ECON-663 Development Macroeconomics
Prof.
Martha Starr
American
University
Thursdays
5:30-8:00
Spring
2007
Telephone: (202) 885-3747
Office:
Roper Hall, Room 201
Office hours: Wednesdays
3-5:00 pm, or by appointment
Class website: AU
Blackboard, ECON-663
Email: mstarr@american.edu
“Development is not only about the
growth of GNP per head, but also about the expansion of human freedom and
dignity.”
-- Amartya Sen
(2000)
Development Macroeconomics
This
class covers contemporary approaches to the macroeconomics of developing
countries, including: discussion of growth models and their implications for
development policy; issues of monetary and financial policy, including exchange
rates, balance of payments issues, capital flows, financial crises; the role of
foreign aid in promoting economic growth (or not); current policy debates
concerning international trade; transnationalization, FDI, and their
implications for growth prospects; growth, poverty and income distribution; and
environmental sustainability. The objective of the class is to provide a
rigorous overview of these issues, with emphasis on recent scholarly work and
policy debates.
Development
Macroeconomics is one of the recommended classes for the development field (the
other being ECON-663 Development Microeconomics). The course should be
accessible to all economics students who have made reasonable progress in their
core macroeconomics sequence; M.A. students should have completed ECON-501, and
PhD students should have completed ECON-702. Students from SIS should be able
to follow the intuition of formal economic models and understand the
significance of econometric work. If any review or clarification of concepts is
needed, some good intermediate-level texts are mentioned at the end of this
hand-out.
Course outline and required readings
The
course outline is given below. Readings that go with each section of the class
consist of articles posted in Blackboard and chapters from the following book
(available at the AU bookstore):
§
James Cypher and James Dietz, The Process of Economic Development, 2nd edition (2004) -- referred to as “C&D” in the
outline
Due
to the great amount of research being done on the macroeconomics of
development, this class is heavy in reading. Be prepared to spend a
considerable amount of time reading each week. The expectation is not
necessarily to read each article in detail, but rather to grasp the central
argument and contribution to the literature of each one: what key idea is being
advanced, what methods are being used to favor it over competing views, what
are the strengths and weaknesses in its logic or methodology, etc. It is
expected that you will come to class prepared to discuss these points for
assigned readings.
Graded work
|
Item |
Contribution
to final grade (percent) |
Due
date |
|
Country macro/financial
profile |
20 |
March
8 |
|
Seminar
leadership |
15 |
To
be assigned (will
be late March or April) |
|
Research
paper (~20 pages) |
25 |
Apr.
26 (last day of class) |
|
Final exam |
30 |
May
3 (take-home) |
|
Class
participation |
10 |
Throughout |
ð
NOTE:
There will be NO CLASS on APRIL 5th
|
|
COURSE
OUTLINE |
Source |
|
1 |
Defining and measuring
economic development (Jan. 18-25) |
|
|
|
Chap. 1, The
development imperative |
C & D |
|
|
Chap. 2. Measuring
economic development |
C & D |
|
|
Amartya Sen, selections
from Development as Freedom |
Hard copy |
|
|
Millennium Development
Goals, Progress Report 2006 |
BB |
|
2. |
Growth
theory and swings in thinking about development policy (Feb. 1-8) |
|
|
|
Neoclassical model |
|
|
|
Obstfeld and Rogoff, pp. 430-440 |
Hard copy |
|
|
Mankiw, N. Gregory, David Romer, David Weil,
"A Contribution to the Empirics of Economic Growth," Quarterly Journal of Economics, vol.
107, no. 2. (May, 1992), pp. 407-437. |
BB |
|
|
Krueger, Alan and Mikael Lindahl, “Education for
Growth: Why and for whom?” Journal of
Economic Literature, 39 (4): 1101-1136. |
BB |
|
|
Developmentalist and heterodox theories -- Chapters 5-6 |
C&D |
|
|
Liberalizationism -- ‘The magic of the market’: |
|
|
|
pp. 105-108: Adam Smith and
the invisible hard |
C&D |
|
|
Rodríguez, Francisco and Dani Rodrik (2001).
