The Global Economy 2030
Fall 2012
Professor:John Eatwell
OfficeKAP 312
Office hoursTuesday 4:00-5:00 and by appointment
Class:TT 2:00 - 3:20
Professor: Jonathan D. Aronson
Office Hours:TT 3:30-5:00 and by appointment
Phone:213-743-1943
Class:TT 2:00 - 3:20
The Global Economy 2030
This is not a course in prediction or even crystalball 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 14% 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.
The course comprises first twelve lectures by John Eatwell – introducing the basic analytical concepts needed to start to understand what is happening in the global economy. Then Jonathan Aronson will take over, typically preparing, on Tuesdays, the discussion with a visiting speaker on Thursdays. The visiting speakers will be:
October 4:Dick EasterlinQuality of life
(USC)
October 25:Don AbelsonInternational economic relations
(former US Trade Representative)
November 1:Hashem Pesaran International linkages
(USC)
November 8thMohamed El-ErianFinancial markets
(CEO of PIMCO)
November 15:Jonathan Taplin Transformational technology
(USC)
November 29:Barry EichengreenThe future of the dollar
(UC Berkeley)
December 6:Baizhu ChenThe challenge of China
(USC)
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 27th (25% of grade) and October 30th (15% 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 13th.
3) 30% of your grade will be based on a final project paper. Due in class on December 1
4) 10% of you grade will be based on class participation.
Required Readings for Global Economy 2030
John Eatwell and Murray Milgate (2011) The Fall and Rise of Keynesian Economics. Oxford University Press, New York
John Eatwell and Lance Taylor (2000) Global Finance at Risk: the case for international regulation, The New Press, New York
Barry Eichengreen (2011) Exorbitant Privilege: the rise and fall of the dollar. Oxford University Press, New York.
Roman Frydman and Michael Goldberg (2011) Beyond Mechanical Markets: asset price swings, risk, and the role of the state. Princeton University Press. (Part II)
Michael Lewis (2011)Boomerang: travels in the new third world. W.W. Norton
Raghuram G. Rajan (2010) Fault Lines: how hidden fractures still threaten the world economy. Princeton University Press
Carmen Reinhart and Kenneth Rogoff (2009) This Time is Different: eight centuries of financial folly. 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, 6th Edition
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 with which to analyse economic trends
Aug 28: Lecture One: “The problem: thinking about the Global Economy 2030” (JE)
Reinhart and Rogoff, This Time is Different, Part 1
Eatwell and Taylor, Global Finance at Risk, Chapter 1.
Aug 30: Lecture Two: “Economic categories: national income, growth and distribution” (JE)
National Income Accounting (simple)
Barry Wickes, Lecture Notes on National Income Accounting, (more difficult)
Mankiw, Macroeconomics, Chapter 10
Sept 4: Lecture Three: “Money, finance and interest rates” (JE)
Mankiw, Macroeconomics, Chapter 13 and 14.
Rajan, Fault Lines, Chapters 5, 6 and 7.
Sept 6: Lecture Four: “The determination of economic output” (JE)
Mankiw, Macroeconomics, Chapters 20 and 21
Reinhart and Rogoff, This Time is Different, Part 2
Eatwell and Milgate, The Fall and Rise of Keynesian Economics. Chapters 8, 9 and 10.
Sept 11: Lecture Five: “The distribution of income” (JE)
Rajan,Fault Lines, Chapters 1 and 4.
Sept 13: Lecture Six: “International monetary policy” (JA)
Mankiw, Macroeconomics, Chapters 18 and 19.
Eichengreen, Exorbitant Privilege, Chapters 1-4
Rajan, Fault Lines, Chapter 3.
Eatwell and Taylor, Global Finance at Risk, Chapters 2 and 3.
Sept 18: Lecture Seven:“The financial crisis and the future of finance” (JE)
Reinhart and Rogoff, This Time is Different, Part V.
Rajan,Fault Lines, Chapter 8.
Sept 20: Lecture Eight: “International trade and finance” (JE)
Eatwell and Taylor, Global Finance at Risk, Chapters 3,4, and 5.
Rajan, Fault Lines, Chapter 2.
Sept 25: Lecture Nine: “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.
Ben Bernanke, Carol Bertaut, Laurie Pounder DeMarco, and Steven KaminInternational 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 PapersNumber 1014, February 2011.
Sept 27: First Midterm Exam
Oct 2: Lecture Ten:“Is economic growth a ‘good thing’”? (JA)
Benjamin M. Friedman, The Moral Consequences of Economic Growth, Vintage (2006), chapters 1 and 16
Brad Delong, “Growth is Good: An economist's take on the moral consequences of material progress”, Harvard Magazine
Oct 4: Lecture Eleven: “Quality of life”. (Easterlin)
Richard Easterlin, “Does economic growth improve the human lot? Some empirical evidence”
Daniel Kahneman and Angus Deaton “High income improves evaluation of life but notemotional well-being.”
Oct 9:Lecture Twelve: “Markets and the State: US, Europe and China” (JA)
Rajan, Fault Lines, Chapter 10.
Dick Nanto and Michael Donnelly U.S. International Trade: Trends and Forecasts, Congressional Research Service, (2011).
Oct 11: Lecture Thirteen:“The dollar and the renminbi”(JE)
Dong He and Robert McCauley, Eurodollar banking and currency internationalisation,
Oct 16: Lecture Fourteen:“Financial regulation” (JE)
The Turner Review, Financial Services Authority, (2009), Chapter 1
Eatwell and Taylor, Global Finance at Risk, Chapters 6 and 7
Oct 18: Lecture Fifteen:“Markets and the state” (JE)
Frydman and Goldberg, Beyond Mechanical Markets, Part II
Oct 23: Lecture Sixteen:“The Global economy 2030” (JE)
Rajan, Fault Lines, Chapter 9.
Reinhart and Rogoff, This Time is Different, Part VI.
Part II: Key Issues for 2030: Most Tuesdays Professor Aronson will provide a background lecture to introduce students to the guest lecturer and their topic. The guest will join the class on Thursday. Readings will be lighter in this section and the next one. We will provide them going forward.
Oct 25: Lecture Seventeen:“International economic relations”(Abelson)
Oct 30: Second Midterm Exam
Nov 1: Lecture Eighteen:“International linkages” (Pesaran)
Nov 6: Lecture Nineteen:“Booms, bubbles, and busts in history”. (JA)
Nov 8: Lecture Twenty:“Financial markets” (El-Erian)
Read from his blog, and: “U.S. Downgrade Heralds a New Financial Era” at and
“Is Europe’s debt crisis a “Lehman Moment” for America?”
Nov 13: Lecture Twenty-one:“Innovation and Competitiveness” (JA)
Nov 15: Lecture Twenty-two:“Transformational technology” (Taplin)
Nov 20: Lecture Twenty-three: (JA)
Nov 22: Thanksgiving
Nov 27: Lecture Twenty-four:“The Changing Role of the dollar” (JA)
Nov 29: Lecture Twenty-five:“The dollar” (Eichengreen)
Dec 4: Lecture Twenty-six:“What can we say about 2030?”(JA)
Dec 6: Lecture Twenty-seven: “The challenge of China” (Chen)
FINAL EXAMINATION: Thursday, Dec. 13: 2-4 p.m.
(This is really a third Midterm taken in the Final Exam Slot)
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