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PA - C4B - ECO583 : Business Economics

Domaine > Economie.


ECO 583 Growth theory and Development

This course is the first half of the course ”Growth and Development” taught jointly by Eric Strobl and Francis Bloch. One way to think about the difference between the ”Growth Theory” part of the course and the ”Development Economics” part is that the former is more ”macro” and the latter more ”micro”. Nevertheless both sections deal with similar issues and the tools/papers studied in both sections are complementary. It is assumed that all students have followed a graduate level course in macroeconomics and are familiar with the tools of dynamic programming. The objectives of the course are the following :
· To present the basic workhorse models of the field
· To review empirical evidence, confront the evidence with the theory and identify research challenges.
This course will cover several of the main topics current in the fields of growth and development economics.

List of topics :
1. Business cycles vs. long-run growth. Evidence. Factor accumulation, the Solow model and convergence.
2. Endogenous population growth, Solow vs. Malthus.
3. Human capital: Extending the Solow model. Externalities and the Lucas puzzle.
4. Optimization in continuous time (Hamiltonians): refresher. Research and Development, and the Romer model. Scale effect: implications and evidence.
5. Evolution of the literature on a number of growth-related issues.
6. Growth and development.
7. The role of institutions and history.
8. Poverty.
9. Civil Conflict.
10. Health and Economic Development.
11. Labor markets.
12. Intra-Household Allocation of Resources in Developing Economies
13. The Role of Trade in Economic Development

Organization of the course:
Each half of the course is graded out of 100 marks. As far as the "Growth Theory" section is concerned, the 100 marks are divided as follows:

2 short Problem Sets graded out 10 marks each
1 long Problem Set graded out 20 marks
1 open book exam graded out 60 marks

Course Content

Lecture 1:
· Intoduction
Business cycles vc. long run growth
Some cross-sectional and time series evidence

· Factor accumulation
Solow model

-Cost of Business Cycles with Indivisibilities and Liquidity Constraints; By Imrohoroglu, Ayse; Journal of Political Economy, December 1989, v. 97, iss. 6, pp. 1364-83
-On the Evolution of the World Income Distribution; by Jones, Charles; Journal of Economic Perspectives, Summer 1997, pp. 19-36
-"Population Growth and Technological Change: One Million B.C. to 1990"; by Kremer, Michael, Quarterly Journal of Economics, August 1993, pp. 681-716
-"Technical Change and the Aggregate Production Function"; by Solow, Robert; Review of Economics and Statistics, August 1957, pp.312-320

Lecture 2:
· Optimization in continuous time (Hamiltonian)

Lecture 3:
· Problem Set 1 (short)
· Factor accumulation (continued)
Endogenous population growth
· Human Capital
Extending the Solow model
Evidence (part 1)

-Economic Growth in a Cross Section of Countries; By Barro, Robert J.; Quarterly Journal of Economics, May 1991, v. 106, iss. 2, pp. 407-43
-"Malthus to Solow"; by Hansen, Gary and Edward Prescott; American Economic Review, September 2002, pp. 1205-1217
-"Population, Technology, and Growth: from Malthusian Stagnation to the Demographic Transition and Beyond"; by Galor, Oded and David Weil; American Economic Review, September 2000, pp. 806-828
-"A Contribution to the Empirics of Economic Growth"; by Mankiw, G., David Romer and David Weil ; Quarterly Journal of Economics; May 1992; pp. 407-437
-"Does Schooling Cause Growth?"; By Bils, Mark; Klenow, Peter J.; American Economic Review, December 2000, v. 90, iss. 5, pp. 1160-83

Lecture 4:
· Problem Set 2 (short)
· Human Capital (continued)
Externalities: evidence and applications
The Lucas puzzle

-Productivity Gains from Geographic Concentration of Human Capital: Evidence from the Cities; By Rauch, James E.; Journal of Urban Economics, November 1993, v. 34, iss. 3, pp. 380-400
-Why Doesn't Capital Flow from Rich to Poor Countries?; By Lucas, Robert E., Jr.; American Economic Review, May 1990, v. 80, iss. 2, pp. 92-96

Lecture 5:
Learning by doing and openness to trade

-Lucas, R.E. Jr., 1988, On the Mechanics of Economic Development, Journal of Monetary Economics 22 (1), 3-42
-Stokey, N.L., 1988, Learning by Doing and the Introduction of New Goods, Journal of Political Economy 96(4), 701-717.
-Young, A., 1991, Learning by Doing and the Dynamic Effects of International Trade, Quarterly Journal of Economics 106(2), 369-405.
-Goh, A.T. and J. Olivier, 2002, "Learning by Doing, Trade in Capital Goods and Growth", Journal of International Economics, Vol 56, pp. 411-444

Lecture 6:
· Research and Development
The Romer model

"Endogenous Technical Change", by Romer, Paul; Journal of Political Economy; October 1990 ; pp. S71-S102

Lecture 7:
· Problem Set 3 (long)
· Research and Development (continued)
Scale effect: implications and evidence

Lecture 8:

Course taught in English

-"Economic Integration and Endogenous Growth", by Rivera Batiz, Francesco and Paul Romer; Quarterly Journal of Economics 1991, pp. 531-556
-Trade, Growth and Poverty; By Dollar, David; Kraay, Aart; Economic Journal, February 2004, v. 114, iss. 493, pp. F22-49
-Evidence on Growth, Increasing Returns and the Extent of the Market; By Ades, Alberto F.; Glaeser, Edward L.; Quarterly Journal of Economics, August 1999, v. 114, iss. 3, pp. 1025-45
-Time Series Tests of Endogenous Growth Models; By Jones, Charles I.; Quarterly Journal of Economics, May 1995, v. 110, iss. 2, pp. 495-525

Langue du cours : Anglais

Credits ECTS : 4

Format des notes

Numérique sur 20

Littérale/grade réduit

Pour les étudiants du diplôme Economics, Data Analytics and Corporate Finance

Le rattrapage est autorisé
    L'UE est acquise si note finale transposée >= C
    • Crédits ECTS acquis : 4 ECTS

    Pour les étudiants du diplôme Smart Cities and Urban Policy

    Le rattrapage est autorisé
      L'UE est acquise si note finale transposée >= C
      • Crédits ECTS acquis : 4 ECTS

      Pour les étudiants du diplôme Diplôme d'ingénieur de l'Ecole polytechnique

      Le rattrapage est autorisé
        L'UE est acquise si note finale transposée >= C
        • Crédits ECTS acquis : 5 ECTS
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