1 Academic Orientation
A review of micro and macroeconomic principles, probability and statistics, and other topics is required for all CDE Fellows. During three weeks of orientation, students attend 1-2 daily lectures, complete homework assignments, and take weekly tests. The goal of the orientation session is to thoroughly prepare students for the rigors of the regular semester.
4 Required Courses
This course focuses on the analysis of modern economic growth and comparative development across nations. Motivated by several stylized facts from cross-country data, we will pose a series of questions: Why are some countries so rich while others remain so poor? What explains heterogeneity in the experience of economic growth across nations, with some growing at a moderate pace over long periods of time, others experiencing rapid growth over shorter intervals, and yet others stagnating persistently? Do all economies face comparable challenges to achieving sustained economic growth? Will poorer countries ever catch up to richer ones? To answer these and other related questions, we will explore the underlying mechanisms of economic growth. What role is played by savings and investment (i.e., the accumulation of physical capital)? What is the influence of population growth? How important are investments in human capital (i.e., education and population health)? What about technological differences across nations? How much significance should we ascribe to cross-country differences in geographical characteristics? How much should we ascribe to differences in the quality of institutions? For each question, we will explore both theoretical and empirical approaches, ranging from formal models to qualitative historical evidence to cross-country growth regressions. We will debate the usefulness of these different approaches for development policy and will discuss the reasons why so many questions about economic growth remain difficult to answer.
(Professor Quamrul H. Ashraf).
ECON 502: This course focuses on basic methods of bringing economic theory and data together to provide empirical guidance for policy formulation, including use of computers in econometric analysis. This course covers techniques of econometric analysis using a moderate level of mathematical exposition. (Professor Anand Swamy).
ECON 503: The course introduces students to the statistical methods used by economists, including those studying policy questions. The focus is on applications. Students will also work with Stata, a software widely used by economists. (Professor Owen Ozier).
This class is about microeconomic and empirical analysis of government expenditure programs in developing and transitional countries. It provides tools for understanding the effects of government policies, as well as a useful conceptual framework for analyzing normative questions such as “what role should government play in the economy” and “what is a good policy?” The course begins by considering the efficiency of market economies, and rationales for government intervention in the market, such as public goods, externalities, information-based market failures, imperfect competition, and equity. We also consider ways that human behavior might deviate from perfect rationality, and what that might imply for policy. Along the way, we apply these concepts to various examples of policy issues, including, among other things, the environment, education, health, infrastructure, security, social insurance, and aid to the poor. We then turn to the general question of how to make the government work better, addressing questions such as the following. When is it better to have the government own and produce things, and when is it better to privatize? What are the incentives of politicians and government employees, and how does the design of political and budgetary institutions affect the degree to which they serve the public interest? How should responsibilities be divided up between the central government and local governments, and what are the advantages and disadvantages of “decentralization?” What can be done to improve the delivery of basic services? For example, how might one address problems of corruption and absenteeism? Throughout the course, we consider examples of empirical research, and to facilitate this, we will occasionally introduce econometric tools that are particularly useful for microeconomic policy evaluation.
(Professor Jon Bakija).
ECON 505: The macroeconomic structures of developing countries tend to be very different from those in high-income countries, and their macroeconomic policy environments also differ in important ways from those in rich countries. This course is intended to introduce students to a set of models that is particularly suitable for analyzing macroeconomic performance in developing countries, as well as to some analytical tools that help us understand why such countries have often experienced a variety of macroeconomic crises, including sovereign debt, currency, and banking crises. (Professor Peter Montiel).
ECON 506: This is a practically oriented course in macroeconomic theory and policy. It begins with a review of core concepts and definitions. It then discusses the contributions of households and firms to aggregate production and spending. Next is an introduction to monetary and fiscal policy. It goes on to develop a complete macro model, which is then used to discuss some of the monetary, fiscal and exchange rate policy issues faced by developing and emerging market economies. The class is offered as an alternative to Econ 505 for those not intending to specialize in macroeconomics. (Professor Hali Edison).
1 Elective Course
(course offerings may change annually)
Students will be introduced to the policy challenges of infrastructure in emerging markets. We will learn how infrastructure is changing with respect to energy and transport. New technologies have impacts on countries’ options for addressing infrastructure needs, as does climate change. The course will illustrate the pros and cons of different policy approaches, and discuss why consensus on infrastructure policy can be hard to achieve.
(Professor Bernard Sheahan).
