Eng Outline Macro II FEN 2015

3/21/2016
DEPARTMENT OF ECONOMICS AND BUSINESS SCHOOL OF ECONOMICS UNIVERSITY OF CHILE MACROECONOMIA II PROGRAM
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DEPARTMENT OF ECONOMY
FACULTY OF ECONOMICS AND BUSINESS
UNIVERSITY OF CHILE
PROGRAM
MACROECONOMIA II
(Cash and short - term uctuations)
PROFESSOR: JOSE DE GREGORIO (jdegregorio@fen.uchile.cl)
Tel .:
29783455
ASSISTANTS: RENATA ABBOTT, RAFT AND HECTOR JOSE JUAN HERRERA
e-mails:
, reabbott@fen.uchile.cl , jbalsa@fen.uchile.cl and
heherrera@fen.uchile.cl
~ 2016
SEMESTER: OTO
NO
OBJECTIVES:
The purpose of this course is to review the main and recent theories
macroeconomic trying to explain the economic cycle and its relationship with
the design and implementation of economic policy with special attention
the case of monetary and exchange in open economies are like
Chilean. It begins studying basic aspects of monetary policy and
their relationship with nancial markets. The model was subsequently revised
Traditional Keynesian and modern extensions that incorporate rules
monetary policy, especially ination targets. Below are presented
as alternative theoretical models to analyze and understand uctuations
short - term economic conditions. Finally properties are discussed
different exchange rate regimes, determining the type of change and crisis
exchange.
The course sought to link the issues discussed with national news and
global, and macroeconomic policies. Thus, at the end of the semester the student
will have a more complete understanding of the aggregate behavior
economy.
The ultimate goal of the course is that students learn Macroeconomics
rigor and intuition two things not easy to reconcile.
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PROGRAMMING:
In laultima sheet is the complete schedule of the course. WhichWANT adjustment will be informed in due course .
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EVALUATION:
There will be two controls, a solemn and an examination. All evaluations can
contemplate giving readings, which promptly notify. The examination Cubrira all matter and some nal readings. Dates controls
and solemn at the end.
Each test is worth 15%, 30% and solemn examination 40% of the grade
nal.
TEXTS:
Gregory, J. (2007), Macroeconomics. Theory and Policy , Pearson Education
tion, Prentice-Hall (DG).
Also, some of the material discussed in the course can be found at
something simpler versions, at:
Barro, R. (2008), Macroeconomics. A Modern Approach, Thomson SouthWestern. (B)
Mankiw, G. (2009), Macroeconomics, seventh edition, Worth Publishers. (M)
Williamson, S. (2010), Macroeconomics, fourth edition, Prentice Hall (W).
Most of the readings is available on the Internet, their addresses so
as direct links are in the list of references of this
program. If there is an error in the link, please googlee. Readings
who are not online (readings that are mandatory for
test and evaluation, marked with *) will be available on the page
course.
CONTENTS:
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In square brackets is the estimated number of classes. The readings

* Are mandatory, it ie you can ask them in all evaluations
tions. The others are good references on the issues, but not required.
If you wish to review, simply a look at the introduction and conclusions,
if it is not understood it is suggested that a more careful reading. with respect
to the empirical work, elenfasis is to understand the results and their
implications, not the details of the econometric methodology.
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I. Introduction [2]
1. Denitions and functions of money
Introduction.
The quantity theory of money.
classical dichotomy and Fisher equation.
Bibliography
DG, Chapter 15.1-15.4.
2. Evidence on ination, product and money
Bibliography
* De Gregorio, J. (1996), "Ination, Growth and Central Banks: Theory
and Empirical Evidence , Public Studies No. 62.
* McCandless, WE Weber GTand 1995, "Monetary Facts" , Federal Republic
Bank of Minneapolis serve Quarterly Review, 19, No. 3, pp. 2-11.
Walsh, C. 1998, Monetary Policy and Theory, Cambridge: MIT Press, c. 1.
II. Money, Ination and Financial Market [4]
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1 Demand for money and ination

