Economics 201 – Macroeconomics I (1st Sem AY 2016-2017)

Professor: Renato E. Reside, Jr.


  • Romer, David, Advanced Macroeconomics – growth up to nominal rigidities  [print only]
  • Barro, Robert J.; Sala-i-Martin, Xavier (2004). Economic Growth (Second ed.). New York: McGraw-Hill. pp. 85–142.  (BS in what follows).  [print only]
  • Maurice Obstfeld and Kenneth Rogoff, Foundations of International Economics, MIT Press 1996 (OR in what follows).   [print only]
  • Blanchard, O. and Fisher, S. 1989, Lectures on Macroeconomics, MIT Press,
    Cambridge, Massachusetts. (BF)  [print only]

Closed Economy Models of Economic Growth
The Solow Model of Growth

Solow, Robert M. (February 1956). “A contribution to the theory of economic growth”. Quarterly Journal of Economics (Oxford Journals) 70 (1): 65–94.   link [Open access]  link [Accessible via UPSE networks]

The Ramsey model and extensions

Analysis of the Ramsey Model; Solution Techniques

Optimal Control
Dynamic Programming

Extensions of the Ramsey Model

Public goods models
Research and development models
Financial repression: Roubini and Sala-i-Martin models

Ramsey, Frank P. (1928). “A Mathematical Theory of Saving”. Economic Journal 38 (152): 543–559.  link  [Accessible via UPSE networks]   link [Open access]

Cass, David (1965). “Optimum Growth in an Aggregative Model of Capital Accumulation”. Review of Economic Studies 32 (3): 233–240.  link [Accessible via UPSE networks]  link [Open access]

Koopmans, T. C. (1965). “On the Concept of Optimal Economic Growth”. IN The Economic Approach to Development Planning. Chicago: Rand McNally. pp. 225–287.

Pontryagin, Lev; Boltyansky, Vladimir; Gamkrelidze, Revaz; Mishchenko, Evgenii (1962). The Mathematical Theory of Optimal Processes. New York: John Wiley.  [print copy only]

Acemoğlu, Daron (2009). “The Neoclassical Growth Model”. IN Introduction to Modern Economic Growth. Princeton: Princeton University Press. pp. 287–326. [print copy only]

Barro, Robert J.; Sala-i-Martin, Xavier (2004). “Growth Models with Consumer Optimization”. IN Economic Growth (Second ed.). New York: McGraw-Hill. pp. 85–142.  [print copy only]

Blanchard, Olivier Jean; Fischer, Stanley (1989). “Consumption and Investment: Basic Infinite Horizon Models”. Lectures on Macroeconomics. Cambridge: MIT Press. pp. 37–89.  [print copy only]

Romer, David (2011). “Infinite-Horizon and Overlapping-Generations Models”. Advanced Macroeconomics (Fourth ed.). New York: McGraw-Hill. pp. 49–77.  [print copy only]

Sala-i-Martin, Xavier (1990), Lecture Notes on Economic Growth (I): Introduction to Neoclassical Growth Models, National Bureau of Economic Research Working Paper 3563.  [print copy only]

Sala-i-Martin, Xavier (1990), Lecture Notes on Economic Growth (II): Five Prototype Models of Endogenous Growth, National Bureau of Economic Research Working Paper 3564.   link [Open access]

Romer, P. (1986). Increasing Returns and Long-Run Growth. Journal of Political Economy. 94 (October) 1002 – 1037.  link [Open access]   link [Accessible via UPSE networks]

Romer, P. (1990). Endogenous Technical Change. Journal of Political Economy. 98 (October) S71 – S102.  link  [Open access]    link [Accessible via UPSE network]

Growth Models with Money

Sidrauski Flexible Price Model

BF, Chapter 4-3 to 4-7, and 10-2. (DR, Chapter 9-7; OR Chapter 8).

Sidrauski, M. (1967). Rational Choice and Patterns of Growth in a Monetary Economy. American Economic Review 57 (May) pp. 534-544.  link [Accessible via UPSE network]   link [Open access]

Roubini, N. and X. Sala-i-Martin (1992), “Financial Repression and Economic Growth,” Journal of Development Economics, 39: 5-30.   [See the eReserve database]

Roubini, N. and X. Sala-i-Martin (1995), “A Growth Model of Inflation, Tax Evasion and Financial Repression,” Journal of Monetary Economics, 35: 275-301.  link [Accessible via Dilnet] 

Real Business Cycle (RBC) Models – models that emphasize shocks coming from the supply side of the economy (labor supply, productivity shocks); they are neoclassical in nature; they also assume prices are flexible

Introduction to Time Series Analysis
RBC models

Source: class notes

Consumption and Asset Prices

Permanent income hypothesis
Hall model of consumption
Consumption-Capital Asset Pricing Model (C-CAPM)
Other asset pricing models

Rajneesh Mehra and Edward Prescott (1985), “The Equity Premium: A Puzzle,” Journal of Monetary Economics (March).  link [Open access]

