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Instructor: |
606 Krannert Bldg. |
494-4235 (o) |
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Secretary: |
Marsha Slopsema |
607 Krannert Bldg.
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494-4310 (o) |
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Class Meetings: |
T Th noon-1:15 in Rawls 1071 |
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Class Website: |
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Office Hours: |
MWF noon-1:00 in my office; drop-ins welcome at other times |
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Course description and objectives. In this course we analyze how the agricultural sector changes over time, interacting with government policies in both the farm and nonfarm sectors. Our goal is to explain and predict major trends and differences across countries, using economic theory to explain and predict what governments will do and how the food and farm sectors are likely to respond.
Prerequisites. The course is designed for first-year graduate students. There are no specific prerequisites, but more advanced students with stronger backgrounds in economics will be able to apply that knowledge in the context of this course. Readings are intended to be accessible for all graduate students, and can be interpreted at various levels of depth.
Structure. The course begins with a brief overview of the major policy issues and drivers of change in the food and agricultural sector around the world. We then spend the bulk of the semester building up the analytical methods and results developed by economists to explain and predict household choices, market outcomes and government policies, starting with farm households’ decisions over production, consumption and trade. We consider the role of biological constraints, first for nutrition and health, and then for farm productivity, and ask how those constraints can be overcome through technology and specialization. We ask how market prices are formed, how market outcomes respond to various kinds of changes, and what (if anything) we can infer from those outcomes about changes in the well-being of market participants. We then examine the evidence on what governments actually do across countries and over time, and try to explain those interventions in economic terms. The focus of the course is on these modern “political economy” explanations of policy choices, in which government actions are explained as the result of equilibrium among optimizing people in both the public and private sectors. The course concludes with presentation and discussion of student projects.
Readings. A complete course packet will be available; some readings are also on-line, with links provided from this syllabus and the course website.
Course requirements and grading. Grades are based on three homework assignments (10% each), a mid-term and final exam (20% each), and a course project (30%). Links to the three homework exercises are included in the electronic version of this syllabus; opening those documents online offers you live links to the data sources need to complete the assignment. For convenience, printed versions of the homework assignments are also included in the reading packet. The two exams will cover material from both the readings and the lectures, for which slides will be posted online on the day of each lecture. The final exam will be comprehensive, covering both halves of the course.
The course project. Your semester-long project is expected to be an analytical review of the literature on a researchable question. This will help you get started on a thesis or other research paper, offering the chance to conduct a deeper analysis of the existing literature than might otherwise be possible. A few students already have access to interesting data and an appropriate method, in which case you may wish to produce an original research paper instead of a literature review.
I can advise you on what topics are likely to prove most fruitful. Often I will encourage you to do this course project on the same topic as other work you are pursuing so as to specialize and achieve a deeper level of analysis, but sometimes it is preferable to diversify and start research on something new.
The final result of the project is a written report about five thousand words in length (15-20 double-spaced pages, plus charts and tables). You will also present the result in class, using a maximum of six slides. The written version can be longer, if more detail is justified. For class presentation the six-slide limit will be strictly enforced, to help you practice distilling results into a very brief message that can be communicated visually and in person.
To make the project as productive as possible, we will proceed in stages. Immediately after the midterm exam and October break, you must submit a brief description of your chosen topic so we can discuss it in class (October 21st). This will allow you to learn from others’ topics and modify your goals accordingly. You must then submit a rough first draft to me for comments (on November 18th), well before the in-class presentations (on December 2nd and 4th). The final written literature review is due on the Friday before finals week (December 12th).
CLASS TOPICS AND READINGS
Optional Background Materials (not required, not in readings packet)
World Bank, World Development Report 2008: Agriculture for Development. Washington, DC: The World Bank, 2008.
