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 Susan Godlonton).
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. Macroeconomics is the study of the economy's aggregate behavior, covering such topics as the determinants of output, employment, inflation, and the current account balance. The state of the economy affects everyone. As a result, macroeconomic issues play a central role in national and international debates. In this course, we will build a simple closed economy macro model suitable for analyzing macroeconomic policy. It will be extended to the open economy and the course will include discussions of key issues related to monetary, fiscal and exchange rate policies with a particular focus on developing and emerging economies. (Professor Andy Powell).
Econometric methods in many fields including macro and monetary economics, finance and international growth and development, as well as numerous fields beyond economics, have evolved a distinct set of techniques which are designed to meet the practical challenges posed by the typical empirical questions and available time series data of these fields. The course will begin with an introductory review of concepts of estimation and inference for large data samples in the context of the challenges of multivariate endogeneous systems, and will then focus on associated methods for analysis of short dynamics such as vector autoregressive techniques and methods for analysis of long run dynamics such as cointegration techniques. Students will be introduced to concepts and techniques analytically, but also by intuition, learning by doing, and by computer simulation and illustration. The course is particularly well suited for economics majors wishing to explore advanced empirical methods, or for statistics, mathematics or computer science majors wishing to learn more about the ways in which the subject of their majors interacts with the fields of economics. The method of evaluation will include a term paper.
Prerequisites: strong mathematical background and a placement test (CDE administered). (Professor Peter Pedroni)
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 winter study course complements the different macroeconomic theory courses CDE fellows have already taken. It provides hands-on experience using macroeconomic data to assess the state of the economy. The activity will include finding, downloading, displaying, graphing, and analyzing economic data. The course focuses on three aspects of the economy: the real sector, the government sector, and the monetary sector. Students will compute output gaps, analyze contributions to growth and inflation, and calculate cyclically adjusted fiscal balances. They will conduct public debt sustainability analysis and will assess the stance of monetary policy. The main format of the course will be hands-on workshops, intersperse with some lectures and readings. A second focus of this course will be on communications. It is possible to master all the material and be conversant with the relevant economic issues, but it is important to communicate those findings and recommendations to others, especially senior policymakers who rely on your advice. A short research project, including a presentation to the class, will be required. Rather than dwell on the fine points of the English language (the writing tutors will help with that), we will focus on three aspects of communication: (1) structuring a paper or memo, (2) editing, revising, and rewriting a paper/memo, (3) efficiently and effectively conveying quantitative information through tables and graphs. (Prof. Hali Edison).
(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
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).
This course aims to identify the causes of fragility and to discuss how policies should be changed to enhance resilience. The course will consider how policy is made; in particular, fiscal policy, monetary policy, exchange rate policy, and export promotion policy, 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. (Prof. Chami)
The stock of government debt has skyrocketed in many countries. At the same time, interest rates have risen as global central banks have sought to tame inflation, generating concerns about the sustainability of public debt, especially in many lower-income and emerging market economies.
What does fiscal/debt sustainability mean, and what are the implications of high public debt for growth and stability? How do the IMF and other institutions assess a country's public debt sustainability? How does uncertainty factor into these assessments, and what special considerations are relevant for natural resource exporters? How have governments sought to bring down high levels of debt, or to prevent excessive debt levels from arising in the first place? Do these approaches need to be modified to account for the impact of COVID on debt stocks? How will demographic developments and climate change affect debt sustainability? By addressing these questions, the course will seek a nuanced understanding of the role of public debt in the economy and its benefits and risks. (Prof. Philip Gerson)
(continuation of Winter Study Independent Research, ECON 57)
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.
This course focuses on the financial system in developing countries and its role in economic development and stability. From both theoretical and applied perspectives, we will investigate the implications of financial development on economic development & growth, income inequality, and short-term fluctuations. We will also explore the dynamics that shape the institutions of a society's financial structure and study the complexities of financial policy design. Throughout the course, a variety of tools of modern economics will be considered, such as theory-based quantitative structural methods, reduced form empirics, and field experiments, and we will study the consequences of finance on economic well-being.
The first part of the course focuses on the functions of finance, how it contributes to growth and poverty alleviation, and what can be done to increase financial inclusion. What are the key parts of the infrastructure that are needed to improve access to financial services, including via 'fintech,' which is taking off in many developing countries? The second part of the course will build upon the first part and investigate how imperfections in financial development could make developing countries susceptible to short-term stability issues. A key focus of the second part will be how to prevent or minimize crises, and we will analyze the government's role as regulator, supervisor, standard setter, contract enforcer, and owner. (Professor Burak Uras).
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).
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. (Prof. Susan Godlonton)
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)