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The Academic Year
The core of the program consists of four two-semester course sequences in Macroeconomic Policy Management, Microeconomic Policy Management, Management Skills for Policymakers, and Development Policy, as well as a one semester course in Econometric Techniques for Policy Managers. Each course has a practical and applied orientation and relies heavily on real-world examples and case studies.
Macroeconomic Policy Management
This sequence provides intensive training in the principles of macroeconomic theory at the intermediate/advanced level, and is divided into the following three sections:
- Topics in international money: Begins with a thorough review of balance-of-payments accounting and macroeconomic identities in the open economy and deals with the monetary approach to exchange rate determination and the long-run determination of real exchange rates. Carefully analyzes fiscal and monetary policies under floating and fixed exchange rates, considered with different international asset market interactions, depending on the degree of openness in those markets. Some of the tools developed are applied to specific issues: balance-of-payments crises, consistency of internal and external policies, and the collapse of fixed exchange rate arrangements, with special attention paid to issues relevant to developing countries. Ends with a consideration of the mechanics and overall strategy of monetary policy.
- Macroeconomic policy for internal and external balance: Studies government policy targets and instruments. Covers policy determinants of the level and composition of domestic spending under fixed and flexible exchange rates. Discusses in detail the macroeconomics of the public sector budget and links between money, inflation, and the budget, with reference to both high-inflation and moderate-inflation economies. Topics discussed include: the sensitivity of the public-sector budget to external and domestic macroeconomic variables, along with the concept of sustainable fiscal deficits; the economic consequences of devaluation (actual and anticipated), along with the causes and consequences of capital flows; determinants of public and private saving; optimal foreign borrowing, with an emphasis on the links between government policy and private savings and investment; and the rationale for, and historical evidence of, World Bank and International Monetary Fund conditional lending and the empirical evidence on its effects.
- Money, banking, and financial markets: Examines the analytics of inflation and stabilization, continuing study of material in section ii. Covers the effects of inflation under a variety of institutional arrangements, emphasizing the connection between inflation and fiscal deficits and giving particular attention to the institutional relationship between the central bank and the fiscal authority. Uses case studies to discuss stabilization, in terms of very high or hyperinflation and of moderately high inflation with indexation and nominal contracts. Considers the general operation of internal financial markets and financial development, with a discussion of the economic role of capital markets and an analysis of financial repression and reform. Studies banking reform, banking crises, and alternative strategies in banking regulation, both with theoretical analysis and with case studies. Analyzes the role of directed credit.
Microeconomic Policy Management
This sequence trains students in the principles of microeconomics at the intermediate/ advanced level, with a focus on the practical problem-solving skills required for the effective management of microeconomic policy. Relies heavily on the analysis of case studies and on group projects and emphasizes the development of quantitative, analytical skills that carry over into policymaking. This course sequence is divided into five parts:
- International trade policy in developing economies: Topics covered include income and income-distribution implications of international trade, including tariffs, quotas, and subsidies; the effect of market imperfections on international trade and the theory of optimal intervention; the relationship between international trade and industrial structure, including a discussion of the role and effects of strategic trade policies; the reform of trade policy; and political determinants of international trade policy.
- Making budgetary decisions: Topics covered include tax policy, public goods, the role of infrastructure and the rationale for government investment; opportunity cost and the value of time. Includes an extensive discussion of project evaluation and cost-benefit analysis. Emphasizes the role of incentives and the formulation of effective social policy and includes a section on implementing efficient and equitable tax systems and on the reform of tax systems.
- Population, labor force, and the environment: Topics covered include population, income distribution, and poverty issues. Explores the use of demographic projections as a planning tool and the effects of population growth and structure on economic development; links between income inequality and economic development; rural-urban migration; and unemployment, underemployment and poverty in developing economies. Studies the role of education and human capital in development, as well as unions, minimum wages and government pay practices. Examines public health as an economic issue, with a section on the design and implementation of health policies that are appropriate and effective.
