14.06 Lecture Notes and Links to Papers

One chapter in the lecture notes IS NOT equivalent to one lecture.

• Chapter 1 – Growth facts. Covered in Lecture 1. You are required to read the whole chapter.
• Chapter 2 – Solow. Covered in Lectures 2, 3, and 4. You are required to read the whole chapter. However, you do not need to know how to do the log-linearization, but you should know what convergence means.
• Chapter 3 – Ramsey. Covered in Lectures 5, 6, 7, and 8. You are not required to know everything in section 3.2. The decentralized competitive equilibrium is discussed in a lot more detail here than what you are expected to know. You should know how to solve the decentralized competitive equilibrium in continuous time, as covered in recitation.
• Chapter 4 (Read also Chapter 7 in Romer’s textbook)
• Volatility and Growth (Aghion, Angeletos, Banerjee and Manova) <slides: they are a bit outdated so they do not include everything that is in the paper>
• Chapter 6 – AK
• Chapter 7 – R&D
• Chapter 8 – Financial markets
• Alesina and Angeletos; “Fairness and Redistribution” (paper) (slides)
• Crises, Angeletos and Werning. (slides) (paper)

Links to papers:

Ramey, G., and V. Ramey (1995); “Cross-Country Evidence on the Link between Volatility and Growth”, American Economic Review 85(5), 1138-1151. <You have to read this paper.>

Bernanke, B., and M. Gertler (1989); “Agency Costs, Net Worth, and Business Fluctuations”, American Economic Review 79(1), 14-31. <Paper covered in Recitation on Friday April 8, 2005.>

Angeletos, G. M. (2004); “Comments on Benigno and Woodford’s ‘Optimal Monetary and Fiscal Policy’ ”, in Gertler, M. and K. Rogoff, eds., NBER Macroeconomics Annual 2003. <Jose: Be aware of the typo I mentioned in the Recitation on Friday April 22, 2005 (in equation 10); I was right.>

Angeletos, G. M. and I. Werning (2005); “Crises and Prices: Information Aggregation, Multiplicity and Volatility”, mimeo, MIT.

Morris, S. and H. S. Shin (2001); “Rethinking Multiple Equilibria in Macroeconomic Modeling”, NBER Macroeconomics Annual 2000, p. 139-161.

Recitation Handouts

April 8, 2005: Bernanke and Gertler (1989)

April 15, 2005: Consumption

April 22, 2005: Angeletos (2004), Tax Smoothing.

April 28, 2005: Barro and Gordon (1983), Monetary Policy and Time Inconsistency.

April 29, 2005: Obstfeld’s (1994) Model of Balance of Payments Crises.

May 6, 2005: Angeletos and Werning (2005) Information Aggregation and Crises.

Here are the links to the two papers you should read before the midterm

Mankiw, N.G., D. Romer, and D. Weil (1992), “A Contribution to the Empirics of Economic Growth,” Quarterly Journal of Economics 107, 401-437.

Lucas, R.E., Jr. (1988), “On the Mechanics of Economic Development,” Journal of Monetary Economics 22, 3-42.