Advanced Macroeconomics

Francesco Giavazzi (10 lectures) and Alessandro Di Nola (2 lectures)

Fall 2013

Syllabus

1. Fiscal policy Theory (classes 1, to 5)

Fiscal multipliers in a Keynesian model Blanchard O., Output, the Stock Market, and Interest Rates, The American Economic

Review, Vol. 71, No. 1 (Mar., 1981), pp. 132-143

Fiscal multipliers in a neo-classical model Marianne Baxter and Bob King (1993), Fiscal Policy in General Equilibrium, AER Nicola Fontana and Marco Tabellini (2013), Can Cuts in Government Spending Be

Expansionary? mimeo, Bocconi university Fiscal multipliers in a calibrated DSGE models

Uhlig, H (1999), A Toolkit for Analyzing Nonlinear Dynamic Stohocastic Models Easily,

in R. Marimon and A. Scott: Computational Methods for the Study of Dynamic Economies. Oxford and New York: Oxford University Press, pp. 30-61.

Uhlig, H. (2010): Some Fiscal Calculus, American Economic Review, 100(2), 3034. Woodford, M. (2011): Simple Analytics of the Government Expenditure Multiplier,

American Economic Journal: Macroeconomics, 3(1), 135. Gal J., J. D. Lpez-Salido and J. Valls (2007), "Understanding the Effects of Government

Spending on Consumption", Journal of the European Economic Association, 5, 227--270. Giancarlo Corsetti and A. Meier (2009), Fiscal stimulus with spending reversals, CEPR

Discussion Paper no 7302 Cimadomo, J, S. Hauptmeier and S. Sola (2011), Identifying the effects of government

spending shocks with and without expected reversals: an approach based on US real-time data, ECB working paper no 1361.

Monetary-Fiscal Interactions

One of the classes on this topic will be taught by Alessandro on Monday November 25 Sargent, T. and N. Wallace (1981), Some unpleasant monetary arithmetic, Federal

Reserve Bank of Minneapolis Quarterly Review/Fall 1981 Leeper E. M. (2011), Fiscal Limits and Monetary Policy

http://mypage.iu.edu/~eleeper/Papers/LeeperFLandMP.pdf " Leeper E. M. (2011), Monetary Science, Fiscal Alchemy", NBER Working Papers No.

16510, National Bureau of Economic Research, Inc. Eric Leepers notes on Monetary-Fiscal interactions available at

http://mypage.iu.edu/~eleeper/SNU/Leeper_SimsPaperMoney.pdf

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Sims, C.A. (2013): Paper Money. AER Presidential Addresshttp://sims.princeton.edu/yftp/PaperMoney/PaperMoneyAER.pdf

Christiano L., M. Eichenbaum, and S. Rebelo (2011), "When is the Government Spending Multiplier Large?", Journal of Political Economy, 119(1), 78121.

Eggertsson G. (2009), "What fiscal policy is effective at zero interest rates?", Federal Reserve Bank of New York Staff Report, No. 402.

Empirical issues (classes 6, to 9) Overview Alberto Alesina and Francesco Giavazzi (eds), Fiscal Policy after the Financial Crisis:

Introduction, University of Chicago Press. 2013

Event studies and old-style identification using cyclically adjusted data Giavazzi F. and M. Pagano (1990), "Can Severe Fiscal Contractions Be Expansionary? Tales

of Two Small European Countries ", in NBER Macroeconomics Annual 1990. http://www.nber.org/chapters/c10973.pdf

Giavazzi Francesco, T. Jappelli, M. Pagano and M. Benedetti (2005): Searching for Non-Monotonic Effects of Fiscal Policy: New Evidence, Monetary and Economic Studies. http://didattica.unibocconi.it/mypage/upload/48751_20100308_033126_NONMONOTONICEFFECTSNEWEVIDENCE.PDF

Perotti R (2013)," The Austherity Myth: Gain without Pain?" in Alesina and Giavazzi (eds), Fiscal Policy after the Financial Crisis, University of Chicago Press.

Alesina A. and S. Ardagna (2010), "Large Changes in Fiscal Policy: Taxes versus Spending", Tax Policy and the Economy, vol. 24, 35--68, edited by J.R. Brown.

