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In 2014, the Kingdom of Saudi Arabia faced a freshwater shortage. Despite the global financial crisis, Saudi Arabia experienced modest economic expansion and increasing stress on its water infrastructure due to expanding agricultural production. The major investments in desalinization plants that the country expected to see had not yet materialized, furthering the strain on resources. This case, used in Darden's "Economics of Water" elective, examines what policy reforms should be explored in bringing Saudi Arabia's water use and agricultural production into balance.

Spreadsheet supplement for Case CU312

In 2013, Michael Froman, the newly appointed United States Trade Representative, was responsible for leading the U.S. negotiating team in the formulation of the terms of the Trans-Pacific Partnership (TPP). During the negotiations, Froman had to adopt a position on the sensitive issue of tariffs on imported footwear. On the one hand, Vietnam, a TPP member country, was America's second largest foreign footwear supplier and was pushing for the elimination of tariffs. On the other hand, U.S. labour unions argued that Vietnam's strength in the footwear industry was based on unfair subsidies and labour practices. Even among U.S. footwear companies, there was disagreement. New Balance, the only U.S. athletic footwear company that produced parts of its shoes in the U.S., was openly opposed to the elimination of tariffs, as their removal could lead to factory closures in the U.S. Nike Inc., however, manufactured all its shoes overseas and was an overt proponent of the abolition of tariffs. Froman had to carefully weigh the arguments of all the stakeholders to determine whether or not to accept the lowering of tariffs on footwear imported from Vietnam and, if he accepted, whether or not to impose conditions on Vietnam.

After struggling through the country's longest recession since 2008, the U.K. was expected to grow faster than any other G7 nation in 2014. Analysts wondered whether the return to growth was because, or in spite of, Prime Minister David Cameron's controversial £113 billion austerity plan introduced in 2010. Despite the positive upturn in the economy, U.K. policymakers still faced challenges with rapidly rising income inequality, an economy dominated by the financial sector, a possible housing bubble, and an approaching referendum on Scotland's independence. Moreover, many claimed the U.K. was at risk of secular stagnation, a slowdown in economic growth caused by a structural deficiency in demand. What could the government do to put the country on a sustained and balanced growth trajectory?

This note extends the IS/LM model to incorporate changes in the aggregate price level and to permit output to be determined by aggregate supply and demand. The note introduces the concept of the full employment level of output, provides microfoundations that underpin the aggregate supply curve, and discusses the effects of fiscal and monetary policy when the economy is below and above the fully employment level of output. The note concludes by reviewing the exogenous components of the IS/LM AD/AS model.

This technical note sets the groundwork for a module on macroeconomics by introducing concepts and definitions that will be revisited in subsequent technical notes. The note begins by introducing national income accounting and the components of GDP, and by discussing why economists care about GDP. It then discusses how the determinants of the components of GDP interact on the market, and how we can predict GDP and interest rates through the lens of a model-a framework that maps assumptions into outcomes. The note introduces students to basic economic modeling by walking them through examples of how to determine endogenous variables from systems of equations and exogenous variables. The note concludes by discussing the role of assumptions in macroeconomics and by listing some of the assumptions that we will maintain in subsequent technical notes.

This technical note introduces the basic structure of the workhorse IS/LM model for a closed economy (i.e., one that does not engage in international trade). The note derives the core components of the model and derives predictions of effects of fiscal and monetary policy. The price level is assumed to be fixed, and aggregate demand determines output. This note precedes a more comprehensive treatment of aggregate demand and aggregate supply found in subsequent technical notes.

The global financial crisis that began in 2007 in the United States has adversely impacted the entire world. The author argues that the main driver of the crisis is global trade and capital imbalances, which, he shows, have unfolded in almost textbook fashion. He warns that if we misunderstand the roots of the imbalances that led to the global financial crisis, it is unlikely that we will choose policies that enable us to work our way out of them.

