6470: Economic growth and development Spring 2012
Requirements Course Calendar
PhD texts: Agénor, Pierre-Richard (2004) Economics
of Adjustment and Growth, 2nd
ed (HUP) 0674015789
Barro, R. & J. Sala-i-Martin (2004) Economic
Growth 2nd ed (MIT Press) 0262025531
(2008) Introduction to
Modern Economic Growth, Princeton University Press
1, chapter 2, chapter
5 and an epilogue available
on this page).
Novales, Alfonso, Esther Fernández and Jesús Ruíz (2010) Economic
Growth: Theory and Numerical Solution Methods
[Paperback 3642111327 ]
Masters level texts:
Jones, Charles I. (2001) Introduction
to Economic Growth 2nd ed (W.W. Norton 0393977455)
Aghion, P and P. Howitt (2009) Economics
of Growth (MIT Press, Boston) 0262012634
Recommended (some required
Aghion, P and P. Howitt (1998) Endogenous Growth (MIT Press, Boston) 0262011662
Barro, Robert J. (1998) Determinants of Economic
Growth (MIT Press, Boston).
Lucas, R.E. (2002) Lectures
on Economics Growth (Harvard
Parente, S. and E. Prescott
(2002) Barriers to Riches (paperback)
Rodrik, Dani (2003) In
Search of Prosperity (Princeton
University Press) 0691092699
David (2005) Advanced Macroeconomics (chapters 1-3)
Course Description: Why do people living in some countries grow rich,
while others remain poor? This is the main question growth and development economists
try to answer. The answer used to be somewhat discouraging: institutions shape
and limit the growth of countries, and they have for some 200 years. Today tables
have turned somewhat and though still relatively poor, during the decade or so
(3 decades in the case of China) the poor have been getting richer. In particular, most African countries have
begun to grow at respectable rates (see lecture notes) especially compared to
their own recent history. This course is
about what caused this favorable shift toward more rapid growth, is the growth
surge sustainable and are the poorest really benefitting from economic growth? Though
World Bank just revised its outlook down, the 2008 financial crisis hit rich
countries much harder than poor countries. The result of a
closing of the gap in incomes between rich and poor. China, Nigeria, Korea, India and Vietnam all
managed to grow rapidly right through the recent crisis. Even Argentina, Venezuela, Nigeria and the
Philippines, historically problem growth countries, grew right through the recent
downturn. In fact, developing countries have been growing faster than OECD
countries for some time now, reducing world inequality and poverty. The first
part of this course explores key theories of economic growth and some empirical
evidence on long term growth and convergence.
The second part of the course turns to growth strategies including the
role of education, trade and capital market openness and/or industrial policy in
facilitating rapid growth. Recent growth booms in India and China were associated
with both internal reforms and trade liberalization: which reforms were key to these growth miracles? Finally, we turn to the political economy of
growth, considering a number of recent arguments that make policy itself
endogenous, stressing the role of inequality, institutions (property rights),
geography and natural resource endowments in shaping governance and therefore
long term growth performance of the least developed countries in particular.
Requirements: The essay based final and
midterm account for 20% and 40% of the course grade. A number of problem sets
(20%) and a country case study (20%) contribute the remaining 40% of the grade.
The case study also serves as a final exam question, it has references and data
you gather, but it is not quite a formal paper.
You can present your case study in class if you like for extra credit.
After the midterm, a detailed country case study description will be
distributed. To reduce the weight of
midterm and to prepare for the final students are also encouraged to present a
brief, optional power point summary of their case study to the class for
discussion and comments.
Topics-Lectures: Part I Development and Growth: Theory and
Evidence Poverty Traps—industrialization
Empirical Evidence on convergence Introduction: Global
crises and Poverty Income Convergence or Divergence? Growth Models: Solow-Swan, AK-HD & R&D based
Endogenous growth Endogenous
Growth I: Population/human capital Endogenous Growth II: Technical change Part II. Growth promoting Economic Policy:
Openness to Trade Openness to Capital
Flows Financial Development
Reduction Macroeconomic Stability Geography,
Reading/Topics: *required readings: **high priority Journal
Problem Set #1A Problem Set #2 Three Growth Models handout Barro’s AK Model with Government
First week: read Jones Chapter 1-2 and Sachs et. al BPEA Ending Africa’s Poverty Trap pp. 121-31.
Growth Miracles and Poverty Traps
Sachs et. al BPEA Ending Africa’s Poverty
Trap pp. 121-31.
R.E. (2000) Macro for the 21st Century. JEP,14:1,
Winter 2000 or Chapt 4 of .
Jones 2nd ed.
Chapter 1, Brad de Long (2000) Cornucopia
Chapter 10 pp. 411-30
*Barro & Sala-i-Martin Introduction and Chapter 1
Lucas (2002) pp. 1-23
and pp. *251-253 “Making
Case Study 1.1 Institutions vs.
