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IR 213: The Global Economy
Spring 2017
Lectures: T&Th 12:30-1:50, WPH B27
Professor: Benjamin Graham Office: VKC 357B
Office Hours: 3-4PM Friday, drop-in
2-3PM Thursdays, by appointment only. Book here.
E-mail: [email protected]
Web Site: http://dornsife.usc.edu/graham
TAs:
Victoria Chonn-Ching
Victoria’s Office:
Victoria’s Office Hours:
Victoria’s E-mail:
Dat Nguyen
Dat’s Office: TBD
Dat’s Office Hours: TBD
Dat’s E-mail: TBD
Syllabus: Version January 2, 2017
****
This syllabus will be updated throughout the semester. New versions of the syllabus will
always be announced in lecture, and students are responsible for ensuring they have the
latest version. The most up to date version will always be on my website.
****
Course Description
This course provides an introduction to international economics for students of international relations. We address the core puzzle of why poor countries are poor and rich countries are rich, with a focus on international (as opposed to domestic) factors. We cover the economic fundamentals governing the international movement of goods, money, and people, but we also cover the political implications of those flows. We pay attention to the winners and losers created by these flows, and to the policies and institutions that regulate them. The economic nuts and bolts introduced in this course: comparative advantage, terms of trade, balance of payments, exchange rates, and so forth, are challenging, and the course is demanding. But if you want to save the world, or if you want to get rich, this is the right course to be in. Readings and Quizzes
The textbook for this course is International Economics by Robert Carbaugh (14th
Edition). We will also read several articles during the term, all of which will be provided
on the course website. (Note: Other editions of this book will suffice substantively, but
page numbers in the syllabus are given for 14th edition.
The required readings are short – usually 10-20 pages per class or 20 minutes of video or
audio – but all students are expected to complete the readings before the class for which
they are assigned. There will be a short reading quiz at the beginning of every class for
which readings are assigned. The quizzes are short and fairly easy – the intention is
simply to enforce the assigned reading.
All students have the opportunity to submit notes on the reading to the TA based on the
readings for a given class. If you submit notes of reasonable quality on the readings for
advance of class, you will automatically receive full credit for the quiz. Notes must be
received by your TA before class begins.
Papers
The course requires two very short papers, each limited to 750 words (about 3 double-
spaced pages). The papers will cover core political issues in the course: the first is on
trade, the second on foreign investment or migration. Despite their short length, my
quality expectations for these papers are very high, and we will have a paper-writing
workshop before the first paper is due.
Homework
There will be 2-3 homework assignments, which cover the core economic concepts in the
course. To learn them, you must work through them. These homework assignments will
be partially completed in section.
Exams
For both the midterm and the final, I will distribute a detailed study guide. All questions
on the exam will come word-for-word off the study guide. If you know the answers to
everything on the study guide, you will ace the exam. No tricks, no surprises. I
encourage students to form study groups and collaborate to develop good answers for
each question on the study guide.
Grading Grades for this course will be based on 1). Lecture & section participation (10%), 2).
Reading quizzes (10%), 3). Midterm exam (15%), 4). Two Papers (17.5% each), 5).
Homework assignments (10%), and 6). Final Exam (20%).
Clickers:
All students in this course are required to purchase a [TOPHAP CLICKER?] Students will use the clickers for two purposes: 1). To take reading quizzes and 2). to answer multiple-choice questions during lecture.
While they are convenient for the reading quizzes, the primary purpose of the clickers is to give students a chance to actively participate in the lecture and to check understanding as we proceed through the material. Clicker responses will be used to calculate participation grades for lecture. With the exception of the reading quizzes, I will not deduct points for wrong answers, but students must attempt to answer the questions to receive participation credit.
Course Webpage This syllabus and appropriate links are available on the course webpage at
http://dornsife.usc.edu/graham. The slides from lecture will be available on the website.
Reviewing the slides is not a substitute for attending lecture, and the slides will not
include all the information covered in lecture, or all the material that will be on the
exams.
