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«Course Description This course will help you understand the rationale for many government programs and non- government organization (NGO) ...»

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Econ 3373 Syllabus Version 08/21/15 Fall 2015

Boston College, Economics Page 1 of 8

Economics 3373

Impact Evaluation in Developing Countries

Instructor: Paul Cichello

Email: paul.cichello@bc.edu

Office: Maloney Hall, 342

Office Hours: M 10 AM-noon; Wed 10-11 AM or by appt.

Class Meetings: MW 3:00-4:15 PM; O’Neill 253 Course Description This course will help you understand the rationale for many government programs and non- government organization (NGO) interventions and how to properly determine the extent to which such programs have succeeded. Specifically, you will learn to better identify market failures, recognize incentive structures embedded within programs intended to overcome such market failures, and properly evaluate the impact of such policy interventions. Examples will come from developing country settings, though the skills are equally transferable to interventions in the United States. The course will cover fixed effects, difference-in-difference, propensity score, instrumental variable, natural experiment, and randomized experiment estimation techniques for evaluating program impacts across a variety of topic areas, including health, education, agricultural insurance and micro-finance programs.

Course pre-requisite Students must have successfully completed EC 2228: Econometrics in order to take this course.

Readings

Required text:

Ray, Debraj, 1998, Development Economics, Princeton University Press, Princeton.

(Available on Reserve at O’Neill Library.) Other required readings are available on blackboard. Required readings should be completed prior to class so that you may be an active participant in the class discussions. (Recommended readings are denoted with an asterisk (*) on the syllabus.) Readings include both conceptual/theoretical readings and empirical papers. You should try to understand the empirical work and results.

Econ 3373 Syllabus Version 08/21/15 Fall 2015 Boston College, Economics Page 2 of 8 Course Grade There will be four problem sets, two group assignments/presentations, and a final exam. Students are also expected to read all of the required readings before each class. They are also expected to actively participate in class discussion and blackboard discussion of papers.

Writing assignments and presentations (58% grade):

1. Written summaries and follow up comments (8% grade) Individual assignment = Starting September 30th, assigned students willprepare a summary of one of the articles to be read in the following week. (You may choose from either the required readings or the optional readings listed.) Reviews are due at 2 PM, the Saturday BEFORE the article is listed on the syllabus so that others may comment on your review before class. The summary should be no more than two pages (usually just one page) and should include: a review of the main points of the articles; a discussion of how the article relates to the themes of the course; a brief description of the key technical techniques used (particularly empirical techniques); and any other comments useful to guide our discussion. Each student will write a summary at least twice this semester. You are also expected to comment on at least one article summary each week.

2. Five econometric problem sets (16% grade) You can work in groups of two, but each person must submit their own problem set.

= Due dates vary: You will have at least one week to complete the problem set.

3. Analysis and presentation of a development success-story (10% grade) Group assignment = Due date varies: Each group will be assigned a topic. The presentations will be due at 6 pm on the Sunday before the specific topic is to be covered in class.

4. Grant proposal for evaluation of a development project (24% grade) Group assignment Note: You will make a formal written proposal for funding to analyze a government or NGO program/policy of your choice. A complete and specific methodology will need to be specified. Detailed instructions will be provided.

Due at 3 pm on Sunday December 6th for all students. (In-class presentations and discussion begin on Monday, December 7th.) Scheduling conflicts with presentation dates must be cleared with the instructor at least three weeks in advance of the scheduled date.

Class participation (12% grade) You will receive grades for class participation after the September 30th, November 2nd, and December 9th classes.

–  –  –

August 31: Introduction to Economic Development Ray, chapter 1 (Introduction), chapter 2 (Economic Development: Overview).

* Bardhan, Pranab, 2005, "History, Institutions, and Underdevelopment", Chapter 1 in Scarcity, Conflicts and Cooperation: Essays in the Political and Institutional Economics of Development, MIT press.

* UNDP, 2001, “Human development – Past, Present and Future,” Human Development Report, Oxford University Press, pp. 9-25.

September 2 and 9: Indicators of Poverty and Inequality Ray, Chapter 8 (Poverty and Undernutrition) and Chapter 6 (Economic Inequality) World Bank, 2001, “The Nature and Evolution of Poverty,” World Development Report 2000-2001, Oxford University Press, pp 15-29.

* Banerjee, Abhijit, and Esther Duflo, 2006, "Economic Lives of the Poor", Journal of Economic Perspectives, 21(1): 141-168.





* Lindauer, David and Lant Pritchett, 2002, “What’s the Big Idea? The third generation of policies for economic growth”, Economica. 3(1), pp 1-28.

