IR331: The Global Economy 2030
Fall 2014
(revised 9/7/2014)
Professor: John Eatwell
Office: KAP360
Office Hours Tuesdays 4:00-5:00 and by appointment
Class: TT 2:00 - 3:20
Professor: Jonathan D. Aronson
Office: KER206 but will meet in VKC
Office Hours Tuesdays 3:30-5:00 and by appointment
Class: TT 2:00 - 3:20
The Global Economy 2030
This is not a course in prediction or even crystal ball gazing - leave that to the fortune- tellers. Precise economic predictions around 20 years ahead are almost invariably wrong (just think of what someone in 1990 would have predicted for the global economy when there was no such thing as a digital telephone, and the Chinese economy was about a 10% of the size it is today). Instead, what the course seeks to do is to identify some of the main forces that will shape the global economy in 2030, to provide a “tool-kit” for evaluating those forces, and to suggest some ways in which they may work out. (You are certainly free to contest our suggestions).
Along the way a significant amount of macroeconomics and finance will be covered. But this will be integrated with a discussion of practical issues in the global economy. A major part of the course will be about the US (after all, the US is the largest economy in the world). But the recent financial crisis has taught, if it wasn’t realized before, that the performance of the US is not independent of the performance of the global economy as a whole.
John Eatwell anchors the course with first set of lectures – introducing the basic analytical concepts needed to start to understand what is happening in the global economy. Jonathan Aronson will then take over, preparing, on most Tuesdays, the discussion that will take place with visiting speakers on Thursdays.
Guest Lecturers will include:
Blythe Masters on Risk and Financial Markets (10/9)
Mohamed El-Erian on the US Economy (10/14)
Thorsten Becker (USC) on Resources (10/24)?
Yael Wolinsky-Nahmias (USC) on Environmental Policy (10/31) ?
Special Guest Lecturer on Foreign Affairs and the Economy (11/6)
Baizhu Chen (USC) on the Challenge of China (11/14) ?
Jamie Galbraith (University of Texas, Austin) on Inequality (11/20)
Peter Cowhey (UCSD) on Disruptive Technology (11/21) ?
Requirements:
1) 40% of your grade will be based on two closed-book, mid-term examinations that will cover the content of the readings and lectures.
(Examinations in Class on September 11th (20% of grade) and October 2nd (20% of grade)
2) 20% of your grade will be based on the final examination (a non-cumulative exam that is in effect a third mid-term) on December 11th.
3) 30% of your grade will be based on a final project paper. Due in class on December 4th
4) 10% of you grade will be based on class participation.
Required Books for the Global Economy 2030
John Eatwell and Lance Taylor (2000) Global Finance at Risk: the case for international regulation, The New Press
John Eatwell and Murray Milgate (2011) The Fall and Rise of Keynesian Economics. Oxford University Press
Barry Eichengreen (2011) Exorbitant Privilege: the rise and fall of the dollar. Oxford University Press
Mariana Mazzucato (2013) The Entrepreneurial State: debunking public vs. private sector myths. Anthem Press.
Raghuram G. Rajan (2010) Fault Lines: how hidden fractures still threaten the world economy. Princeton University Press
Anat Admati and Martin Hellwig (2013) The Bankers’ New Clothes: what’s wrong with banking and what to do about it. Princeton University Press
Eswar S. Prasad (2014) The Dollar Trap: how the US dollar tightened its grip on global finance. Princeton University Press
Reference
For basic concepts in macroeconomics it may prove valuable to refer to a basic textbook, such as N. Gregory Mankiw, Principles of Macroeconomics
Your Project Paper/Report
A description of possible project topics will be provided in class in early October. Students may undertake a topic not on the initial list if first approved by the faculty. We are considering, but have not yet decided, whether to permit group projects.
Academic Integrity:
The School of International Relations is committed to upholding the University’s Academic Integrity code as detailed in the Scampus Guide. It is the policy of the SIR to report all violations of the academic code. Any serious violation or pattern of violations of the Academic Integrity Code will result in the student’s expulsion from the International Relations major or minors. The University may also decide on further consequences.
Disability Accommodation:
Students requesting academic accommodations based on disability are required to register with Disability Services and Programs (DSP) each semester. A letter of verification for approved accommodations can be obtained from DSP when adequate documentation is filed. Please be sure the letter is delivered to me as early in the semester as possible. DSP is open M-F, 8:30-5:00pm. The office is in STU 301 and their phone is 740-0776.
Part I: The toolkit – concepts and methods for analyzing economic trends
Week 1:
Aug 26: Session One: The Problem: Thinking about the Global Economy 2030 (JE)
Eatwell and Taylor, Global Finance at Risk, pp. 1-28.
