15.014 
Applied International Macroeconomic: Development & Sustainability
 

15.014
Applied International Macroeconomic:
Development & Sustainability

2014


This course addresses, from an economics point of view, some of the issues currently at the fore front of development, sustainability, and social entrepreneurship. The underlying question of the course is how can standards of living be improved in a sustainable manner. In this context, sustainability has more than one dimension: (i) obviously sustainability from the environmental and resource use dimension; (ii) from the social and political dimensions; and (iii) from the financial and economic dimension. Sustainable improvements in the standards of living need all dimensions to be satisfied.


The purpose of this course is to offer a framework to analyze these problems, and to apply the learning to a particular application/problem.


Prerequisites: you must have 15.012 before taking this class (or 15.015 if you are a Sloan Fellow) No exceptions!


  1. BulletDescription and Evaluation 

  2. BulletSyllabus and Required Readings

  3. BulletContact information


We will use notes that i have been writing. the chapters will be available as we go along...


Schedule and Reading


Class 1

Demand Multiplier

  1. BulletDemand Multiplier Notes (BS.pdf)

  2. BulletBaby-Sitter’s coop (Baby-Sitting the Economy.pdf)

  3. BulletChapter: Basic Demand Multiplier

  4. BulletBB


Class 2

Macroeconomic Stability I

  1. BulletNN

  2. BulletFiscal and Monetary Policy

  3. BulletAutomatic Adjustment

  4. BulletChapter: BBNN Basics


Class 3

Macroeconomic Stability II: Offshoring Game

  1. BulletOffshoring Game


Class 4  

Macroeconomic Stability III: Measurement

  1. BulletMeasuring external sustainability: Current Account

  2. BulletMeasuring internal sustainability: Unit Labor Cost


Class 5

Macroeconomic Stability iV: Shocks

  1. BulletChapter: BBNN Shocks

  2. BulletShort Run Policies: Fiscal and Monetary Policy

  3. BulletShocks (Productivity and Migration)


Class 6   

BBNN - Sustainability Political

  1. BulletEconomic and Political Cycles

  2. BulletChapter: BBNN Sustainability


Class 7     

Monetary Policy Channels. Limitations

  1. BulletLimits of Monetary Policy (MonetaryPolicy.pdf)


Class 8     

BBNN Exam

  1. BulletIn class exam



Class 9     

Fiscal Policy and Debt Dynamics

  1. BulletLimits of Fiscal Policy

  2. BulletDebt Dynamics

  3. BulletPS Debt Dynamics is assigned



Class 9  

Exchange Rate Regimes

  1. BulletHBS: Exchange Rate Regimes (9-704-038)

  2. BulletCentral Bank Accounting


Class 10

Currency and Financial Crises

  1. BulletHBS: The Argentine Paradox (9-702-001)


Class 11     

Contagion, Europe, and Optimal Currency Unions

  1. BulletCase Darden School: The Euro Zone and the Sovereign Debt Crisis (UV5652)

  2. BulletHBS: Argentina’s Convertibility Plan (9-702-002)


Class 12

Comparative Advantages: Simulation

  1. BulletChapter: Comparative Advantages

  2. BulletASSIGNMENT DUE: The Fiscal Sustainability Assignment is due at 5pm this day.


Class 13

Comparative Advantages: Strategic Trade Policy

  1. BulletClass Materials

  2. BulletInternational Trade Organizations


Class 14

Global Climate Change Market: Problem of the commons

  1. BulletHBS: The Carbon Market in 2008 (9-209-064)

  2. BulletClass Simulation

  3. BulletEDGES Score Card

  4. BulletFOR ASSIGNMENT: HBS: Cape Wind: Offshore Wind Energy in the USA (9-708-022)


Class 15

Poverty, Micro Lending, Corruption

  1. BulletHBS: Banca Regional Andino (9-307-060)

  2. BulletServing the World’s Poor Profitably: HB Review, Prahalad and Hammond

  3. BulletHBS: Corruption in international business (9-701-128)


Class 16

Health Care Reform, Social Security Reform

  1. BulletStanford Case: HEALTH CARE REFORM: 2009-2010 (P-74)

  2. BulletClass Simulation


Class 17

Natural Resources and the Dutch Disease

  1. BulletExtracts from Facts about Commodities (WB Report) (Report.pdf)

  2. BulletASSIGNMENT DUE: Evaluation of Cape Wind from the EDGES point of view


Class 18

Capital Controls and Inflation Targeting   

  1. BulletHBS: Capital Controls in Chile (9-705-031)

  2. BulletHBS: Brazil 2003: Inflation Targeting (9-704-028)


Class 19

Why Rich Countries are Rich and Poor Countries are Poor

  1. BulletClass Materials


Description


This course addresses: how countries grow? What is the interaction between the political economy of a country and its probability of a crisis? What are the advantages and costs of offshoring? What is the role of capital controls? How to deal with corruption? How to make world growth consistent with environmental concerns? What are the problems of poverty and income distribution? what are the implications of the actual programs dealing with poverty and the environment? how markets can help, and when they can’t help? what is the role of property right in the problem of the environment? In other words, how to make development sustainable.


We will devote a fair amount of time to understand the international and macroeconomic implications of these issues. In most of the problems highlighted in this course there are welfare gains, although they will be rarely fairly distributed among the population. Hence, an important part of the discussion is to understand the implications of policy design to the different groups or countries.



Evaluation:


The course is cased based. There is a mid term exam that corresponds to 40 percent of the grade. Two assignments that correspond to the other 60 percent. 30 percent each.


Assignments:


Fiscal Sustainability:

Teams of 3-4 students (no more than that) pick 3-4 countries (one per participant). All teams have to pick the US and Greece. The purpose is to evaluate the fiscal sustainability of those countries. We will answer what is the primary deficit effort the country has to do the following 10 years to make sure the debt to gdp ratio falls to 60 percent 20 years from now.


Cape Wind Evaluation:

Using the EDGES framework evaluate the cape wind project. Same teams need to provide an evaluation of the project according to the EDGES framework.

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Contact Information


Roberto Rigobon

  1. Bulletx8-8374

  2. Bulletrigobon@mit.edu.

  3. Bullethttp://web.mit.edu/rigobon/www/


Administrative Assistant

  1. BulletRose Ziv Carpenter

  2. Bulletroseziv@mit.edu


Teaching Assistants

  1. BulletDustin Matthew Willard: dwillard@mit.edu

  2. BulletDavid Walker: dkw10@mit.edu



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