Geography: how rich countries became poor
Acemoglu, Daron, Simon Johnson and James Robinson (2006)
Understanding Prosperity and Poverty:
Institutions and the Reversal of Fortune
long version… Acemoglu, D. (2003)
Rodrik, Dani (2003) “The Primacy
of Institutions” IMF
Finance & Development 40,2,
IMF, June 2003
Sachs, Jeffery (2003)
Matter, but not for everything (same issue of F&D)
Edison, Hal (2003)
Case Study 1.2 Is globalization good for
Challenges AER, May 2004;
& Kraay Spreading the Wealth Foreign
David Is Growth Good for the Poor?, World Bank
Working Paper, March 2000
World Bank, Pro Poor Growth in the 1990s LatAm Virtuous circles
J “Anti-Globalization: why? Stilitz, J.
Globalization & Growth
Rajan & Zingales (2003)
Saving Capitalism…, book excerpt, Milken Institute Review
Case Study 1.3: Is World Inequality &
Poverty rising or falling? Lecture notes
2. Three Growth Models: convergence or
divergence? *Agénor Chapter 11
Chapter 1 *Jones 2nd ed, Chapters
1-3 Problem Set #1A
B. (1996) Neoclassical vs. Endogenous Growth FRB of
Sala-i-Martin 15 Years of Growth Theory
Jones Chapts. 2,3 Romer, D. Chapts 1 & 3
Lucas, R.E. Macro for the 21st Century..
JEP, 14:1, Winter 2000.
Divergence Big Time. Lucas, R.E.(1988)
"Mechanics of Development" JME,22,3-42.
Solow, R. M.
(1956) "Contribution to the Theory of Growth," QJE, 70, 65-94.
Mankiw, Romer, and Weil,
"Empirics of Growth," QJE, May,1992,107:2,407-38.
Economics of poverty traps: Population,
Industrialization and Market Structure
*Barro and Sala pp. 74-77 Sachs et. al BPEA Ending Africa’s Poverty
Trap pp. 121-47.
*Krugman (1996) “The Fall and Rise of Development Economics” Journal Acronyms
*Murphy, K. Schleifer & Vishny
(1989) "Industrialization & the Big Push" JPE, 97:5,
Robelo, S. (1992) “Growth in open economies” Carnegie-Rochester
Public Policy Series, 36,5-46.
Krugman, P. (1994) Counter-Counter Revolution In Development
4. Empirical Evidence: Exogenous vs. Endogenous growth and
29-35, *B&SM Chapts 11,12
*Agénor Chapter 13)
Bosworth and Collins (2003) “The Empirics of Growth: An Update” BPEA, No. 2.
Levine R. & D. Renelt (1992)"Cross-cty Growth
Regressions," AER, Sept,84:2,942-63 [cd]
*Barro, R. J. (1998) Determinates of Economic Growth Chapt 1. and TEAM pp. 60-69.
*Sala-i-Martin, J. (1997) “I just
ran four million regressions,” Columbia University
*McGratten, E. (1998) “A Defense of AK Growth Models, FRBMQR, Fall,22:4, 13-27
Jones, C. “Time Series Tests of
Endogenous Growth Models," QJE, May 1995, 110, 495-525
Barro, Robert J., "Growth in a Cross Section of Countries," QJE,
May 1991,106, 407-43.
Barro, R.J. and X. Sala-i-Martin,
"Convergence," JPE, 1992, 100 (2), 223,251.
W. et. al. (1994) "Good Policy
or Good Luck?” JME
Asian Growth: Miracle or not?
WB Team Report
Chapter 5 Krugman, P. “East Asian Miracle?”
I. Promoting Growth: Good policy or good
(bad) luck? Journal Acronyms
5. Openness and Growth I
: Trade and Growth
Models: *Basu and Mcleod Terms of Trade Fluctuations and Economic Growth JDE, 1992
*Sachs, Jeffery and Gallup (1998) Geography and Economic growth [cd]
Evidence: *Rodriguez and Rodrik. (2000) Trade Policy and Economic Growth: A Skeptics View"
*Warner, Andrew (2003) “Once more into the Breach, Reply to Rodriguez & Rodrik”
Dollar, et. al. (2002) Trade Growth and Poverty (globalizers classified by growth in trade and tariff
Sachs, Jeffrey D. & Andrew Warner.
1995. “Economic Reform and Global Integration.” BPEA (1):1-118.
processed, Kennedy School of Government, Harvard
Edwards, S, (1997) Openness and Growth: What do We Really
Dollar, David (1992) Outward-Oriented Developing Economies Really
do Grow More
Rapidly, Economic Development and
Cultural Change, 523-43.
