Econ 2410f General Introduction

Instructors

Doireann Fitzgerald, Nicola Fuchs-Schündeln, Manuel Amador

 

Description

This class is intended to help second and third year PhD students develop a research question in an area of closed or open economy macroeconomics, and acquire some of the skills needed to answer their question. The class will be divided into three parts. Each part will cover a different literature and, and in doing so, highlight a different set of skills. The first part covers macroeconomic implications of frictions in international goods trade, and highlights empirical applications. The second part focuses on heterogeneous household model in macroeconomics, and will provide an introduction to Matlab and dynamic programming. The third part covers agency problems in international finance, with a particular emphasis on developing countries. It will highlight modeling techniques, including numerical methods.

 

Meeting times

Tuesday and Thursday, 8.30am to 10am, Littauer M 15

 

Assessment

There are two components to the assessment for this class. The first component is a short paper, on a topic broadly related to one of the three parts of the class. The second component is weekly exercises that will be specific to each of the three parts of the class. See the relevant parts of the syllabus for a description of these.

 

The goal of the paper is help you learn some hands-on lessons about the process of doing research. The minimal requirement is to replicate empirical results or a calibration exercise from a paper in the literature. Obviously, more ambitious exercises are welcome. You should start talking to the relevant instructor about your ideas as soon as possible, and definitely before the due date for the proposal. The proposal should be two pages long, and contain a detailed outline of what you plan to do. For example, if you plan to replicate an empirical paper or work on an empirical topic of your own, your proposal should describe the relevant data sources, and demonstrate that you have access to them.

 

Important dates for the paper

1st November:              Proposal for paper is due

13th December:            Draft of the paper is due

20th December:            In-class presentations of papers

20th January:                Final version of paper is due

 

Econ 2410f Part I

 

Instructor

Doireann Fitzgerald

 

Instructor’s contact information

Office: Littauer 323

Office hours: TBA

E-mail: dfitzger at ucsc dot edu

 

Description

This part of the class will focus on international macroeconomics, and in particular on macroeconomic aspects of frictions in international trade in goods. The class will be organized around a number of workhorse models in the field, and a variety of (mainly) empirical applications of these models. The aim is to ensure that you are very familiar with the workhorse models, and to give you a taste of the huge range of potential applications.

 

Weekly assessment

For this part of the class, you will be required to write and present an average of one short referee report per week. The papers will be assigned (numbers permitting) from the list on the course outline. These presentations will be followed by class discussion, and your participation in these discussions will also count towards the final grade.

 

Readings

There is no required text for this part of the class. Some of the readings are chapters from books. Most of the other readings are available online, either through the links provided, or through electronic journals available from Harvard IP addresses. Although you will be required to write and present a referee report for only one paper per week, you are expected to be familiar with the content of the other papers on the list, the better to participate in the class discussion.

 

Outline

Week 1.

1. Tuesday 20th September

Introduction to the class. All three instructors will be present.

 

2. Thursday 22nd September

Lecture: Benchmark frictionless model in international macroeconomics; Data on gross and net trade in goods and assets.

 

Reading:

Obstfeld, Maurice and Kenneth Rogoff (1996), Foundations of International Macroeconomics, Chapter 1, Chapter 5

Lucas, Robert E. (1982),“Interest Rates and Currency Prices in a Two-Country World,”

Journal of Monetary Economics 10, 335-60.

Cole, Harold and Maurice Obstfeld (1991), “Commodity trade and international risk sharing,” Journal of Monetary Economics, 28 (1), p. 3-24.

 

Week 2

3. Tuesday 27th September

Lecture: Specialization of production due to increasing returns; Iceberg trade costs.

 

Reading:

Helpman, Elhanan and Paul Krugman (1987), Market Structure and Foreign Trade, Section III.

 

4. Thursday 29th September

Discussion: Gravity models and applications

 

Papers to be assigned:

1. Anderson, James and Eric van Wincoop (2003), “Gravity With Gravitas,” American

Economic Review 93, p. 170-192

2. Santos Silva, J. M. C. and Silvana Tenreyro (2004), “The Log of Gravity,” mimeo

3. Rose, Andrew and Eric van Wincoop (2001), “National Money as a Barrier to

International Trade: The Real Case for Currency Union,” American Economic Review, 91

(2), p. 386-390.

4. Broda, Christian and John Romalis (2003), “Identifying the Relationship between

Trade and Exchange Rate Volatility,” mimeo

5. Frankel, Jeffrey and David Romer (1999), “Does Trade Cause Growth,” American

Economic Review, 89 (3), p. 379-399.