Statement for Students with Disabilities
Any student requesting academic accommodations based on a disability is required to
register with Disability Services and Programs (DSP) each semester. A letter of
verification for approved accommodations can be obtained from DSP. Please be sure the
letter is delivered to me as early in the semester as possible. DSP is located in STU 301
and is open 8:30 a.m.–5:00 p.m., Tuesday through Friday. The phone number for DSP
is (213) 740-0776.
Statement on Academic Integrity
USC seeks to maintain an optimal learning environment. General principles of academic
honesty include the concept of respect for the intellectual property of others, the
expectation that individual work will be submitted unless otherwise allowed by an
instructor, and the obligations both to protect one’s own academic work from misuse by
others as well as to avoid using another’s work as one’s own. All students are expected to
understand and abide by these principles. Scampus, the Student Guidebook, contains the
Student Conduct Code in Section 11.00, while the recommended sanctions are located in
Appendix A: http://www.usc.edu/dept/publications/SCAMPUS/gov/. Students will be
referred to the Office of Student Judicial Affairs and Community Standards for further
review, should there be any suspicion of academic dishonesty. The Review process can
be found at: http://www.usc.edu/student-affairs/SJACS/.
Course Schedule NUTS AND BOLTS Tuesday, January 10
Lecture 1: Introductory Lecture Optional Viewing: “How Ideas Trump Crises” http://www.ted.com/talks/alex_tabarrok_foresees_economic_growth?language=en#t-478723
Optional Reading:
1. “Is the Era of Great Famines Over?” www.nytimes.com/2016/05/09/opinion/is-the-era-of-great-famines-over.html
2. “In 1990, more than 60% of people in East Asia were in extreme poverty. Now only 3.5% are.” https://www.evernote.com/l/AUsEDMBb-FFF2oZKmP2ZmBcg_2_9V4FsJaU
Thursday, January 12
Lecture 2: Fundamentals: Supply, Demand, Complements, Substitutes Required Reading (actually viewing), watch videos from the Principles of Economics: Microeconomics series by Marginal Revolution University:
1. “The Demand Curve” 2. “The Supply Curve”, 3. “The Equilibrium Price” 4. “The Demand Curve Shifts” (super important, this is hard for many
folks) 5. “The Supply Curve Shifts” (first 4:35 mandatory, the rest
recommended) The videos are on youtube. https://www.youtube.com/playlist?list=PL-uRhZ_p-BM4XnKSe3BJa23-XKJs_k4KY Alternatively, check out these readings: http://www.investopedia.com/university/economics/economics3.asp http://www.policonomics.com/supply-and-demand/ Optional Viewing: I recommend adding in “A Deeper Look at the Demand Curve” and “A Deeper Look at the Supply Curve” from the video playlist above, but they are not strictly required.
Tuesday, January 17 Lecture 3: Comparative vs. Absolute Advantage
Required Reading: Carbaugh, Chapter 2, pp. 29-40, 52-55. Required Viewing: “Comparative Advantage and the Tragedy of Tasmania” http://mruniversity.com/courses/everyday-economics/comparative-advantage-and-tragedy-tasmania
Optional Viewing: https://www.khanacademy.org/economics-finance-domain/microeconomics/choices-opp-cost-tutorial/gains-from-trade-tutorial
TRADE Part I: How Trade Makes Wealth Thursday, January 19 Lecture 4: The Terms of Trade: Winners and Losers Between Countries
Required Reading: 1. Carbaugh, pp. 40-44 2. Irwin, Douglas (2009 (3rd Edition)) Ch6 Developing Countries and Open Market in Free Trade under Fire. Only pp. 178-193 required.