Micro-simulation modeling provides one of the most powerful tools for ex ante evidence-based analysis of economic and social policy interventions. Rooted in representative household surveys of a country’s population, the models provide a picture of poverty, employment, consumption and income levels throughout the country. A micro-simulation model enables researchers to investigate the impact of existing economic and social policy interventions (such as tax and public benefit interventions) on income levels, poverty, inequality and other outcomes. In addition, researchers are able to simulate the impact and estimate the cost of new policy interventions.
During this course, students will learn to apply these methods to analyze public policies and interpret the findings. The course examines measurement issues, analytical tools and their application to household survey data for a range of developing countries. The course also links the outcomes of the analysis with the challenges of policy implementation, exploring how the political environment and/or institutional setting may result in the implementation of second-best options. This is a hands-on modeling course, and students will build a micro-simulation model for a country of their choice and use this model in completing the course requirements. The course will employ Excel, Stata and advanced micro-simulation packages. The final requirement for the course is a policy paper that provides students with an opportunity to write accessible prose that communicates the methodology adopted and the key lessons of the analysis.
(Professor Michael Samson).
This course is designed to provide hands-on experience using microeconomic data to assess trends in key indicators used to measure progress towards the sustainable development goals. The course will build students’ skills in finding, accessing and using various data sources. It will also expose students to the range of new types of data for development. Students will build skills in data cleaning, data manipulation and data visualization techniques. The course will use Stata, and most of the course will involve hands-on in-class data workshops, interspersed with some lectures and readings. Each student will focus on a lower middle-income country of their choice and produce a policy report using the data skills acquired during the course. (Prof. Susan Godlonton)
This is an introduction to the analysis of macroeconomic policy issues, especially monetary, fiscal and exchange rate policy. We will focus on the data, metrics and techniques that financial markets analysts/economists use in assessing the macro conditions of countries. The goals are threefold: (1) to become familiar with some of the analytical tools used in macroeconomics, (2) to be able to understand and critique empirical macro research, and (3) to practice the writing and presentation skills used in policy analysis. The emphasis will be on practical issues, such as working with macro data, rather than on formal econometric methods. (Prof. Donald Hanna).
(will continue through 2nd semester if sufficient progress is made)
For those CDE fellows who will be pursuing a second semester independent research project, it is required to begin that work during Winter Study. Interested students should consult with a CDE faculty member about designing an appropriate project well in advance of winter study and spring registration. Prerequisites: consent of an instructor and of the CDE Chair. Selection of participants will be limited to those with realistic project proposals and strong first semester performance. Enrollment limited.
1 Writing Intensive Course &
(course offerings may change annually)
1 Writing Intensive Course
Skills are a major driver of economic growth. The skills gap between rich and poor countries explains many of their income differences. The skills gap is a determinant of structural change, the process by which economies grow certain sectors (like manufacturing and services) and shrink others (like agriculture) in the process of achieving high-income country status and reducing poverty. The skills gap both affects and is affected by every other aspect of the economy: agricultural productivity, health, poverty rates, and fiscal capacity. This course will examine the economic policies that are essential for nations to upgrade the skills of their workforce, including the fiscal policies to finance those investments. The course will also explore complementary economic policies--in areas from labor markets to agriculture to healthcare--that allow maximum returns to skills investments. (Prof. Evans)
Over the past three decades, developing countries have increasingly expanded social protection systems to tackle poverty and vulnerability while promoting inclusive social development and equitable economic growth. These systems provide pro-poor policy instruments that can balance trade and labor market reforms, fiscal adjustments (such as reduced general subsidies) and other economic policies aimed at enabling better market performance. In addition, social protection systems help vulnerable people to cope with shocks to their livelihoods, promoting resilience, human capital development and sometimes high-return risk-taking. In times of crisis, these systems are more important than ever. From March to June 2020, the World Bank identified 195 countries that have adapted and expanded their social protection systems to respond to the COVID-19 pandemic. This tutorial offers the opportunity to explore how shock-responsive social protection systems can better enable developing countries to respond to global and local shocks in a manner that minimizes the medium- to long-term costs of the resulting crises. The tutorial examines how developing countries build social protection systems to tackle poverty, vulnerability and social exclusion that result from global and local shocks. Topics include how the design and implementation of effective interventions both respond to crises and strengthen long-term developmental outcomes. The tutorial focuses on country responses to the COVID-19 pandemic as both a relevant case study and an example of the kinds of global crises to which national social protection systems must be able to respond in the future.
(Professor Michael Samson).