6. Hummels, David (2001), “Towards a Geography of Trade Costs,” mimeo

7. Bergoeing, Raphael and Timothy Kehoe (2003), “Trade Theory and Trade Facts,” mimeo.

Week 3

5. Tuesday 4th October

Discussion: Love of variety and welfare effects of trade liberalization

 

Papers to be assigned:

1. Feenstra, Robert (1994), “New Product Varieties and the Measurement of International Prices,” American Economic Review, 84 (1), p. 157-177.

2. Broda, Christian and David Weinstein (2004), “Globalization and the Gains From Variety,” mimeo

3. Hummels, David and Volodymyr Lugovskyy (2005), “Trade in Ideal Varieties,”

mimeo.

 

Discussion: Agglomeration

 

Papers to be assigned:

4. Krugman, Paul and Antony Venables (1995), “Globalization and the Inequality of Nations,” Quarterly Journal of Economics, 110 (4), p. 857-880.

5. Davis, Donald and David Weinstein (2004), “A Search for Multiple Equilibria in Urban Industrial Structure,” NBER working paper 10252

6. Redding, Stephen and Daniel Sturm (2005), “The Costs of Remoteness: Evidence from German Division and Reunification,” mimeo

 

6. Thursday 6th October

Lecture: Ricardian specialization

 

Reading:

Dornbusch Rudiger, Stanley Fischer, and Paul Samuelson (1977), “Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods,” American Economic Review, 67 (5), p. 823-39.

Eaton, Jonathan and Samuel Kortum, “Technology, Geography and Trade,” Econometrica 70 (5), p. 1741-1779

Alvarez, Fernando and Robert Lucas (2004), “General Equilibrium Analysis of the Eaton-Kortum Model of International Trade,” mimeo.

 

Week 4

7. Tuesday 11th October

Discussion: Applications of the Ricardian model

 

Papers to be assigned:

1. Romalis, John (2004), “Factor Proportions and the Structure of Commodity Trade,” American Economic Review, 94 (1), p. 67-97.

2.Atkeson, Andrew and Ariel Burstein (2005), “Trade Costs, Pricing to Market and International Relative Prices,” mimeo.

3. Yi, Kei-Mu (2003), “Can Vertical Specialization Explain the Growth of World Trade?” Journal of Political Economy, pp.52-102

4. Yi, Kei-Mu (2005), “Vertical Specialization and the Border Effect,” mimeo.

Vertical specialization – Kei-Mu Yi

5. Eaton, Jonathan, Samuel Kortum and Francis Kramarz, “An Anatomy of International Trade: Evidence from French Firms,” mimeo

6. Bernard, Andrew, Jonathan Eaton, Bradford Jensen and Samuel Kortum (2003), “Plants and Productivity in International Trade,” American Economic Review 93 (4), p. 1268-1290

7. Rossi-Hansberg, Esteban (2005), “A Spatial Theory of Trade,” American Economic Review, forthcoming

 

8. Thursday 13th October

Lecture: Firm-level heterogeneity

 

Reading:

Melitz, Marc (2003), “The Impact of Trade on Intra-Industry Reallocations and

Aggregate Industry Productivity,” Econometrica, 71 (6), p. 1695-1725.

 

Week 5

9. Tuesday 18th October

Discussion: Trade at the extensive vs. intensive margin

 

Papers to be assigned:

1. Hummels, David and Peter Klenow (2005), “The Variety and Quality of a Nation’s Exports,” American Economic Review, 95, p.704-723.

2. Kehoe, Timothy and Kim Ruhl (2002), “How Important is the New Goods Margin in International Trade?” mimeo.

3. Chaney, Thomas (2005), “Distorted Gravity: Heterogeneous Firms, Market Structure and the Geography of International Trade,” mimeo

4. Hillberry, Russell and David Hummels (2005) “Trade Responses to Geographic Frictions: A Decomposition Using Micro-Data,” NBER working paper 11339

5. . Corsetti, Giancarlo, Philippe Martin and Paolo Pesenti (2005), “Productivity Spillovers, Terms of Trade and the ‘Home Market Effect,’” mimeo

 

Discussion: Different approaches to heterogeneity

 

Papers to be assigned:

6. Ghironi, Fabio and Marc Melitz (2005), “International Trade and Macroeconomic Dynamics with Heterogeneous Firms,” mimeo

7. Bergin, Paul and Reuven Glick (2005), “Endogenous Tradability and Macroeconomic Implications,” mimeo.

 

