Advanced Topics in Macroeconomics (PhD), 2014

This is a second year graduate course in macroeconomics. The focus is on the aggregate implications of quantitative models of producer heterogeneity, with applications to firm dynamics, innovation and aggregate growth, cross-country income differences, and international trade.


Lecture 1 Introduction and course overview. Motivating facts about the firm size distribution and firm dynamics.
Lecture 2 Hopenhayn's industry equilibrium model with entry and exit (firm turnover) but stationary firm distribution.
Lecture 3 Solving the Hopenhayn model, further computational details and practicalities.
Lecture 4 Hopenhayn/Rogerson, implications of nonconvex adjustment costs for aggregate productivity and turnover.
Lecture 5 Quality ladders and growth via creative destruction, review of some continuous time tools.
Lecture 6 Klette/Kortum, quality-ladder model of growth via creative destruction with firm dynamics.
Lecture 7 Lentz/Mortensen, fundamental heterogeneity in Klette/Kortum, selection and structural estimation.
Lecture 8 Atkeson/Kehoe, diffusion of new technologies following increase in rate of embodied technical change.
Lecture 9 Restuccia/Rogerson, aggregate productivity and welfare consequences of idiosyncratic distortions.
Lecture 10 Hsieh/Klenow, evidence on the importance of misallocation, implications for cross-country income differences.
Lecture 11 Peters, microfoundations for misallocation in a quality ladder model.
Lecture 12 Buera/Shin, financial frictions and misallocation, sluggish transitional dynamics following a reduction in misallocation.
Lecture 13 Krugman, monopolistic competition, scale economies and trade.
Lecture 14 Melitz, monopolistic competition, firm heterogeneity and trade.
Lecture 15 Chaney, asymmetric countries, intensive and extensive margins of trade, gravity equations.
Lecture 16 Eaton/Kortum, Ricardian models with many asymmetric countries, implications for trade flows.
Lecture 17 Arkolakis/Costinot/Rodriguez-Clare, gains from trade in standard quantitative trade models.
Lecture 18 Arkolakis/Costinot/Donaldson/Rodriguez-Clare, elusive pro-competitive effects of trade in monopolistic competition models with non-CES demand.
Lecture 19 Edmond/Midrigan/Xu, pro-competitive effects of trade with oligopolistic competition, implications for misallocation, importance of head-to-head competition.

Problem set 1
Problem set 2
Problem set 3
Problem set 4