AEM 632 Spring 2006 Lecture Outline and Readings - First Half

NOTE : ONLY the starred readings are assigned or expected for the course. Other readings are included for those who want more depth in a particular area or as references for material included in lectures.

The text for the course is Agenor, The Economics of Adjustment and Growth Harvard U. Press 2004 and is referred to below as “Agenor”. No chapter appendices are required except if specifically indicated.

Week 1 - Basic Macroeconomic Accounting and Relationships and the Long Term Characteristics of Growth

*          Agenor Chapters 1, 10 and 13 pp 523 - 544

            Helmers, F. "National Accounting Identities", Appendix B in Dornbusch & Helmers eds.                         The Open Economy, Oxford U. Press 1988.

Week 2 - Fiscal Deficits, Public Debt and the Current Account

*          Agenor Chapters 2 and 3 (Except 3.6, 3.7 and 3.8)

            Agenor Chapter 15 pp 582-603 (except part 15.2.2)

Week 3 - The Financial System, Money and Inflation

*          Agenor Chapter 4; (Skim 4.6.1 and 4.6.2) Agenor Chapter 6; Agenor Chapter 15 pp.             604 - 618

*          Tanzi, V., "Inflation, Real Tax Revenue, and the Case for Inflationary Finance: Theory             with an Application to Argentina," IMF Staff Paper, September 1978. (NOTE = The             “elasticity of the tax system” is the change in Tax Revenue/GDP in response to a change             in the price level.)

Week 4 - Exchange Rates

*          Agenor Chapter 5

            Dornbusch, R. & L. Kuenzler, "Exchange Rate Policy: Options and Issues", Chapter 5 in             Dornbusch, Policymaking in the Open Economy Oxford University Press 1993.

            Frankel, Jeffrey “Experience of and Lessons from Exchange Rate Regimes in Emerging             Economies” Background Paper for Studey of Monetary and Financial Cooperation in East             Asia August 2002.

Week 5 - Capital Flows and Financial Crises

*          Agenor Chapters 7 (Except 7.5) and 8

            Corden, M., "Booming Sector and Dutch Disease Economics: Survey and                                      Consolidation", Oxford Economic Papers 35 (1984) pp. 359-80.

            Dornbusch, R. and S. Fischer, "Third World Debt," Science Vol. 234, Nov. 1986, pp.             836-41.

            Eaton, J., "Foreign Public Capital Flows," Chapter 25 in Chenery, H. and T.N.                   Srinivasan, eds., Handbook of Development Economics Vol. 2 North Holland, 1989.

            Helmers, F, "The Real Exchange Rate", Chapter 2 in The Open Economy, Dornbusch &                         Helmers eds., Oxford U. Press, 1988. See also Appendix C "Real Exchange Rate                         Indexes".

            Salter, W. "Internal and External Balance: The Role of Price and Expenditure Effects",                         The Economic Record August 1959 pp 226-38.


Week 6 - The World Bank, The IMF and Liberalization/Reform Programs

*          Agenor Chapters 14 and 16 (Skim 16.2)

            Frankel, J “The Balance Between Adjustment and Financing”Mimeo May 1999. 

Week 7 - More Liberalization and Reform and the Washington Consensus

*          Dollar, David and Aart Kraay “Trade, Growth and Poverty” Development Research                                     Group, World Bank June 2001

*          Rodrik, D. “Comments on “Trade, Growth and Poverty” by D. Dollar and A. Kraay             Harvard University, Oct. 2000.