Readings

A series of case studies are required readings for the course. Additional case studies and textbook chapters are suggested as optional readings. The following texts are recommended:

[MFS] = Amazon logo Mankiw, N. Gregory, and Laurence Ball. Macroeconomics and the Financial System. Worth Publishers, 2010. ISBN: 9781429253673.

[M] = Amazon logo Mankiw, N. Gregory. Macroeconomics. 7th ed. Worth Publishers, 2009. ISBN: 9781429218870.

[KOM] = Amazon logo Krugman, Paul R., Maurice Obstfeld, and Marc Melitz. International Economics: Theory and Policy. Prentice Hall, 2011. ISBN: 9780132146654.

SES # TOPICS READINGS
1 Introduction and the money multiplier via babysitters

Optional

"Money and Inflation." Chapter 4 in [M].

"Price Levels and the Exchange Rate in the Long Run." Chapter 15 in [KOM].

2 Germany and Zimbabwe: Monetary policy and the velocity theory of money

Required

Moss, David A., and Julio J. Rotemberg. "German Hyperinflation of 1923." Harvard Business School Case. Harvard Business School Publishing. Case: 9-798-048, January 5, 1998.

Optional

Wells, Wyatt, and David A. Moss. "Note on Money and Monetary Policy." Harvard Business School Note. Harvard Business School Publishing. Note: 9-797-094, January 24, 1997.

"Money and Inflation." Chapter 4 in [M].

"Price Levels and the Exchange Rate in the Long Run." Chapter 15 in [KOM].

3 The IS-LM model

Optional

"Aggregate Demand I: Building the IS-LM Model." Chapter 10 in [M].

"Aggregate Demand II: Applying the IS-LM Model." Chapter 11 in [M].

4 Japan, Ireland, and the Great Depression: Applications of the IS-LM model: Fiscal policy and the Great Depression

Required

McCraw, Thomas K. "Great Depression: Causes and Impact." Harvard Business School Case. Harvard Business School Publishing. Case: 9-391-258, July 3, 1991.

Kanno, Akiko, and Laura Alfaro. "Kinyuseiksaku: Monetary Policy in Japan." Harvard Business School Case. Harvard Business School Publishing. Case: 9-708-017, January 8, 2008.

Optional

Kennedy, Robert E. "National Income Accounting." Harvard Business School Case. Harvard Business School Publishing. Case: 9-797-075, November 15, 1996.

"National Income: Where It Comes From and Where It Goes." Chapter 3 in [M].

"Aggregate Demand I: Building the IS-LM Model." Chapter 10 in [M].

"Aggregate Demand II: Applying the IS-LM Model." Chapter 11 in [M].

"Output and the Exchange Rate in the Short Run." Chapter 16 in [KOM].

5 AD-AS and long run adjustment: The connection to inflation

Required

Kennedy, Robert E. "Fiscal Policy: Managing Aggregate Demand." Harvard Business School Note. Harvard Business School Publishing. Note: 9-797-076, January 15, 1997. Revised March 30, 1998.

Optional

"Introduction to Economic Fluctuations." Chapter 9 in [M].

"Aggregate Demand I: Building the IS-LM Model." Chapter 10 in [M].

6 Central bank accounting

Optional

"Money and Inflation." Chapter 4 in [M].

"Investment." Chapter 18 in [M].

7 World through inflation

Optional

"The Data of Macroeconomics." Chapter 2 in [M].

"Money and Inflation." Chapter 4 in [M].

8 Banking crisis and accounting

Optional

"Banking." Chapter 18 in [MFS].
9 Theories of nominal exchange rates: Short-run and long-run

Optional

"Money, Interest Rates, and the Exchange Rates." Chapter 14 in [KOM].

"Price Levels and the Exchange Rate in the Long Run."Chapter 15 in [KOM].

"Output and the Exchange Rate in the Short Run." Chapter 16 in [KOM].

10 Fiscal currency crises (GAME: Greece, Argentina, Mexico, and Everyone else)

Required

Di Tella, Rafael, and Eliseo Neuman. "Menem and the Populist Tradition in Argentina." Harvard Business School Case. Harvard Business School Publishing. Case: 9-700-061, March 21, 2000.

Di Tella, Rafael, and Ingrid Vogel. "2001 Crisis in Argentina: An IMF-Sponsored Default? (A)." Harvard Business School Case. Harvard Business School Publishing. Case: 9-704-004, October 27, 2003.

Optional

"Financial Crises." Chapter 19 in [MFS].

"Developing Countries: Growth, Crisis, and Reform." Chapter 22 in [KOM].

11 Self-fulfilling currency crises (MIT: Malaysia, Indonesia, and Thailand)

Required

Alfaro, Laura, Rafael Di Tella, and Renee Kim. "Chronology of the Asian Financial Crisis." Harvard Business School Case. Harvard Business School Publishing. Case: 9-708-001, February 8, 2008.

Pill, Huw, Rafael Di Tella, and Jonathan Schlefer. "Financial Crisis in Asia: 1997-1998 (Abridged)." Harvard Business School Case. Harvard Business School Publishing. Case: 9-709-004, October 31, 2008.

Optional

Pill, Huw. "Responding to the 21st Century Financial Crisis." Harvard Business School Case. Harvard Business School Publishing. Case: 9-798-090, April 13, 1998.

"Developing Countries: Growth, Crisis, and Reform." Chapter 22 in [KOM].

12 Exchange-rate regimes

Required

Di Tella, Rafael, and Ingrid Vogel. "Exchange Rate Regimes." Harvard Business School Case. Harvard Business School Publishing. Case: 9-704-038, May 5, 2004.

Optional

"The Open-Economy Revisited: The Mundell-Fleming Model and the Exchange-Rate Regime." Chapter 12 in [M].

"The International Monetary System, 1870-1973." Chapter 18 in [KOM].

"Macroeconomic Policy and Coordination Under Floating Exchange Rates." Chapter 19 in [KOM].

13 Capital controls, exchange rate regimes, and unemployment: The unholy trinity

Required

Abelal, Rawi, and Laura Alfaro. "Capital Controls." Harvard Business School Case. Harvard Business School Publishing. Case: 9-702-082, April 3, 2002.

Optional

"The Open-Economy Revisited: The Mundell-Fleming Model and the Exchange-Rate Regime." Chapter 12 in [M].

"Macroeconomic Policy and Coordination Under Floating Exchange Rates." Chapter 19 in [KOM].

14 US financial crisis

Required

Alfaro, Laura, Rafael Di Tella, Ingrid Vogel, and Matthew Johnson. "U.S. Current Account Deficit." Harvard Business School Case. Harvard Business School Publishing. Case: 9-706-002, July 6, 2005.

Alfaro, Laura, and Renee Kim. "The First Global Financial Crisis of the 21st Century." Harvard Business School Case. Harvard Business School Publishing. Case: 9-709-057, April 7, 2009.

Optional

"Banking." Chapter 18 in [MFS].

"Financial Crises." Chapter 19 in [MFS].

"The Global Capital Market: Performance and Policy Problems." Chapter 21 in [KOM].

15 Debate 1: The international role of the dollar  
16 Debate 2: The Euro  
17 Introduction to development economics

Required

Kennedy, Robert E., and Katherine Marquis. "China: Facing the 21st Century." Harvard Business School Case. Harvard Business School Publishing. Case: 9-798-066, February 13, 1998.