ECO-32111 Macroeconomia Aplicada, Fall 2014

Applied Macroeconomics

Instructor: Rahul Giri
Lecture Location: Salon 105, Santa Teresa
Day/Time: Monday, 8:00am - 11:00am
Office Hours: Monday and Wednesday, 2:30pm - 3:30pm or by appointment
Office: Centro de Investigacin (CIE), ITAM, Santa Teresa
E-mail: rahul.giri@itam.mx

Objective
The objective of this course is to introduce you to the workhorse models of modern macroeconomics,
focusing on the issue of economic growth. We will focus on certain key questions that macroeconomists
have been trying to answer in the recent past.
1. What are the forces that drive long-run economic growth?
2. Why are some countries richer than others? Which factors are the most important in explaining
these income differences?

Textbooks
There is no single textbook that we will follow for this course. Lecture notes will be provided for
understanding the workhorse models. Then, we will explore extensions of these models, developed in the
literature, that are relevant to answer the questions we are interested in. To supplement the lecture notes, I
recommend the following books:
BSM - Economic Growth, Robert J. Barro & Xavier Sala-i-Martin, 2
nd
ed., The MIT Press.
DR - Advanced Macroeconomics, David Romer, 3
rd
ed., McGraw Hill Irwin.
BH - Modern Macroeconomics, Ben J. Heijdra, 2
rd
ed., Oxford University Press.

For the more mathematically inclined I highly recommend:
Introduction to Modern Economic Growth, Daron Acemoglu, Princeton University Press.

Grading
Your final grade in the course will depend on the following components (and their respective weights):
Final 40%, Midterm 35%, Homeworks and/or Presentations 25%.
Syllabus
I. Primer Some History and National Income Accounting
II. Models of Exogenous Growth Theory and Data
1) Model with Exogenous Savings: Solow-Swan
Lecture Notes, DR - Chapter 1; BSM Chapter 1; BH Chapter 13.
2) Growth Accounting
Lecture Notes, BSM Chapter 10.
3) Cross-Country Evidence Growth Regressions
Lecture Notes, BSM Chapter 12.
4) Growth Model with Endogenous Savings: Ramsey-Cass-Koopmans and Diamond
Lecture Notes, DR - Chapter 2; BSM Chapter 2; BH Chapter 13.
ECO-32111 Macroeconomia Aplicada, Fall 2014

Calibrating the optimal growth model.
5) Proximate Causes of Growth: What is Missing?
Caselli, Francesco (2005), The Missing Input: Accounting for Cross-Country Income Differences, in
P. Aghion and S. Durlauf, eds., Handbook of Economic Growth, North-Holland.
MIDTERM


III. Models of Endogenous Growth Theory and Data
Lecture Notes, DR - Chapter 3; BSM Chapter 4, Chapter 5; BH Chapter 14.
Lucas, Robert E., Jr. (1988), "On the Mechanics of Economic Development." Journal of Monetary
Economics 22, no. 1, July, pp: 3-42.
Jones, Charles I. (2002), "Sources of U.S. Economic Growth in a World of Ideas," American
Economic Review, Vol. 92 (1), pp. 220-239.
IV. Alternative Approaches
Acemoglu, Daron, Simon Johnson and James Robinson (2005), Institutions as a Fundamental Cause
of Long-Run Growth, in P. Aghion and S. Durlauf, eds., Handbook of Economic Growth, North-
Holland.
Mokyr, Joel (2005), Long-Term Economic Growth and the History of Technology, in P. Aghion and
S. Durlauf, eds., Handbook of Economic Growth, North-Holland.
Jovanovic, Boyan and Rousseau, Peter L., General Purpose Technologies, in P. Aghion and S.
Durlauf, eds., Handbook of Economic Growth, North-Holland.
Hanushek, Eric and Ludger Woessmann (2008), "The Role of Cognitive Skills in Economic
Development", Journal of Economic Literature 46(3), September, pp. 607-668.
Banerjee, Abhijit, and Esther Duflo (2005), Growth Theory through the Lens of Development
Economics, in P. Aghion and S. Durlauf, eds., Handbook of Economic Growth, North-Holland.
Ventura, Jaume (2005), A Global View of Economic Growth, in P. Aghion and S. Durlauf, eds.,
Handbook of Economic Growth, North-Holland. (May be)
Aghion Philippe and Howitt, Peter (2005), "Growth with Quality-Improving Innovations: An
Integrated Framework," in P. Aghion and S. Durlauf, eds., Handbook of Economic Growth, North-
Holland. (May be)

V. The Case of Mexico
Hanson, Gordon (2010), Why Isnt Mexico Rich?, Journal of Economic Literature, 48:4, 9871004.
FINAL