See also the talk by Adair Turner listed under Session Twenty-Eight
Aug 28: Session Two: Economic Categories: National Income, Growth and Distribution (JE)
National Income Accounting (simple) www.johnzietlow.com/MACROECON/PPTs/Chap005.ppt
Barry Wickes, Lecture Notes on National Income Accounting, (more difficult) http://econ.la.psu.edu/~bickes/nia.pdf
Mankiw, Macroeconomics, Chapter 10
Week 2:
Sept 2: Session Three: Money, Finance and Interest Rates (JE)
Mankiw, Macroeconomics, (Chapter 13 and 14).
Rajan, Fault Lines, pp. 101-153. (Chapters 5-7).
Sept 4: Session Four: The determination of economic output (JE)
Mankiw, Macroeconomics, (Chapters 20 and 21)
Eatwell and Milgate, The Fall and Rise of Keynesian Economics. Preamble, and Chapters 1, 8-10.
Week 3:
Sept 9: Session Five: The distribution of income (JE)
Rajan, Fault Lines, pp. 21-45, 83-100 (Chapters 1 and 4).
Thomas Piketty, Capital in the Twenty-First Century, Harvard University Press, 2014 (Chapters 7 and 8), pp. 237-303.
Gillian Tett, “An unequal world is an uncharted economic threat”, 4th September 2014. http://www.ft.com/cms/s/0/f0a593b2-3413-11e4-b81c-00144feabdc0.html#axzz3CDrg9Efp
Sept 11: Session Six: First mid-term exam
Week 4:
Sept 16: Session Seven: International Monetary Policy (JE)
Mankiw, Macroeconomics, Chapters 18 and 19.
Eichengreen, Exorbitant Privilege, pp. 1-96. (Chapters 1-4)
Prasad, The Dollar Trap, Parts One and Two
Eatwell and Taylor, Global Finance at Risk, pp. 29-95, (Chapters 2 and 3).
Sept 18: Session Eight: The Financial Crisis and the Future of Finance (JE)
Admati and Hellwig, The Bankers’ New Clothes, Part I and Part III
Week 5:
Sept. 23: Session Nine: International Trade and Finance (JE)
Eatwell and Taylor, Global Finance at Risk, pp. 54-179, (Chapters 3-5).
Rajan, Fault Lines, pp. 46-67, Chapter 2.
Sept 25: Session Ten: Excess Savings or Excess Elasticity – International Finance and the US boom and bust. (JE)
Claudio Borio and Piti Disyatat, Global imbalances and the financial crisis: Link or no link? BIS Working Papers No 346.
http://www.bis.org/publ/work346.pdf
Ben Bernanke, Carol Bertaut, Laurie Pounder DeMarco, and Steven Kamin International capital flows and the returns to safe assets in the United States, 2003-2007, Board of Governors of the Federal Reserve System, International Finance Discussion Papers Number 1014, February 2011.
http://www.federalreserve.gov/pubs/ifdp/2011/1014/ifdp1014.pdf
Week 6:
Sept 30: Session Eleven: The Role of the State (JE)
Eatwell and Milgate, The Fall and Rise of Keynesian Economics, Chapters 6,7 and 12.
Mazzucato, The Entrepreneurial State, Chapters 1, 2, 4 and 5.
Oct 2: Session Twelve: Second Midterm Exam
Part II: Issues and Guest Lectures
Week 7:
Oct 7: Session Thirteen: (JA) Booms, Bubbles, and Busts in History
Avinash Persaud (with M. Brunnermeier, A. Crockett, C. Goodhart and H. Shin), (2009) The Fundamental Principles of Financial Regulation, Chapters 1,2,3 and 8. http://www.princeton.edu/~hsshin/www/Geneva.pdf.
Tim Harford, “How to see into the future”, Financial Times, 5th September 2014, http://www.ft.com/cms/s/2/3950604a-33bc-11e4-ba62-00144feabdc0.html#axzz3CDrg9Efp
Oct 9: Session Fourteen: Guest Lecture Blythe Masters on Risk
Eatwell and Taylor, Global Finance at Risk, pp. 180-239 (Chapters 6 and 7)
Rajan, Fault Lines, pp. 202-224, (Chapter 10).
Week 8:
Oct 14: Session Fifteen: Guest Lecture Mohamed El-Erian on the US economy.
Eichengreen, Exorbitant Privilege: the rise and fall of the dollar, pp. 97-177 (Chapters 5-7).