Optional Reading: 1 . “Learning the Lessons of Stagnation” (This is a 2015 Economist article on Latin America) http://www.economist.com/news/americas/21656201-memories-galloping-growth-fade-it-time-tough-thinking-about-future-learning 2. Wise & Tuynman (2015) NAFTA 20: A Bittersweet Celebration http://www.americasquarterly.org/content/nafta20-bittersweet-celebration
Tuesday, January 24th
***Homework 1 Due*** Lecture 5: Sources of Comparative Advantage: Winners and Losers Within Countries Required Reading: Carbaugh, pp. 65-82
Optional Reading: Carbaugh, pp, 82-103 An Application of Comparative Advantage (Optional Reading): “The Allocation of Talent and U.S. Economic Growth.” http://faculty.chicagobooth.edu/erik.hurst/research/HHJK.pdf?utm_content=buffer6ae7c&utm_source=buffer&utm_medium=twitter&utm_campaign=Buffer
Thursday, January 26th Lecture 6: The Law of One Price and Barriers to Trade
Required Reading: 1. “Why Voters Don’t Buy it When Economists Say Free Trade is Good.”
https://www.evernote.com/l/AUsaKg1-jjZKSIvCHjHwu8QU6kBJkcos_Ss Optional Reading: Chapters 4 & 5 Optional Viewing: Check out this data visualization: http://globe.cid.harvard.edu/?mode=gridSphere&id=null
Part II: The Politics of Trade
Tuesday, January 31 Lecture 7: Domestic Politics of Trade: Concentrated vs. Diffuse interests, lobbying, etc
Required reading: 1. Carbaugh, pp. 209-215 2. Planet Money: The Lollipop War http://www.npr.org/sections/money/2013/04/26/179295426/episode-454-the-lollipop-war 3. “France moves to placate farmers with more aid” http://www.wsj.com/articles/france-moves-to-placate-farmers-with-aid-1437578010 Optional reading: 1. “Why are Unions so Focused on Fighting Trade Deals”
http://blogs.wsj.com/washwire/2015/03/20/why-are-unions-so-focused-on-fighting-trade-deals/ (VERY SHORT)
2. Irwin, Douglas (2009 (3rd Edition)) Ch6 Developing Countries and Open Market in Free Trade under Fire. pp. 200-204
Thursday, February 2
Lecture 8: International Politics of Trade: A Little History Required Reading: Carbaugh, 179-193
Optional Viewing: This is a UC Riverside lecture that covers material I don’t, and in a pretty engaging way. A Brief History of International Trade, by Ryan Petersen http://www.youtube.com/watch?v=mwEB85eX4R4&playnext=1&list=PL81`931CF32FB0D9AE&feature=results_video
Tuesday, February 7 *****Homework 2 Due*****
Lecture 9: International Politics of Trade: Current Debates Required Reading: Carbaugh, pp. 193-209 Optional Viewing: Planet Money Makes a T-Shirt http://apps.npr.org/tshirt/#/title
Optional Reading: 1. Labor Standards & Trade Agreements Irwin, Chapter 6, pp. 204-218. (First half of the chapter assigned September 2nd). 2. 'Reshoring' Trend Has Little Impact On U.S. Economy, Study Finds http://www.npr.org/2014/12/16/371059896/reshoring-trend-has-little-impact-on-u-s-economy-study-finds
3. Economist (2015)TPP, RIP? http://www.economist.com/news/leaders/21654612-row-over-pacific-trade-deal-harming-americas-economic-and-political-interests-tpp-rip?zid=293&ah=e50f636873b42369614615ba3c16df4a 4. Economist (2015) What’s the big deal? http://www.economist.com/news/asia/21647330-why-whiff-panic-has-entered-americas-pacific-trade-negotiations-whats-big-deal
Thursday, February 9
Lecture 10: Trade and Development Required Reading: 1. Carbaugh, pp. 223-240 2. Re-skim the first half of Chapter 6 from Irwin. Optional Reading (Fair Trade Movement): 1. Economist (2014) Good thing, or bad? http://www.economist.com/news/business-books-quarterly/21606248-easing-consciences-good-thing-or-bad 2. NPR (2013) Coffee For A Cause: What Do Those Feel-Good Labels Deliver? http://www.npr.org/sections/thesalt/2013/04/24/177757797/coffee-for-a-cause-what-do-those-feel-good-labels-deliver 3. Freakonomics (2010) Fair Trade and the Food Movement http://freakonomics.com/2010/06/30/fair-trade-and-the-food-movement/
