15.012 
Applied Macro and International Economics
 

15.012

2014
Applied Macro and International Economics


This course explores the macroeconomic environment in which firms operate. It aims to provide a good grounding in macroeconomic concepts and applying it to understand specific country experiences. The course first develops the basic tools of macroeconomic management, predominantly monetary and fiscal policy. We will use both historic case studies as well as discussions of modern policy for context. This is focused on the short run. We will then move to the long run and discuss how to understand the long term growth prospects of an economy, the paths countries have taken to liberalization and the role of the private sector more generally. Finally, we will include a discussion of what exchange rate decisions economies make and how financial crises take place. Overall, our class will try to cover a broad array of emerging economies from China and India to Latin America and Africa, as well as a good discussion of the issues facing developed countries in the 21st century.



  1. BulletDescription

  2. BulletClass Schedule and Required Readings

  3. BulletContact information

  4. BulletFull Syllabus:


Schedule and Reading


Wed Feb 5: Introduction and the Babysitter Crisis

                    Mankiw “Macroeconomics” Chapter 1


Fri Feb 10:Where Does Growth Come From: Growth Theory

HBR Article #07406:How Fast Can the US Economy Grow

Article (Economist): The Growth of Growth Theory


Wed Feb 12:Growth Theory: Total Factor Productivity and Innovation

HBS Case #9-703-040:Singapore Inc.

Article(WSJ):Singapore Swing: Krugman was Right…

Article (Economist):Lands of Opportunity


Tues Feb 18:     Trade and Comparative Advantage


Wed Feb 19:The Role of Foreign Aid

Article (LA Times): Foreign Aid Face Off: Can We End Poverty With Wads of Cash

Hubbard, Glenn, "The Aid Trap: Hard Truths About Ending Poverty", Chapter 4

Article (Economist): Economics Focus: To Give or Forgive


Mon Feb 24:Markets and Growth

Article (Bloomberg Businessweek): In Kenya, Securing Cash on a Cell Phone

Article (FT): Perhaps Microfinance Isn’t Such a Big Deal After All

Article (Economist): Flicker of a Brighter Future: Business in Africa

Romer, Paul, TED Talk 2009, "Charter Cities"


Wed Feb 26:    Money, Banking and Central Banks

                        MFS Chapter 4 with Appendix

                        HBS Case #9-798-048:The German Hyperinflation of 1923


Mon Mar 3:    Aggregate Supply and Aggregate Demand

                    Mankiw “Macroeconomics” Chapter 2

                    MFS Chapter 9


Wed Mar 5:Monetary Policy: Applications and Channels

                    HBS Case #9-711-048: Steering Monetary Policy through Unprecedented Crises


Mon Mar 10:Fiscal Policy: Applications and Channels

HBS Case #9-391-258: The Great Depression: Causes and Impact (Abridged)


Wed Mar 12: Fiscal Policy: Debt Dynamics

HBS Case #:


Mon Mar 31:Introduction to Exchange Rates and Exchange Rate Regimes

Mankiw “Macroeconomics”  Chapter 5-3 (pages 137-150)

Article (Economist):Currency Contortions


Wed Apr 2:Import Substitution: Zambia and Copper

                    HBS Case #9-792-089:Reconstruction of Zambia

HBS Supp #9-797-056: Reconstruction of Zambia, 1997


Mon Apr 7:India and the Washington Consensus

HBS Case #9-798-065:India on the Move

Article (Economist):Hopes Suspended

Article (Economist): Reflections of Reality


Wed Apr 9:Europe and Optimal Currency Areas

Article (Economist):Staring into the Abyss

Article (Economist):The Euro Crisis: Damned with Faint Plans


Mon Apr 14:Balance of Payments Crisis in Argentina 

HBS Case #9-700-061: Menem and the Populist Tradition in Argentina

HBS Case #9-704-004: The 2001 Crisis in Argentina: An IMF-Sponsored Default? (A)


Wed Apr 16:China and the Internationalization of the Renminbi

HBS Case #9-706-021:China: To Float or Not to Float? (A)


Mon Apr 21:Holiday


Wed Apr 23:Financial Crises: the US


Mon Apr 28:Financial Crises: Europe


Wed Apr 30:Exchange Rates and Capital Controls: Malaysia


Mon May 5:Burma and Ethics 

                    HBS Case #9-798-078:The Burma Pipeline


Wed May 7:        Debate 1


Mon May 12:        Debate 2


Wed May 14:Debate 3


Description


The class will be co-taught by Professors Roberto Rigobon and Tavneet Suri. On any given day, all three sections will be taught by the same professor. All sections will therefore cover exactly the same material and have exactly the same set of classes.


Note that this class is meant to be an introduction to macro and international economics. There will be additional macro and international classes that will build on this material. In particular, Roberto Rigobon will teach 15.014 in Fall 2014, a class on “Applied Macro and International Economics II”, for which 15.012 is required/a prerequisite. This course focuses on economic policy, and the constraints it faces. We study how economic policy sometimes collides with social and political aspirations and environmental objectives. The ultimate objective of the course is to understand how economic policy is conducted in practice and how economies balance the different dimensions of sustainability: environmental, social, political, institutional, markets, firms and personal.


In addition, Kristin Forbes teaches 15.218, a class on “Global Economic Challenges and Opportunities”, for which 15.012 is recommended. Finally, Tavneet Suri will teach a class on “The Business of the Poor” in Spring 2015.


There are three TAs for the class, one for each section. There will be no recitations for this class, but the TAs will each hold office hours by appointment.


Before each class, you are expected to read all “required readings” listed below. An optional textbook is “Macroeconomics and the Financial System”, by Mankiw and Ball (referred to as MFS below). This is meant for those interested in further reading or for those who want a different reference for the tools and frameworks covered in class.


This is a case/readings-based class. There is no final exam. Instead, three classes will be reserved for debates/presentations, which are described in detail below.



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Contact Information


Roberto Rigobon

  1. BulletOffice:E62-519

  2. BulletEmail:rigobon@mit.edu

  3. BulletOffice Hours:By appointment


Tavneet Suri

  1. BulletOffice:E62-517

  2. BulletEmail:tavneet@mit.edu

  3. BulletOffice Hours:By appointment



Teaching Assistants

Section A: Anne- Flore Elard

  1. BulletEmail:

  2. BulletOffice Hours:By appointment


Section B:Thomas

  1. BulletEmail:

  2. BulletOffice Hours:By appointment


Section C: Stawan

  1. BulletEmail:

  2. BulletOffice Hours:By appointment



Course Assistant

  1. BulletLucy Sonner

  2. BulletEmail: lsonner@mit.edu

  3. Bullet

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