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Professor Sergei Guriev Office
1721-11 The course is to provide a brief overview of modern development economics at the graduate level. We will address the main challenges development economics faces and modern approaches to modelling economic development. There will be no common framework for the course. Rather, we will discuss a a diverse collection of models that refer to various aspects of underdevelopment. The course will complement Economic Growth and Economics of Transition courses with minimum overlaps. The course does not include topics on transition. However, we shall discuss implications that development economics has for Russian economy in its present state including the importance of institutions, the effect. There will be three problem sets and a final exam. Each problem set will contribute 10% and the final exam will contribute 70% to the course grade. NES attendance policies will apply. The
main book for the course is: The book provides an excellent verbal overview of the field. The discussion of relevant models will be based on papers below. Handbook of Development Economics (North Holland Elsevier, Amsterdam 1989) may be also useful though it is somewhat outdated. 1.Development: facts and figures
Ray. Ch 1-2. World Development Report, various issues.
Ray. Ch 3,4,8 Nelson, Richard (1956). “A theory of the low-level equilibrium trap in underdeveloped economies”. American Economic Review. Azariadis, Costas and Allan Drazen (1990). “Threshold externalities in economic development.” Quarterly Journal of Economics. Ben-David, Dan (1997). “Convergence clubs and subsistence economies.” CEPR Discussion Paper No. 1745. 2. Industrialization and the Big Push: the challenge of market size Ray, Ch.5 Murphy, Kevin, Andrei Shleifer and Robert Vishny (1989). “Industrialization and the Big Push” Journal of Political Economy. Matsuyama, Kiminori (1995). “Complementarities and cumulative processes in models of monopolistic competition.” Journal of Economic Literature. 3. Contract enforcement and corruption 3.1 Economic organization. Stiglitz, Joseph (1989). “Economic organization, information and development.” Handbook of Development Economics, Vol.1. Greif, Avner (1993). “Contract enforceability and economic institutions in early trade: the Maghribi traders coalition.” American Economic Review. Greif, Avner, Paul Milgrom and Barry Weingast (1994). “Coordination, commitment and enforcement: the case of the merchant guild.” Journal of Political Economy. 3.2 Corruption and development. Bardhan, Pranab (1998). “Corruption in developing countries: a review of issues”, Journal of Economic Literature. Mauro, Paulo (1995). Corruption and growth, Quarterly Journal of Economics. Tirole, Jean (1996). “A theory of collective reputations.” Review of Economic Studies. 4. Inequality and growth
Ray, Ch.6-7 Forbes, Kristin (2000). A Reassessment of the Relationship Between Inequality and Growth, American Economic Review, Sep 2000. Banerjee, Abhijit and Esther Duflo (2000). Inequality and Growth: What Can the Data Say? Mimeo, MIT. Alesina, Alberto and Dani Rodrik, “Distributive politics and economic growth”, Quarterly Journal of Economics, 1994. Benabou, Roland (1996). “Inequality and growth”, NBER Macroeconomics Annual, MIT press 11-74.
Ray, Ch.14 Banerjee, Abhijit and Andrew Newman (1993) “Occupational choice and the process of development”, Journal of Political Economy. Aghion, Philippe and Patrick Bolton (1997) " A Theory of Trickle-Down Growth and Development", Review of Economic Studies, April 1997. 5. Political economy of reform Alesina, Alberto and Allan Drazen (1991). “Why are stabilizations delayed?”, American Economic Review. Fernandez, Raquel and Dani Rodrik (1991). “Resistance to reform: Status quo bias in the presence of individual-specific uncertainty”, American Economic Review. 6. Openness and economic development Ray. Ch. 17-18 Edwards, Sebastian (1993). “Openness, trade liberalization, and growth in developing countries.” Journal of Economic Literature. Rodriguez, Francisco and Dani Rodrik (1999) Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence, NBER Working Paper No. 7081. Krugman, Paul (1987). The narrow moving band, the Dutch dsiease and the competitive consequences of Mrs. Thatcher: notes on trade in the presence of dynamic scale economies. Journal of Development Economics. 7. Debt crisis and East Asian miracle Sachs, Jeffrey (1989). The debt overhang of developing countries.” In Debt Stabilization and Development, UN University Press, 1989. Krugman, Paul (1988). "Financing v. forgiving a debt overhang,' Journal of Development Economics, 253-268. 8. East Asian miracle and crisis Krugman, Paul (1995). “A myth of Asia’s miracle.” Foreign Affairs. Young, Alwin (1995). “The tyranny of numbers.” Quarterly Journal of Economics, 1995. Krugman, Paul (1998). “What happened in Asia?” mimeo, MIT.
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