Academic Year 2004-2005 Michal Kejak
Summer Semester
Macroeconomics III - Economic Growth and Development
The course will, following its title, focus on general equilibrium models of economic growth. The course will start with neoclassical growth models and continues with recent models which try to explain long-run growth endogenously. We will also introduce money into the growth models and study the relationship between growth and inflation. The course will conclude with empirical evidence on growth models.
There will be a three hour final exam. There will also be weekly problem sets. Problem sets and class participation will count for 15 % of the course grade, and the final exam will count for 35 % of the course grade, respectively.
As a main textbook we will use Barro and Sala-i-Martin's Economic Growth and Lucas’ Lectures on Economic Growth. Moreover, readings listed with a ♦ will be discussed in detail in lectures; please read them in advance.
Recommended books:
Barro, Robert and Xavier Sala-i-Martin: Economic Growth. McGraw-Hill, 1995.
Blanchard, Olivier J. and Stanley Fischer: Lectures on Macroeconomics. MIT Press, 1989.
Robert E. Lucas: Lectures on Economic Growth. Harvard University Press. 2002
Romer David: Advanced Macroeconomics. McGraw-Hill, 1996.
Other important books:
Jones, I. Charles: Introduction to Growth. W.W. Norton, New York, 1998
Gylfason, T.: Principles of Economic Growth. Oxford University Press, 1999
Grossman, Gene and Elhanan Helpman: Innovation and Growth in the Global Economy. Cambridge MA, MIT Press, 1991
Kamien, Morton and Nancy Schwartz: Dynamic Optimization: The Calculus of Variations and Optimal Control in Economics and Management. North-Holland, 1991
Topics and Readings:
v Barro, Robert and Xavier Sala-i-Martin (1995) Economic Growth. McGraw-Hill, Chapter 1
v Solow R. (1956) "A Contribution to the Theory of Economic Growth" Quarterly Journal of Economics 70, 65-94
v Romer David (1996) Advanced Macroeconomics. McGraw-Hill, Chapter 1
King R. and S. Rebelo (1993) "Transitional Dynamics and Economic Growth in the Neoclassical Model" American Economic Review 83, 908-931
v Barro, Robert and Xavier Sala-i-Martin (1995) Economic Growth. McGraw-Hill, Chapter 2
v Romer David (1996) Advanced Macroeconomics. McGraw-Hill, Chapter 2A
v Parente, S.L., Rogerson, R. and R. Wright (2000) “Homework in Development Economics: Household Production and the Wealth of Nations” Journal of political Economy, vol. 108 (4), 680-687
v Hayashi, F., E.C. Prescott (2002) “The 1990s in Japan: A Lost Decade” Review of Economic Dynamics, 5, 206-235
v Parente, S.L. and E.C. Prescott (2000) “Barriers to Riches” The MIT Press,.
Blanchard, Olivier J. and Stanley Fischer (1989) Lectures on Macroeconomics. MIT Press, Chapter 2
v Barro, Robert and Xavier Sala-i-Martin (1995) Economic Growth. McGraw-Hill, Chapter 3 Appendix
v Romer David (1996) Advanced Macroeconomics. McGraw-Hill, Chapter 2B
Diamond P. (1965) "National Debt in a Neoclassical Growth Model" American Economic Review 55, 1126-1150
Blanchard O. (1985) "Debt, Deficits, and Finite Horizons" Journal of Political Economy 93, 223-247
v Barro, Robert and Xavier Sala-i-Martin (1995) Economic Growth. McGraw-Hill, Chapter 3
A. "AK" Growth Models (One-Sector Models of Endogenous Growth)
v Barro, Robert and Xavier Sala-i-Martin (1995) Economic Growth. McGraw-Hill, Chapter 4
Romer P. (1986) "Increasing Returns and Long-Run Growth" Journal of Political Economy 94, 1002-1037
v Romer P. (1989) "Capital Accumulation in the Theory of Long Run Growth" in R. Barro (ed.) Modern Business Cycle Theory, Cambridge MA, Harvard University Press
Rebelo S. (1991) "Long-Run Policy Analysis and Long-Run Growth" Journal of Political Economy 99, 500-521
Jones L. and R. Manuelli (1990) "A Convex Model of Equilibrium Growth: Theory and Policy Implications" Journal of Political Economy 98, 1008-1038
v Barro R. (1990) "Government Spending in a Simple Model of Endogenous Growth" Journal of Political Economy 98, S103-S125
Barro R. and X. Sala-i-Martin (1992) "Public Finance in Models of Economic Growth" Review of Economic Studies 59, 645-661
v Barro, Robert and Xavier Sala-i-Martin (1995) Economic Growth. McGraw-Hill, Chapter 5
v Lucas R. (1988) "On the Mechanics of Economic Development" Journal of Monetary Economics 22, 3-42
Lucas R. (1993) "Making a Miracle" Econometrica 61, 251-272
Arrow K. (1962) "The Economic Implications of Learning by Doing" Review of Economic Studies 29, 155-173
Mulligan C. and X. Sala-i-Martin (1993) "Transitional Dynamics in Two-Sector Models of Endogenous Growth" Quarterly Journal of Economics 108, 739-773