Bibliography
DG, Chapter 15.5.
Alvarez, F. and F. Lippi (2009), "Financial Innovation and the Transactions
Demand for Cash " Econometrica, 77 (2): 363-402.
2 Offer money and monetary policy
The money supply and monetary policy.
unconventional policies.
Tax ination and se~nioriaje.
The costs of ination.
Bibliography
DG, Chapter 16.
* Central Bank of Chile (2008), Financial Stability Report, rst
semester, "Tools Central Bank of Chile for administration
tion of liquidity " Box p. 28.
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* Central Bank of Chile (2005), Monetary Policy Report, January "new

It will operationalization of monetary policy " , Box pp. 37-38.
* Central Bank of Chile (2009), Monetary Policy Report, December,
"Unconventional monetary policy" , Box pp. 11-12.
* De Gregorio, J. (1999), "On the Determinants and Costs of ination"
, Chilean Economics, Vol. 2, No. 1
Friedman, B., and K. Kuttner (2011), "Implementation of Monetary Policy:
How Do Central Banks Interest Rates in September ?? in Handbook of Monetary
tary Economics, Vol. 3B, Benjamin M. Friedman and Michael Woodford
(eds.), Amsterdam: Elsevier; North-Holland.
Sargent, T. and N. Wallace, (1981), "Some Unpleasant monetarist Arithmetic " Quarterly Review of the Minneapolis Federal Reserve Bank, fail,
1-17.
3 Financial markets and monetary policy
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Return,
and forward
rate structure.
Expectations
Hypothesis.
Arbitration and stock prices.
speculative bubbles.
unconventional monetary policies.
Bibliography
DG, Chapter 17.
* Bernanke, B. (2006), "Reections on the Yield Curve and Monetary Policy " , Speech the Economic Club of New York, New York, New York
March 20, 2006.
Blanchard, J. and S. Fischer (1989), Lectures on Macroeconomics, MIT Press,
Cambridge, Mass, chaps. 4 and 5.
Campbell, J. (1995), "Some Lessons from the Yield Curve", Jounal of Economic Perspectives Vol.9 No. 3 pp. 298-345
The crisis: monetary policies during the nancial crisis:
* Banque of France (2009), "Unconventional Monetary Policy Measures," Focus, April.
* Bernanke, B. (2009), "The Crisis and the Policy Response" , Speech at the
Stamp Lecture, London School of Economics, London, England, 13
January.
* Bernanke, B. and V. Reinhart (2004), "Conducting Monetary Policy at
Very Low Short-Term Interest Rates, " American Economic Review, vol.
94 (2), May, pp. 85-90.
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Borio, C. and P. Disyatat (2009), "Unconventional Monetary Policies: An Appraisal ,? BIS Working Paper No. 292.
* Cecchetti, S. (2008), Monetary Policy and the Financial Crisis of 2007-2008 ,
CEPR Policy Insight No. 21, short version , April.
Gregory, J. (2009), "Monetary policy and rates Transfer to
Of interest" , Presentation at the Economic Committee of the Chamber of
Deputies.
Gagnon, J, et al (2010), "Large-Scale Asset Purchases by the Federal
Reserve: Did They Work " Federal Reserve Bank of New York Sta
Report No. 441.
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* IMF (2013), "Unconventional Monetary Policies-Recent Experiences and

Prospects " .
* Yellen, J. (2013), "Challenges Confronting monetary policy" speech, March.
III. Short - Term Fluctuations and Monetary Policy [10]

1 Introduction [1]
supply and aggregate demand.
nominal and real rigidities.
wage rigidities.
2 Model IS-LM: closed economy [1]
The IS-LM model of macroeconomic policy and applications.
The problem of Poole.
3 Model IS-LM: open economy [2]
Perfect mobility of capital and the Mundell-Flemming.
Imperfect capital mobility.
Exchange rate regimes and monetary unions.
currency crises.
4 Supply added: Phillips curve [2]
The model and the Lucas critique.
Rational expectations.
Stiffness in the markets for goods and labor.
5 IS-Phillips curve and monetary policy rules [2]
5
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Rules monetary policy and the money market.

