Government sector and fiscal policy. The aim of this lecture is to review the role of government in the economy, public goods, ways of financing public expenditure in finite and infinite time horizon models. course hours: 2, hours of student’s self study: 4.

The Government Budget Constraint The Ricardian Equivalence Result Ricardian Equivalence in Practice Tax-Smoothing Political-Economy Theories of Budget Deficits Strategic Debt Accumulation Delayed Stabilization Empirical Application: Politics and Deficits in Industrialized Countries 12.9 The Costs of Deficits 12.10 A Model of Debt Crises Problems Online Appendix B: Narrative Evidence on the Motivation for Fiscal Policy in Crisis Episodes [PDF], May 2019. means that the overall dispersion of average incomes across different parts of the world must have been much smaller than it is today (Pritchett, 1997). Over the past few decades, however, there has been no strong tendency either toward continued divergence or toward convergence. The implications of the vast differences in standards of living over time and across countries for human welfare are enormous. The differences are associated with large differences in nutrition, literacy, infant mortality, life expectancy, and other direct measures of well-being. And the welfare consequences of long-run growth swamp any possible effects of the short-run fluctuations that macroeconomics traditionally focuses on. During an average recession in the United States, for example, real income per person falls by a few percent relative to its usual path. In contrast, the productivity growth slowdown reduced real income per person in the United States by about 25 percent relative to what it otherwise would have been. Other examples are even more startling. If real income per person in the Philippines continues to grow at its average rate for the period 1960–2001 of 1.5 percent, it will take 150 years for it to reach the current U.S. level. If it achieves 3 percent growth, the time will be reduced to 75 years. And if it achieves 5 percent growth, as the NICs have done, the process will take only 45 years. To quote Robert Lucas (1988), “Once one starts to think about [economic growth], it is hard to think about anything else.” The first four chapters of this book are therefore devoted to economic growth. We will investigate several models of growth. Although we will examine the models’ mechanics in considerable detail, our goal is to learn what insights they offer concerning worldwide growth and income differences across countries. Indeed, the ultimate objective of research on economic growth is to determine whether there are possibilities for raising overall growth or bringing standards of living in poor countries closer to those in the world leaders. This chapter focuses on the model that economists have traditionally used to study these issues, the Solow growth model.3 The Solow model is the starting point for almost all analyses of growth. Even models that depart fundamentally from Solow’s are often best understood through comparison with the Solow model. Thus understanding the model is essential to understanding theories of growth. The principal conclusion of the Solow model is that the accumulation of physical capital cannot account for either the vast growth over time in output per person or the vast geographic differences in output per person. Specifically, suppose that capital accumulation affects output through the conventional channel that capital makes a direct contribution to production, for which it is paid its marginal product. Then the Solow model 3 The Solow model (which is sometimes known as the Solow–Swan model) was developed by Robert Solow (Solow, 1956) and T. W. Swan (Swan, 1956).Nominal Rigidities. The aim of the lecture is present the Calvo's model of staggered price contracts. Then the resulting price setting policy is used in the derivation of the New Keynesian Phillips curve. The latter is combined with the new IS curve to allow the analysis of the short run money non-neutrality. Course hours: 3; hours of student’s self-study: 4.