Tuesday, February 14 *****Midterm Exam****** Thursday, February 16 *******Guest Lecture on TPP****** Thursday, February 16
Lecture 12: Foreign Investment (I) Required Reading: Friedman, Excerpt from The Lexus and the Olive Tree, http://sdarcy.edublogs.org/files/2011/03/goldenstraightjacket-pu084c.pdf
Tuesday, February 21 Lecture 13: Foreign Investment II Required Reading: Pandya, Sonal. 2016. “Political Economy of Foreign Direct Investment: Globalized Production in the Twenty-First Century. Annual Review of Political Science. http://www.annualreviews.org/doi/pdf/10.1146/annurev-polisci-051214-101237
Optional Reading: 1. The Economist, “Istanbuls and Bears” http://www.economist.com/node/21552216 2. Quantitative Easing and Capital Flows to Emerging Markets http://econbrowser.com/archives/2014/01/guest_contribut_41 3. Why Foreign Direct Investment Still Polarizes India http://www.washingtonpost.com/blogs/monkey-cage/wp/2014/09/30/why-foreign-investment-still-polarizes-india/
3. Moran, Theodore. “Toward Best Outcomes From Foreign Direct
Investment in Poorly Performing States” http://www.cgdev.org/doc/shortofthegoal/chap11.pdf
For Later Reference: Chapter 9, Carbaugh
Thursday, February 23 Lecture 14: What is money? Also, interest rates and exchange rates
Required Reading (many articles, but all very short): 1. Carbaugh, p. 386 “How to Play the Falling (Rising) Dollar” 2. “What a Stronger Dollar Means for the Economy”: http://www.nytimes.com/2015/01/06/upshot/what-a-stronger-dollar-means-for-the-economy.html?abt=0002&abg=1 3. NYTimes: Clashes and Protest in Iran As Currency Plungeshttp://www.nytimes.com/2012/10/04/world/middleeast/clashes-reported-in-tehran-as-riot-police-target-money-changers.html?_r=1&hp 4. The Wikipedia page on Gresham's law: http://en.wikipedia.org/wiki/Gresham%27s_law You don't need to read the whole entry -- just figure out what the law is, so you can understand the blog post in #5. 5. "Gresham's Law Takes Iran": http://ftalphaville.ft.com/2012/10/03/1190441/greshams-law-takes-iran/
Tuesday, February 28
Lecture 15: Paper Writing Workshop Due in Class: A one-sentence thesis statement for your paper, and a bibliography with at least three sources.
Thursday, March 2 Lecture 16: Balance of Payments Required Reading:
1. Carbaugh Chapter 10
2. NYTimes: As the U.S. Borrows, Who Lends? http://www.nytimes.com/2012/09/22/business/economy/as-the-us-borrows-who-lends.html?src=recg Optional Readings: 1. Economist (2014) Tourism and the trade balance: A number of great import http://www.economist.com/news/china/21596568-china-has-worlds-biggest-trade-deficitin-services-number-great-import
Tuesday, March 7 ******Paper 1 Due****** Lecture 17: The IMF
Required Reading: 1. Read the introduction and section 5.1 of the Wikipedia article on the IMF. Skim the rest of the article. 2. Kenneth Rogoff, “The IMF Strikes Back”, http://www.imf.org/external/np/vc/2003/021003.htm Required Viewing Watch the three videos at the link (one each on surveillance, technical assistance, and lending) http://www.imf.org/external/about/ourwork.htm
Optional Reading (short): Frankel, “Critiques of the IMF” http://www.hks.harvard.edu/fs/jfrankel/Critiques_of_the_IMF.pdf
Optional Reading (short): Jerven: “What does Nigeria’s new GDP number actually mean?” http://africanarguments.org/2014/04/08/what-does-nigerias-new-gdp-number-actually-mean-by-morten-jerven/
Thursday, March 9
Lecture 18: Financial Crises: The Asian Financial Crisis, The Global Financial Crisis, and the Future of the Eurozone Required Reading:
“A Good Look at the Thai Financial Crisis in 1997-1998” http://www.columbia.edu/cu/thai/html/financial97_98.html
Optional Listening: This American Life, episode #455, “Continental Breakup.”
