Journalism 499



IR331: The Global Economy 2030

Fall 2014

(revised 9/7/2014)

Professor: John Eatwell

Email je24@cam.ac.uk

Office: KAP360

Office Hours Tuesdays 4:00-5:00 and by appointment

Class: TT 2:00 - 3:20

Professor: Jonathan D. Aronson

Email aronson@usc.edu

Office: KER206 but will meet in VKC

Office Hours Tuesdays 3:30-5:00 and by appointment

Class: TT 2:00 - 3:20

The Global Economy 2030

This is not a course in prediction or even crystal ball gazing - leave that to the fortune- tellers. Precise economic predictions around 20 years ahead are almost invariably wrong (just think of what someone in 1990 would have predicted for the global economy when there was no such thing as a digital telephone, and the Chinese economy was about a 10% of the size it is today). Instead, what the course seeks to do is to identify some of the main forces that will shape the global economy in 2030, to provide a “tool-kit” for evaluating those forces, and to suggest some ways in which they may work out. (You are certainly free to contest our suggestions).

Along the way a significant amount of macroeconomics and finance will be covered. But this will be integrated with a discussion of practical issues in the global economy. A major part of the course will be about the US (after all, the US is the largest economy in the world). But the recent financial crisis has taught, if it wasn’t realized before, that the performance of the US is not independent of the performance of the global economy as a whole.

John Eatwell anchors the course with first set of lectures – introducing the basic analytical concepts needed to start to understand what is happening in the global economy. Jonathan Aronson will then take over, preparing, on most Tuesdays, the discussion that will take place with visiting speakers on Thursdays.

Guest Lecturers will include:

Blythe Masters on Risk and Financial Markets (10/9)

Mohamed El-Erian on the US Economy (10/14)

Thorsten Becker (USC) on Resources (10/24)?

Yael Wolinsky-Nahmias (USC) on Environmental Policy (10/31) ?

Special Guest Lecturer on Foreign Affairs and the Economy (11/6)

Baizhu Chen (USC) on the Challenge of China (11/14) ?

Jamie Galbraith (University of Texas, Austin) on Inequality (11/20)

Peter Cowhey (UCSD) on Disruptive Technology (11/21) ?

Requirements:

1) 40% of your grade will be based on two closed-book, mid-term examinations that will cover the content of the readings and lectures.

(Examinations in Class on September 11th (20% of grade) and October 2nd (20% of grade)

2) 20% of your grade will be based on the final examination (a non-cumulative exam that is in effect a third mid-term) on December 11th.

3) 30% of your grade will be based on a final project paper. Due in class on December 4th

4) 10% of you grade will be based on class participation.

Required Books for the Global Economy 2030

John Eatwell and Lance Taylor (2000) Global Finance at Risk: the case for international regulation, The New Press

John Eatwell and Murray Milgate (2011) The Fall and Rise of Keynesian Economics. Oxford University Press

Barry Eichengreen (2011) Exorbitant Privilege: the rise and fall of the dollar. Oxford University Press

Mariana Mazzucato (2013) The Entrepreneurial State: debunking public vs. private sector myths. Anthem Press.

Raghuram G. Rajan (2010) Fault Lines: how hidden fractures still threaten the world economy. Princeton University Press

Anat Admati and Martin Hellwig (2013) The Bankers’ New Clothes: what’s wrong with banking and what to do about it. Princeton University Press

Eswar S. Prasad (2014) The Dollar Trap: how the US dollar tightened its grip on global finance. Princeton University Press

Reference

For basic concepts in macroeconomics it may prove valuable to refer to a basic textbook, such as N. Gregory Mankiw, Principles of Macroeconomics

Your Project Paper/Report

A description of possible project topics will be provided in class in early October. Students may undertake a topic not on the initial list if first approved by the faculty. We are considering, but have not yet decided, whether to permit group projects.

Academic Integrity:

The School of International Relations is committed to upholding the University’s Academic Integrity code as detailed in the Scampus Guide. It is the policy of the SIR to report all violations of the academic code. Any serious violation or pattern of violations of the Academic Integrity Code will result in the student’s expulsion from the International Relations major or minors. The University may also decide on further consequences.

