Schedule and Reading

09-09   

Introduction and the Money Multiplier via Babysitters

1. BS.pdf (Roberto Rigobon)
   

09-14  

Monetary Policy and the Velocity Theory of Money

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

2. Article (Economist): Bag of Bricks: The Hyperinflation in Zimbabwe
   

09-16  

The IS-LM Model and its Applications

1. ISLMnew.pdf (Roberto Rigobon)
   

09-21    

Short run Theories of Nominal Exchange Rates              

1. Textbooks: KO Chapter 12 and 13
   

09-23 

The Choice of an Exchange Rate Regime: China

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

2. Article (Economist): Who Wants to be a Trillionaire? China’s Foreign Reserves
   

09-28   

Game: Central Banking and Currency Crises

1. HBS Note #9-799-089: Note on Currency Crises
   

09-30   

Game: Financial Crises

1. USCrisis.pdf (Roberto Rigobon)
   

10-05   

Internal and External equilibrium

1. BBNN.pdf (Roberto Rigobon)
   

2. HBS Case # 97-309: How do economies grow?
   

10-07  

Diagnosis and Development policies: The Latin Triangle

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

10-13  

(Monday Schedule) Why Rich countries are Rich, and Poor Countries are Poor?

1. Textbooks: KK Chapter 12
   

10-14 

Final Exam

1. The exam covers the material until Oct 7th class.
   

Optional Reading

Introduction and the Money Multiplier via Babysitters

1. Babysitter in practice: Krugman: http://www.slate.com/id/1937/
   

Monetary Policy and the Velocity Theory of Money

1. Textbooks: M Chapter 4
   

The IS-LM Model and its Applications

1. Textbooks: M Chapter 9, 10 and 11
   

Short run Theories of Nominal Exchange Rates              

1. Textbooks: M Chapter 12 and 13
   

2. Textbooks: KK Chapter 22
   

3. Textbooks: KO Chapter 12, 13 and 14
   

The Choice of an Exchange Rate Regime: China

1. Textbooks: KK Chapter 23 and 24
   

Game: Central Banking and Currency Crises

1. Article (Economist): Tequila Slammer: The Peso Crisis, Ten Years On
   

2. Textbooks: KK Chapter 31, 32 and 34
   

3. HBS Note #9-797-075: National Income Accounting
   

4. HBS Note #9-705-025: Reading the Balance of Payments
   

Game: Financial Crises

1. Textbooks: KK Chapter 33 and 35
   

Internal and External equilibrium

1. Textbooks: KO Chapter 15 and 16
   

Diagnosis and Development policies: The Latin Triangle

1. Textbooks: KO Chapter 22
   

2. Eichengreen: How Economists Think About Crises
   

Why Rich countries are Rich, and Poor Countries are Poor?

1. Textbooks: KK Chapters 15 and 17
   

Final Exam

1. Pray: All acceptable Holly books are good. And what is even more important... all are equally effective.
   

Description

The course is divided into two main sections. The first section 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 section if focused on the short run and will therefore also include a discussion of exchange rates and decisions economies make. How do economies decide how to set their exchange rate policy? Why do crises occur and how to manage these crises (currency and financial)? The second section will look at the long run macroeconomic issues in developing and emerging economies, covering a variety of development strategies. This section covers topics such as economic growth, the management of natural resources, the role of foreign aid and the role of markets. We will spend some time discussing alternative strategies to growth and development that have been followed to understand their success (or lack thereof). Overall, the class will try to cover a broad array of developing economies from China and India to Africa, as well as a good discussion of issues facing developed countries in the 21st century.

Note that this class is meant to be an introduction to macro and international economics. There is a slate of additional macro and international classes that build on this material. In particular, in Fall 2009 (H2), Roberto will teach 15.014, a class on “Sustainable Development  and Social Entrepreneurship”, for which 15.012 and 15.015 is required. And in Spring 2010, Kristin Forbes will teach 15.018, a class on “Global Economic Challenges”, for which 15.012 or 15.015 are recommended.

The class is based on cases and class discussion. The grade consists of participation (1/3) and a final exam (2/3). Before each class, you are expected to read at least the relevant case and usually an extra article and/or note. Below is a list of required readings for each class. These are also available in the reading packet. There is also a list of optional readings (organized by class) at the end of the main syllabus. These optional readings are meant for those interested in further reading or for those who want a different reference for the tools and material covered in class. The optional readings are not in the reading packet – they are meant purely for extra reading. In that spirit, there are three optional textbooks (that complement each other) which you can use if you want more detail on any of the theories covered in class. The optional and required readings are from:

1. “Macroeconomics”, 6th Edition, by Gregory Mankiw (referred to as M below)
   

2. “International Economics: Theory and Policy”, 7th Edition, by Paul Krugman and Maurice Obstfeld (referred to as KO below).
   

3. “International Economics and International Economic Policy”, 4th Edition, by King and King (referred to as KK below)