There is also a transcript you can download if you prefer.
http://www.thisamericanlife.org/radio-archives/episode/455/continental-breakup
Optional Reading:
1. Economist (2015) Greece signs up to a painful, humiliating agreement with
Europe
http://www.economist.com/news/europe/21657627-agreeing-long-resisted-
reforms-just-start-greece-greece-signs-painful-humiliating
2. A Set of Economist summaries on the Greek Crisis.
http://www.economist.com/greekcrisis
4. Gordon and Wright (2015) No Exit Why Greece and Europe Will Still Stay
Attached https://www.foreignaffairs.com/articles/greece/2015-06-30/no-exit
5. The Giant Pool of Money – A good, if dated, This American Life episode explaining the U.S. housing bubble that burst in 2008. https://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money
*********SPRING BREAK***********
Tuesday, March 21
Lecture 19: Development Strategies Required Reading: Carbaugh, pp. 255-258 (247-250) Also: Start reading for Thursday (Thursday readings are longer than usual, but important)
Thursday, March 23
Lecture 20: Foreign Aid Required Readings: 1. Sachs, “The Development Challenge” in Foreign Affairs http://heinonline.org/HOL/Page?handle=hein.journals/fora84&div=33&g_sent=1&collection=journals 2. Easterly, “How to Assess the Need for Aid? The Answer: Don’t Ask” http://www.ffem.fr/jahia/webdav/site/afd/shared/PUBLICATIONS/RECHERCHE/Archives/Notes-et-documents/29-notes-documents-VA.pdf#page=37 3. Dambisa Moyo, “Why Foreign Aid is Hurting Africa” http://online.wsj.com/article/SB123758895999200083.html#articleTabs%3Darticle Optional Reading: Biggs, Ryan. “Does Foreign Aid Target the Poorest?” International Organization. 2016. https://doi.org/10.1017/S0020818316000345
Tuesday, March 28 Lecture 21: Foreign Aid II Required Reading:
1. Charles Kenny, “Get an MBA, Save the World,” http://foreignpolicy.com/2012/04/23/get-an-mba-save-the-world/ 2. Sean Parker “Philanthropy for Hackers”
http://www.wsj.com/articles/sean-parker-philanthropy-for-hackers-1435345787
3. “Jimmy Carter May Soon Get His 90th Birthday Wish: No More Guinea Worm” http://www.npr.org/2016/06/06/480973123/jimmy-carter-may-soon-get-his-90th-birthday-wish-no-more-guinea-worm
Optional Reading: 1. A short blog post on biometric smart cards in India.
“http://marginalrevolution.com/marginalrevolution/2016/10/indias-biometric-smartcards-good-sentence.html”
2. The Problem with International Development and How to Fix It http://www.newrepublic.com/article/120178/problem-international-development-and-plan-fix-it
Thursday, March 30
Lecture 22: The World Bank Required Reading: 1. “The World Bank Group,” Council on Foreign Relations Backgrounder (all sections). http://www.cfr.org/world-bank/world-bank-group/p27990 2. U.S. Opposing China’s Answer to World Bank http://www.nytimes.com/2014/10/10/world/asia/chinas-plan-for-regional-development-bank-runs-into-us-opposition.html
Optional Reading:
1. “Uruguay: The little country that changed tobacco laws.” https://www.evernote.com/l/AUuowuWV4rZEZon7IYeVfsuKj67jonOTxR0
Tuesday, April 4
Lecture 23: Migration and Development: Winners and Losers From Immigration Required Reading: 1. Vox article on open borders. http://www.vox.com/2014/9/13/6135905/open-borders-bryan-caplan-interview-gdp-double 2. Carbaugh, pp. 331-337 (317-323) Optional Reading: 1. Michael Clemens, “Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?”
