The lecture Macroeconomics II and the tutorial are held in English. The outline of the course and the literature is presented in detail in the syllabus . The course is based on articles from the literature which students read to prepare for the lecture and the tutorials. The syllabus presents an overview of the relevant literature and a selection of those papers will be central for the course. These core papers will be announced in the lecture.
The material in this course and the link between psychology, behavioural economics and macroeconomics is subject of ongoing research. Unfortunately, this implies that there is no textbook that covers all the material which is taught in the course. Students will be rewarded for this lack by an insight into state-of-the art research and thinking.
The literature for this course is provided in the syllabus. Links for easy access (from within the campus net or from other nets having the appropriate licences) are provided behind the titles as follows.
1 Introduction: Issues in Behavioural Macroeconomics
1.1 Macroeconomics
- Economic growth
- Business cycles
- Nominal rigidities
- Unemployment
- Saving and investment
- Inflation and monetary policy
- Fiscal policy and budget de cits
1.2 Behaviour
- Akerlof (2002) Behavioral Macroeconomics and Macroeconomic Behavior
- Camerer and Loewenstein (2004) Behavioral Economics: Past, Present, Future
- Crawford (2013) Boundedly Rational versus Optimization-Based Models of Strategic Thinking and Learning in Games
- Fudenberg (2006) Advancing beyond Advances in behavioral economics
- Harstadt and Selten (2013) Bounded-Rationality Models: Tasks to Become Intellectually Competitive.
- Mullainathan and Thaler (2001) Behavioral Economics
- Rabin (2013) Incorporating Limited Rationality into Economics
2 Economic growth
2.1 Convergence debate
- Sala-i-Martin (2006) The World Distribution of Income: Falling Poverty and ... Convergence, Period
- World Bank (2014) World Development Report 2014(data appendix)
2.2 Theory
- Aghion and Howitt (1992) A Model Of Growth Through Creative Destruction
- Galor (2005) From Stagnation to Growth: Uni ed Growth Theory
- Jones (1995) Rn&D-Based Models of Economic Growth
- Rebelo (1991) Long-Run Policy Analysis and Long-Run Growth
- Romer (1986) Increasing Returns and Long-Run Growth
- Romer (1990) Endogenous Technological Change
- Segerstrom (1998) Endogenous Growth without Scale Effects
- Solow (1956) A Contribution to the Theory of Economic Growth (see Aghion and Howitt, 1998, ch. 1.1)
- Wälde (2012) Applied Intertemporal Optimization
2.3 Towards behavioural growth
- Foellmi, Rosenblatt-Wisch, Schenk-Hoppé and Reiner (2011) Consumption paths under prospect utility in an optimal growth model
- Fudenberg and Levine (2006) A Dual Self Model of Impulse Control.
3 Business cycles
3.1 Some numbers on Business cycles
- Eurocoin (2014)
- Jones (1995) Time series test of endogenous growth models (fig. I)
- Marczak and Beisinger (2013) Real wages and the business cycle in Germany (see also special figure on growth trend and cycle)
- Schirwitz (2009) A comprehensive German business cycle chronology
- Wälde and Woitek (2004) R&D expenditure in G7 countries and the implications for endogenous fluctuations and growth
3.2 The real Business cycle approach
- Kydland and Prescott (1980) A Competitive Theory of Fluctuations and the Feasibility and Desirability of Stabilization Policy
- Kydland and Prescott (1982) Time to Build and Aggregate Fluctuations
- Wälde (2012) Applied Intertemporal Optimization (ch. 8.1)
3.3 Natural volatility
- Francois and Lloyed-Ellis (2003) Animal Spirits Trough Creative Destruction
- Wälde (2005) Endogenous Growth Cycles
- Wälde (2005) Introduction to natural volatility
3.4 Sunspot cycles
- Benhabib and Farmer (1994) Indeterminacy and Increasing Returns
- Benhabib and Nishimura (1998) Indeterminacy and Sunspots with Constant Returns
4 Nominal rigidities
- Romer (2011) Advanced macroeconomics 4th edition
5 Unemployment
- Akerlof and Yellen (1988) Fairness and Unemployment
- Burdett and Mortensen (1998) Wage Differentials, Employer Size, and Unemployment
- Cahuc and Zylberberg (2004) Labor Economics
- Fehr and Schmidt (1999) A Theory of Fairness, Competition, and Cooperation
- Moen (1997) Competitive search equilibrium
- Pissarides (1985) Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages
- Rogerson, Shimer and Wright (2005) Search-Theoretic Models of the Labor Market: A Survey
- Solow (1979) Another Possible Source of Wage Stickiness
6 Saving and investment
6.1 Saving and retirement
- Laibson (1997) Golden Eggs and Hyperbolic Discounting
- Strotz (1955/56) Myopia and Inconsistency in Dynamic Utility Maximization
- Thaler and Benartzi (2004) Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving
6.2 Asset prices
- Barberis, Huang and Santos (2001) Prospect Theory and Asset Prices
- Benartzi and Thaler (1995) Myopic Loss-Aversion and the Equity Premium Puzzle
- Caplin Leahy (2001) Psychological Expected Utility Theory And Anticipatory Feelings
- Loomes and Sugden (1982) Regret Theory: An Alternative Theory of Rational Choice under Uncertainty
- Loomes and Sugden (1986) Disappointment and Dynamic Consistency in Choice under Uncertainty
- Mehra and Prescott (1985) The Equity Premium A Puzzle
7 Ination and monetary policy
- Fehr and Tyran (2001) Does Money Illusion Matter?
- Köszegi and Rabin (2006) A model of reference-dependent preferences
- Romer (2011) Advanced macroeconomics 4th edition
- Sha r Diamond Tversky (1997) Money Illusion
8 Fiscal policy and budget de cits
- Barro (1974) Are government bonds net wealth?
- Barro (1979) On the Determination of the Public Debt
- de Grauwe (2009) Economics of Monetary Union 8th edition
- Lane (2012) The European Sovereign Debt Crisis
- Uribe (2006) On Overborrowing