Econ 2410f Part II: Consumption: Theory and Empirics

 

Instructor

Nicola Fuchs-Schündeln

 

Instructor’s contact information

Office: Littauer 212

Office hours: TBA

E-mail: nfuchs at harvard dot edu

 

Description

This part of the course covers heterogeneous agents models in macroeconomics. This is a very active and fascinating line of research. Many questions in macroeconomics cannot be answered satisfyingly with a representative agent model. We will hence look at models that explicitly take into account heterogeneity of households. While this is of interest in itself, we will further look at aggregate implications of microeconomic non-linearities. The course will cover consumption and savings decisions. We will put special emphasis on dynamic programming techniques using Matlab, and on empirical work using micro data. You will get familiar with the most heavily used data sets in this area.

 

 

Weekly assessment

The weekly assignment for this class will consist of referee reports and computer exercises. For the computer exercises, you will get short Matlab-programs that you will have to modify. The referee reports will be handled similarly as in the first part of the course.

 

 

Readings

There is no required textbook for this part of the class. The syllabus contains links to most of the readings. The readings marked with a star are the more important ones.


1. Consumption Puzzles: Excess Smoothness, Excess Sensitivity, the Comovement of Consumption and Income, the Equity Premium Puzzle

 

* Attanasio, Orazio P. and Guglielmo Weber (1995): Is Consumption Growth Consistent with Intertemporal Optimization? Evidence from the Consumer Expenditure Survey, Journal of Political Economy, 103(6), 1121-1157.

 

Attanasio, Orazio P. and Guglielmo Weber (1993): Consumption Growth, the Interest Rate and Aggregation, Review of Economic Studies, 60(3), 631-649.

 

Baxter, Marianne and Urban J. Jermann (1999), Household Production and the Excess

Sensitivity of Consumption to Current Income, American Economic Review, 89 (4), 902-920.

 

Blundell, Richard, Luigi Pistaferri and Ian Preston (2005): Imputing Consumption in the PSID Using Food Demand Estimates from the CEX, mimeo.

 

* Browning, Martin, and Dolores Collado (2001): The Response of Expenditures to Anticipated Income Changes: Panel Data Estimates, American Economic Review, June, 91(3), 681-692.

 

* Carroll, Christopher D., and Lawrence H. Summers (1991): Consumption Growth Parallels Income Growth: Some New Evidence, in: National Saving and

Economic Performance, ed. by B. Douglas Bernheim, and John B. Shoven. Chicago

University Press, Chicago.

 

Deaton, Angus (1993): Understanding Consumption, Oxford University Press.

 

Flavin, Marjorie (1981): The Adjustment of Consumption to Changing Expectations about Future Income, Journal of Political Economy, 89(5), 974-1009.

 

Fuchs-Schündeln, Nicola (2004): Adjustment to a Large Shock – Do Households Smooth Low Frequency Consumption?, mimeo.

 

* Hsieh, Chang-Tai (2003): Do Consumers React to Anticipated Income Changes? Evidence from the Alaska Permanent Fund, Princeton University, American Economic Review, March 2003, 397-405.

 

* Johnson, David, Jonathan Parker and Nicholas S. Souleles (2004): Household Expenditure and the Income Tax Rebates of 2001, NBER Working Paper 10784.

 

* Mehra, Rajinish and Edward C. Prescott (1985): The Equity Premium: A Puzzle, Journal of Monetary Economics, 15(2), 145-162.

 

Shea, John (1995): Union Contracts and the Life Cycle-Permanent Income Hypothesis, American Economic Review, 85(1), 186-200.

 

 

2. An Introduction into Matlab and Dynamic Programming

 

 

3. Representative Agent Models and Euler Equation Estimation: What are the Problems?

 

* Carroll, Christopher (2001): Death to the Log-Linearized Consumption Euler Equation! (And Very Poor Health to the Second-Order Approximation), Advances in Macroeconomics, 1(1).

 

* Carroll, Christopher (2000): Requiem for the Representative Consumer? Aggregate Implications of Microeconomic Consumption Behavior, American Economic Review Papers and Proceedings, 90(2). 110-115.

 

Dynan, Karen E. (1993): How Prudent Are Consumers?, Journal of Political Economy, 101(6), 1104-1113.

 

Ludvigson, Sydney, and Christina H. Paxson (2001): Approximation Bias in Linearized Euler Equations, Review of Economics and Statistics, 83(2), 242-56.