Alesina A. and S. Ardagna (1998), "Tales of fiscal adjustment", Economic Policy, 13(27), 487--545.

VAR Identification Blanchard O. and R. Perotti (2002), "An Empirical Characterization of the Dynamic Effects

of Changes in Government Spending and Taxes on Output", Quarterly Journal of Economics, 117(4), 1329--1368.

Caldara, Dario and Christophe Kamps (2008), What are the Effects of Fiscal Policy Shocks? A VAR-based comparative Analysis, European Central Bank, WP 877

Uhlig, Harald and Andrew Mountford (2009), What Are the Effects of Fiscal Policy Shocks?" Journal of Applied Econometrics, 2009, 24(6), pp. 960-92. http://dx.doi.org/10.1002/jae.1079

Auerbach A. and Y. Gorodnichenko, (2012), "Measuring the Output Responses to Fiscal Policy", American Economic Journal: Economic Policy, 4(2), 1--27.

Anticipation Effects Leeper, E, T B Walker and S Yang (2012), Fiscal foresight and information flows

http://mypage.iu.edu/~eleeper/Papers/LWY_Foresight_Final.pdf Ramey, Valerie A. (2008), Identifying Government Spending Shocks: It s All in the

Timing, mimeo, UCSD.

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Mertens K. and M. O. Ravn (2011), "Understanding the Aggregate Effects of Anticipated and Unanticipated Tax Policy Shocks", Review of Economic Dynamics, 14(1), 27--54.

Evidence from Micro Data

Giavazzi F. and M. McMahon (2013), "The Household effects of Government Spending", in

A. Alesina and F. Giavazzi (eds.), Fiscal Policy After the Financial Crisis, University of Chicago Press.

Narrative Identification Ramey V. A. (2011), "Can Government Purchases Stimulate the Economy?", Journal of

Economic Literature, 49(3), 673--685. Barro R. J. and C. J. Redlick (2011), "Macroeconomic Effects from Government Purchases

and Taxes", The Quarterly Journal of Economics, 126(1), 51--102. Romer C. and D. H. Romer (2010), "The Macroeconomic Effects of Tax Changes:

Estimates Based on a New Measure of Fiscal Shocks", American Economic Review, 100(3), 763--801.

Leduc, Sylvain and Daniel Wilson (2013), Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment, NBER Macroeconomics Annual. University of Chicago Press, May, p. 89 142.

Favero, C. and F. Giavazzi (2012), Measuring Tax Multipliers: The Narrative Method in Fiscal VARs, American Economic Journal: Economic Policy: Volume 4, Issue 2, May.

Devries P., J. Guajardo, D. Leigh and A. Pescatori (2011), "A New Action-based Dataset of Fiscal Consolidation"IMF Working Paper No. 11/128

J. Guajardo, D. Leigh and A. Pescatori (2011), "Expansionary Austerity New International Evidence", IMF Working Paper No. 11/158,

Alesina, A., C. Favero and F. Giavazzi (2012), The output effect of fiscal consolidations, NBER WP 18336

Local Projections

Jord, Oscar (2005), "Estimation and Inference of Impulse Responses by Local Projections," American Economic Review, 95(1), 161-182.

Ramey, Valerie, (2013) Are Government Spending Multipliers Greater During Periods of Slack? Evidence from 20th Century Historical Data with Michael Owyang and Sarah Zubairy, American Economic Review Papers and Proceedings.

1. Credit Cycles and Limited Pledgability (classes 10 to 12 TBD) One of the classes on this topic will be taught by Alessandro on Monday December 2nd

Nobu Kioyotaki and John Moore, Credit Cycles, Journal of Political Economy, 97 Caballero, R. (2004), Fiscal policy and financial depth, NBER wp 10532 Caballero, R. (2007) On the macroeconomics of asset shortages, NBER wp 12753. Caballero, R., E. Farhi, and P.O. Gourinchas, (2008). An equilibrium model of

Global Imbalances and low interest rates, American Economic Review

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Advanced MacroeconomicsFall 2013