Syllabus

Course Meeting Times

Lectures: 3 sessions / week, 1.5 hours / session for 6 weeks

Course Description

This course investigates the macroeconomic environment in which firms operate. It aims to provide a good grounding in macroeconomic concepts and tools, using specific country experiences. The course first develops the basic tools of macroeconomic management, predominantly monetary and fiscal policy.

First, we will use both historic case studies as well as discussions of modern policy for context. This is focused on the short run and will therefore also include a discussion of what exchange rate decisions economies make. We also discuss why crises occur and how to manage these crises (both currency and financial).

Second, we concentrate on the behavior of exchange rates. We study short run and long run theories of nominal exchange rates, as well as look at the different exchange rate regimes used in the world. We will study the advantages and disadvantages of flexible, fixed, and managed exchange rate systems. We study capital controls and other policies devoted to manage capital flows.

Third, we finish the course by introducing some of the long run issues in developing and emerging economies. We will spend some time discussing alternative strategies to growth and development that have been followed by various economies to understand their success (or lack thereof). Overall, the class will try to cover a broad array of emerging economies from China and India to Latina America, as well as a good discussion of the issues facing developed countries in the 21st century.

Related Courses

15.014 Macroeconomics, Development and Sustainability requires 15.012 as a prerequisite. 15.018 Global Economic Challenges also recommends 15.012 as a prerequisite.

Course Requirements

Before each class, you are expected to read at least the relevant case and usually an extra article and/or note. All required readings are cited in the readings section of the course. This list also includes optional readings. These optional readings are meant for those interested in further reading or for those who want a different reference for the tools and material covered in class. In that spirit, there are three optional text books which you can use if you want more detail on any of the theories covered in class:

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

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

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

This is a case/readings based class. There is no final exam. Instead, there will be a short graded assignment, and two classes will be reserved for debates, which are detailed in the assignments section.

Grading

Class Participation

Class participation is graded on a range of -2 to 3 in every class. If you do not attend class, you get a -2. If you attend but do not speak up much, you get 0. If you speak up with at least one decent comment, you will get points ranging from 1 to 3, depending on the quality of the comment. Speaking up on its own is not enough to earn even a 1. A 3 will be awarded extremely rarely and is for a comment/question that really changes the discussion. Your final participation grade is an average of all the individual class grades.