Lahore University of Management Sciences. ECON 4410 Issues in Economic Policy

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1 ECON 4410 Issues in Economic Policy Fall 2013 Instructor Nazish Afraz, Ijaz Nabi Room No. 252 Office Hours Nazish: Wednesday 11am-12noon; Ijaz Nabi: by appointment Telephone Ext Secretary/TA TBA TA Office Hours Course URL (if any) Course Basics Credit Hours 4 Lecture(s) Nbr of Lec(s) Per Week 2 Duration 100 minutes Recitation/Lab (per week) Nbr of Lec(s) Per Week 0 Duration Tutorial (per week) Nbr of Lec(s) Per Week 0 Duration Course Distribution Core Elective Open for Student Category Close for Student Category Yes Junior/Senior COURSE DESCRIPTION The aim of this course is to give a flavour of the issues that concern real world economists in developing countries. We will look at welfare outcomes of interest to policy makers, and specifically at empirical techniques used in policy evaluation, limitations and lessons. Within each welfare topic, we will also discuss current policy and initiatives in Pakistan. COURSE PREREQUISITE(S) Statistics Econometrics Microeconomics Development Economics COURSE OBJECTIVES To provide an understanding of empirical techniques used in impact assessments To provide an overview of topics specifically related to developing countries, in particular to familiarize students with current debates and developments in the chosen topics To generate discussion on the external validity and applicability of the papers studied to Pakistan To familiarize students with reading journal articles and reports

2 Grading Breakup and Policy Term paper [25%]: There will a term paper of 2000 words, written in groups of 5. Presentation: [10%] Quizzes [15%]: There will be 4 announced quizzes the best 3 will be counted. Class Participation [15%] Final [35%] Examination Detail Midterm Exam There is no midterm for this course Final Exam There will be a comprehensive, closed book final exam of 2.5 hours. Lecture Topics Required Readings Banerjee, Abhijit. "Big Answers for Big Questions: The Presumption of Growth Policy." Paper for the Brookings conference on "What Works in Development? Thinking Big and Thinking Small." (2008). 1. Introduction Dugger, W. Celia, For Health Care Zimbabweans make a deal, International Herald Tribune, December, 20, Review of statistics and econometrics Wooldridge, Jeffrey M. Introductory Econometrics: A Modern Approach (2009) Chapter 1 3. Methods Duflo, Glennerster and Kremer (2006) Using Randomization in Development Economics Research: A Toolkit 4. Education I Case, Anne The primacy of Education Chapter 18 in Understanding Poverty, A. Banerjee, R. Benabou, D. Mookherjee (eds.), pp , Oxford University Press (2005) Duflo, Esther. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment." American Economic Review 91, no. 4 (2001): Education II Paul Schultz, T. "School subsidies for the poor: evaluating the Mexican Progresa poverty program," Journal of Development Economics, Elsevier, vol. 74(1), (2004): Education III Duflo, Esther, Pascaline Dupas, and Michael Kremer. "Peer Effects, Pupil Teacher Ratios, and Teacher Incentives: Evidence from a Randomized Evaluation in Kenya." (2007). Andrabi, T, Das, J and Asim A. Khwaja Education Policy in Pakistan: A Framework for Reform (2010)