September 14 & 16: Econometrics Review: OLS, SEs, Conditional Mean and Omitted Var. Bias Wooldridge, J. M., 2003, Chapters 3 and 4 in Introductory Econometrics: A Modern Approach (4th edition), Mason, OH: South-Western Cengage Learning.

September 21: Introduction to Empirical Policy Analysis Duflo, Esther, Rachel Glennerster, and Michael Kremer, 2006, Sections 1 and 2 in “Using Randomization in Development Economics Research: A Toolkit,” NBER Technical Working Paper 333. pp. 3 – 19.

Angrist, J.D. and Pischke, J. 2009. Chapters 1 and 2 in Mostly Harmless Econometrics: An Empiricist’s Companion. Princeton University Press. pp. 3 – 24.

Deaton, Angus, 1997, Chapter 1 (1.1-1.3) in The Analysis of Household Surveys. A Microeconometric Approach to Development Policy, Johns Hopkins University Press, Baltimore, pp 7-40. (pp.13-38 in the online version) * Martin Ravallion, 2001, “The Mystery of the Vanishing Benefits: An Introduction to Impact Evaluation”, World Bank Economic Review, 15: 115-140.

–  –  –

September 30 & Oct. 5: Asymmetric Information, Incentives and Capture of Resources Platteau, Jean-Philippe, 2003, “Decentralized Development as a Strategy to Reduce Poverty?” paper presented at the AFD-EUDN conference, November 13, Paris.

Reinikka, Ritva, and Jakob Svensson, 2004, “The Power of Information: Evidence from a Newspaper Campaign to Reduce Capture of Public Funds”, mimeo, Stockholm University.

Besley, Timothy, Rohini Pande, Lupin Rahman, and Vijayendra Rao, 2004, The Politics of Public Good Provision: Evidence from Indian Local Governments, Journal of the European Economic Association Papers and Proceedings, 2(2-3): 416-426.

* Ferraz, Claudio and Fred Finan, 2008, “Exposing Corrupt Politicians: The Effects of Brazil’s Publicly Released Audits on Electoral Outcomes.” Quarterly Journal of Economics, 123(2): 703-745.

* Svensson, Jacob and Martina Bjorkman, 2009, “Power to the People: Evidence from a Randomized Field Experiment on Community-Based Monitoring in Uganda.” Quarterly Journal of Economics, 124(2): 735-769.

October 7 & 14: Econometrics # 2: Instrumental Variables (2SLS) and Natural Experiments Wooldridge, J. M., 2003, Chapter 15 in Introductory Econometrics: A Modern Approach (4th edition), Mason, OH: South-Western Cengage Learning. pp. 507-536.

Murray, Michael P., 2006, “Avoiding Invalid Instruments and Coping with Weak Instruments”, Journal of Economic Perspectives, 20(4): 111-132.

Angrist, Joshua, B. and Alan B. Krueger, 2001, “Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments”, Journal of Economic Perspectives, 15(4): 69-85.

Duflo, Esther, Rachel Glennerster, and Michael Kremer, 2006, Sections 6 in “Using Randomization in Development Economics Research: A Toolkit,” NBER Technical Working Paper 333. pp. 47-61.

* Meyer, Bruce D., 1995, “Natural and Quasi-Experiments in Economics”, Journal of Business and Economic Statistics, 13(2): 151-161.

* Bound, John, David Jaeger and Regina Baker, 1995, “Problems with Instrumental Variables Estimation when the Correlation Between the Instruments and the Endogenous

Explanatory Variable is Weak”, Journal of the American Statistical Association, 90(430):

443–50.

–  –  –

+ Dercon, Stefan, 2001, “Income Risk, Coping Strategies and Safety Nets”, background paper prepared for the World Development Report 2000-2001. Section 1 (pp. 1-7) and 4 (pp.

19-24) required. (The rest is optional.) October 26 & 28: Credit Markets and Microfinance Institutions pt. 1 Ray, Chapter 14 (Credit).

Burgess, Robin and Rohini Pande, 2005, “Can Rural Banks Reduce Poverty? Evidence

from the Indian Social Banking Experiment”, American Economic Review, 95(3):

780-795.

Murdoch, Jonathan, 1999, “The Microfinance Promise”, Journal of Economic Literature, 37(4): 1569-1614.

* Besley, Timothy, 1994, “How Do Market Failures Justify Interventions in Rural Credit Markets", World Bank Research Observer, 9(1): 27-48.

* Banerjee, Abhijit V., Esther Duflo, and Kaivan Munshi, 2003, “The (Mis)allocation of Capital.” Journal of the European Economic Association Papers and Proceedings, 1(2/3): 484-494.