Despite tremendous improvements in combating global hunger and child mortality, an increasing number of the world’s population continue to live in fragile conditions, buffeted by conflict, forced migration, weak governance, and state inability to deliver basic services to its citizens. Setting macroeconomic policy is difficult in such countries. Not only are decisions affected by policymakers’ distorted incentives and governments’ internal conflicts, fragility also deteriorates policy transmission mechanisms and constrains policy spaces. This course aims at identifying the causes and consequences of fragility and at discussing how policies should be changed to enhance resilience in such countries. The course will, first, look into the definition and characteristics of fragility, its numerical representation, and its causes and main consequences. The course will also highlight how policy is made in states of fragility, in particular, fiscal policy, monetary policy, exchange rate policy, export promotion policy, etc.), as well as consider policy interactions. Finally, the course will focus on efforts to mitigate fragility and enhance resilience in such countries, including the role of structural policies and that of international financial institutions.
(Professor Ralph Chami).
(continuation of Winter Study Independent Research, ECON 97)
In this course, each Fellow carries out an individual research study on a topic in which he or she has particular interest, usually related to one of the three seminars. The approach and results of the study are reported in a major paper. Research studies are analytical rather than descriptive and in nearly all cases include quantitative analyses. Often the topic is a specific policy problem in a Fellow’s own country.
The course uses both a practical and conceptual/theory based approach, with emphasis on methods of structural identification of dynamics in VARs and cointegration analysis, both in conventional time series and panel time series which contain spatial dimensions. The course will also investigate methods of computer simulation related to these techniques. The course is well suited for students considering empirically oriented honors theses in fields that employ these techniques, such as macro, finance, growth, trade and development, as well as fields outside of economics that use time series data. It is also well suited for students majoring in economics, statistics, computer sciences or mathematics who wish to expand their econometrics training and understanding to a more advanced level. (Prof. Peter Pedroni)
Why are some nations rich while other nations are poor, and what can be done to end global poverty and promote shared prosperity? This course explores the historical determinants of global poverty and inequality, and analyzes the range of policy options available to promote economic development and equalize opportunities. Drawing on research in development economics, development studies, political science, and anthropology, we seek to understand the factors that shaped the global economy and contributed to the cross-country income disparities observed today. In addition, we'll use the tools of modern empirical microeconomics to assess the possibilities for eliminating global poverty and underdevelopment in the future. Undergraduate students will receive 200-level credit and should not register at the 500-level. (Prof. Jakiela)
This course focuses on the financial system in developing countries and its role in economic development. The first part explores the functions of finance, how it contributes to growth and poverty alleviation, as well as examining what can be done to increase financial inclusion. It will look at experiences with financial sector repression and subsequent liberalization, and investigate the causes and impact of financial crises. Then it will study how to make finance effective in dealing with a variety of risks facing societies, including aging and climate change. A key focus will be how to prevent or minimize crises, analyzing government’s role as regulator, supervisor, standard setter, contract enforcer, and owner. In this final part, attention will be devoted to the role of institutions (laws, norms, culture) and incentives in financial sector development.
(Professor Gerard Caprio).
Government policy is important for economic development. To finance their policies, governments must build the fiscal capacity to implement a tax system. In turn, fiscal capacity–the ability for the government to raise revenue–depends on economic development. This endogeneity between fiscal capacity and economic development creates challenges for tax policy in developing countries. Given these challenges, what types of taxes should countries use to raise revenues? How can governments build the fiscal capacity to generate revenue to finance critical services? This class explores tax policy from a global and comparative perspective. Because most students will be CDE fellows, we will emphasize tax policy issues, examples, and evidence that are pertinent to developing countries. However, tax policy lessons are universal so we will learn about tax policies in developed countries, especially issues relevant for transnational transactions. Topics addressed include: how economic principles can be applied to the efficiency and equity consequences of tax policies; how personal income taxes, corporate income taxes, and value-added taxes are designed and administered and how they influence the economy; ideas for fundamental tax reforms; the debate over progressive taxes versus “flat” taxes; how taxes affect incentives to save and invest; how market failures and administrative problems may influence the optimality of tax policy; the implications of global capital flows and corporate tax avoidance for tax policy; tax holidays and other special tax incentives for investment; empirical evidence on the influence of taxes on foreign direct investment, labor supply, and tax evasion; tax policy towards natural resources such as minerals and oil; case studies of efforts to reform tax administration and reduce tax evasion and corruption; taxes on land and property; taxes on imports and exports; presumptive taxation; and the informal economy and its implications for tax policy.
(Professor Jon Bakija).
Developing countries must confront a number of macroeconomic challenges that industrialized countries do not have to contend with: exchange rate volatility, large capital flows and commodity price fluctuations, for example. Building on ECON 505, this course examines these issues from both theoretical and empirical standpoints. The focus will be on the design of monetary, fiscal and exchange rate policies and institutions to enhance macroeconomic stability, and create an environment conducive to growth.
