study of Economics with Infinitely Many Commodities.” In Models of Economic Dynamics: Proceedings of a Workshop held at the IMA, University of Minnesota, Minneapolis, USA, October 24–28, 1983 (Lecture Notes in Economics and Mathematical Systems) . Edited by Hugo F. Sonnenschein. Springer, 1986, pp. 184–205. ISBN: 9783540160984.
- [IMEG] Chapters 10–12.
- [IMEG] Chapter 13.
- Acemoglu, Daron. Introduction to Modern Economic Growth . Princeton University Press, 2009. ISBN: 9780691132921.
Spring 2007 · Macroeconomic Theory II
This is the second course in the four-quarter graduate sequence in macroeconomics. Its purpose is to introduce the basic models macroeconomists use to study fluctuations. Topics include the basic model or the consumption/saving choice, the RBC model or the labor/leisure choice, non-trivial investment decisions, two-good analysis, money, price setting, the "new Keynesian" model, monetary policy, and fiscal policy.
Readings
- [MW] Woodford, M. Interest and Prices: Foundations of a Theory of Monetary Policy . Princeton, NJ: Princeton University Press, 2003. ISBN: 9780691010496.
- Blanchard, O. “What Do We Know About Macroeconomics that Fisher and Wicksell Did Not?” Quarterly Journal of Economics 115, no. 4 (November 2000): 1375-1410.
- Chari, V. V. “Modern Macroeconomics in Practice: How Theory is Shaping Policy.” Journal of Economic Perspectives 20, no. 4 (2006): 3-28.
- Mankiw, N. G. “The Macroeconomist as Scientist and Engineer.” Journal of Economic Perspectives 20, no. 4 (2006): 29-46.
- BF, chapter 1.
- Stock, J., and M. Watson. “Business Cycle Fluctuations in U.S. Macroeconomic Time Series.” Chapter 1 in Handbook of Macroeconomics . Vol 1A. Edited by J. Taylor and M. Woodford. New York, NY: Elsevier, 1999. ISBN: 9780444501561.
- Blanchard, O., and D. Quah. “The Dynamic Effects of Aggregate Demand and Aggregate Supply Disturbances.’’ American Economic Review 79, no. 4 (1989): 654-673.
- Christiano, L., M. Eichenbaum, and C. Evans. “Monetary Policy Shocks: What have we Learned and to What End?” Handbook of Macroeconomics . Vol. 1A. Edited by J. Taylor and M. Woodford. New York, NY: Elsevier, 1999, pp. 65-148. ISBN: 9780444501561.
- Aguiar, M., and G. Gopinath. “Emerging Market Business Cycles,” and “The Cycle is the Trend.” Journal of Political Economy 115, no. 1 (2007): 69-102.
- BF, chapter 2 and section 6-2.
- OR, chapters 1 and 2.
- Campbell, J. “Inspecting the Mechanism: An Analytical Approach to the Stochastic Growth Model.” Journal of Monetary Economics 33, no. 3 (June 1994): 463-506.
- BF, chapter 7.
- King, R., and S. Rebelo. “Resuscitating Real Business Cycles.” Chapter 14 in Handbook of Macroeconomics . Vol. 1B. Edited by J. Taylor and M. Woodford. New York, NY: Elsevier, 1999, pp. 927-1007. ISBN: 9780444501578.
- Shleifer, A. “Implementation Cycles.” Journal of Political Economy 94, no. 6 (December 1986): 1163-1190.
- OR, chapter 3.
- Shiller, R. Irrational Exuberance . Princeton, NJ: Princeton University Press, 2000. ISBN: 9780691050621.
- Blanchard, O., C. Rhee, and L. Summers. “The Stock Market, Profit, and Investment.” Quarterly Journal of Economics 108, no. 1 (February 1993): 115-136.
- Obstfeld, M., and K. Rogoff. “The Intertemporal Approach to the Current Account.” Chapter 34 in Handbook of International Economics . Vol. 3. Edited by G. Grossman and K. Rogoff. New York, NY: Elsevier, 1997, pp. 1731-1799. ISBN: 9780444828644.
- OR, chapter 4.
- MW, chapter 2-1, and “Price Level Determination under Interest Rate Rules.”
- Dornbusch, R., F. Sturzenegger, H. Wolf, S. Fischer, and R. Barro. “Extreme Inflation: Dynamics and Stabilization.” Brookings Papers on Economic Activity 1990, no. 2 (1990): 1-84.
- Blanchard, O. “Why Does Money Affect Output? A Survey.” In Handbook of Monetary Economics . Vol 2. Edited by B. Friedman and F. Hahn. New York, NY: Elsevier, 1990, pp. 779-835. ISBN: 9780444880260.
- MW, chapter 3-1, and “Optimizing Models with Nominal Rigidities. A Basic Sticky-Price Model.”
- Dhyne, E., L. Álvarez, H. Le Bihan, G. Veronese, D. Dias, J. Hoffmann, N. Jonker, P. Lünnemann, F. Rumler, and J. Vilmunen. “Price Changes in the Euro area and the United States: Some Facts from Individual Consumer Price Data.” The Journal of Economic Perspectives 20, no. 2 (2006): 171-192.
- BF, chapters 8-2 and 8-3.
- MW, chapter 3-2, “Optimizing Models with Nominal Rigidities,” and “Inflation Dynamics with Staggered Price Setting.”
- Clarida, R., J. Gali, and M. Gertler. “The Science of Monetary Policy: A New Keynesian Perspective.” Journal of Economic Literature 37 (December 1999): 1661-1707.
- MW, chapters 4-1 and 4-2, and “A Neo-Wicksellian Framework for the Analysis of Monetary Policy.”
- King, M. “What has Inflation Targeting Achieved?” In The Inflation-Targeting Debate . Edited by B. Bernanke and M. Woodford. Chicago, IL: University of Chicago Press, 2005. ISBN: 9780226044712.
- Galí, J., J. López-Salido, and J. Vallés. “Understanding the Effects of Government Spending on Consumption.” Journal of the European Economic Association 5, no. 1 (March 2007): 227-270.
- Baxter, M., and R. King. “Fiscal Policy in General Equilibrium.” American Economic Review 83, no. 3 (June 1993): 315-334.
- Blanchard, O., and R. Perotti. “An Empirical Characterization of the Dynamic Effects of Government Spending and Taxes on Output.” Quarterly Journal of Economics 117, no. 4 (2002): 1329-1368.
Prerequisites & course information
Prereq: 14.451 and permission of instructor G (Fall; second half of term) 3-0-3 units
Sources
- Course catalogue ↗2026–2027
- MIT OpenCourseWare ↗Fall 2016
- MIT OCW readings ↗
- MIT OCW syllabus ↗
- MIT OpenCourseWare ↗Spring 2007
- MIT OCW readings ↗
- MIT OCW syllabus ↗
- Historical MIT OpenCourseWare offering. Named reading entries and schedule topics are automatically extracted from the linked source pages.
- Historical MIT OpenCourseWare offering. Named reading entries and schedule topics are automatically extracted from the linked source pages.