- Industrial development, markets and regulatory decisions: Topics covered include the industrialization experience of developing countries and various theories of successful development. Examines experiences with public enterprises and with privatization programs in both developing countries and transition economies. Explores government regulation of industry (e.g., electric power, transport) and the significance of externalities, environmental policy and sustainable development.
- Games and strategic interactions: This section aims to foster in students the strategic sophistication required to anticipate and correct what may be vulnerable in a seemingly well-constructed policy proposal. It also provides insight into how strategy and incentives have shaped existing policies and institutions. The methodology acquaints students with the basic grammar of strategic interaction as codified in the "theory of games." Facility with this framework is tested and expanded by application to several real-world problems, including the interaction of small numbers of competing firms, each anticipating the price and/or quantity behavior of others in the market; the optimal design of auctions when the seller does not know the value of the commodity to potential buyers; the structure of work incentives in the absence of direct monitoring; the form of insurance contracts in the presence of "moral hazard" and "adverse selection"; the design of taxation and regulation when the government has imperfect information about the characteristics of those to be taxed and/or regulated; and the structure of civil lawsuits as an enforcement mechanism for unobservable economic/legal behavior.
Management Skills for Policymakers
This sequence teaches basic skills and tools for the effective management of public sector organizations and the efficient implementation of economic policy.
Accounting and Finance
Accounting and financial management covers basic concepts of accounting and financial management used in decision making. Introduces accounting systems as information systems and decision tools. Selected applications include business accounting, public enterprise accounting, social sector accounting and macroeconomic accounting. Students are given a brief introduction to financial instruments, financial markets and the rudiments of bond pricing.
Public Management
Managing public organizations presents the basic concepts and techniques of public management: how to advance policy in a bureaucracy; how to structure organizations for optimum productivity; how to master budgetary and financial processes; how to communicate and be persuasive; and how to develop and use effective management information systems (MIS) and the problems that ineffective MIS can cause.
Human resources focus on the effective mobilization of human energies. Topics include how to recruit, motivate, and retain good staff; how to deal with superiors and subordinates; how to develop leadership capabilities; how to bargain with unions; how to manage labor conflict; and how to design and manage personnel systems. This section utilizes cases, videos, role-playing or other experiential exercises, and simulation of policymaking situations.
Development Policy
This sequence of courses examines the theory of and evidence on the economic development of nations. These courses also address a number of important contemporary issues in economic development. Past topics have included: economic reform and adjustment in Africa; privatization and market formation in Eastern Europe and the former Soviet Union; emerging stock markets and their characteristics; overcoming economic volatility in Latin America; the macroeconomics of fiscal deficits; coping with massive capital flows in Asia; economic growth and environmental quality; and panics, crises and crashes in emerging financial markets.
Development Economics
Describes the history and current situation of the level and distribution of global income. Analyses the theory of economic growth and the empirical evidence on the factors influencing growth, including physical and human capital accumulation, technical change and population growth. Explores the effects of trade, foreign direct investment, natural resources, geography, and public sector institutions on economic growth and distribution of income. Examines how financial development and exchange rate regimes affect the prospects for economic growth.
The Political Economy of Development
Examines the ways in which economic and political dynamics interact in shaping development outcomes, particularly, how political interests, agents, and institutions influence economic policy choices. Examines the development strategies that developing countries have adopted and their political underpinnings. Explores why seemingly inefficient institutions and policies often survive and under what conditions structural reform typically occurs. Analyzes the concept of governance in theory and practice, focusing on topics that have dominated contemporary debates, such as corruption, managing ethnic divisions, legal systems, and creating robust systems of property rights. Considers how states may attempt to cope with the myriad challenges presented by globalization, particularly, how they can best manage their relationships with external actors.
Econometric Techniques for Policy Managers
Provides a discussion of how policy managers can assess the validity of technical studies in economics. By providing a survey of applied statistical methods, also allows students to carry out their own data analysis. Econometric techniques discussed include both time series and cross-sectional analysis, such as: linear and multiple regression, specification tests, forecasting, limited dependent variable models and logistic regression.