| 1 |
Fluctuations. Facts
Covariance Stationarity; Trends/Cycles Decompositions; Shocks and Propagation Mechanisms; Wold Representation; ARMAs, VARs, SVARS; Impulse Responses; Co-movements of GDP Components; Correlations Between Real Wages, Interest Rates, and Output; The Correlations of Output and Money; Cycles, Slumps, and Depressions; Non Linearities. |
| 2 |
The Basic Model. The Consumption/Saving Choice
Setting up the Optimization Problem; Intertemporal Choice, Shocks, Uncertainty; The First Order Conditions; The Keynes-Ramsey Condition; Solving the Model; Numerically; Value Functions; Log Linearization; Special Cases and Other Short Cuts; Equivalence Between Centralized and Decentralized Economies; The Consumption Problem in the Decentralized Economy. |
| 3 |
Allowing for a Labor/Leisure Choice (The RBC model)
Why the Extension?; Movements in Employment/Unemployment; Interpreting the First Order Conditions; Solving the Model Numerically, and by Log Linearization; Special Case: Log and Full Depreciation; Evidence on Labor Supply Elasticity; Evidence on High Frequency Technological Shocks; Solow Residuals and their Interpretation; Alternative Models of Innovation-driven Booms. |
| 4 |
Allowing for Non-trivial Investment Decisions
Costs of Adjustment for Investment; Investment, Consumption, and Interest Rates in the Decentralized Economy; The Role of the Term Structure of Interest Rates; The Stock Market and Investment; The Effects of Shocks on Output, Investment, the Stock Market, and the Term Structure; The Open Economy Version; Shocks, Investment, Saving, and Movements in the Current Account; Asset Price Bubbles, Investment, and Fluctuations. |
| 5 |
Allowing for Two Goods
Why Introduce Two Goods?; The Pitfalls of One-good Models; Capital/Consumption Goods; Tradable/Non Tradable Goods; Domestic/Foreign Goods; The Consumer Problem with Two Goods; Intratemporal and Intertemporal First Order Conditions; Closing the Model if Tradables/Non Tradables; The Balassa-Samuelson Effect; The Transfer Problem; Effects of Technological Shocks on Relative Prices, and on the Current Account. |
| 6 |
Introducing Money
Decentralized Exchange and the Use of Money; Cash-in-advance Models; Money in the Utility Function; The Effects of Money Growth on Capital Accumulation; Dynamics of Hyperinflation; The Cagan Model; The Budget Deficit and Money Growth. |
| 7 |
Introducing Price Setting
Decentralized Exchange, Money, and Price Setters; A Yeoman Farmer Model of Price Setting Under Monopolistic Competition; The Role of Price Above Marginal Cost, Markups; Predetermined Prices; The Effects of Money on Output and Welfare; Role of Wage Versus Price Setting; The behavior of Real Wages; Revisiting the Effects of Technological and Other Shocks; Indexation; Macro-implications of the Choice of Numeraire; The Monetary Policy Problem; Time Consistency. |
| 8 |
The "New Keynesian" Model
Staggering of Price Decisions; Fischer-Taylor-Calvo Models; Coordination Mroblems; The "modern Phillips curve"; Inflation Inertia?; The "Modern IS-LM Model", the "Modern AS-AD Model". |
| 9 |
Monetary Policy
Inflation Targeting; Interest Rate Rules; The Liquidity Trap. |
| 10 |
Fiscal Policy
Effects of Spending and Taxes in Models with Flexible or Sticky Prices; Empirical Evidence; Perverse Effects of Fiscal Expansions. |