"Trade Policy and Economic Growth: A Skeptic's Guide to the
Cross-National Literature," NBER
Macroeconomics Annual 2000. |
BB |
|
|
Endogenous
growth -- Chap. 8 |
C&D |
|
3 |
Monetary
and financial policy (Feb. 15 - March 1) |
|
|
|
Chapter
15, Macroeconomic equilibrium |
C&D |
|
|
Sergio
Schmukler (2004). “Financial Globalization: Gain and Pain for Developing
Countries,” Atlanta Fed Economic
Review, Vol. 89, No. 2. |
BB |
|
|
Sebastian Edwards (1999). “How Effective are Capital Controls?” Journal of
Economic Perspectives, Vol. 13, no. 4 (Fall), pp.
65-84 |
BB |
|
|
Ross Levine, "Finance and Growth:
Theory and Evidence" |
BB |
|
|
Chap.
16, The debt problem and its development |
C&D |
|
4 |
Foreign
aid and economic growth (March 22) |
|
|
|
Burnside, Craig and David
Dollar, “Aid, Policies, and Growth,” American Economic Review 90(4)
(September 2000): pp. 847–68. |
BB |
|
|
William
Easterly, Ross Levine, and David Roodman (2000). "New Data, New Doubts:
A Comment on Burnside and Dollar's ‘Aid, Policies, and Growth," American Economic Review, 2003,
forthcoming. |
BB |
|
|
Steven
Radelet, Michael A. Clemens, Rikhil Bhavnani (2004). “Counting chickens when
they hatch: The short-term effect of aid on growth.” Center for Global
Development Working Paper No. 44 |
BB |
|
5 |
World
trade (March 29) |
|
|
|
Sandra
Polaski, “Winners and Losers: The Impact of the Doha Round on Developing
Countries” (Carnegie Endowment) |
BB |
|
|
Dani
Rodrik, “What’s so special about China’s exports?” |
BB |
|
|
Måns Söderbom and Francis Teal (2002). “Are manufacturing exports the key to economic success
in Africa?” |
BB |
|
|
Arslan
Razmi and Robert Blecker (2006). “Developing Country Exports of Manufactures: Moving Up the Ladder to
Escape the Fallacy of Composition?” |
BB |
|
|
Garth
Frazier (2005). “Used-Clothing Donations and Apparel Production in
Africa”. |
BB |
|
6 |
Poverty, inequality
and growth (April 12) |
|
|
|
David
Dollar and Aart Kraay (2000). “Growth Is
Good for the Poor” |
BB |
|
|
Deaton,
Angus, "Measuring Poverty in a Growing World (or Measuring Growth in a
Poor World)," June 2003. |
BB |
|
|
Excerpts
from Branco Milanovic, Worlds Apart |
Hard copy |
|
|
World Bank, World Development Report 2006: Equity and
Development |
BB |
|
7 |
Sustainability and
development (April 19) |
|
|
|
Stern Report,
Chapter 4 |
BB |
|
|
Economist article on
the Stern Report |
BB |
Useful background materials
(if needed)
Interpreting
results of regression analysis
§
Appendix
from Meier and Rauch, “How to Read a Regression Table”
Intermediate-level economics
texts
For review or
clarification of basic open-economy macro, one of these texts would be helpful:
§
Krugman,
Paul, and Maurice Obtsfeld (2005). International
Economics: Theory and Policy (Harper Collings, 7th edition).
[previous editions are fine too]
§
Sachs,
Jeffrey, and Felipe Larrain (1992). Macroeconomics
in the Global Economy (Prentice Hall, 1992).
§
Rivera-Batiz,
Francisco and Luis Rivera-Batiz (1994).
International Finance and Open Economy Macroeconomics (New York:
MacMillan, 2nd edition).