Growth and Cycles

Objective: Western societies have benefited since the early nineteenth century from an almost permanent increase in their gross domestic product. In addition, this increase in aggregate output has outpaced population growth and has resulted in a significant increase in living standards. The explanatory theories of this phenomenon are explained in the first part of the course. But economic growth is erratic and there are cyclical cycles characterized by the succession of good and bad years. However, any decrease in the growth rate imbalances the functioning of the economic system (explosion of public deficits, aggravation of unemployment, etc.). The analysis of business cycles is discussed in the second part of the course. This course thus takes stock of the knowledge in this field by articulating the theoretical, historical and statistical approaches. It is also an introduction to the methods of economic dynamics.

Outline:

I - The economic analysis of growth

1 / Growth: history and measures

• Maddison classification
• Galor classification
• Stylized facts of growth
• Debates on "secular stagnation" (Gordon, Phelps, Summers)
• Growth Factors and Solow Residue

2 / History of growth analysis

• Growth in classical theory
• Early Twentieth Century Models: Harrod, Domar, Cambridge School

3 / The Solow-Swan model

• The simple model
• The model with technical progress and depreciation of capital
• The golden rule

4 / Endogenous growth

• A new axiomatic
• Romer's model
• Lucas's model
• Endogenous growth and "economy of ideas" (Jones)

5 / Schumpeterian models

• Creative destruction
• The models of Aghion and Howitt

II - Models of the business cycle

1 / Cycles: history and measures

• The cycle in a historical perspective
• The classification of Zarnowitz
• Some indicators of the business cycle
• The Juglar and Kitchin cycles

2 / Oscillators

• Precursors of macrodynamics (Frisch, Kalecki, Lundberg)
• The oscillator of Samuelson
• The Hicks model
• Oscillators and Yule-Slutsky effect

3 / Analysis of cycles and simulations: RBC and DSGE models

• The early works of Kydland and Prescott
• RBC models
• The condition of Keynes-Ramsey
• DSGE models

Grading: Final exam at the end of the semester.

Bibliography:

• Le Page, J.-M. (2014), La croissance et les cycles conjoncturels, Éditions Archétype 82-L’esprit des Lois (manuel du cours) ;
• Aghion, P., Howitt P. (2009), The Economics of Growth, The MIT Press, 2009, traduction française, L’économie de la croissance, Economica, 2010 ;
• Barro, R. J., Sala-I-Martin, X. (1995): Economic Growth, McGraw-Hill ;
• Weil, D. N. (2008), Economic Growth, Pearson International Edition.