(1991) Learning by Doing and the Dynamic Effects of International Trade,QJE
Baldwin, R. (2003) Openness and Growth A
6. Openness and Growth II: Capital Mobility and Growth (Agénor Chapter 16)
and Olivier Jeanne (2002) Benefits of Capital Account Liberalization
for Emerging Economies Tornell,
A, Westerman & Martinez (2004) The Link Between Financial Liberalization
Growth And Crises *Edwards, S (2000) Capital Mobility
and Economic Performance, NBER, (cdrom)
*De Gregorio (1998) Financial Integration, Financial Development and
Economic Growth (cd)
*World Bank (2001) Capital Flows and Economic Growth, Global Dev. Finance Chapter 3
Hausman, Ricardo and Eduardo Fernandez-Arias 2000
“Foreign Direct Investment: Good Cholesterol?”
7. Financial Development and Growth:
*Levine, Ross (2003) More on finance and growth: more finance,
more growth? Economic Review
St. Louis Federal Reserve Bank,
*Levine Finance and Growth Slideshow World
Bank Ross Levine at RepEc
*Levine, Ross (1997) Financial
Development and Economic Growth JEL, XXXV,688–726
Espinosa, M and W. Hunter (1994)
Financial Repression & Development, Economic Review,
Federal Reserve Bank of Atlanta,
King, R. and R. Levine (1993) "Finance, Entrepreneurship, &
Growth" JME, 32:3,
Greenwood, J., & B. Jovanovic, "Financial Development & Income Dist,"
JPE, 5:1, 1990: 1076‑107.
V, & B. Smith (1991) "Financial Intermediation & Endog.Growth,"RES, 58,195-209
McKinnon, R. (1991) The
Order of Economic Liberalization (Johns Hopkins Press).
McKinnon, Ronald, Money
and Capital in Economic Development, Brookings, 1973.
8. Poverty, Redistribution and Political
Economy (see *Barro (1997) Chapter 2):
Aghion & Williamson (2000) Growth Inequality and Globalization, Intro
& Chapter 1
A&W Part I, Inequality and Economic Growth, Aghion JEL Survey.
*Barro, R Inequality
and Growth in a Panel of Countries,
*Alesina and Perotti (1994) The
Political Economy of Growth Survey, WBER (photocopy)
Kristen The Relationship between Inequality and
Growth, MIT (AER 2001)
Benabou, Roland (1997) “Inequality and Growth” NBER
Macroeconomics Annual 1997,
(1997) Democracy and Economic Performance, processed, Harvard Univ.
Rodrik, Dani (1998) “Growth
Collapses” processed, Inequality and Growth Further Reading
9. Macroeconomic Stability and Growth (*Barro, Determinants
of Growth, Chapter 3)
Inflation and Growth—Further Reading
(1993) The Role of Macroeconomic Factors in Growth, JME, 32,485-512 [cd]
*Easterly, William. The Lost
Decades: Explaining Developing Countries' Stagnation 1980-1998
World Bank, Development
Research Group, Jan 2000, (forthcoming) presentation
R.(1990) Government Spending w/ Endogenous Growth, JPE,98,103-25[cdrom]
Michael, & W. Easterly (1998) "Inflation Crises & Long-Run
Growth." JME 41:1:3-26
Jose (1993) Inflation, Taxation and L-R Growth, JME, 39,59-84.
Easterly, W. and S. Rebelo (1993) Fiscal Policy
and Economic Growth, JME, 32, 417-58.]
Easterly, William(1993) How Much do Distortions affect
Growth? JME, 32, 187-212.
Natural Resources, Foreign Aid and Economic Growth
*IMF, WEO April 2003 Institutions & Growth Chapt. 3 Rodik *Getting institutions right: a primer
Rodrik, Institutions Rule Finance & Development
Issue Institutions Rule: Longer paper
Edison, H. How Strong are the links?
Sachs, J and A. Warner (1995) Natural Resource Abundance and Growth HIID WP #517
14. Case Study Resources
*Pritchet, Lant (2004) Socialist Star and Democratic…Growth
Theory, Vietnam and the Philippines
in Rodrik, D. ed. In Search of Prosperity (Princeton University Press).
*Rodrik, D. (2003) Growth Strategies (NBER working paper 10050) Boston, MA
Radelet, et.al. (2003) MCA country selection process (CGD web site)
Reference & background reading (click to full list
Aghion, P. & J.Williamson
(1998) Growth, Inequality & Globalization, Cambridge
Surjit (2002) Imagine There’s No Country,
Ros, Jaime (2000) Development Theory & Economic Growth
(U of Michigan Press)
Bank, (2000) The Quality of Growth (QOG)
Bank (1993) The East Asian Miracle (Oxford U Press-- or “TEAM” )
Gylfason, Thorvaldur, 1997, Principles
of Economic Growth (Oxford U Press, NY)