Stokey N. (1991) "Human Capital, Product Quality and Growth" Quarterly Journal of Economics 106, 587-616
Young A. (1993) "Invention and Bounded Learning by Doing" Journal of Political Economy 101, 443-472
Irwin D. and P. Klenow (1994) "Learning-by-Doing Spillovers in the Semiconductor Industry" Journal of Political Economy 102, 1200-1227
v Barro, Robert and Xavier Sala-i-Martin (1995) Economic Growth. McGraw-Hill, Chapter 6
v Barro, Robert and Xavier Sala-i-Martin (1995) Economic Growth. McGraw-Hill, Chapter 7
v Romer David (1996) Advanced Macroeconomics. McGraw-Hill, Chapter 3A
Romer P. (1987) "Growth Based on Increasing Returns Due to Specialization" American Economic Review Papers and Proceedings 77, 56-62
v Romer P. (1990) "Endogenous Technological Change" Journal of Political Economy 98, S71-S102
Aghion P. and P. Howitt (1992) "A Model of Growth Through Creative Destruction" Econometrica 60, 323-351
Grossman G. and E. Helpman (1991) "Quality Ladders and Product Cycles" Quarterly Journal of Economics 106, 557-586
Jones C. I. (1995) "R&D-Based Models of Economic Growth" Journal of Political Economy 103, 759-784
Romer Paul (1993) "Idea Gaps and Object Gaps in Economic Development" Journal of Monetary Economics 32, 543-573
Jones C. I. (1998) "Sources of U.S. Economic Growth in a World of Ideas" Mimeo. Stanford University
Jones C. I. (1998) "Population and Ideas: A Theory of Endogenous Growth" Mimeo. Stanford University
v Durlauf, Steven N. and Danny T. Quah (1999) "The New Empirics of Economic Growth" in Handbook of Macroeconomics (John Taylor and Michael Woodford, eds.). (forthcoming)
v Hall, Robert E. and Charles I. Jones (1999) "Why Do Some Countries Produce So Much More Output per Worker than Others?" Quarterly Journal of Economics, (forthcoming)
v Prescott Edward C. (1997) "Needed: A Theory of Total Factor Productivity" Research Department Staff Report 242, Federal Reserve Bank of Minneapolis
v Parente S., Prescott, E. C. (2000) “Barriers to Riches.” MIT Press
v McGrattan, E., Schmitz, J. (1999) “Explaining cross-country income differences.” Chapter 10 in Handbook of Macroeconomics, Elsevier North-Holland
v Barro, Robert and Xavier Sala-i-Martin (1995) Economic Growth. McGraw-Hill, Chapter 10
Solow R. (1956) "Technical Change and the Aggregate Production Function" Review of Economics and Statistics 39, 312-320
Benhabib J. and B. Jovanovic (1991) "Growth Accounting and Externalities" American Economic Review 81, 82-113
v Barro, Robert (1998) "Notes on Growth Accounting" NBER, WP 6654
v Young A. (1992) "A Tale of Two Cities: Factor Accumulation and Technical Change in Hong Kong and Singapure" in O.Blanchard and S.Fischer (ed.) NBER Macroeconomics Annual 1992, MIT Press, Cambridge MA
Young A. (1995) "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience" Quarterly Journal of Economics 110, 641-680
Collins S. and B. Bosworth (1996) "Economic Growth in East Asia: Accumulation versus Assimilation" Brookings Papers on Economic Activity 2, 135-203
Rodrik Dani (1997) "TFPG Controversies, Instituttions, and Economic Performance in East Asia" NBER, WP 5914
v Barro, Robert and Xavier Sala-i-Martin (1995) Economic Growth. McGraw-Hill, Chapter 11
Baumol W. (1986) "Productivity Growth, Convergence, and Welfare: What the Long Run Data Show" American Economic Review 76, 1072-1085
DeLong J. B. (1988) "Productivity Growth, Convergence, and Welfare: Comment" American Economic Review 78, 1138-1154
v Barro R. (1991) "Economic Growth and a Cross Section of Countries" Quarterly Journal of Economics 106, 407-441
v Mankiw G., D. Romer and D. Weil (1992) "A Contribution to the Empirics of Economic Growth" Quarterly Journal of Economics 107, 407-437
Mankiw G. (1995) "The Growth of Nations" Brookings Papers on Economic Activity 1, 275-310
Levine R. and D. Renelt (1992) "A Sensitivity Analysis of Cross-Country Growth Regressions" American Economic Review 82, 942-963
Sala-i-Martin X. (1997) "I just ran four million regressions" NBER, WP 6252
Barro R. and X. Sala-i-Martin (1992) "Convergence" Journal of Political Economy 100, 223-251
Jones C. (1995) "Time Series Tests of Endogenous Growth Models" Quarterly Journal of Economics 110, 495-526
v Jones C. (1997) "Convergence Revisited" Journal of Economic Growth 2, 131-153
de la Fuente A. (1997) "The empirics of growth and convergence" J. Economic Dynamics And Control (21)1, 23-73
Kocherlakota R. Narayana and Kei-mu Yi (1997) "Is There Endogenous Long-Run Growth? Evidence from the United States and the United Kingdom" J. Money, Credit, and Banking (29) 2, 233-262
Temple J. (1999) "The New Growth Evidence" Journal of Economic Literature (forthcoming)