Curriculum

Course Offerings for MA in Policy Economics in 2021 – 2022

Curriculum 2021-2022 [download PDF]

August: ORIENTATION

Review of microeconomics principles with two lectures daily, assignments, and test. Additional review of probability and statistics will be included.

September – December: FIRST SEMESTER

There are four required courses in the first semester:

  • ECON 501: Economic Growth and Development
    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).
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  • ECON 502: Statistics/Econometrics
    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).
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  • ECON 503: Statistics/Econometrics: Advanced Section
    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).
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  • ECON 504: Public Economics in Developing Countries
    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).
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  • ECON 505: Developing Country Macroeconomics I
    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).
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  • ECON 506: Fundamentals of Developing Country Macroeconomics
    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).
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January: WINTER STUDY

Each CDE fellow must be enrolled in one January course. The topics below are courses that are offered in 2021 – 2022.

    • ECON 51: Infrastructure in Developing Countries
      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).
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    • ECON 52: Micro-Simulation Modeling for Ex Ante Policy Analysis
      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).
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    • ECON 54: Monetary Policy in Emerging and Developing Economies
      This is an introduction to the empirical analysis of macro and monetary policy issues, building on the material covered in Econ 505/506 and 502/503. The goals are threefold: (1) to become familiar with some of the econometric 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 economic research. The emphasis will be on practical issues, such as working with macro data, rather than on formal econometric methods.
      (Professor Kenneth Kuttner).
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    • ECON 97: Independent Research (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.
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February – May: SECOND SEMESTER

Each CDE fellow must complete four semester courses: 1 writing-intensive course plus 3 electives.
One Writing-Intensive Course: Each CDE fellow must be enrolled in a tutorial format course or in an independent research project.

    • Tutorial format:
      The MA program of the CDE requires a writing-intensive course in the second semester for all participants. Most CDE fellows enroll in one tutorial course selected from several possible topics. All the tutorial courses provide weekly practice in identifying, researching, writing about, presenting, and answering questions on policy arguments under the direct supervision of an experienced faculty member. This training provides excellent preparation for CDE graduates who will assume policy-oriented job roles in their nations. Tutorial participants will meet once a week in pairs with the faculty member. Each week, one student will prepare a policy paper and submit the paper to the professor and to the other student in advance of the meeting. During the meeting, the student who has written the paper will present an argument, evidence, and conclusions. The other student will provide a detailed written critique of the paper based on concepts and evidence from the readings. The professor will join the discussion after each participant has presented and ask questions that highlight or illustrate critical points. During the semester, each participant will write and present 5 policy papers and the same number of critiques. Enrollment limited.
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    • ECON 532T: Inclusive Growth and Crisis Response
      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).
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    • ECON 534T: Long Term Fiscal Challenges
      This tutorial will address the conceptual and theoretical issues that confront policy makers when they face policy challenges that are likely to emerge only over the medium- to long-term and that have important budgetary implications. It will explore the strategies and approaches that a number of countries have attempted to develop to bring the long-term into their current policy and budgetary planning processes. Students will be exposed to different long-term challenges that have important budgetary implications, including aging populations, health care, climate change, energy and infrastructure, artificial intelligence, and water. The course will consider the specific policy challenges that arise for each and the ways in which different countries are addressing them.
      (Professor Peter Heller).
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    • ECON 538T: Resilience and Macroeconomic Policy
      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).
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    • ECON 540: Research Studies (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.
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Three Elective Courses – After designating preferences, CDE fellows will be enrolled in elective courses for the second semester. Enrollment in each is limited.

The following electives are offered in 2021 – 2022:

  • ECON 510: Financial Development and Regulation
    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).
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  • ECON 514: Tax Policy in Global Perspective
    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 William M. Gentry).
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  • ECON 515: Developing Country Macroeconomics II: Institutions and Policy Regimes
    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).
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  • ECON 516: International Trade and Development
    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).
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  • ECON 523: Program Evaluation for International Development
    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).
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  • ECON 524: Advanced Methods for Causal Inference
    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).
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  • ECON 545: Growth Diagnostics
    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).
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  • ECON 548: Human Capital and Development
    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).
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