Economic Growth and Development

2022/2023

Academic Year

ENG

Instruction in English

3

ECTS credits

Delivered at:

Department of Applied Economics

Course type:

Elective course

When:

3 year, 3 module

Instructor

Besstremyannaya, Galina

Course Syllabus

Abstract

The purpose of this applied course is to review major theoretical models of economic growth and to study their implementation in the developed and developing countries. The course includes a macro-level part (related to growth, technological change, inflation, human capital, poverty etc. at the aggregate level of the country) and a micro-level part (associated with individual/household/firm-level analysis of labor market behavior, production, consumption, educational choices etc.). The course uniquely focuses both on the issues of the catch-up growth by middle/low income countries and on the current economic concerns of the high-income countries. The latter include the development of the technology economy, the decrease of inequality across individuals and companies, stimuli for R&D investment and protection of intellectual property rights, promotion of energy efficiency and the use of environmentally friendly technologies. The course draws upon the experience of the US, EU, Japan and the BRICS countries. Special features of the course are the emphasis on applied econometric techniques and the work with macro and micro datasets in attempt to replicate journal articles on growth and technological change in various countries. Topics in the end of the course deal with economic growth in Russia. • Applicability of exogenous and endogenous growth models to Russian economy: growth decomposition, capital intensity and total factor productivity; technological growth and strategic development through innovation. • The dependence of the economy on the natural resources and evidence on the presence of Dutch disease in Russia. • Wages and returns to education in Russia in 1990s and 2000s, the comparison with the US and East-European countries. There are two homework assignments (econometric estimations with macro datasets), a midterm test (a combination of theoretical questions and econometric estimations) and a final test (theoretical questions). Final grade: homework 1 (15%), homework 2 (25%), midterm (20%), final exam (40%). Prerequisites: Introductory courses in Macroeconomics, Microeconomics and Econometrics.

Learning Objectives

• The purpose of this applied course is to review major theoretical models of economic growth and to study their implementation in the developed and developing countries. The program of the course goes beyond the exogenous growth models analyzed in the core macroeconomic courses and incorporates various versions of endogenous growth models, where the growth is explained by the behavior of the firms and/or by the policy of the government.

Expected Learning Outcomes

• The students will learn modern approaches to modeling economic growth and technological change, the methods of applied economic analysis of the policy changes in various countries, the examples of policy interventions and the determinants of their success, the causes and consequences of poverty and inequality. The students will also learn key issues related to fostering economic growth.

Course Contents

• Gross domestic product and production
• Heterogeneity in economic growth: does initial level of per capita GDP matter?
• Exogenous growth models: theoretical review
• Empirical evaluation of the country’s growth in the framework of exogenous growth models.
• Models of endogenous growth
• Empirical estimation of growth motivated by endogenous growth models
• The analysis of company growth.
• Human capital and labor markets
• Empirical estimation of growth in Russia

Assessment Elements

• homework 1
  • Homework assignments Homework is individual work (no group work is allowed). Student’s work during the course is largely focused on studying various aspects of economic growth in a country chosen by the student. Each student may choose any country for such work. Homework assignment will require applying the textbook codes from Soderbom et al. (2015) to these most recent data series for this country. There will be 2 homework assignments and the tentative topics are: - Estimating time profiles of total factor productivity and conducting growth decomposition with country-level data. - Measuring growth equations and evaluating the impact of inflation in a country/countries. The in-class empirical assignments at sections will cover such topics as - Estimating production function on the company level. - Estimating wage equations and measuring returns to education using micro-data on individuals.
• homework 2
  • Homework assignments Homework is individual work (no group work is allowed). Student’s work during the course is largely focused on studying various aspects of economic growth in a country chosen by the student. Each student may choose any country for such work. Homework assignment will require applying the textbook codes from Soderbom et al. (2015) to these most recent data series for this country. There will be 2 homework assignments and the tentative topics are: - Estimating time profiles of total factor productivity and conducting growth decomposition with country-level data. - Measuring growth equations and evaluating the impact of inflation in a country/countries. The in-class empirical assignments at sections will cover such topics as - Estimating production function on the company level. - Estimating wage equations and measuring returns to education using micro-data on individuals.
• midterm
  Midterm is an open book 40 minute test. Midterm will be a quiz with a list of questions on the general knowledge of the course (see samples below) and an empirical exercise which will require to conduct econometric estimations in class.
• final exam
  The final tests will consist of a list of open questions, which cover the material of the lectures and sections. Final test is an closed book 1 hour 20 minute test.

Interim Assessment

• 2022/2023 3rd module
  0.15 * homework 1 + 0.2 * midterm + 0.25 * homework 2 + 0.4 * final exam

Bibliography

Recommended Core Bibliography

• Development economics, Ray, D., 1998
• Empirical development economics, Soderbom, M., 2015

Recommended Additional Bibliography

• Contemporary issues in development economics, , 2001
• Introduction to modern economic growth, Acemoglu, D., 2009