Week 1. Introduction and background
8/26 What’s ahead? Introduction to Agricultural Development and Policy [+ my questionnaire]
8/28
Some context: The
world food crisis of 2007-08
Readings:
· Trostle, Ronald, “Global Agricultural Supply and Demand: Factors Contributing to the Recent Increase in Food Commodity Prices.” Outlook Report WRS-0801. Washington, DC: ERS/USDA, July 2008 (30 pages).
· Masters, W.A. “Beyond the Food Crisis in Africa.” African Technology Development Forum, forthcoming 2008.
Week 2.
Introduction to agricultural policy
9/02 Farms, food and the development paradox
9/03 Population growth and economic transformation (note this class moved to Weds, 2:00-3:15 in Kran 661)
[for the best animations, check out http://graphs.gapminder.org/world!]
Readings:
· Norton, G.W., J. Alwang and W.A. Masters, “Economic Transformation and Growth”, chapter 6 in Economics of Agricultural Development (Abingdon: Routledge, forthcoming 2006), 20 pages.
· Tomich, Thomas P., Peter Kilby and Bruce F. Johnston (1995), "Poverty and the Rural Economy" and "Structural Transformation" (excerpts), in Transforming Agrarian Economies (Ithaca, NY: Cornell University Press), pp. 9-19 and 35-48.
· Montgomery, Keith (2000), “Notes on the Demographic Transition.” Also available online, http://www.uwmc.uwc.edu/geography/Demotrans/demtran.htm.
Homework #1: Drivers of Change (due Thurs. 9/11 in class) [Note this assignment was changed 9/3: here is the data for Part 1.]
Week 3.
Farm households and the “industrialization” of agriculture
9/09 Does agriculture industrialize?
9/11 Nutrition, health and human capital
Readings:
· Allen, D.W. and D. Lueck, The Nature of the Farm: Contracts, Risk and Organization in Agriculture (Cambridge: MIT Press, 2002), excerpts: “Farming in North America” (pages 17-26), “Farm Organization and Vertical Control: Historical and Current Case Studies” (pages 181-191).
· Haddad, L. et al., “Nutrition Trends and Implications,” chapter 2 in The Fifth Report on the World Nutrition Situation: Nutrition for Improved Development Outcomes. UN Standing Committee on Nutrition, March 2004.
Week 4. Nutrition and food markets
9/16 No class
9/18 Imperfect information and food demand
Readings:
· Masters, W.A. and D. Sanogo, “Welfare Gains from Quality Certification of Infant Foods: Results from a Market Experiment in Mali” American Journal of Agricultural Economics, 84(4, 2002): 974-989.
Homework #2: Food prices, nutrients and the least-cost diet (due Tuesday 9/23 in class)
Week 5. Farm productivity and technology
9/23 Input use, R&D and technology adoption
9/25 No class
Readings:
· Masters, W.A. “Paying for Prosperity”, Journal of International Affairs, 58(2, 2005): 35-64.
· Alston, J.M, M.C. Marra, P.G. Pardey and T.J. Wyatt, "Research returns redux: a meta-analysis of the returns to agricultural R&D." Australian Journal of Agricultural and Resource Economics, 44 (2, June 2000): 185-215.
Week 6. Market equilibrium and social welfare
9/30 Market equilibrium with trade and policy
10/02 Policy incidence and social welfare: value and limitations of economic surplus
Readings:
· Schmitz, A., H. Furtan and K. Baylis, “Theoretical Considerations” and “Trade and Macroeconomic Effects”, chapters 4 and 5 in Agricultural Policy, Agribusiness and Rent-Seeking Behavior. Toronto: University of Toronto Press, 2002), pages 83-118 and 119-153.
· Hines, James R., Jr., "Three Sides of Harberger Triangles." Journal of Economic Perspectives 13(2, Spring, 1999): 167-88.
Mid-term Exam (to be given Thursday 10/9 in class) [Click
here for an example past exam.]
