A U G U S T 05, 2013

Economic Analysis ABOUT THE COURSE Modern public policy practitioners need a solid grounding in economics so as to craft policies that take into account the economic realities that affect nearly all aspects of policy making. The first half of this course introduces the principles of microeconomics. Topics include demand and cost analysis, markets and pricing decisions in both competitive and concentrated markets. Public policy applications include taxes, externalities, public goods, trade, regulation and competition policy. The second half deals with the fundamentals of macroeconomics and the tools of macroeconomic policy. Topics include macroeconomic indicators, national income, the balance of payments, exchange rate determination, inflation, supply-side policies for economic growth and stabilization policies. LEARNING OUTCOMES Students will know the basic economic concepts underlying markets and market failures. In macroeconomics, they will know the concepts underlying growth, inflation, unemployment, exchange rates and policy interventions such a monetary and fiscal policy. The use of cases will assist their understanding of how the fundamental intuition of Economics is applied to problems in a particular social and political context. They will understand that there may be a need for government intervention in the case of market failures and that governments have a choice of instruments such as direct regulation or using market based solutions. However, the solutions do not necessarily carry over from one context to another, so each country must tailor its own policies. In macroeconomics, they will understand the interdependence of economic systems, suggesting that the concerted action by a group of countries may be required to solve many economic problems we face today. Students will become informed and intelligent consumers of macroeconomic information from financial and economic news sources. They will also be able to conduct simple industry analysis and identify the drivers of various industries. In addition they will be able to diagnose market failures and provide basic policy advice on regulatory interventions. Since this course is taught using the case method, students will also develop skills in problem diagnosis, policy design and choices and implementation challenges. The case method also helps improve softer skills such as verbal communication, listening and using fact-based analysis to make persuasive arguments. EXPECTATIONS This course deals with a complex subject and is taught using the case method. The case method and the learning value of peer interaction and discussion require extensive advance preparation by participants for each case discussion.

PRE-READING ON CASE METHOD John S. Hammond Learning by the Case Method HBS 9-376-241 (distributed during orientation) READINGS (TEXTS) N. Gregory Mankiw (2012) Principles of Economics, Sixth edition, South-Western / Cengage Learning. (This is an online textbook and you can purchase a card from the bookstore to get access). Macroeconomics Supplementary: Farrokh K. Langdana (2009) Macroeconomic Policy: Demystifying Monetary and Fiscal Policy, Second edition, Springer (e-Book will be provided)

PAGE 1 OF 4

A U G U S T 05, 2013

ASSESSMENT On individual written assignment and one group presentation, each worth 15%. Individual class participation worth 30% and an open book, case-based final examination worth 40%. Cases will be distributed at least one week before the exam. The final exam is presently scheduled for Monday December 2, 2013 starting at 9 am.

PAGE 2 OF 4

A U G U S T 05, 2013

No. 1 2 3 4

Date 12 Aug. 2013 19 Aug 2013 26 Aug. 2013 02 Sept. 2013 09 Sept. 2013 No Physical Class 16 Sept. 2013

Session Demand, Supply Efficiency Elasticities Taxes/Externalities/Public Goods Costs of Production Market Structure: Competition Market Structure: Imperfect Competition Macroeconomic indicators

Case

Reading Mankiw Chapters 4, 6 &7 Mankiw Chapter 5 Mankiw Chapters 8-11

Case: The Aluminum Industry in 1994 Background Note: The Industry Cost Curve as a Strategic Tool McKinsey Quarterly E-learning week lecture will be posted online Case: Arcadia Biosciences: Seeds of Change (Abridged) Background Note: The Carbon Market Watch on your own time before 30 Sept. Case: RWE and the proposal for a German Electricity Regulator Background Note: Note on Regulatory Choices Case: Common Agricultural Policy and the Future of French Farming Background Note: Stalemate at the WTO: TRIPS, Agricultural Subsidies, and the Doha Round

Mankiw Chapter 13

Mankiw Chapter 14

Mankiw Chapters 15 &16 Mankiw Chs. 23, 24, 31 Langdana Chapters 2&3 GUIDES: Insights Through Indicators Mankiw Ch. 33 Langada Chapters 8 & 10

Online

30 Sept. 2013

Supply Side

07 Oct. 2013

Demand Side

Mankiw Chapters 29, 33 Langdana Chapters 4 &5 Mankiw Chapters 26, 29 Langdana Chapter 11 Mankiw Chapters 25,28, 34, 35 Langdana Chapter 9 Mankiw Chapter 30 Langdana Chapter 6

9 10

14 Oct. 2013 21 Oct. 2013

Money and the Monetary System Growth & Stabilization Policy Inflation, Debt and the Open Economy Case: Spain: Can the House Resist the Storm? U.S. Subprime Mortgage Crisis: Policy Reactions (A) Subprime Meltdown: American Housing and Global Financial Turmoil

11

28 Oct. 2013

PAGE 3 OF 4

A U G U S T 05, 2013

12

04 Nov. 2013

PBL Problem definition

U.S. Subprime Mortgage Crisis: Policy Reactions (B) The First Global Financial Crisis of the 21st Century

13

11 Nov. 2013

PBL Presentations

PAGE 4 OF 4