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Course Outline and Readings

1.   Overview of Modern Macroeconomics

A.  Issues and Ideas

Snowden and Vane (SV), 1.1 – 1.3

Krugman, “How Did Economists Get It So Wrong?”

Cochrane, “How did Paul Krugman get it so Wrong?”

B.  Business Cycle Features and Facts

SV, 6.6

Lucas, “Understanding Business Cycles” (HO)

C.  The Great Depression

SV, 1.4 and 2.14

Shales, “Introduction” The Forgotten Man: A New History of the Great Depression (HO)

Romer, “Changes in Business Cycles: Evidence and Explanations”

Bernanke, “The Macroeconomics of the Great Depression: A Comparative Approach”

Eichengreen, “The Origins and Nature of the Great Slump Revisited”

D.  The Development of Modern Macroeconomics

SV, 1.5 – 1.10

Blinder, “The Fall and Rise of Keynesian Economics”

2.   “Classical” Economics

SV, 2.1 – 2.5

Ahiakpor, “The Classical Theories of Interest, the Price Level and Inflation” (HO)

Ahiakpor, “Full Employment: A Classical Assumption or Keynes’s Rhetorical Device?”

Baumol, “Say’s (at Least) Eight Laws, or What Say and James Mill May Really Have Meant”

Kates, “On the True Meaning of Say’s Law”

Clower and Leijonhufvud, “Say’s Principle: What It Means and Doesn’t Mean” (HO)

Yeager and Rabin, “Monetary Aspects of Walras’s Law and the Stock-Flow Problem”

3.   Keynes’ General Theory

General Theory, chapter 8

General Theory, chapter 12

General Theory, chapter 13

General Theory, chapter 17

General Theory, chapter 18

General Theory, chapter 24

Keynes, “The General Theory of Employment”

Gerrard, “Keynes’s General Theory: Interpreting the Interpretations”

4.   Orthodox Keynesianism: IS-LM

SV, 3.1 – 3.7

Hicks, “Mr. Keynes and the “Classics”; A Suggested Interpretation”

Modigliani, “Liquidity Preference and the Theory of Interest and Money”

Tobin, “Price Flexibility and Output Stability: An Old Keynesian View”

5.   Orthodox Monetarism

SV, 4.1 – 4.5

Friedman, “The Role of Monetary Policy”

Friedman, “Inflation and Unemployment”

Laidler, “Monetarism: A Interpretation and an Assessment”

Modigliani, “The Monetarist Controversy Revisited”

6.   Clower and Leijonhufvud: Disequilibrium “Keynesianism”

Leijonhufvud, “Keynes and the Keynesians: A Suggested Interpretation”

Clower and Leijonhufvud, “The Coordination of Economic Activities: A Keynesian Perspective”

7.   The New Classical School

SV, 5.1 – 5.6

Laidler, “The New-Classical Contribution to Macroeconomics” (HO)

Maddock and Carter, “A Child’s Guide to Rational Expectations”

Lucas and Sargent, “After Keynesian Macroeconomics” (HO)

Lucas, “Monetary Neutrality”

Davidson, “Rational Expectations: A Fallacious Foundation for Studying Crucial Decision-Making Processes”

Leijonhufvud, “Inflation and Economic Performance” (HO)

8.   Real Business Cycle School

SV, 6.1 – 6.18

Prescott, “Theory Ahead of Business Cycle Measurement”

Plosser, “Understanding Real Business Cycles”

Mankiw, “Real Business Cycles: A New Keynesian Perspective”

Summers, “Some Skeptical Observations on Real Business Cycle Theory”

9.   The New Keynesians

SV, 7.1 – 7.14

Gordon, “What is New-Keynesian Economics?”

Greenwald and Stiglitz, “New and Old Keynesians”

Mankiw, “The Reincarnation of Keynesian Economics” (HO)

10.   The Post-Keynesian School

SV, 8.1 – 8.11

Davidson, “What Revolution? The Legacy of Keynes”

Rosser, “Alternative Keynesian and Post Keynesian Perspectives on Uncertainty and Expectations”

11.   The Austrian School

SV, 9.1 – 9.13

Hayek, “The Pretence of Knowledge”

Garrison, “From Keynes to Hayek: The marvel of thriving macroeconomies”

Wagner, “Austrian Cycle Theory and the Prospect of a Coordinationist Macroeconomics”

Wagner, “A Macro Economy as an Emergent Ecology of Plans”

Wagner, “Viennese Kaleidics”

12. The New Political Macroeconomics

SV, 10.1 – 10.19

Wagner, “Boom and Bust: The Political Economy of Economic Disorder”

13. The Failure(?) of Macroeconomics and the Great Recession

A.  Classical/Neoclassical Perspectives

K, Kates, “The crisis in economic theory: the dead end of Keynesian economics”

Ohanian, “The Economic Crisis from a Neoclassical Perspective

B. Regulatory/Deregulatory Perspectives

K, Ricketts, “The governance of financial transactions”

Hanke, “Basel’s Capital Curse” (HO)

Yandle, “The Real Cause of the Financial Meltdown

White, “The Credit-Rating Agencies and the Subprime Debacle

Wallison, “Credit-Default Swaps are not to Blame

Wallison, “Cause and Effect: Government Policies and the Financial Crisis

Jablecki and Machaj, “The Regulated Meltdown of 2008

Bhide, “An Accident Waiting to Happen

Acharya and Richardson, “Causes of the Financial Crisis

C. Coordinationist Perspectives

K, Boettke and Luther, “The ordinary economics of an extraordinary crisis”

K, Gunning, “Incentive divergence and the global financial crisis”

K, Horwitz, “The microeconomic foundations of macroeconomic disorder”

Horwitz and Luther, “The Great Recession and Its Aftermath from a MonetaryEquilibrium Theory Perspective

White, “How Did We Get into This Financial Mess?”

D. Post-Keynesian Perspectives

K, Keen, “The coming depression and the end of economic delusion”

K, King, “Reflections on the global financial crisis”

K, Prasch, “Bankers gone wild: the Crash of 2008”

K, Toporowski, “Excess debt and asset deflation”

K, Wray, “Minsky, the global money-manager crisis,, and the return of big government”

E. “Keynesian” Perspectives

Stiglitz, “Anatomy of a Murder: Who Killed America’s Economy?

Leijonhufvud, “Keynes and the Crisis”

F. Monetarist Perspectives

K, Congdon, “Did Bernanke’s ‘creditism’ aggravate the financial crisis of 2008?”

Laidler, “Two Crises, Two Ideas, and One Question

Taylor, “Economic Policy and the Financial Crisis

Gjerstad and Smith, “Monetary Policy, Credit Extension, and Housing Bubbles

G. Political Economy and Economics Profession Perspectives

Acemoglu, “The Crisis of 2008

Friedman, “A Crisis of Politics, Not Economics

Colander, et. al., “The Financial Crisis and the Systemic Failure of the Economics Profession

Zingales, “Learning to live with not-so-efficient Markets

Colander, “How Economists Got It Wrong

H. Has the Fed Been a Failure?

Selgin, Lastrapes, and White, “Has the Fed been a failure?

Bordo, “Could the United States have had a better central bank?

Friedman, “Rules versus discretion at the Federal Reserve System

Meltzer, “The Federal Reserve (almost) 100

Miron, “Comment on Selgin, Lastrapes and White