The determination of real variables such as output and employment, and of nominal variables such as inflation and the nominal interest rate, will be studied, as will their interaction. In general the module will draw on more than one school of thought, such as Classical ideas and Keynesian ideas and their modern variants. ADVANCED MACROECONOMICS, FOURTH EDITION Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., c 2012 by 1221 Avenue of the Americas, New York, NY, 10020. Copyright  c 2006, 2001, The McGraw-Hill Companies, Inc. All rights reserved. Previous editions  and 1996. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOC/DOC 1 0 9 8 7 6 5 4 3 2 1 ISBN 978-0-07-351137-5 MHID 0-07-351137-4 Vice President & Editor-in-Chief: Brent Gordon Vice President EDP/Central Publishing Services: Kimberly Meriwether David Publisher: Douglas Reiner Marketing Manager: Dean Karampelas Managing Developmental Editor: Christina Kouvelis Editorial Coordinator: Alyssa Otterness Project Manager: Robin A. Reed Design Coordinator: Margarite Reynolds Cover Designer: Studio Montage, St. Louis, Missouri Buyer: Nicole Baumgartner Media Project Manager: Balaji Sundararaman Compositor: MPS Limited, a Macmillan Company Typeface: 9.25/12 Lucida Bright Printer: R. R. Donnelley Library of Congress Cataloging-in-Publication Data Romer, David. Advanced macroeconomics / David Romer. — 4th ed. p. cm. ISBN 978-0-07-351137-5 1. Macroeconomics. I. Title. HB172.5.R66 2012 339—dc22 2010040893 Macroeconomics is the study of the economy as a whole. It is therefore concerned with some of the most important questions in economics. Why are some countries rich and others poor? Why do countries grow? What are the sources of recessions and booms? Why is there unemployment, and what determines its extent? What are the sources of inflation? How do government policies affect output, unemployment, inflation, and growth? These and related questions are the subject of macroeconomics. This book is an introduction to the study of macroeconomics at an advanced level. It presents the major theories concerning the central questions of macroeconomics. Its goal is to provide both an overview of the field for students who will not continue in macroeconomics and a starting point for students who will go on to more advanced courses and research in macroeconomics and monetary economics. The book takes a broad view of the subject matter of macroeconomics. A substantial portion of the book is devoted to economic growth, and separate chapters are devoted to the natural rate of unemployment, inflation, and budget deficits. Within each part, the major issues and competing theories are presented and discussed. Throughout, the presentation is motivated by substantive questions about the world. Models and techniques are used extensively, but they are treated as tools for gaining insight into important issues, not as ends in themselves. The first four chapters are concerned with growth. The analysis focuses on two fundamental questions: Why are some economies so much richer than others, and what accounts for the huge increases in real incomes over time? Chapter 1 is devoted to the Solow growth model, which is the basic reference point for almost all analyses of growth. The Solow model takes technological progress as given and investigates the effects of the division of output between consumption and investment on capital accumulation and growth. The chapter presents and analyzes the model and assesses its ability to answer the central questions concerning growth. Chapter 2 relaxes the Solow model’s assumption that the saving rate is exogenous and fixed. It covers both a model where the set of households in Shapiro-Stiglitz model of efficiency wages. The aim of this lecture is to analyse Shapiro-Stiglitz model, and explain the concept of principal-agent problem of imperfect monitoring of workers' effort. Course hours: 3, students' self-study hours: 3. Lavoie, M. (2014). Post-Keynesian Economics: New Foundations, Cheltenham, UK and Northampton, MA, USA: Edward Elgar.Building Blocks of Dynamic New Keynesian Models Predetermined Prices: The Fischer Model Fixed Prices: The Taylor Model The Calvo Model and the New Keynesian Phillips Curve Search and matching theory. The aim of this lecture is to present search and matching theory of the labor market and the flow concept into the labor market. Course hours: 4, students' self-study hours: 4.

He has 13 or 14 chapters. Each chapter is a fundamental section of macroeconomics, starting with economic growth, going on to endogenous growth and the economics of ideas, economics of information, economics of monetary policy, fiscal policy, employment—you name it. It’s the most comprehensive, and it’s accessible. Keeping the book up to date has been made even more challenging by the financial and macroeconomic crisis that began in 2008. I have deliberately chosen not to change the book fundamentally in response to the crisis: although I believe that the crisis will lead to major changes in macroeconomics, I also believe that it is too soon to know what those changes will be. I have therefore taken the approach of bringing in the crisis where it is relevant and of including an epilogue that