2. http://www.nytimes.com/2013/05/13/us/san-diego-mayor-building-economic-bridges-to-tijuana.html?hp&_r=0 3. CGD blog post http://blogs.cgdev.org/globaldevelopment/2012/01/two-years-after-haiti%E2%80%99s-catastrophe-it%E2%80%99s-time-to-complement-aid-with-the-most-cost-effective-assistance-migration.php Optional Viewing: Is There a Brain Drain? http://mruniversity.com/courses/development-economics/there-brain-drain
Thursday, April 6 Lecture 24: Migration and Development II Required Reading:
1. Accepting Migrants but Not Offering Rights: http://www.newrepublic.com/article/120179/how-reduce-global-income-inequality-open-immigration-policies 2. Buy a House, Get a Visa http://www.citylab.com/housing/2012/11/buy-house-get-visa-coming-soon-everywhere/3959/
Optional Readings:
1. “Where Refugees Can Come Home” https://www.evernote.com/l/AUtpq00HpmlJF6A4NMaR9hM4Z3w0F123j8I
2. “New poll: Voter worries about immigration mostly aren’t about the economy.” http://www.vox.com/2016/7/6/12098622/immigration-worries-economy-security
Tuesday, April 11 Lecture 25: Global Supply Chains: Complicating Everything You’ve Learned Readings TBD Thursday, April 13
Lecture 26: Charter Cities: How do you design a successful polity? Required Viewing: Paul Romer, Why the World Needs Charter Cities, http://www.ted.com/talks/paul_romer.html Required Listening: “#415 Can a Poor Country Start Over” Planet Money podcast, 11-9-2012. Free to download from itunes or the Planet Money website. Optional Reading: 1. “Robot makers turn to technology industry as next world to conquer” http://www.ft.com/intl/cms/s/0/1ff23f0a-ed5e-11e3-8a1e-00144feabdc0.html?siteedition=intl#axzz34GdI1fSk
Tuesday April 18 Lecture 26: Special Topics: Economic Inequality
Required Reading:
1. How Much Money Could a Land Value Tax Raise? http://www.slate.com/blogs/moneybox/2013/10/17/land_value_tax_revenue_how_much_can_we_raise_by_taking_unimproved_land.html 2. “And the Richest Countries in the World 2040 Are…” http://matthewandrews.typepad.com/mattandrews/2014/07/the-richest-30-countries-in-the-world-in-2040-are.html
6. “A Bigger Economic Pie but a Smaller Slice for Half of the US.”
http://www.nytimes.com/2016/12/06/business/economy/a-bigger-economic-pie-but-a-smaller-slice-for-half-of-the-us.html?_r=0
Thursday, April 20 Lecture 27: Special Topics: Current Policy Debates in the Global Economy. Possible Readings:
1. Planet Money: The Last Bank Bailout http://www.npr.org/sections/money/2016/12/27/507125309/episode-744-the-last-bank-bailout
2. The Opposite of Brexit: The African Union Launches an all-Africa Passport 1. “STRONG DEMAND FOR THINGS POOR PEOPLE SELL SOMEHOW BAD FOR
POOR PEOPLE.” https://boringdevelopment.wordpress.com/2014/07/29/strong-demand-for-things-poor-people-sell-somehow-bad-for-poor-people/
***Paper 2 Due****** Tuesday, April 25 Lecture 28: The Research Frontier in IPE Readings TBD Thursday, April 27 Final Exam Review FINAL EXAM: Tuesday, May 10, 2PM - 4PM