- Pascal Michaillat
- Associate Professor of Economics, UCSC
- Tuesday–Thursday, 5:20pm–6:55pm
- Room 222, Cowell Academic Building
- Wednesday, 3:00pm-4:00pm
- Room 437, Engineering 2 Building
The course covers research topics related to economic slack—the amount of productive resources in the economy that are unused. The course is centered around formal modeling, but it also presents some of the evidence supporting the assumptions introduced in the models. The course presents models of economic slack and discusses policies used to tackle slack. The course tries to answer several questions:
- Why does slack exist?
- How does slack affect economic life?
- Why does slack vary over time?
- How are slack fluctuations related to price and wage rigidity?
- What is the socially optimal level of slack?
- How should monetary policy respond to fluctuations in slack over the business cycle?
- How should fiscal policy respond to fluctuations in slack over the business cycle?
All of you should be shifting away from learning the results of other peoples' research into learning how to conduct your own research. A major reason for teaching this material is to positively influence your research. We will also devote a good part of this course to active research. We will practice:
- How to select a research question
- How to position your paper in the literature
- How to develop and refine the answer to your research question
By the end of the course, you will have experienced all the stages of a research project and completed a short research paper.
Office hours will be conducted in-person. Office hours are first-come-first-served: there is no need to sign up. Feel free to come to office hours to discuss concepts covered in lecture and readings, discuss your research project, or talk about any other course-related matters.
In addition to office hours, we will communicate using GitHub Discussions. This collaborative discussion forum is designed to get you help quickly and efficiently. You can ask and answer questions, share updates, have open-ended conversations, and follow along on decisions affecting the course. So rather than emailing me or each other, I encourage you to post your questions and queries on GitHub, and to participate whenever you can.
This is a flipped course.
- At home, you will watch lectures and read articles.
- Classes time will have two parts:
- During the first part of the class, we will discuss the lecture material and readings. To lead the discussion, you will give short presentations that summarize the material from the readings. We will discuss anything that is unclear and answer all questions.
- During the second part of class, you will work on your research project. This will involve both development of the project and presentation of various intermediate steps.
At home, before each meeting, you will have to watch lecture videos and go over readings.
- Before Thursday 11 January: videos & main readings in Introduction
- Before Tuesday 16 January: videos in Overview of business-cycle models and Prevalence of slack and matching function
- Before Thursday 18 January: main readings in Overview of business-cycle models and Prevalence of slack and matching function
- Before Tuesday 23 January: videos in Basic model of slack
- Before Thursday 25 January: main readings in Basic model of slack
- Before Tuesday 30 January: videos in Model of slack with income and wealth inequality and Discussion of the solution concept
- Before Thursday 1 February: main readings in Model of slack with income and wealth inequality and Discussion of the solution concept
- Before Tuesday 6 February: videos in Price and wage rigidities
- Before Thursday 8 February: main readings in Price and wage rigidities
- Before Tuesday 13 February: videos in Model of slack with labor and product markets
- Before Thursday 15 February: main readings in Model of slack with labor and product markets
- Before Tuesday 20 February: videos in Dynamic model of slack
- Before Thursday 22 February: main readings in Dynamic model of slack
- Before Tuesday 27 February: videos in Social welfare, efficiency, and inefficiency
- Before Thursday 29 February: main readings in Social welfare, efficiency, and inefficiency
- Before Tuesday 5 March: videos in Optimal monetary policy over the business cycle
- Before Thursday 7 March: main readings in Optimal monetary policy over the business cycle
- Before Tuesday 12 March: videos in Optimal government spending over the business cycle
- Before Thursday 14 March: main readings in Optimal government spending over the business cycle
The main readings cover important material on which the lectures are based. You should read them from beginning to end, reproduce the key steps of the derivations, and remember the key results. Additional readings are also be provided in each section. These readings provide additional theoretical results, empirical evidence, some background, and may provide inspiration for your research. If you plan to do research in macroeconomics, you are encouraged to go over all the supplemental readings as well.
This is a tentative schedule. Updates to the schedule will be communicated via the discussion forum.
The course's lecture videos are also available as a playlist on YouTube. The playlist might make it easier to watch the lectures and follow the course.
At the beginning of class, we will discuss the lecture material and readings. To lead the discussion, students will give 10-minute presentations that summarize the readings for the week.
Each presentation should have 5 slides addressing the following questions:
- What is the research question addressed by the paper?
- How does the material covered in the paper contribute to the previous literature? Which hole does it fill?
- What are the main elements of the answer to the research question?
- Illustrate graphically the answer to the research question or an interesting mechanism discussed in the paper.
- What are the limitations of the answer provided in the paper? How could the answer be improved?
If you need a few more slides to explain the paper and its results, or if you need not just one but a few graphs to explain the mechanisms, that is no problem at all as long as the presentation remains below 10 minutes.
Presentation slides must be written in LaTeX and compiled to a PDF.
The slides should be uploaded to the course portal before the presentation. The easiest way to upload your slides is through GitHub Desktop. After forking the course repository, add your slides to the folder presentations in your fork, and then submit a pull request. Once I accept your pull request, your branch will be merged to the course repository, thereby adding your slides to the course folder. Please adhere to the following naming convention for the presentation: AuthorsYear.pdf.