“Is Europe’s debt crisis a “Lehman Moment” for America?” http://blogs.reuters.com/mohamed-el-erian/2011/07/05/is-europes-debt-crisis-a-lehman-moment-for-america/
Read from El-Erian’s blog, and: “U.S. Downgrade Heralds a New Financial Era” at http://www.huffingtonpost.com/mohamed-elerian/us-downgrade-heralds-a-ne_b_920144.html
Oct 16: Session Sixteen: (JA): Driver: Demography and Migration
Watch TED Talk: Jared Diamond: How societies can grow old better
http://www.ted.com/talks/jared_diamond_how_societies_can_grow_old_better
Week 9:
Oct 21: Session Seventeen: (JA) Driver: Water
Watch TED Talk by Allan Savory: “How to fight desertification and reverse climate change,” at http://www.ted.com/talks/allan_savory_how_to_green_the_world_s_deserts_and_reverse_climate_change
Ben Sutherland, “Water shortages 'foster terrorism'” http://news.bbc.co.uk/2/hi/science/nature/2859937.stm
Oct 23: Session Eighteen: Guest Lecture: (?) Thorsten Becker (USC) on Resources
Watch: TED Talk by Amory Lovins, “A 40-Year Plan for Energy,” http://www.ted.com/talks/amory_lovins_a_50_year_plan_for_energy
Read: Amory Lovins, Energy Efficiency: The Secret Revolution,” (Blackboard).
Week 10:
Oct 28: Session Nineteen: (JA) Driver: Environment and Climate Change
Read: Introductory Essay on Climate Change at: http://www.ted.com/read/ted-studies/environmental-studies/introductory-essay and
Watch: James Hansen, “Why I must speak out about climate change,” at http://www.ted.com/talks/james_hansen_why_i_must_speak_out_about_climate_change
Oct 30: Session Twenty: Guest Lecture (?) Yael Wolinsky-Nahmias (USC) on Environmental Policy
Review: Environmental Policy, Scientific American, August 2014, http://www.scientificamerican.com/topic/environmental-policy/
Week 11:
Nov 4: Session Twenty-one: (JA) Driver: International Linkages and Challenges(JA)
Dick Nanto and Michael Donnelly U.S. International Trade: Trends and Forecasts, Congressional Research Service, (2011). http://fpc.state.gov/documents/organization/168665.pdf
Nov 6: Session Twenty-two: Special Guest Lecture on Foreign Affairs as a Driver of the Global Economy
Week 12:
Nov 11: Session Twenty-three: (Driver) Innovation and Technology (JA)
Peter F. Cowhey, The Third Wave: Innovation and Public Policy, Draft: July 2014. (Most recent draft will be provided)
WATCH: Dan Breznitz, Strategies for Innovation Based Growth (Online at: https://www.youtube.com/watch?v=5HFk-6euD88)
Nov 13: Session Twenty-four: Guest Lecture: Peter Cowhey (UCSD) on Disruptive Technology
Craig Lambert, “Disruptive Genius: Innovation guru Clayton Christensen on spreading his gospel, the Gospel, and how to win with the electric car,” Harvard Magazine, July-August 2014. (http://harvardmagazine.com/2014/07 or provided by instructor.
Jill Lepore, “The Disruption Machine: What the gospel of innovation gets wrong, The New Yorker, June 23, 2014 (http://www.newyorker.com/reporting/2014/06/23/140623fa_fact_lepore?currentPage=all
Week 13:
Nov 18: Session Twenty-five: (JA) Driver: Jobs and Productivity
Watch TED Talk: Andrew McAfee: What will future jobs look like?http://www.ted.com/talks/andrew_mcafee_what_will_future_jobs_look_likealk:
Nov 20: Session Twenty-six: Guest Lecture: Jamie Galbraith (University of Texas, Austin) on Inequality
Peter Diamond and Emmanuel Saez, 2011. “The Case for a Progressive Tax: From Basic Research to Policy Recommendations,” Journal of Economic Perspectives, 25(4): 165-190. http://eml.berkeley.edu/~saez/diamond-saezJEP11full.pdf
Thomas Piketty, Capital in the Twenty-First Century, Harvard University Press, 2014 (Chapters 9 and 10), pp. 304-376.
Week 14:
Nov 25: Session Twenty-seven: (Driver) The Web, the Cloud, and Social Networking (JA)
Kenneth Neil Cukier and Viktor Mayer-Schoenberger “The Rise of Big Data: How It's Changing the Way We Think About the World, Foreign Affairs, May/June 2013.
Nov 27: Thanksgiving: No Class
Week 15:
Dec 2: Session Twenty-eight: Rethinking economic policy (JE)
Adair Turner, Wealth, debt, inequality and low interest rates: four big trends and some implications, http://www.cass.city.ac.uk/__data/assets/pdf_file/0014/216311/RedingNotes_Lord-Turner-Annual-Address-at-Cass-Business-School-March-26-2014.pdf
Slides associated with this lecture are available at: http://www.cass.city.ac.uk/__data/assets/pdf_file/0020/216290/Slides_Lord-Turner-Annual-Address-at-Cass-Business-School-March-26-2014.pdf
Dec 4: Session Twenty-nine: Summing-up (JA)
Dec 11: Thursday, 2-4 pm FINAL EXAMINATION
Maybe Nov 25 or Dec 4: Session Twenty-four: Guest Lecture: (?) Baizhu Chen (USC) on the Challenge of China
Dong He and Robert McCauley, Eurodollar banking and currency internationalisation,
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2128556
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