Ination, unemployment and adjustment.
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6 INFLATION TARGETING [2]

Elements of ination targeting regime.
Goals exible ination and output volatility.
Credibility and transparency.
The Phillips curve in open economies.
The role of the exchange rate.
exchange interventions.
Literature, 1-6
DG, Chapters 18 to 22.
B, Ch. twenty.
M, chaps. 9-13.
Central Bank of Chile (2006), Monetary Policy Central Bank
Chile: Objectives and Transmission .
Clarida, R., J. M. Gali and Gertler (1999), "The Science of Monetary Policy:
A New Keynesian Perspective " , Journal of Economic Literature, Vol. 37,
No. 4, pp. 1661-1707.
* De Gregorio, J. (2003), "Money and Ination: what are we?" , Economics
Chile, Vol. 6, No. 1, pp. 5-19.
* De Gregorio, J. (2006), "Ination Goals and Goal of Full Employment" ,
Chilean economy, Vol. 9, No. 2, pp. 5-13. Friedman, M. (1953), "The
Case for Flexible Exchange Rates ", in Essays in Positive Economics,
University of Chicago Press.
* Gali, Jordi (2009), "The New Keynesian Approach to Monetary Policy
Analysis: Lessons and New Directions, " mimeo, UPF.
* Gali, Jordi (2012), "The Monetary Pillar and the Great Financial Crisis,"
The Great Financial Crisis: Lessons for Financial Stability and Monetary Policy, European Central Bank, 2012, 74-95.
* Krugman, Paul (2011), "Mr. Keynes and the Moderns " , Voxeu.org.
Krugman, Paul (2010), "Debt, deleveraging, and the Liquidity Trap: A
Fiher-Minsky-Koo appoach, " mimeo, Princeton University, Version short
ta .
Lucas, Robert (1973), "Some International Evidence on Output Ination
Tradeos "American Economic Review, 63, pp. 326-334.
* Mankiw, N. Gregory (2001), "US Monetary Policy During the 90's" , NBER
Working Paper No. 8471.
Romer, D. (2000), "Keynesian Economics without the LM Curve", Journal
of Economic Perspectives, Vol. 14, No. 2, pp. 149-169.
6
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On the crisis: bubbles, monetary policy and nancial stability

ra
Ahrend, Rudiger (2010), "Monetary Ease: A Factor behind Financial Crises?
Some Evidence from OECD Countries ,? Economics, The Open-Access,
Open-Assessment E-journal, Vol. 4, 2010-12.
Bernanke, Benjamin S. (2010), "Monetary Policy and the Housing Bubble,"
speech at the Annual Meeting of the American Economic Association.
* De Gregorio, Jose (2012), "Price and Financial Stability in Modern Central
,? Banking Economics, Vol 13, No 1, pp. 1-11 Fall.
* Cesa-Bianchi, A. and A. Rebucci (2013), "Is the Federal Reserve Breeding
the New Financial Crisis " , VoxEU.
Taylor, John B. (2010), "Getting Back on Track: Macroeconomic Policy
Lessons from the Financial Crisis ,? Federal Reserve Bank of St. Louis
Review, May / June, 92 (3): 165-76.
IV. Other models Fluctuations and Monetary Policy

[10]
1 discretionary policy and dynamic inconsistency [2]
Introduction
Ination and discretionary policy
Solutions to the problem of ination bias
Choice of exchange rate regime.
exchange rate regime classication.
Desempe~no macroeconomic and exchange rate regimes.
Bibliography
DG, Chapter 25.
Alesina, A. and L. Summers (1993), "Central Bank Independence and Ecomic Performance ", Journal of Money, Credit and Banking, 25, May, pp.
157-162, http://www.jstor.org .
Barro, R. and D. Gordon (1983a), "A Positive Theory of Monetary Policy in
Natural-Rate Model ", Journal of Political Economy, 91, August, pp.
Barro, R. and D. Gordon (1983b), "Rules, Discretion, and Reputation in a
Model of Monetary Policy ", Journal of Monetary Economics, 12, July,
pp. 101-121.
* Bianchi, A. (2009), "The autonomy of the Central Bank of Chile: Origin and
Legitimation" , Chilean Economics Vol. 12, No. 3, pp. 11-23.
Blanchard, S. Fischer Oy (1989), Lectures on Macroeconomics, Cambridge:
MIT Press, ch. eleven.
7
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Page8
Calvo, G. and C. Reinhart (2002), "Fear of Floating", Quarterly Journal of

