Economics 8344 - Macroeconomic Theory III
Fall 2013



MIDTERM DATE: March 6th.


FINAL: Referee report on a paper. To be graded.)


No class: April 15


Presentations: (Please send me your papers, so I can post them here)


April 1 ---  Wen:  Bruno-Shin   slides


April 8 --- Carolina: Hau-Rey

April 10 --- Jake: Nikolsko-Rzhevskyy-Papell-Prodan

April 17 --- Edson: Carroll-Weil

April 22 --- Lan House Prices and Risk Sharing

April 24 – Mike Jack and Suri

April 29 – Blake Martin and Ventura



Reading List (Out of date)


We start with my work producing stylized facts about (lack of) international financial integration.

1)     ``International Risk Sharing and European Monetary Unification.'' (JIE 1998) Measures international risk sharing and find channels.

2)     ``Economic Integration, Industrial Specialization, and the Asymmetry of Macroeconomic Fluctuations.'' (JIE 2001) Welfare gains from risk sharing.

3)     ``Home Bias and International Risk Sharing: Twin Puzzles Separated at Birth.'' (JIMF 2007) Measures Home Bias and correlates it with risk sharing

For Monday 2/4 read BackusSmith JIE1993 (Or read Obstfeld and Rogoff’s section in Chapter 5 with non-durable goods).


Morgan, Rime, Strahan (QJE 2004) on volatility effects of banking integration (I expect you to be able to replicate the demand-supply figures)

Demyanyk, Ostergaard, Sorensen (JF 2007)  risk sharing and banking integration (I won’t ask questions in this, but it complements MRS nicely)

Ekinci, Kalemli-Ozcan, Sorensen (NBER  International Seminar on Macroeconomics 2007. MIT Press 2008). This paper is about capital flows and trust (trust variables are well motivated instruments for financial integration and arguably  exogenous)

(Look at  EKS for Monday 2/18. Look back here, I may add stuff).


Holmstrom-Tirole QJE 1997


Consumption papers:

Carroll 2001, Buffer Stock Model (for Feb 25)

Luengo-Prado and Sorensen Restat 2008


Productivity paper: Quantifying Productivity Gains from Foreign Investment

(slides for presentation)


Volatility paper: Kalemli-OzcanSorensenVolosovych


Zipf’s law, Gabaix QJE 99 and Granularity Gabaix ECA ‘11


A list of further works (by me) on risk sharing filling in blanks and updating, I plan to briefly give the punch lines :

Further work of mine on RS (with ultra-short summary) Many of these papers use the  same framework and I can quickly tell you about the empirical findings.


Tentative Requirements (20 percent each):


  • 4-5 homeworks
  • A midterm
  • A mock referee report on a paper of interest (imaging you evaluate the paper for a top macro journal)
  • Student presentations (1 or 2 to a class, depending on final class size, can be joint)
  • Student participation: You will read and give comments to the presentations of other students








HW #1 

Homework 1

 Mon Feb 4

HW #2

Homework 2

 Mon Feb 11

HW #3



HW #4



HW #5



HW #6