 

Parker, Jonathan and Bruce Preston (2005): Precautionary Saving and Consumption Fluctuations, American Economic Review, forthcoming.

 

 

4. Theory and Empirics of Precautionary Savings

 

Browning, Martin, and Annamaria Lusardi (1996): Household Saving: Micro Theories and Micro Facts, Journal of Economic Literature, 34(4), 1797-1855.

 

* Carroll, Christopher D. (2001): A Theory of the Consumption Function, With and Without Liquidity Constraints, Journal of Economic Perspectives, 15(3). (link gives earlier NBER WP version, which is more elaborate)

 

Carroll, Christopher D. (1992): The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence, Brookings Papers on Economic Activity, 2, 61-156.

 

* Carroll, Christopher D. and Andrew A. Samwick (1998): How Important Is Precautionary Saving?, Review of Economics and Statistics, 80(3), 410-419.

 

* Carroll, Christopher D. and Andrew A. Samwick (1997): The Nature of Precautionary Wealth, Journal of Monetary Economics, 40, 41-71.

 

Carroll, Christopher D.: Solving Microeconomic Dynamic Stochastic Optimization Problems. Lecture Notes.

 

Deaton, Angus (1991): Saving and Liquidity Constraints, Econometrica, 59(5), 1221-1248.

 

Fuchs-Schündeln, Nicola, and Matthias Schündeln (2005): Precautionary Savings and Self-Selection – Evidence from the German Reunification “Experiment”, Quarterly Journal of Economics, 120(3).

 

* Gross, David B. and Nicholas S. Souleles (2002): Do Liquidity Constraints and Interest Rates Matter for Consumer Behavior? Evidence from Credit Card Data, Quarterly Journal of Economics, 16, 149-185.

 

Guiso, Luigi, Tullio Jappelli and Daniele Terlizzese (1992): Earnings Uncertainty and Precautionary Savings, Journal of Monetary Economics, 30(2), 307-337.

 

Huggett, Mark and Sandra Ospina (2001): Aggregate precautionary savings: when is the third derivative irrelevant?, Journal of Monetary Economics, 48(2), 373-396.

 

Kazarosian, Mark (1997): Precautionary Savings - A Panel Study, Review of Economics and Statistics, 79(2), 241-247.

 

Kennickell, Arthur and Annamaria Lusardi (2004): Disentangling the Importance of the Precautionary Savings Motive, mimeo, Dartmouth College.

 

Ludvigson, Sydney C. and Alexander Michaelides (2001): Does Buffer-Stock Saving Explain the Smoothness and Excess Sensitivity of Consumption?, American Economic Review, 631-647.

 

Lusardi, Annamaria (1997): Precautionary Saving and Subjective Earnings Variance, Economics Letters, 57(3), 319-326.

 

 

5. Structural Estimation of a Life Cycle Consumption Model

Cagetti, Marco (2003): Wealth Accumulation Over the Life Cycle and Precautionary Savings, Journal of Business and Economic Statistics, 21(3), 339-353.

* French, Eric (2003): The Effects of Health, Wealth and Wages on Labor Supply and Retirement Behavior, Working Paper 2000-02, Research Department, Federal Reserve Bank of Chicago (forthcoming in Review of Economic Studies)

 

* Gourinchas, Pierre-Olivier and Jonathan A. Parker (2002): Consumption over the Life Cycle, Econometrica, 70(1), 47-89.

 

Laibson, David, Andrea Repetto, and Jeremy Tobacman (2004): Estimating Discount Functions from Lifecycle Consumption Choices, mimeo.

 

 

6. The Aggregate Capital Stock and the Skewness of the Wealth Distribution

 

* Aiyagari, S. Rao (1994): Uninsured Idiosyncratic Risk and Aggregate Saving, Quarterly Journal of Economics, 109, 659-684.

 

* Castaneda, Ana, Javier Diaz-Gimenez and Jose-Victor Rios-Rull (2003): Accounting for Earnings and Wealth Inequality, Journal of Political Economy, 111(4), 818-857.

 

Carroll, Christopher D. (2001): Portfolios of the Rich, in: Guiso, Luigi, Michael Haliassos and Tullio Jappelli (eds.): Household Portfolios: Theory and Evidence. MIT Press Cambridge, MA.

 

Carroll, Christopher D. (2000): Why Do the Rich Save So Much?, in: Slemrod, Joel B. (ed.): Does Atlas Shrug? The Economic Consequences of Taxing the Rich. Harvard University Press 2000.