3 LEAPS project: Executive summary and Thoughts for discussion and debate 7. Health I Millennium Development Goals Report, Pakistan 2010 Banerjee, Abhijit, Esther Duflo, Rachel Glennerster and Dhruva Kothari. "Improving Immunization Coverage in Rural India: A Clustered Randomized Controlled Evaluation of Immunization Campaigns With and Without Incentives." Massachusetts Institute of Technology, Cambridge, MA, (2008). 8. Health II Jensen, Robert T., and Nolan Miller. "Do Consumer Price Subsidies Really Improve Nutrition?" Center for International Development Working Paper No. 160, Harvard University, (2008). Dow, Will, et al. "Health Care Prices, Health and Labor Outcomes: Experimental evidence." RAND Labor and Population Program Working Paper Series 97 01, DRU 1588 NIA, (1998) _pg3_6 food prices too high un.html 9. Health III Miguel, Edward, and Michael Kremer. "Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities." Econometrica 72, no. 1 (2004): Social Protection I Benazir Income Support Program. Presentation, Government of Pakistan Social Protection in Pakistan: In the midst of a Paradigm Shift? Haris Gazdar, Economic and Poltical Weekly, July 9, 2011 Graduation Strategies for Safety Net Beneficiaries, R.G. Hermosillo and Asad Sayeed Social Protection II: Skills development I Skills development II Upgrading worker skills, Chapter 7 in Towards A Prosperous Pakistan: A Strategy for Rapid 8Industrial Growth, Ministry of Industries, Production and Special Initiatives, Government of Pakistan, 2005., Regional Trade I Pakistan Business Council: Regional trade panel report, April Trading with the enemy in Sajal Lahiri, Regionalism and Globalization, Theory and Practice, Routledge, 2001 Regional Trade II Energy I Energy Security Plan Presentation to the Planning Commission by Secretary Ministry of Petroleum and Natural Resources, 2008 Round Table on water and Power Sectors, Presentation by Ministry of Water and Power, Government of Pakistan, 2008

4 17. Energy II Student Presentations Lahore University of Management Sciences Gender I Gender II Duflo Esther, Gender Equality and Development, BREAD Policy Paper, (2005). Qian, Nancy. "Missing Women and the Price of Tea in China." Quarterly Journal of Economics 123, no. 3 (2008): Duflo, Esther and Petia Topalova (2004) Unappreciated Service: Performance, Perceptions, and Women Leaders in India 20. Intra-household Bargaining Duflo, Esther. "Grandmothers and Granddaughters: Old Age Pension and Intra household Allocation in South Africa." World Bank Economic Review 17, no. 1 (2003): Child Labour 1 Udry, Christopher Child Labor (in Understanding Poverty 2006 ed. Abhijit Banerjee, Roland Benabou, Dilip Mookherjee) Beegle, Dehejia, Gatti (2002) Do households resort to child labor to cope with income shocks? Columbia University Discussion Paper Series # Child Labour 2 Fasih, Tazeen (2007) Analyzing the Impact of Legislation on Child Labor in Pakistan World Bank Policy Research Working Paper 4339 Good Practice ILO articles: Addressing poverty to eliminate child labour in post crisis settlings (Pakistan) From bondage to schools in brick kilns (Tamil Nadu) Eliminating child labour in the jermal fishing industry (Indonesia) Cooperating out of child labour (Karnataka, India) 23. Land I Jacoby H. G. and Mansuri Ghazala, Incomplete Contracts and Hold up: Land Tenancy and Investment in Rural Pakistan, CEPR Discussion Papers, (2006). 24. Land II Banerjee, Abhijit, Paul Gertler and Maitresh Ghatak. "Empowerment and Efficiency: Tenancy Reform in West Bengal." Journal of Political Economy 110, no. 2 (2002): Credit I Esther Duflo, Abhijit Banerjee, Rachel Glennerster and Cynthia Kinnan, The Miracle of Microfinance: Evidence from a Randomized Evaluation, MIT Department of Economics and NBER, (2010) 26. Credit II Khwaja, Asim, and Atif Mian. "Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market." Quarterly Journal of Economics 120, no. 4 (2005): Savings Ashraf, N., D. Karlan and W. Yin (2006). "Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines." Quarterly Journal of Economics 121(2): The Economist. The Economics of Savings. The Economist. London: Apr 9, Vol. 375, Iss. 8421; pg. 61 Karlan, Dean (2008). The Impact of Savings. The Financial Access Initiative. Framing Note No. 1.

5 28. Case Study Lahore University of Management Sciences Review and practical application of some of the key concepts acquired during the course Textbook(s)/Supplementary Readings The course material is constructed entirely from journal articles listed above. The articles will be uploaded on LMS. Although there is no textbook reading required for this course, Debraj Ray s Development Economics provides a good background and overview for most of the topics covered.