Economics, 117 (2): 379-408.
Cukierman, A. (1992), Central Bank Strategies, Credibility and Independentista
ce, Cambridge: MIT Press.
* De Gregorio, J. (2009), "Twenty years of central bank autonomy
From Chile" , Chilean Economics Vol. 12, No. 3, pp. 5-10.
Romer, D. (2006), Macroeconomics, Third Edition, McGraw-Hill,
cap. 9.
Walsh, C. (1998), Monetary Policy and Theory, Cambridge: MIT Press,
Chapter 8.
2 real business cycle models [2]
Stylized facts.
Basic model of RBC.
Bibliography
DG, Chapter 23.
Aguiar, Mark and Gita Gopinath (2007), 'Emerging Market Business Cycle:
Th Cycle is the Trend ,? Journal of Political Economy, 115 (1): 69-102.
* Backus, D., P. Kehoe and Kydland F. (1993), "International Business Cycles:
Theory vs. Evidence " , Federal Reserve Bank of Minneapolis Quarterly
Review Vol. 17 No. 4.
King, R. and S. Rebelo (1999), "Resuscitating Real Business Cycle" In JB
Taylor and M. Woodford (eds.), Handbook of Macroeconomics, vol. 1B, pp.
928-1002.
Obstfeld, M. and K. Rogo (2000), "The Six Major Puzzles in International
Macroeconomics: Is There a Common Cause? " Bernanke, B. and K.
Rogo (eds.) NBER Macroeconomics Annual 2000, Volume 15.
Prescott, E. (1986), "Theory Ahead of Business Cycle Measurement" , Fedral Reserve Bank of Minneapolis Quarterly Review Vol. 10, No. 4, pp.
9-22.
3 Labour market and economic cycle [2]
Stylized facts of the labor market and the economic cycle.
Efciency wages and real rigidities.
matching models and equilibrium unemployment.
macroeconomic implications.
Bibliography
DG, Chapter 24.1 to 24.4.
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Acemoglu, Daron and Robert Shimer (2000), "Productivity Gains from Unemployment Insurance , European Economic Review, 44 (7): 1195 1224?.
* Blanchard, O. and L. Katz (1996), "What We Know and Do Not Know About
the Natural Rate of Unemployment , "Journal of Economic Perspectives,
11 (1): 51-72, http://www.jstor.org .
Blanchard, O. and L. Katz (1999), "Wage Dynamics: Reconciling Theory and
Evidence ", American Economic Review, Papers and Proceedings, 89 (2):
Gali, Jordi (2012), "Notes for a New Guide to Keynes (I): Wages, Aggregate
Demand, and Employment, NBER Working Paper No. 18651.
Millard, S., and M. A. Scott Sensier (1985), "The Market Labour over the
Business Cycle: Theory Can Fit the Facts ", Oxford Review of Economic?
Policy, 13 (3): 70-92.
Pissarides, Christopher (2000), Equilibrium Unemployment Theory, 2nd Edition, MIT Press.
4 channel credit, collateral and uctuations [2]
collaterals, the credit channel and amplifying
Financial Intermediation, types of nancing and activity
IS-LM with credit channel
Crisis, collateral and information.
Evidence
Bibliography
DG, Chapter 24.5 to 24.8.
Bernanke, Benjamin and Alan Blinder (1988), "Credit, Money, and Aggregate
demand " American Economic Review, Papers and Proceedings, Vol.
78, No. 2, pp. 435? 439.
* Bernanke, B. and M. Gertler (1995), "Inside the Black Box: The Credit Channel of Monetary Transmission ", Journal of Economic Perspectives, 9 (4):
Bernanke, B., M. Gertler and Gilchrist S. (1996), "The Financial Accelerator
and the Flight to Quality ", Review of Economics and Statistics, 78 (1):