(Professor Kenneth Kuttner).
This course will examine the causes and consequences of globalization and its implications for less-developed countries. We will study the classic models of international trade and discuss the empirical relevance of these theories. In addition, we will focus on other dimensions of globalization that are of particular importance to developing countries such as trade and education, emigration, brain drain, remittances, foreign direct investment, trade policies, infant industry protection, trade and growth, the resource course, and trade agreements.
(Professor Will Olney).
This course introduces the economic view of climate change, including both theory and empirical evidence. Given the substantial changes implied by the current stock of greenhouse gases (GHGs) in the atmosphere, we will begin by looking at impacts on agriculture, health, income, and migration. We will consider the distribution of climate damages across poor and wealthy people, both within and across countries. Next we will study adaptation, including capital investments and behavioral changes. We will examine the sources of climate change, especially electricity generation and transportation, and think about optimal policies. Throughout the course we will discuss the limits of the economic approach, pointing out normative questions on which economic theory provides little guidance. (Prof. Gibson)
Development organizations face strict competition for scarce resources. Both public and private organizations are under increasing pressure to use rigorous program evaluation in order to justify funding for their programs and to design more effective programs. This course is an introduction to evaluation methodology and the tools available to development practitioners, drawing on examples from developing countries. It will cover a wide range of evaluation techniques and discuss the advantages and disadvantages of each. The course is a mix of applied econometrics and practical applications covering implementation, analysis, and interpretation. You will learn to be a critical reader of evaluations, and to develop your own plan to evaluate an existing program of your choice.
(Professor Pamela Jakiela).
How do we estimate the causal effect of a policy on an outcome? Building on a basic understanding of econometrics and statistics, this methodology course will take students through several applied microeconometric techniques for answering this question. Students will be expected to use statistical software throughout, as we explore the inner workings of these methods and the assumptions required for them to deliver credible estimates. We will discuss the randomized trial and its variants, then cover difference-in-difference, regression discontinuity, and instrumental variables. We will discuss historical roots of modern methods, and will explore newer alternatives to the most commonly used kinds of statistical tests.
(Professor Owen Ozier).
Evidence from across the developing world suggests that the “binding constraints” to economic growth can be remarkably heterogeneous–i.e., the growth potential of stagnating or underperforming economies may be unlocked in a large variety of ways. For instance, pre-reform China had been constrained by poor supply incentives in agriculture, whereas Brazil has been held back by an inadequate supply of credit, South Africa by poor employment incentives in manufacturing, El Salvador by insufficient production incentives in tradables, Zimbabwe by bad governance, and so forth. How can developing-country policymakers determine country-specific constraints like these, thus enabling them to pragmatically pursue a selected set of growth-promoting policies rather than attempting to implement a “laundry list” of reforms that are naively based on “best practice” rules-of-thumb? This course will serve as a primer on “growth diagnostics,” an empirically-driven analytical framework for identifying the most binding constraints to economic growth in a given country at a point in time, thereby allowing policymakers to develop well-targeted reforms for relaxing these constraints while being cognizant of the nation’s prevailing economic, political, and social context. The course will first build on the basic theories and empirics of economic growth to elucidate the diagnostic framework and will then employ a wide range of country-specific case studies to demonstrate how the framework can be operationalized for policy making. Throughout the semester, students will be required to work in groups, each representing a given developing or emerging-market economy, in order to build a growth diagnostic for their group’s assigned country by the end of the course.
(Professor Quamrul Ashraf).
Children around the world face unequal opportunities to attend school, and to learn. This course will introduce students to economic studies of education, focusing on pre-school through high school. The course will mainly cover research in low-income and middle-income countries, but will also discuss connections to policy debates in the United States and elsewhere. Topics will include the importance of early-life conditions and investments; the connections between health and education; the roles of information, incentives, inputs, and technology; research methods; and decisions between policy options. Students in this course will analyze data themselves, and will critically read published research.
(Professor Owen Ozier).
Poor health is both a cause and a consequence of poverty. It can trap individuals in poverty and reduce aggregate economic growth. This course will be structured around major global health challenges, including maternal health, infectious diseases (e.g. HIV/AIDS, tuberculosis, COVID), neglected tropical diseases (e.g malaria, dengue, Ebola), nutritional deficiencies, and mental health. We will focus primarily, but not exclusively, on health in low-income countries in this course. Students will read papers and conducted empirical assignments related to the various topics, as well as develop their own research idea during the semester related to one of the topics covered. (Prof. Susie Godlonton)