Course Meeting Times
Lectures: 3 sessions / week, 90 minutes / session
Prerequisites
The prerequisite for this course is 15.012 Applied Macro- and International Economics for MBAs or 15.015 Macro and International Economics for Sloan Fellows.
Course Overview
This course is the continuation of 15.012 (and 15.015 if you are a Sloan Fellow). The course is divided in three distinct sections. The first one addresses questions of sustainability from a macroeconomic point of view.
In discuss a framework called PROMISE that I am designing. The underlying problem is how can standards of living be improved in a sustainable manner. In this context, sustainability has more than one dimension: (i) obviously sustainability from the environmental and resource use; but also from (ii) social and political; (iii) institutions; (iv) economy and markets; (v) organizations; (vi) relations; (vii) and personal. Growth in standards of living and social wellbeing needs all dimensions to be internally consistent. For example, it makes no sense to grow the economy if that is inconsistent with the environment, nor if it is inconsistent with personal aspirations. We develop a framework where we can study the interactions between all these dimensions and study each dimension in particular. We will use my class notes to develop this framework.
The second part of the course deals with economic policy. Having understood what economies need to do, then the next step is to consider how those actions can be implemented. Questions such as: How to deal with problems and conflicts that arises from international trade? How to deal with corruption and its economic impact? What are the problems of poverty and income distribution? In fact, what are the implications of the actual programs dealing with poverty in different countries and their impact on the environment? How can we design social security systems that are viable? What about health care systems? How to solve the problems of public choice, public goods, externalities, etc.? We will devote a fair amount of time to understand the international and macroeconomic implications of these issues. And how the solutions differ across the globe (and why they differ). In most of the problems highlighted there are welfare gains that can be generated, although they will be rarely fairly distributed among the population. To understand these problems we will rely heavily on simulations, games, and cases.
The last part of the course talks about how technology is changing the macro economy. I will pay attention to three main issues: How technology is changing currencies (cryptocurrencies), how technology is changing the banking and payment system, and how technology is affecting the way statistical offices work (related to my research with Alberto Cavallo on the Billion Prices Project).
Evaluation
The course is a combination of lectures, simulation exercises and cases. The grade is entirely driven by case write-ups. For each case I’ll have some questions that I want to be addressed before class. If the case has no question assigned then no case write-up is required. You have to have a write up for every case that has a question. You should work in teams of three to four. The grade in this course is evenly divided among the 6 total case deliverables.
Calendar
| SES # | TOPICS | KEY DATES |
|---|---|---|
| BBNN Framework | ||
| 1 | PROMISE (Part I) | |
| 2 | BBNN: Internal and External Adjustment | |
| 3 | Short Run Adjustment: ASAD | |
| 4 | Automatic Adjustment and External Account Measurement | Case Question 1 due |
| 5 | Shocks to BB and NN | |
| 6 | Social Peace Line and Political Cycles | Case Question 2 due |
| 7 | Environmental Restriction Line | |
| 8 | Offshoring Exercise | Case Question 3 due |
| Economic Policy | ||
| 9 | Fish Banks and Pareto Efficiency | |
| 10 | Market Faillure: Natural Monopolies: Natural Resources | |
| 11 | Market Faillure: Crime, Corruption, and Institutions | |
| 12 | Market Faillure: Public Goods: Social Security | Case Question 4 due |
| 13 | Market Faillure: Public Choice: Democracy | |
| 14 | Market Faillure: Externalities: Lobsters and Taxes | Case Question 5 due |
| 15 | Market Faillure: Unaceptable Outcomes: Poverty and Inequality | Case Question 6 due |
| New Technologies | ||
| 16 | New Technologies: Cryptocurrencies | |
| 17 | New Technologies: Payment Systems | |
| 18 | New Technologies: Economic Measurement | |
| 19 | PROMISE (Part II) | |
| 20 | Life through Others | |
