Macro and international economics

Lectures: 2 sessions / week, 1.5 hours / session for 7 weeks

Until recently, the conventional wisdom was that macroeconomic policy had evolved to the point where rich "industrial countries" could manage stable growth with low inflation. Severe crises were thought to be confined to "emerging market" countries.

The global financial crisis of 2008–09 clearly showed this view was incorrect—a major financial crisis broke out in the United States, spread with great virulence to Western Europe, and affected most of the world.

How should we reassess standard macroeconomic thinking in light of these developments? Was 2008–09 a "one off" aberration that will not happen again for another half century? Or does it suggest that the structure of the world's economy has shifted in a more dangerous direction?

This course will review the conceptual tools need to understand contemporary macroeconomic dynamics in a wide range of countries. We will cover the basics in depth, but also develop a more applied understanding of our current economic trajectories—both opportunities and risks. Crises of various kinds—past, present and likely future—will be a particular focus.

This course is part one of a two part course series, and should be followed by 15.223 Global Markets.

Readings include a combination of analytic articles and country–level case studies drawn from key historical and modern experiences.

You should also keep track of daily updates regarding the global economy on The Baseline Scenario; not all posts are equally relevant for this course, so use your judgment regarding how to spend your time.

My columns on macroeconomics and finance issues can be found at the NYT.com's Economix blog and on Bloomberg.

You may also want to keep an eye on what appears on the Real Time Economic Issues blog at the Peterson Institute for International Economics.

There are no required textbooks, but please see below a list of recommended books:

Mankiw, Gregory. Macroeconomics. 6th ed. Worth Publishers, 2006. ISBN: 9780716762133.

Krugman, Paul, and Maurice Obstfeld. International Economics: Theory and Policy (7th Edition). Addison Wesley, 2005. ISBN: 9780321293831.

King, Philip, and Sharmila King. International Economics and International Economics Policy: A Reader. 4th ed. McGraw–Hill/Irwin, 2004. ISBN: 9780072873337.

The following resources are also useful background material for all class sessions:

Financial Times (a general glossary)

US Treasury (a more specific glossary, focused on essential terms for US macro issues)

Your active participation in the discussion in class is integral to the design of this course. Class participation counts for 35% of your final grade. Prior preparation of the cases and assigned readings are essential as this background is presumed in the lectures and case discussions. Those of you whose native language is not English and/or may have difficulty speaking up in class are encouraged to meet with the teaching team to discuss how your participation in class can be ensured.

There will also be a series of informal and optional lunches (or other meetings outside of class), dealing with various relevant topics. A good way to earn participation credits is to help organize one of those sessions, for example by inviting a guest who is able to help us talk about some economic issues—perhaps outside the United States.

Another good way to earn participation credit is to suggest news stories or other readings that can provide timely and insightful updates to the issues being discussed in class. You can email suggestions at any time of day or night.

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