One of the main objectives of the course is to produce a short research paper on a topic related to economic slack.
A good research paper should do the following:
- Develop a well-posed research question
- Answer the research question using a combination of theory, simulations, and empirical analysis
- Position the paper in the prior literature
- Tuesday 30 January: class presentation of the project outline
- Tuesday 27 February: class presentation of early results
- Tuesday 12 March: class presentation of final results
- Thursday 21 March: final paper due
This is a tentative schedule for the paper's due dates. Updates to the schedule will be communicated via the discussions forum.
The project outline should be presented in 10–15 minutes with 4–7 slides.
- Slide 1: research question—what are you asking in the project & why that matters
- Slide 2: positioning—what we already know & what we do not yet know
- Slide 3: research methodology—how you will address the research question
- Slides 4–6: overview of what you have so far—data & model & code
- Slide 7: hurdles & next steps
- It is fine to propose several possible projects.
Early results should be presented in 15–20 minutes with 7–10 slides.
- Slide 1: review the research question & why it matters
- Slide 2: position of the project in the literature—explain what the few most related papers have done and not done, and how your paper is going to fill this gap
- Slide 3: review the research method: how you will answer the research question
- Slides 4–6: overview of the data, model, & method
- Slides 7–9: overview of the early results
- Slide 10: current roadblocks & next steps
Final results should be presented in 15–20 minutes with 7–10 slides.
- Slide 1: review the research question & why it matters
- Slide 2: position of the project in the literature
- Slides 3–5: overview of the data, model, & methodology
- Slides 6–9: description of the final results
- Slide 10: summary & implications
Presentation slides must be written in LaTeX and compiled to a PDF.
Your research paper should be short and follow the AER: Insights guidelines:
- Manuscripts must be less than 6,000 words, with a maximum of five exhibits (figures or tables). The wordcount applies to the main body of the text, but excludes title page, reference list, and exhibits.
- Manuscripts should contain no more than 5 exhibits (tables and figures). Individual exhibits are limited to one page each.
- Manuscripts must include an abstract of 100 or fewer words.
- Papers must be self-contained. Specifically, a reader should be able follow the analysis in the paper and be convinced it is correct and coherent from the main text alone, without consulting the appendix. For empirical work, the main text should include relevant information about data sources, variable definitions and construction, the estimating equations, and any other information needed to understand and assess each exhibit in the main text. For theoretical work, proofs should typically be contained in the paper. This is the case when the proof itself provides insight into the paper's argument or when the method of proof is innovative.
The research paper must be written in LaTeX, compiled to a PDF, and submitted by email before the due date.
Your grade will be based on the quality of the research project and your participation. The contribution to the total grade of 100 points is as follows:
-
Participation: 30 points. This is a research-intensive course. As such, attendance and participation are key. The participation grade will be based on various elements:
- Summary of the reading material in class
- Participation in class
- Participation to GitHub discussions
- General community building
-
Research project: 70 points. The project will be evaluated based on quality of analysis, clarity, and originality. The project grade will have the following components:
- Presentation of project outline: 10 points
- Presentation of early results: 10 points
- Presentation of final results: 10 points
- Final paper: 40 points
Letter grades will be based on your total grade, with standard cutoffs.
LaTeX is the best system to typeset scientific research. In particular, it allows to typeset mathematical expressions, insert tables and figures with results, and manage scientific references. This is why I am asking you to write your presentation slides and research paper in LaTeX. If you continue on a research path, you will need to use LaTeX, so it is good to learn how to use it now.
If you are looking for LaTeX templates, I have developed a template for presentations and a template for papers that might be helpful. These templates follow typographical best practices and have a minimalist design. They are freely available on GitHub:
I have also developed a style file collecting useful LaTeX commands to write math. You can use this style file in conjunction with the templates and obtain mathematical expressions that are more legible.
If you are new to LaTeX, I encourage you to use Overleaf, for which UCSC supplies professional accounts. Overlead makes it easy to produce research paper and research presentations in LaTeX directly from your web browser. You can use the templates with Overleaf.
There is no textbook for this course, but several books might be helpful to write your research paper.
First and foremost, a good research paper needs to have a good structure. A good reference on how to structure your paper is The Little Book of Research Writing by Varanya Chaubey.
Scientific papers involve two elements that do not appear in other writings but are fundamental to communicate scientific ideas: graphs and proofs. It is important to make clear, clean, and meaningful graphs and proofs.
- A great reference on how to create compelling graphs is The Visual Display of Quantitative Information by E.R. Tufte.
- A good guide on how to choose notation, how to describe a model, and how to present mathematical results and proofs, is A Guide for the Young Economist by W. Thomson. The book also contains useful advice on giving talks.
Once your paper has a good structure, it does not hurt to have a decent style—to help readers go through the paper.
- The canonical reference on style is The Elements of Style by W. Strunk and E. B. White.
Whatever you write, it is important to follow the rules and conventions of the English language. The canonical manual—followed by most US journals—is the Chicago Manual of Style. You should consult it if you have any question about English writing, rules, conventions, and style.