ECON202B: BUSINESS CYCLES - SPRING 2011
LECTURE #2 - REAL BUSINESS CYCLE (I)
YURIY GORODNICHENKO
We begin our analysis of business cycles by considering an elementary economy perturbed by
shocks to productivity. This elementary model, constructed in spiri
Agenda
Monetary Policy Control Monetary Policy and the Federal Reserve System, Part 2
Intermediate targets Making monetary policy in practice
Rules versus Discretion
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Monetary Policy Control
Intermediate targets:
The Fed uses intermediate targ
Agenda
Principles of Money Supply Creation Monetary Policy and the Federal Reserve System, Part 1 The Federal Reserve System Monetary Policy Tools
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Money Creation
Three groups affect the money supply:
The central bank conducts monetary policy.
Agenda
Fixed Exchange Rates
Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy, Part 3
Macroeconomic Policy in an Open Economy with Fixed Exchange Rates Fixed versus Flexible Exchange Rates
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Fixed Exchange Rates
Fixe
Agenda
How Exchange Rates are Determined (again)
Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy, Part 2
The IS-LM Model for an Open Economy Macroeconomic Policy in an Open Economy with Flexible Exchange Rates
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How
UNIVERSITY OF CALIFORNIA Department of Economics
SPRING 2008 Economics 202B Y. Gorodnichenko/D. Romer
MACROECONOMICS
FIRST HALF ECONOMIC GROWTH A. THE SOLOW MODEL *Romer, David. 2006. Advanced Macroeconomics. Third edition. New York: McGraw-Hill. Chapter
ECON202B: BUSINESS CYCLES - SPRING 2011
LECTURE #13 - EMPIRICS, OVERVIEW AND OPEN QUESTIONS OF
RESEARCH IN BUSINESS CYCLES
YURIY GORODNICHENKO
In previous lectures we documented a few stylized facts about business cycles and developed
a series of models t
ECON202B: BUSINESS CYCLES - SPRING 2011
LECTURE #12 - FINANCIAL FRICTIONS
YURIY GORODNICHENKO
The baseline New Keynesian and RBC models do not have nancial markets. This omission
could be motivated by several reasons:
(1) In a normally functioning economy
ECON202B: BUSINESS CYCLES - SPRING 2011
LECTURE #11 - MONETARY POLICY
YURIY GORODNICHENKO
In this lecture, we will briey look into design of optimal monetary policy when prices are
sticky. We will use the basic Calvo pricing model in our analysis. Althoug
ECON202B: BUSINESS CYCLES - SPRING 2011
LECTURE #10 - MODELS WITH STICKY PRICES (II)
YURIY GORODNICHENKO
1. Interpretation and solution
In the previous lecture we derived the three equation system of equations which constitute the
simplest New Keynesian m
ECON202B: BUSINESS CYCLES - SPRING 2011
LECTURE #9 - MODELS WITH STICKY PRICES (I)
YURIY GORODNICHENKO
In the previous lecture, we considered why rms may nd it optimal to keep their prices
xed in response to shocks. Our analysis was static in nature while
ECON202B: BUSINESS CYCLES - SPRING 2011
LECTURE #8 - PRICE RIGIDITY
YURIY GORODNICHENKO
1. Stylized Facts about Pricing
As we discussed in the previous lecture, inexible prices can lead to ex-post counter-cyclical
markups and thus can serve as a useful pr
ECON202B: BUSINESS CYCLES - SPRING 2011
LECTURE #7 - IMPERFECT COMPETITION AND VARIABLE
MARKUPS
YURIY GORODNICHENKO
1. Introduction
In our analysis of the basic RBC model, we found that the basic RBC model lacks strong
internal amplication and propagation
ECON202B: BUSINESS CYCLES - SPRING 2011
LECTURE #6 - REAL BUSINESS CYCLE (V)
YURIY GORODNICHENKO
In the previous lecture, we investigated the properties of the baseline real business cycle
(RBC) model. Overall, the conclusion was that to a rst-order appro
ECON202B: BUSINESS CYCLES - SPRING 2011
LECTURE #5 - REAL BUSINESS CYCLE (IV)
YURIY GORODNICHENKO
1. Quantitative Validity of the Real Business Cycle Model
We are now ready to assess the empirical success of the theoretical model we developed so
far. We w
ECON202B: BUSINESS CYCLES - SPRING 2011
LECTURE #4 - PHASE DIAGRAMS WITH CAPITAL STOCK AND
FLEXIBLE LABOR SUPPLY
YURIY GORODNICHENKO
1. Comparative Statics of Equilibrium in RBC
In previous classes, we specied, calibrated, log-linearized, and solved the b
ECON202B: BUSINESS CYCLES - SPRING 2011
LECTURE #3 - REAL BUSINESS CYCLE (II)
YURIY GORODNICHENKO
1. Steady State
Recall the system of equations dening the steady state of the basic RBC model:
(1)
C L1/ = (1 )Y /L
(2)
1 = (Y /K + (1 )
(3)
Y = Z K L1
(4)
Final Exam Thursday, May 22nd Summary and Conclusions 12:30 3:30 p.m. 100 Haas Pavilion
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Agenda Summary
The IS-LM, DAD-SAS, and SGM together. Macroeconomic Rules of Thumb.
CORRECTION on Fiscal Policy
Automatic Stabilizers (slide 24-8):
Because o