15.s18 Applied International Macroeconomics II
Roberto Rigobon
rigobon@mit.edu
Spring 2014
The course’s objective is to expand the tools and discussions developed during
Macro I and apply them to current events. The US crisis resolution, Europe’s fiscal
crises, and Japan’s challenges are just some of the topics we will address. We will
discuss how monetary policy and fiscal policy work, and what are their limitations.
We will develop a simple framework to understand growth, financial sustainability,
political sustainability, and crises. We will study how different shocks impact the
economy – shocks such as as financial crises, immigration, contagion, currency wars,
etc.
The boring section: Grades: 40 percent first assignment and 60 percent from the
final assignment. Participation? Not graded. I’ll explain why in the first class.
More boring stuff: RULES! Actually, there is only one rule in my classes: The rule is
known at MIT as “Roberto’s Rule”. If you are late you have to bring me a coffee (it
has to be decaf with soy milk – so, yes, brown water) or tea (it has to be herbal tea).
After the first 5 minutes you will realize you do not want me on caffeine, and I am
allergic to milk and stupid comments. If you do not bring the coffee I will make you
go and buy it! No exceptions!
Other than that you can do whatever you want in class. So, computers, ipads,
iphones are all welcomed. Please leave them on, and use them if my classes become
boring. I use this behavior as a signal when a joke is needed.
The notes will be available after the classes. You do not have to do a single prereading before the first one (you’re welcome). After that, I expect you to do the
reading before the classes except for my notes. The notes are part of a book I am
writing and they are incomplete and meant to reinforce the discussions. I can also
recommend macro books to you – Olivier Blanchard’s Macroeconomics is one of the
best. But those books teach macroeconomics in a way that I believe is confusing for
management.
The course has 12 sessions (6 days):
Tittle
External and Internal
Sustainability
Readings
BBNN Basic (Ch 7)
HBS 9706002: The U.S. Current Account Deficit
Jan 25
External and Internal
Sustainability II
BBNN Shocks (Ch 8)
HB Review F0809A-PDF-ENG: New Thinking for a New
Financial Order
Feb 07
Crisis and Social Peace
BBNN Social Peace + Sustainability (Ch 10-11)
Feb 28
Development: Cycle of SelfDiscovery
Macro Development (Ch 16)
HBS 9706041: China: Building “Capitalism with Socialist
Characteristics”
Apr 12
Sovereign Debt Sustainability
Fiscal Policy (Ch 5)
EuroZone Debt - Roubini Report
HBS 9711088: The Greek Crisis
Apr 25
ESIMP
Jan 24
Assignments:
1. Form teams of 3-4. Pick a country – any country you want. Perform a
diagnostic of the macro situation using the BBNN. Place the last 5 years in the
BBNN map and evaluate the social and political conditions: explain your
evaluation, indicate the sources, etc. Due date is Feb 28th.
2. Use the country you used in part one. Design a growth program for the
country. The growth program has to be consistent with social, political,
institutions, environmental, and individual constraints. Use the ESIMP
framework. Again, explain your decisions, sources, etc. The final report
should not have more than 20 pages including everything.
Please, include an analysis of the debt dynamics and fiscal situation. Due date
is May 2.
Useful sources for country data?
World Bank:
World Development Indicators
http://databank.worldbank.org/data/views/variableSelection/selectvariables.aspx?source=world-development-indicators
IMF:
International Financial Statistics or
World Economic Outlook
http://elibrary-data.imf.org
Economist Intelligence Unit:
http://www.eiu.com/default.aspx?autologin=bulk
(go to Vera, you have to enter through MIT)