* Fafchamps, Marcel, 2000, “Ethnicity and Credit in African Manufacturing”, Journal of Development Economics, 61: 205-235.

November 2 & 4: Econometrics #3: Propensity Score and Randomized Experiments Martin Ravallion, 2001, “The Mystery of the Vanishing Benefits: An Introduction to Impact Evaluation”, World Bank Economic Review, 15: 115-140.

Duflo, Esther, Rachel Glennerster, and Michael Kremer, 2006, Sections 3-8 in “Using Randomization in Development Economics Research: A Toolkit,” NBER Technical Working Paper 333. pp. 19-75. (Note: We read Section 6 (pp. 47-61) previously.)

Duflo, Esther and Raghabendra Chattopadhyay, 2004, “Women as Policy-Makers:

Evidence from a India-wide Randomized Policy Experiment”, Econometrica, 72(5):

1409-43. (skim Section 3) * Barrett, Christopher B. and Michael R. Carter, 2011, The Power and Pitfalls of Experiments in Development Economics: Some Non-random Reflections,” Applied Economic Perspectives and Policy 32(4): 515-548.

* Imbens, Guido W., and Jeffrey M. Wooldridge, 2009, "Recent Developments in the Econometrics of Program Evaluation", Journal of Economic Literature, 47(1): 5-86.

* The Journal of Economic Literature (June 2010) and the Journal of Economic Perspectives (Spring 2010) have special editions dedicated to the controversy over the dominant role randomized experiments have gained in policy circles in recent years. They are interesting reads in fleshing out the bounds such experimental approaches can play in policy analysis. There is a desire among many leading critics that such experiments attempt to identify underlying structural parameters guiding outcomes (not just program impacts).

Econ 3373 Syllabus Version 08/21/15 Fall 2015 Boston College, Economics Page 6 of 8 November 9 & 11: Credit Markets and Microfinance Institutions pt. 2 Banerjee, Abhijit and Esther Duflo, 2010, “Giving Credit Where it is Due”, Journal of Economic Perspectives 24(3): 61-80.

Karlan, Dean S., 2007, “Social Connections and Group Banking” Economic Journal. 117:

F52-84.

Banerjee, Abhijit, Esther Duflo, Rachel Glennerster, and Cynthia Kinnon, 2013, “The Miracle of Micro-finance? Evidence from a Randomized Evaluation”, NBER Working Paper No. 18950.

McKenzie, David, “Impact Assessments in Finance and Private Sector Development: What Have We Learned and What Should We Learn?”, World Bank Research Observer 25: 209-233.

* Banerjee Abhijit, Dean Karlan, and Jonathan Zinman, 2015, “Six Randomized Evaluations of Microcredit: Introduction and Further Steps”, American Economic Journal: Applied Economics, 7(1): 1-21. http://dx.doi.org/10.1257/app.20140287 * Morduch, Jonathan, 1999, “The Microfinance Promise”, Journal of Economic Literature, 37(4): 1569-1614.

* McKenzie, David, and Chris Woodruff, 2007, “Returns to Capital in Microenterprises:

Evidence from a Field Experiment”, Quarterly Journal of Economics, 123(4): 1329Dupas, Pascaline and Jonathan Robinson, 2009, “Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya.” NBER Working Paper No.

14693. Cambridge, MA.

* Karlan, Dean S., and Jonathan Zinman, 2009, “Expanding Microenterprise Credit Access:

Using Randomized Supply Decisions to Estimate the Impacts in Manila”, http://www.poverty-action.org/ * Pitt, Mark M., Shahidur R. Khandker and Jennifer Cartwright, 2003, “Does Micro-Credit Empower Women? Evidence from Bangladesh” World Bank Policy Research Working Paper 2998.

November 16 & 18: Health and Nutrition, Part 1 Kremer, Michael, 2002, “Pharmaceuticals and the Developing World”, Journal of Economic Perspectives, 16(4), 67-80.

Das, Jishnu, and Jeffrey Hammer, 2007, “Money for Nothing: The Dire Straits of Medical Practice in Delhi, India,” Journal of Development Economics 83: 1-36.

* John Strauss, and Duncan Thomas, 1998, “Health, Nutrition, and Economic Development”, Journal of Economic Literature, 36(2): 766-817.

Econ 3373 Syllabus Version 08/21/15 Fall 2015 Boston College, Economics Page 7 of 8 November 23: Health and Nutrition, Part 2 Gertler and Boyce, 2001, “An Experiment in Incentive-Based Welfare: The Impact of PROGRESA on Health in Mexico”, mimeo, University of California at Berkeley.

Michael Kremer and Edward Miguel, 2007, “The Illusion of Sustainability”, Quarterly Journal of Economics. 122(3) 1007-1065.



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