Merton, Robert C. 1973.  “An Intertemporal Capital Asset Pricing Model.”  Econometrica 41 (September): 867-887.  link [Accessible via UPSE network] 


Neoclassical model of investment
Tobin’s q model of investment
Location theory
Fiscal incentives

Eisner, R. and Nadiri, M. I., (1968), “Investment Behavior and Neoclassical Theory”, Review of Economics and Statistics, vol. 50, no. 3, 369-382.  link [Open access]  

Tobin, James (1969). “A General Equilibrium Approach to Monetary Theory”. Journal of Money, Credit and Banking 1 (1): 15–29.  link [Accessible via UPSE network] 

Government Expenditure

Class notes

Topics in Open Economy Macroeconomics

Introductory concepts

Balance of payments
Exchange rates
Purchasing power parity
Uncovered interest parity

Ad hoc Open Economy Models (OR Chapter 8)

Review of the Mundell-Fleming Model
Dornbusch Overshooting Model
Monetary Model of the Exchange Rate

Frenkel, J. (1976). A Monetary Approach to the Exchange Rate: Doctrinal Aspects and Empirical Evidence. Scandinavian Journal of Economics 78 (May) pp 200 – 224.  link [Accessible via UPSE network] 

Mussa, M. (1976). The Exchange Rate, the Balance of Payments, and Monetary and Fiscal Policy Under a Regime of Controlled Floating. Scandinavian Journal of Economics 78 (May) pp 229 – 248.   link [Accessible via UPSE network] 

Dornbusch, R. (1983). Expectations and Exchange Rate Dynamics. Journal of Political Economy 84 (December) pp 1161 – 1176.  link [Accessible via UPSE network] 

Clarida, R. and J. Galí (1994). Sources of real exchange rate fluctuations: how important are nominal shocks? Carnegie-Rochester Conference Series on Public Policy 41, 1-56. Also NBER Working Paper 4658.  link [Open access]

Economic Crisis Models

Krugman (OR 8)
Flood and Garber (OR 8)
Obstfeld (OR 9)
Chang and Velasco

Chang, R. and A. Velasco (1998). Financial Crises in Emerging Markets: A Canonical Model. Federal Reserve Bank of Atlanta Working Paper 98-10 July.

Flood R. and P. Garber (1984). Collapsing Exchange Rate Regimes Some Linear Examples. Journal of International Economics 17 (August) pp 1 – 13.  [See eReserve database]

Krugman, P. (1979). A Model of Balance-of-Payments Crises. Journal of Money, Credit, and Banking (August) 11(3), pp. 311-25.   link [Open access]  link [Accessible via UPSE network]

Obstfeld, M. (1994). The Logic of Currency Crises. National Bureau of Economic Research (Cambridge, MA) Working Paper No. 4640, February.  link [Open access]

__________. (1996). Models of Currency Crises with Self-fulfilling Features. European Economic Review, April 1996, 40(1), pp. 1037-47.  link [Open access]  link [Accessible via Dilnet]

Nominal Rigidities

Menu costs

Mankiw, N. Gregory. 1985.  “Small Menu Costs and Large Business Cycles: A Macro-economic Model of Monopoly.”  Quarterly Journal of Economics 100 (May):  529-539.  Reprinted in Mankiw and Romer (1991).  link [Open access]

Staggered price adjustment – Taylor, Fischer, Calvo (optional) models

Taylor, J. (1980), Aggregate Dynamics and Staggered Contracts, Journal of Political Economy, 88, pp 1 – 24.  link [Accessible via UPSE network]

Calvo, G.A., Staggered Prices in a Utility-Maximizing Framework, Journal of Monetary Economics 12 (3) September 383-398.  link [Accessible via UPSE network]

Tools for More In-Depth Analysis of the Ramsey Model


More Advanced New Keynesian Macroeconomics

Monopolistic Competition and Nominal Rigidities in Recent Monetary Models

Dixit-Stiglitz Model (BF 8, OR 4)
Blanchard-Kiyotaki Model (BF 8)
Gali-Gertler Sticky Prices Model
Clarida-Gali-Gertler Optimal Monetary Policy Paper (optional)
Obstfeld and Rogoff Redux Paper (optional)

Dixit, A. and J. Stiglitz (1977). Monopolistic Competition and Optimum Product Diversity. American Economic Review 67, 3 (June) 297 – 308.  link [Open access]   link [Accessible via UPSE network]

Blanchard, O. and N. Kiyotaki (1987). Monopolistic Competition and the Effects of Aggregate Demand. American Economic Review 77 (September), 647-666.   link [Open access]   link [Accessible via UPSE network]

Clarida, R., J. Gali and M. Gertler (1999). The Science of Monetary Policy: A New Keynesian Perspective. Journal of Economic Literature Vol 37 pp 1661-1707.   link [Open access]

Obstfeld, M. and K. Rogoff (1995). Exchange Rate Dynamics Redux. Journal of Political Economy, 103 (June) 624-660.  link [Open access]  link  [Accessible via UPSE network]