Curriculum

Course Offerings for MA in Policy Economics in 2019 – 2020

Curriculum 2019-2020 [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 introduces some of the major theories and ideas about economic growth and development. Motivated by a number of stylized facts from cross-country data, we will begin by posing a series of questions: Why are some countries rich and others poor? Why have some countries grown at high rates over extended periods of time, while others have experienced little or no growth? Do all economies face comparable challenges to achieving sustained economic growth? Will poor countries catch up to rich countries or are they doomed to stagnate in a poverty trap? To answer these “big” 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)? How important are technological differences across countries? How much significance should we ascribe to differences across countries in geographical characteristics? How much should we ascribe to differences in the quality of institutions? For each question, we will explore different theoretical and empirical strategies developed by economists to answer the question, ranging from formal models to historical and anecdotal evidence to cross-country growth and development regressions. We will evaluate the usefulness of the different approaches to each question for informing development-promoting and poverty-alleviation policies, and we will also discuss the reasons why so many important questions about economic growth continue to 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. The 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 introduced students to the statistical methods used by economist, including those studying policy questions. The focus is on applications. Students will also work with Stata, a software widely used by economist.
    (Professor Lara Shore-Sheppard).
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  • ECON 371: Time Series Econometrics and Empirical Methods for Macro
    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.
    (Professor Peter Pedroni).
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  • ECON 504: Public Economics
    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, microfinance, 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 M. 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 J. 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 Kenneth Kuttner).
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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 2019 – 2020.

    • 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 58: Macroeconomic Data Assessment
      This course complements the different macroeconomics courses students have already taken. It is designed to provide hands-on experience using macroeconomic data to assess the state of the economy. The course will augment students’ skills relating to finding, downloading, displaying, graphing, and analyzing economic data. The course will focus on three aspects of the economy: the real sector, the government sector, and the external sector. Students will learn to measure and compute output gaps, expenditure contributions to growth, Taylor and inflation-targeting rules, cyclically-adjusted fiscal balances, and reserve adequacy. They will also learn how to assess the sustainability of public and external debt and identify the key economic risks. The main format of the course will be hands-on workshops, interspersed with some lectures and readings. Requirements include a short research project and a presentation to the class.
      (Professor Hali Edison).
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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: The Role of Social Safety Nets
      Designing and implementing effective national strategies to promote inclusive economic growth can require difficult policy reforms, sometimes with adverse short-term impacts for vulnerable groups within society. Social safety nets provide a pro-poor policy instrument that can balance trade and labor market reform, fiscal adjustments (such as reduced general subsidies) and other economic policies aimed at enabling better market performance. In addition, social safety nets help the poor to cope with shocks to their livelihoods, promoting resilience, human capital development and sometimes high-return risk-taking. This tutorial will offer students the opportunity to explore the role of social safety nets in promoting inclusive economic growth, drawing on case studies from Africa, Asia, Latin America and Eastern Europe. The first part of the tutorial will define social safety nets within the broader context of social protection, examining the diversity of instruments and their linkages to economic growth. The second part will delve more deeply into the design and implementation of effective interventions, assessing program choice, affordability, targeting, incentives and other issues. The third part will analyze the role of social safety nets in supporting economic growth strategies, drawing on international lessons of experience.
      (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 coming years 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, and water. The course will consider the specific policy challenges that arise for each and the ways in which different industrial and emerging market countries are addressing them.
      (Professor Peter S. 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 2019 – 2020:

  • ECON 471: Topics in Advanced Econometrics
    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.
    (Professor Peter Pedroni).
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  • ECON 510: Financial Regulation and Development
    This course focuses on the financial system and its role in economic development. The first part explores the functions of finance, how it contributes to growth, and reviews different models of financial sector development and their influence on how governments viewed the sector. It will examine 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 and 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
    Taxes are half of what government does. So if you are interested in what government policy can do to promote efficiency, equity, and economic development, you should be interested in tax policy. Governments must raise tax revenue to finance critical public goods, address other market failures and distributional issues, and to avoid problems with debt and inflation. Taxes typically take up anywhere from ten to fifty percent of a country’s income, they profoundly affect the incentives to undertake all varieties of economic activity, and the government expenditures that they finance have potentially large consequences for human welfare. So the stakes involved in improving tax policy are quite large. This class provides an in-depth exploration of tax policy, from a global and comparative perspective. Because most students in this class will be CDE fellows, we will emphasize tax policy issues, examples, and evidence that are most pertinent to developing countries, but we will also learn something about tax systems in the U.S. and other industrialized nations. Topics addressed in this class include: how basic economic principles can be applied to help one think about 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 reforms of these taxes; theory and evidence in the debate over progressive taxes versus “flat” taxes; how various elements of tax design affect incentives to save and invest; how market failures and administrative problems may influence the optimality of different tax policies; the implications of global capital flows and corporate tax avoidance for the design of tax policy; tax holidays and other special tax incentives for investment; empirical evidence on the influence of taxes on economic growth, 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 521: Incentives and Development Policy
    Why isn’t the whole world developed? This course (and instructor) is of the opinion that the difficulty of getting incentives right is the key source of inefficiency. The course therefore studies how limited enforcement and asymmetric information constrain development, and about innovative development designs that attempt to overcome these constraints. The course readings will be a mix of field studies, empirical evidence and theoretical tools from game theory. Incentive and corruption problems in health, education, the regulation of banks and natural monopolies, privatization, budgeting, debt forgiveness, foreign aid, microfinance, climate treaties and ethnic violence will be studied using a unified framework. Note: this course was developed to address issues that arise in the countries represented at the CDE.
    (Professor Ashok Rai).
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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 Susan Godlonton).
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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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