Week 7. Mid-term review and exam
10/7 Wrap-up and pre-exam review
10/9 Mid-term exam
Week 8. October break
10/14 Oct. break -- no class
10/16 Discussion of exam and course projects
Project Assignment #1: topic for the literature review (due Tuesday 10/21 in class)
Week 9. Discussion of student projects
10/21 Presentation/discussion of project topics and literature sources
10/23 Measuring policies: distortions and investment
· Masters, W.A., "Guidelines on National Comparative Advantage and Agricultural Trade," APAP III Methods and Guidelines Paper No. 4001 (Bethesda, MD: Abt Associates, 1995), pages 1-29.
Week 10. Measuring policies across countries and over time
10/28 Nominal and effective protection
10/30 Aggregate measures of support
Readings:
· Tsakok, I., “Single-Market Analysis: Calculating the Impact of Price Policy,” chapter 6 in Agricultural Price Policy (Ithaca: Cornell University Press, 1990), pages 158-182.
· OECD, “Agricultural Policies in OECD Countries At a Glance 2008” (Paris: OECD, July 2008), pages 33-58.
Homework #3: Markets, market failures and policy failures (due 11/04 by email)
Week 11. Explaining policies: economics of the public sector
11/04 Markets: how far reaches the invisible hand?
The tragedy of the commons, prisoner’s dilemmas and the Coase Theorem
11/06 Policy: how well can market failures be remedied?
Optimal regulation, Pigovian taxes and economics of the second-best
Readings
· Hillman, A., “Private Solutions for Externalities” and “Public Policy for Externalities,” ch. 4.1 and 4.2 in Public Finance and Public Policy: Responsibilities and Limitations of Government (New York: Cambridge University Press, 2003), pages 228-294.
Week 12. Rent-seeking and political economy
11/11 Rent-seeking and government failure
11/13 Political economy and public choice
Readings
· Hillman, A., “Political Behavior and Public Policy” and “Public Policy and Rent-Seeking Behavior,” ch. 6.2 and 6.3 in Public Finance and Public Policy: Responsibilities and Limitations of Government (New York: Cambridge University Press, 2003), pages 416-460.
Project assignment #2: First draft of the literature review (due Tuesday 11/13 in class)
Week 13. Political economy of agricultural policy (continued)
11/18 The stylized facts of agricultural policy
11/20 Political Economy theories and hypothesis tests
Readings
· Masters, William A. and Andres Garcia (forthcoming), “Price Distortion and Stabilization: Stylized Facts and Hypothesis Tests,” in K. Anderson, ed., The Political Economy of Agricultural Distortions. Washington, DC: The World Bank, 2009. [to be distributed—not yet in readings packet]
· Anderson, Kym (1995), "Lobbying Incentives and the Pattern of Protection in Rich and Poor Countries." Economic Development and Cultural Change 43(2, January): 401-424..
Week 14. Thanksgiving break
11/25 Political economy review and discussion
11/27 Thanksgiving (no class)
Project assignment #3: in-class presentation with slides (T.-Th., 11/27 or 29)
Week 15. Project presentations
12/02 Student presentations
12/04 Student presentations (cont’d)
Week 16. Wrap-up and review
12/09 Overview of the policy analysis toolkit
12/11 Review for final exam
Project paper (due Friday 12/12 by 5:00 pm)
Final exam (date to be announced)
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AGEC 640 – Fall 2008 Summary schedule of topics, assignments and readings
Useful background reading: World Bank, World Development Report 2008 (click links for URLs to all readings available online) |
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Date and topic |
Required readings (all in photocopied packet) |
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Week 1. Introduction and background |
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8/26 |
What’s ahead? Intro to AGEC 640 |
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Trostle, “Global agricultural supply and demand” |
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8/28 |
Some context: The world food crisis of 2007-08 |
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Masters, “Beyond the food crisis” |
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Week 2. Trends behind the headlines |
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Norton, Alwang & Masters, “Econ.Transformation and Growth” |
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9/02 |
Farms, food and the development paradox |
Tomich, Kilby & Johnston, "Poverty…" and "Struct. Transf." |
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9/04 |
Population growth & economic transformation |
Montgomery, “Notes on the demographic transition” |
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Homework assignment #1: drivers of change (due Thursday 9/11 in class) |
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Week 3. Farm households and the “industrialization” of agriculture |
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9/09 |
Does agriculture industrialize? |
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Allen and Lueck, The Nature of the Farm (excerpts) |
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9/11 |
Nutrition, health and human capital |
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Haddad et al, ”Nutrition Trends and Implications" |
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Week 4. Nutrition and food markets |
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9/16* |
No class |
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9/18 |
Imperfect information and food demand |
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Masters and Sanogo, “Welfare Gains from Quality Certification" |
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Homework assignment #2 : nutrients and the least-cost diet (due Tuesday 9/23 in class) |