Constantinides, George M. and D Duffie (1996): Asset Pricing with Heterogeneous Consumers, Journal of Political Economy, 104(2), 219-240.

De Nardi, Mariacristina (2004): Wealth Inequality and Intergenerational Links, Review of Economic Studies, 71(3), 743-768.

 

Diaz, Antonia, Josep Pijoan-Mas and Jose-Victor Rios-Rull (2003): Precautionary Savings and Wealth Distribution under Habit Formation Preferences, Journal of Monetary Economics, 50(6), 1257-1291.

 

Dynan, Karen, Jonathan Skinner and Stephen Zeldes (2004): Do the Rich Save More?, Journal of Political Economy, 112(2), 397-444.

 

* Heaton, J. and Deborah J. Lucas (1996): Evaluating the Effects of Incomplete Markets on Risk Sharing and Asset Pricing, Journal of Political Economy, 104(3), 443-487.

 

Hubbard, Glenn, Jonathan Skinner and Stephen Zeldes (1995): Precautionary Saving and Social Insurance, Journal of Political Economy, 103(2), 360-399.

 

Huggett, Mark (1996): Wealth Distribution in Life-Cycle Economies, Journal of Monetary Economics, 38, 469-494.

 

Huggett, Mark, and Gustavo Ventura (2000): Understanding Why High Income Households Save More Than Low Income Households, Journal of Monetary Economics, 45(2), 361-397.

 

Kotlikoff, Laurence and Lawrence Summers (1981): The Role of Intergenerational Transfers in Aggregate Capital Accumulation, Journal of Political Economy, 89(4), 706-732.

 

Krusell, Per and Anthony A. Smith (1999): On the Welfare Effects of Eliminating Business Cycles, Review of Economic Dynamics, 2, 245-272.

 

* Krusell, Per and Anthony Smith (1998): Income and Wealth Heterogeneity in the Macroeconomy, Journal of Political Economy, 106(5), 867-896.

Lucas, Deborah (1994): Asset Pricing with Undiversifiable Income Risk and Short Sales Constraints – Deepening the Equity Premium Puzzle, Journal of Monetary Economics, 34, 325-241.

Quadrini, Vincenzo (2000): Entrepreneurship, Saving and Social Mobility, Review of Economic Dynamics, 3(1), 1-40.

 

 

 7. Consumption Commitments and Habit Formation

 

* Alessie, Rob and Annamaria Lusardi (1997): Consumption, Saving and Habit Formation, Economics Letters, 55, 103-108.

 

Carroll, Christopher D., Jody R. Overland, and David N. Weil (2000): Saving and Growth with Habit Formation, American Economic Review, 90(3), 341-355.

 

Chen, Xiahong and Sydney Ludvigson (2004): Land of Addicts? An Empirical Investigation of Habit-Based Asset Pricing Models, mimeo.

 

Chetty, Raj (2003): Consumption Commitments, Unemployment Duration, and Local Risk Aversion, NBER WP 10211.

 

Chetty, Raj and Adam Szeidl (2004): Consumption Commitments: Neoclassical Foundations for Habit Formation, mimeo.

 

* Dynan, Karen E.  (2000): Habit formation in Consumer Preferences: Evidence from Panel Data, American Economic Review, 90(3), 391-406.

 

Frank, Robert H. (1984): Are Workers Paid their Marginal Products?, American Economic Review, 74(4), 549-571.


* Luttmer, Erzo F.P. (2004): Neighbors and Negatives: Relative Earnings and Well-Being, mimeo.

 

Postlewaite, Andrew, Larry Samuelson and Dan Silverman (2004): Consumption Commitments and Preferences for Risk, University of Michigan Working Paper, April 2004.

 

Ravina, Enrichetta (2005): Keeping Up with the Joneses: Evidence from Micro Data, mimeo.

 

* Sinai, Todd and Stephen S. Shore (2004): Household Risks and the Demand for Housing Commitments, mimeo.

 

 

8. Income Processes and Consumption Inequality

 

Attanasio, Orazio, Erich Battistin and Hidehiko Ichimura (2004): What Really Happened to Consumption Inequality in the US?, NBER WP 10338.

 

Attanasio, Orazio and Davis, S. (1996): Relative Wage Movements and the Distribution of Consumption, Journal of Political Economy, 104(6), 1227-1262.

 

* Blundell, R. and I. Preston (1998): Consumption Inequality and Income Uncertainty, Quarterly Journal of Economics, 113(2), 603-640.