describes some of the main issues that the crisis raises for macroeconomics. But I believe that it will be years before we have a clear picture of how the crisis is changing the field. For additional reference and general information, please refer to the book’s website at www.mhhe.com/romer4e. Also available on the website, under the password-protected Instructor Edition, is the Solutions Manual. Print versions of the manual are available by request only—if interested, please contact your McGraw-Hill/Irwin representative. This book owes a great deal to many people. The book is an outgrowth of courses I have taught at Princeton University, the Massachusetts Institute of Technology, Stanford University, and especially the University of California, Berkeley. I want to thank the many students in these courses for their feedback, their patience, and their encouragement. Four people have provided detailed, thoughtful, and constructive comments on almost every aspect of the book over multiple editions: Laurence Ball, A. Andrew John, N. Gregory Mankiw, and Christina Romer. Each has significantly improved the book, and I am deeply grateful to them for their efforts. In addition to those four, Susanto Basu, Robert Hall, and Ricardo Reis provided extremely valuable guidance that helped shape the revisions in this edition. Many other people have made valuable comments and suggestions concerning some or all of the book. I would particularly like to thank James Butkiewicz, Robert Chirinko, Matthew Cushing, Charles Engel, Mark Gertler, Robert Gordon, Mary Gregory, Tahereh Alavi Hojjat, A. Stephen Holland, Hiroo Iwanari, Frederick Joutz, Pok-sang Lam, Gregory Linden, Maurice Obtsfeld, Jeffrey Parker, Stephen Perez, Kerk Phillips, Carlos Ramirez, Robert Rasche, Joseph Santos, Peter Skott, Peter Temin, Henry Thompson, Matias Vernengo, and Steven Yamarik. Jeffrey Rohaly prepared the superb Solutions Manual. Salifou Issoufou updated the tables and figures. Tyler Arant, Zachary Breig, Chen Li, and Melina Mattos helped draft solutions to the new problems and assisted with proofreading. Finally, the editorial and production staff at McGraw-Hill did an excellent job of turning the manuscript into a finished product. I thank all these people for their help.Consumption. The aim of this lecture is to present the intertemporal approach to consumption decisions using two- and multi-period models. course hours: 2, hours of student’s self study: 4. Let’s move on to your next economics textbook, Macroeconomics by Stephen Williamson, who is Professor and Stephen A. Jarislowsky Chair in Central Banking at the University of Western Ontario. An extended Solow growth model describing the interaction between the economy and the climate system as a basis for a discussion of climate policy And does it cover in-depth all the unorthodox policies that central banks have had to undertake post-2008, quantitative easing and that kind of thing? Investment. The aim of this lecture is to compare the predictions of the neoclassical investment theory with the q- theory. course hours: 2, hours of student’s self study: 4.

Flexible Prices and the Role of Expectations. The aim of the lecture is to present the Cagan's model of money and prices and the Lucas' misperception theory. Course hours: 2; hours of student’s self-study: 4. Concepts such as rational expectations and dynamic general equilibrium will be widely used. It will generally include analysis of both the short run, or business-cycle, behaviour of a macroeconomy; and of the long-run, or growth, behaviour. ECONOMETRICS Gujarati and Porter Basic Econometrics Fifth Edition Gujarati and Porter Essentials of Econometrics Fourth Edition MANAGERIAL ECONOMICS Baye Managerial Economics and Business Strategy Eighth Edition Brickley, Smith, and Zimmerman Managerial Economics and Organizational Architecture Fifth Edition Thomas and Maurice Managerial Economics Tenth Edition INTERMEDIATE ECONOMICS Bernheim and Whinston Microeconomics First Edition Dornbusch, Fischer, and Startz Macroeconomics Eleventh Edition Frank Microeconomics and Behavior Eighth Edition ADVANCED ECONOMICS Romer Advanced Macroeconomics Fourth Edition Equilibrium unemployment rate – NAIRU model. The aim of this lecture is to present the model of the NAIRU – non-accelerating inflation rate of unemployment and the analysis of the determinants of equilibrium unemployment rate and it's short run and long run changes. Course hours: 2, students' self-study hours: 2. Shapiro, Stiglitz (1984) 'Equilibrium Unemployment as a Worker Discipline Device', American Economic Review , Vol. 74, pp. 433-444.Monetary Growth Theory I: The Tobin Model. The aim of the lecture is to introduce the concept of money non-superneutrality and to show that inflation may raise the steady-state level of income if it leads to the portfolio substitution effect. Course hours: 1; hours of student’s self-study: 1. So, it’s really narrow, but it’s still a fundamental book. I say narrow, but of course, monetary policy is one of the biggest sub-fields in macro. And, especially if you are interested in macroeconomic policy, then monetary policy is one of the two key things you need to have. It’s a classic in central banking and monetary policy.