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Week 5. Farm productivity and technology |
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9/23 |
Input use, R&D and technology adoption |
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Masters, "Paying for Prosperity"; Alston et al., "Research returns" |
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9/25* |
No class |
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Week 6. Market equilibrium and social welfare |
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9/30 |
Market equilibrium with trade and policy |
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Schmitz, Furtan and Baylis, “Theoretical...” and “Trade and Macro” |
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10/2 |
Policy incidence and social welfare |
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Hines, "Three Sides of Harberger Triangles." |
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Mid-term exam (to be given Thursday 10/9 in class) |
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Week 7. Mid-term exam |
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10/7 |
Mid-term review and discussion |
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10/9* |
Mid-term exam (in class) |
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Week 8. Oct. break |
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10/14 |
Oct. break (no class) |
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10/16 |
Discussion of exam and course projects |
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Project assignment #1: topic for the literature review (due Tuesday 10/21 in class) |
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Week 9. Discussion of projects / Measuring policies |
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10/21 |
Presentation/discussion of project topics |
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10/23 |
Measuring policies: distortions and investment |
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Masters, "Guidelines on Comparative Advantage and Trade" |
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AGEC 640 – Fall 2008 Summary schedule of topics, assignments and readings (continued) |
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Date and topic |
Required readings (all in photocopied packet) |
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Week 10. Measuring policies |
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10/28 |
Nominal and effective protection |
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Tsakok, “Single-Market Analysis: Impact of Price Policy” |
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10/30 |
Aggregate measures of support |
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OECD, “Agricultural Policies in OECD Countries” |
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Homework assignment #3 : market & policy failures (due Tuesday 11/04 in class) |
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Week 11. Choosing policies: public economics |
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11/04 |
Markets and the Coase Theorem |
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Hillman, “Private Solutions...” and “Public Policy for Externalities” |
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11/06 |
Governments and the economics of the second-best |
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Week 12. Rent-seeking and political economy |
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11/11 |
Rent-seeking and government failure |
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Hillman, “Political Behavior...” & “Public Policy and Rent-Seeking" |
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11/13 |
Political economy and public choice |
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Project assignment #2 : first draft of the literature review (due Tuesday 11/18 in class) |
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Week 13. Political economy of agricultural policy (continued) |
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11/18 |
The stylized facts of agricultural price policy |
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Masters & Garcia, “Price Distortions and Stabilization…”(TBD) |
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11/20 |
Political economy theories and hypothesis tests |
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Anderson, "Lobbying Incentives and the Pattern of Protection" |
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Week 14. Thanksgiving break |
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11/25 |
Political economy review and discussion |
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11/27 |
Thanksgiving (no class) |
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Project assignment #3 : in-class presentation with slides (Tues. or Thurs., 12/02 or 04) |
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Week 15. Project presentations |
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12/02 |
Student presentations |
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12/04 |
Student presentations (cont’d) |
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Week 16. Wrap-up and review |
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12/09 |
Overview of the policy analysis toolkit |
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12/11 |
Review for final exam |
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Project paper (due Friday 12/12 by 5:00 pm) |
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Final exam (date T.B.A.) |
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