 

Deaton, Angus and Christina Paxson (1994): Intertemporal Choices and Inequality, Journal of Political Economy, 102(3), 437-468.

 

* Guvenen, Fatih (2004): Learning Your Earning: Are Labor Income Shocks Really Very Persistent?, University of Rochester, mimeo.

 

Heathcote, Jonathan, Kjetil Storesletten, and Gianluca Violante (2004): The Macroeconomic Implications of Rising Wage Inequality in the United States, mimeo.

 

Huggett, Mark, Gustavo Ventura and Amir Yaron (2005): Human Capital and Earnings Distribution Dynamics, Journal of Monetary Economics, forthcoming.

 

* Krueger, Dirk and Fabrizio Perri (2003): On the Welfare Consequences on the Increase in Inequality in the US, NBER Macroeconomics Annual, 83-121. Comments by Steve Davis and Kjetil Storesletten

 

Storesletten, Kjetil, Chris Telmer and Amir Yaron (2004): Cyclical Dynamics in Idiosyncratic Labor-Market Risk, Journal of Political Economy, 112(3), 695-717.

 

Econ 2410f Part III:

 

Instructor

Manuel Amador

 

Instructor’s contact information

Office: Littauer 213

Office hours: TBA

E-mail: amador at stanford dot edu

 

Description

The main focus of this part of the class is on of developing countries and international macroeconomics. We will study several open economy models, emphasizing the modeling techniques. 

 

Assessment

TBA
Thursday 17th November:

Lecture 1. Some Facts

Agénor and McDermott et. al (2000). “Macroeconomic Fluctuations in Developing Countries: Some Stylized Facts”, World Bank Economic Review 14, 2, pp. 251-285

 

Uribe, M. and V.Z. Yue (2005), “Country spreads and emerging countries: Who drives whom?” forthcoming Journal of International Economics

Neumeyer, Pablo A. and Fabrizio Perri (2005), “Business Cycles in Emerging Markets: The Role of Interest Rates”.  Journal of Monetary Economics. 52, pp 345-380.

 

Tuesday 22nd November:

Lecture 2. Small Open Economy Models.

Mendoza, E.G. (1991), “Real business cycles in a small open economy”. American Economic Review 81 (4), 797–818.

Schmitt-Grohe, S., Uribe, M.(2003), “Closing of Small Open Economy Models”, Journal of International Economics, 61, 163-185.

Aguiar and Gopinath (2004). “Emerging Market Business Cycles: The Cycle is the Trend”.

Thursday 24th November:

Thanksgiving

Tuesday 29th November:

Lecture 3. Uncontingent Sovereign Debt and Default

Jonathan Eaton and Mark Gersovitz “Debt with Potential Repudiation”, Review of Economic Studies, Vol. 48, No. 2, pp. 289-309.

Cristina Arellano, “Default Risk, the Real Exchange Rate, and Income Fluctuations in Emerging Economies”, March 2005


Thursday 1st December:

Lecture 4. Sovereign Debt and Savings

Jeremy Bulow and Kenneth Rogoff (1989), “Sovereign Debt: Is to Forgive to Forget?”, American Economic Review, 79, no. 1, pp. 43-50.


 

Tuesday 6th December:

Lecture 5.  Capital flows and the tragedy of the commons.

Aaron Tornell and Andres Velasco, “The Tragedy of the Commons and Economic Growth: Why Does Capital Flow from Poor to Rich Countries?” Journal of Political Economy, University of Chicago Press, 100, no.6, pages 1208-31.

 

Thursday 8th December:

Lecture 6. Lack of commitment and expropiation.

 

Thomas, Jonathan & Worrall, Tim, 1994. “Foreign Direct Investment and the Risk of Expropriation”, Review of Economic Studies, vol. 61(1), pages 81-108.

 

Mark Aguiar, Manuel Amador and Gita Gopinath (2005). “Efficient Fiscal Policy and Amplification”.


Tuesday 13th December:

Lecture 7. Capital flows and limited enforcement in a two-country RBC model.

Patrick Kehoe and Fabrizio Perri (2002), “International Business Cycles with Endogenous Market Incompleteness”, Econometrica, 70, no. 3, p. 907-928, also NBER Working Paper 7870.

 

Thursday 15th December:

Lecture 8. Capital flows with limited enforcement and (one-sided) asymmetric information.

Andrew Atketson, (1991), “International Lending with Moral Hazard and Risk of Repudiation”, Econometrica, 59, no. 4, pp. 1069-1089.

 

 

 

Tuesday 20th December:

In-class presentation of papers