1-15 http://www.jstor.org .
De Gregorio, Jose (2014), Latin America Weatheared How the Global Financial Crisis, Peterson Institute for International Economics, Washington
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DC, chapter 4.
Holmstrom, Bengt and Jean Tirole (1997), "Financial Intermediation, Loa
nable Funds, and the Real Sector " Quarterly Journal of Economics,
112 (3): 663-691.
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Kiyotaki, Nobuhiro and John Moore (1997), "Credit Cycles" Journal of PoEconomy litical 105 (2): 211-248.
5 Banking, bubbles and crises [2]
The banking system and leverage
bank runs
Bubbles and crises
Conclusions and Policy Implications
Bibliography
* Adrian, Tobias and Hyun Song Shing (2008), "Leverage and Procyclical
Value-at-Risk, " Sta Reports No. 338, Federal Reserve Bank of New
York.
Adrian, Tobias and Hyun Song Shing (2010), "Liquidity and Leverage"
Journal of Financial Intermediation, 19 (3): 418-437.
Allen and Douglas Gale Franlin (2000), "Bubbles and Crises" , The Economic
Journal, Vol. 100, No. 460, pp. 236-255.
* Brunnermeir, Markus K. (2008), "Bubbles" , New Palgrave Dictionary of
Economics, Second Edition.
Diamond, D. and P. Dybvig (1983), "Bank Runs, Deposit Insurance, and Liquidity ", Journal of Political Economy, 91: 401-419, http: //www.jstor.
org .
Gali, Jordi (2014), "Monetary Policy and Asset Price Bubbles Rational "
American Economic Review, 104 (3): 1-33.
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Calendar FEN 1st half 2015
Macroeconomics II (Salas, cat: H-201, Ay: H-107)
March
29
Tuesday
7
class in the afternoon
Wednesday
Thursday
Friday
10
eleven
fteen
16
17
18
twenty-one
22
2. 3
24
25
28
29
30
31
eleven
12
13
18
19
twenty
twenty-one
22
25
26
27
28
29
4
SOLEMN
5
SOLEMN
6
SOLEMN
9
SOLEMN
10
SOLEMN
eleven
12
SOLEMN
SOLEMN
13
SOLEMN
14
2 classes
April
4
2 classes
May
14
CONTROL 1
fteen
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June
16
17
18
19
twenty
2. 3
24
?
25
26
27
30
31
10
CONTROL 2
13
July
14
fteen
16
17
twenty
twenty-one
22
2. 3
24
27
28
29
30
CHAIRS. Tuesday and Friday 8: 00-9: 30

Assistantships. MONDAY 18: 30-20: 00
EVALUATIONS
NOTE: MONDAY and there cathedra assistantship.
tomorrow,
if itbegins it is dark classes in
When the cell
starts with stripes it is the assistantship in the morning and kind of chair in the afternoon
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Eng Outline Macro II FEN 2015

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Direitos autorais:

Formatos disponíveis

3/21/2016

In square brackets is the estimated number of classes. The readings

1 Demand for money and ination

* Central Bank of Chile (2005), Monetary Policy Report, January "new

* IMF (2013), "Unconventional Monetary Policies-Recent Experiences and

III. Short - Term Fluctuations and Monetary Policy [10]

Rules monetary policy and the money market.

6 INFLATION TARGETING [2]

On the crisis: bubbles, monetary policy and nancial stability

IV. Other models Fluctuations and Monetary Policy

Calvo, G. and C. Reinhart (2002), "Fear of Floating", Quarterly Journal of

CHAIRS. Tuesday and Friday 8: 00-9: 30

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