Disability Accommodation:

Students requesting academic accommodations based on disability are required to register with Disability Services and Programs (DSP) each semester.  A letter of verification for approved accommodations can be obtained from DSP when adequate documentation is filed.  Please be sure the letter is delivered to me as early in the semester as possible.  DSP is open M-F, 8:30-5:00pm.  The office is in STU 301 and their phone is 740-0776.

Part I: The toolkit – concepts and methods for analyzing economic trends

Week 1:

Aug 26: Session One: The Problem: Thinking about the Global Economy 2030 (JE)

Eatwell and Taylor, Global Finance at Risk, pp. 1-28.

See also the talk by Adair Turner listed under Session Twenty-Eight

Aug 28: Session Two: Economic Categories: National Income, Growth and Distribution (JE)

National Income Accounting (simple) MACROECON/PPTs/Chap005.ppt

Barry Wickes, Lecture Notes on National Income Accounting, (more difficult)

Mankiw, Macroeconomics, Chapter 10

Week 2:

Sept 2: Session Three: Money, Finance and Interest Rates (JE)

Mankiw, Macroeconomics, (Chapter 13 and 14).

Rajan, Fault Lines, pp. 101-153. (Chapters 5-7).

Sept 4: Session Four: The determination of economic output (JE)

Mankiw, Macroeconomics, (Chapters 20 and 21)

Eatwell and Milgate, The Fall and Rise of Keynesian Economics. Preamble, and Chapters 1, 8-10.

Week 3:

Sept 9: Session Five: The distribution of income (JE)

Rajan, Fault Lines, pp. 21-45, 83-100 (Chapters 1 and 4).

Thomas Piketty, Capital in the Twenty-First Century, Harvard University Press, 2014 (Chapters 7 and 8), pp. 237-303.

Gillian Tett, “An unequal world is an uncharted economic threat”, 4th September 2014.

Sept 11: Session Six: First mid-term exam

Week 4:

Sept 16: Session Seven: International Monetary Policy (JE)

Mankiw, Macroeconomics, Chapters 18 and 19.

Eichengreen, Exorbitant Privilege, pp. 1-96. (Chapters 1-4)

Prasad, The Dollar Trap, Parts One and Two

Eatwell and Taylor, Global Finance at Risk, pp. 29-95, (Chapters 2 and 3).

Sept 18: Session Eight: The Financial Crisis and the Future of Finance (JE)

Admati and Hellwig, The Bankers’ New Clothes, Part I and Part III

Week 5:

Sept. 23: Session Nine: International Trade and Finance (JE)

Eatwell and Taylor, Global Finance at Risk, pp. 54-179, (Chapters 3-5).

Rajan, Fault Lines, pp. 46-67, Chapter 2.

Sept 25: Session Ten: Excess Savings or Excess Elasticity – International Finance and the US boom and bust. (JE)

Claudio Borio and Piti Disyatat, Global imbalances and the financial crisis: Link or no link? BIS Working Papers No 346.



Ben Bernanke, Carol Bertaut, Laurie Pounder DeMarco, and Steven Kamin International capital flows and the returns to safe assets in the United States, 2003-2007, Board of Governors of the Federal Reserve System, International Finance Discussion Papers Number 1014, February 2011.



Week 6:

Sept 30: Session Eleven: The Role of the State (JE)

Eatwell and Milgate, The Fall and Rise of Keynesian Economics, Chapters 6,7 and 12.

Mazzucato, The Entrepreneurial State, Chapters 1, 2, 4 and 5.

Oct 2: Session Twelve: Second Midterm Exam

Part II: Issues and Guest Lectures

Week 7:

Oct 7: Session Thirteen: (JA) Booms, Bubbles, and Busts in History

Avinash Persaud (with M. Brunnermeier, A. Crockett, C. Goodhart and H. Shin), (2009) The Fundamental Principles of Financial Regulation, Chapters 1,2,3 and 8. .

Tim Harford, “How to see into the future”, Financial Times, 5th September 2014,

Oct 9: Session Fourteen: Guest Lecture Blythe Masters on Risk

Eatwell and Taylor, Global Finance at Risk, pp. 180-239 (Chapters 6 and 7)

Rajan, Fault Lines, pp. 202-224, (Chapter 10).

