Read:  The symposium on the natural rate of unemployment in the Journal of Economic Perspectives, Winter 1997.  Begin with the articles by Staiger, Stock and Watson and by Blanchard and Katz.  If possible have these two read by Tuesday, the rest by Thursday 2/26.

 Model Solving Exercise, Due 2/19
The Keating paper that is to be read by the Tuesday, 1/20 class is available in the secretary's office on the first floor of 37HH.
By Thursday, 1/29:  Find from Citibase a measure of the aggregate wage, a measure of the overall price level for final goods, and a measure of real activity.  Estimate a VAR in the logs of these variables, compute impulse responses, and discuss whether the results confirm or call in to question the results of Keating and Leeper-Sims-Zha as discussed in class.  Check whether results change substantially if you replace the overall price level with a broad index of auction-market prices, e.g. a commodity price index.  Write up your results, including plots of impulse responses.  Unless you are an expert in some other statistical or matrix programming language, the easiest way to estimate a VAR is probably to use RATS, which is available on the machines at Statlab.

By Tuesday, 1/27:  Read Julio Rotemberg's October 1982 Review of Economic Studies article.  (The AER article I mentioned in class, it turns out, was a 1983 comment extending this 1982 REStud article.  It's the REStud article we will discuss Tuesday.)  Also review, looking for evidence on price/real interactions, the article "What Does Monetary Policy Do?", by Eric Leeper, C. Sims, and Tao Zha in Brookings Papers on Economic Activity 1996:2.