ECON 545
Growth Diagnostics Spring 2023
Division II Quantitative/Formal Reasoning
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Evidence from across the developing world suggests that the “binding constraints” to economic growth can be remarkably heterogeneous–i.e., the growth potential of stagnating or underperforming economies may be unlocked in a large variety of ways. For instance, pre-reform China had been constrained by poor supply incentives in agriculture, whereas Brazil has been held back by an inadequate supply of credit, South Africa by poor employment incentives in manufacturing, El Salvador by insufficient production incentives in tradables, Zimbabwe by bad governance, and so forth. How can developing-country policymakers determine country-specific constraints like these, thus enabling them to pragmatically pursue a selected set of growth-promoting policies rather than attempting to implement a “laundry list” of reforms that are naively based on “best practice” rules-of-thumb? This course will serve as a primer on “growth diagnostics,” an empirically-driven analytical framework for identifying the most binding constraints to economic growth in a given country at a point in time, thereby allowing policymakers to develop well-targeted reforms for relaxing these constraints while being cognizant of the nation’s prevailing economic, political, and social context. The course will first build on the basic theories and empirics of economic growth to elucidate the diagnostic framework and will then employ a wide range of country-specific case studies to demonstrate how the framework can be operationalized for policy making. Throughout the semester, students will be required to work in groups, each representing a given developing or emerging-market economy, in order to build a growth diagnostic for their group’s assigned country by the end of the course.
The Class: Format: seminar
Limit: 19
Expected: 19
Class#: 3691
Grading: no pass/fail option, no fifth course option
Requirements/Evaluation: extensive class participation, two short (5-page) papers, two 15-page team papers comprising a country growth diagnostic, and a team presentation on the diagnostic
Prerequisites: for undergraduates ECON 251, ECON 252, and either ECON 255 or STAT 346
Enrollment Preferences: CDE fellows and senior Economics majors
Distributions: Division II Quantitative/Formal Reasoning
Notes: This course is cross-listed and the prefixes carry the following divisional credit:
ECON 345 Division II ECON 545 Division II
QFR Notes: The course material will be draw heavily on mathematical and statistical models of economic growth and macroeconomic development, and students will be required to routinely develop mathematical models and/or conduct econometric analysis in their assignments.

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