Week 8:

Oct 14: Session Fifteen: Guest Lecture Mohamed El-Erian on the US economy.

Eichengreen, Exorbitant Privilege: the rise and fall of the dollar, pp. 97-177 (Chapters 5-7).

“Is Europe’s debt crisis a “Lehman Moment” for America?”

Read from El-Erian’s blog, and: “U.S. Downgrade Heralds a New Financial Era” at

Oct 16: Session Sixteen: (JA): Driver: Demography and Migration

Watch TED Talk: Jared Diamond: How societies can grow old better



Week 9:

Oct 21: Session Seventeen: (JA) Driver: Water

Watch TED Talk by Allan Savory: “How to fight desertification and reverse climate change,” at

Ben Sutherland, “Water shortages 'foster terrorism'”

Oct 23: Session Eighteen: Guest Lecture: (?) Thorsten Becker (USC) on Resources

Watch: TED Talk by Amory Lovins, “A 40-Year Plan for Energy,”

Read: Amory Lovins, Energy Efficiency: The Secret Revolution,” (Blackboard).

Week 10:

Oct 28: Session Nineteen: (JA) Driver: Environment and Climate Change

Read: Introductory Essay on Climate Change at: and

Watch: James Hansen, “Why I must speak out about climate change,” at

Oct 30: Session Twenty: Guest Lecture (?) Yael Wolinsky-Nahmias (USC) on Environmental Policy

Review: Environmental Policy, Scientific American, August 2014,

Week 11:

Nov 4: Session Twenty-one: (JA) Driver: International Linkages and Challenges(JA)

Dick Nanto and Michael Donnelly U.S. International Trade: Trends and Forecasts, Congressional Research Service, (2011).

Nov 6: Session Twenty-two: Special Guest Lecture on Foreign Affairs as a Driver of the Global Economy

Week 12:

Nov 11: Session Twenty-three: (Driver) Innovation and Technology (JA)

Peter F. Cowhey, The Third Wave: Innovation and Public Policy, Draft: July 2014. (Most recent draft will be provided)

WATCH: Dan Breznitz, Strategies for Innovation Based Growth (Online at: )

Nov 13: Session Twenty-four: Guest Lecture: Peter Cowhey (UCSD) on Disruptive Technology

Craig Lambert, “Disruptive Genius: Innovation guru Clayton Christensen on spreading his gospel, the Gospel, and how to win with the electric car,” Harvard Magazine, July-August 2014. ( or provided by instructor.

Jill Lepore, “The Disruption Machine: What the gospel of innovation gets wrong, The New Yorker, June 23, 2014 (

Week 13:

Nov 18: Session Twenty-five: (JA) Driver: Jobs and Productivity

Watch TED Talk: Andrew McAfee: What will future jobs look like?:

Nov 20: Session Twenty-six: Guest Lecture: Jamie Galbraith (University of Texas, Austin) on Inequality

Peter Diamond and Emmanuel Saez, 2011. “The Case for a Progressive Tax: From Basic Research to Policy Recommendations,” Journal of Economic Perspectives, 25(4): 165-190.

Thomas Piketty, Capital in the Twenty-First Century, Harvard University Press, 2014 (Chapters 9 and 10), pp. 304-376.

Week 14:

Nov 25: Session Twenty-seven: (Driver) The Web, the Cloud, and Social Networking (JA)

Kenneth Neil Cukier and Viktor Mayer-Schoenberger “The Rise of Big Data: How It's Changing the Way We Think About the World, Foreign Affairs, May/June 2013.

Nov 27: Thanksgiving: No Class

Week 15:

Dec 2: Session Twenty-eight: Rethinking economic policy (JE)

Adair Turner, Wealth, debt, inequality and low interest rates: four big trends and some implications,

Slides associated with this lecture are available at:

Dec 4: Session Twenty-nine: Summing-up (JA)

Dec 11: Thursday, 2-4 pm FINAL EXAMINATION

Maybe Nov 25 or Dec 4: Session Twenty-four: Guest Lecture: (?) Baizhu Chen (USC) on the Challenge of China

Dong He and Robert McCauley, Eurodollar banking and currency internationalisation,



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