Good news out of MIT: labour market expert Paul Osterman does not believe that we are going to become a nation of brain surgeons and hamburger flippers. However, inequality does indeed exist within the labour market, and in this wide-ranging interview he describes how leaders must step forward to address the realities of the changing workforce through better job design. The bottom line, he says, is that low wages and high levels of inequality are corrosive to democracy. Moral outrage doesn't provide a strategy for moving forward, he says, but at the end of the day, the moral case for creating good, fair-wage jobs seems pretty compelling.

Since the opening up of its economy in 1979, China has followed an export-led growth policy and transformed the country into a 'Factory of the World' with its labour-intensive manufacturing. Since then, many factories were set up and concentrated mostly in the south-eastern coastal provinces. Although this policy resulted in consistently high annual growth and creation rates, negative side effects such as environmental, economic and social problems became increasingly evident. To address these challenges, in 2012, China's policymakers changed the policy direction to focus more on domestic consumption-led growth. One strategy to achieve the goal was to expand its manufacturing base into the hinterland. To attract investors to move to the inner regions, the government developed gigantic industrial parks and basic infrastructure to accommodate the new policy. This case depicts Xi Yong Micro-electronics Industrial Park in Chongqing, the largest municipality in Western China. It discusses the implementation of the government's development strategy at Xi Yong and presents an opportunity to examine whether Xi Yong and other similar industrial parks would provide the solution that the government is looking for.

After reading and analyzing the case, students will be able to: Apply the event study methodology to analyze economic effects; Recognize how macroeconomic news affects the prices of financial securities; Describe the connections between the prices of financial securities and the macroeconomy; Debate the relative costs and benefits of quantitative easing and the optimality of Federal Reserve policy.

The first of a three-case series, this is a classic business-government relations (BGR) challenge for Southwest Airlines. The A case takes the student from the problems SWA had with competitors and the Civil Aviation Board in the early years of attempting to fly through the passage of the Wright Amendment in the late 1970s. House Majority Leader Jim Wright championed the cause for the Dallas/Fort Worth Airport Authority and the big DFW airlines, most prominently American Airlines. The case then updates the situation 25 years later, when SWA is a big airline and the events of September 11, 2001, hurt the short-haul business of low-cost airlines. The case presents BGR strategies of SWA over time.

The second of a three-case series, this is a classic business-government relations (BGR) challenge for Southwest Airlines. The A case took the student from the problems SWA had with competitors and the Civil Aviation Board in the early years of attempting to fly through the passage of the Wright Amendment in the late 1970s. It then updated the situation 25 years into the future when SWA was a big airline, and the events of September 11, 2001, hurt the short-haul business of low-cost airlines. This case affords the opportunity to update the analysis performed in the A case in the context of almost every strategic and political aspect of Southwest and Love Field having changed.

Widespread critiques of capitalism-as articulated by social movements such as Occupy Wall Street-have been widely legitimated, say the authors, and the resulting ideological shift has propelled migration towards 'connected consumption'. Emphasizing the re-use of goods rather than buying new, these practices facilitate local, face-to-face connections, and they are redesigning models of service delivery. The authors describe four types of connected consumption, then focus on one ('time banks'), explaining the broader context that is propelling this movement's popularity.

This note is used in the Darden course elective, "The Economics of Water." In many cities, water, sewage, and electricity utilities are city-owned, not-for-profit institutions. Indeed, a 2011 survey of 330 major cities worldwide published by Global Water Intelligence reveals that almost 85% of the water services of the cities surveyed are publicly managed; public-private partnerships account for 5%, and about 10% are privately run. As this note argues, there is a reason for this institutional setup.

Water is a renewable natural resource. Driven by solar energy and gravity, the global water cycle indefinitely circulates water through the atmosphere, over continents, and across oceans. On a more local level, however, water sometimes has more of a nonrenewable character because it can be depleted, at least to some degree. Withdrawing too much water from an aquifer that has only limited recharge, for example, diminishes stored water. This note discusses groundwater withdrawal, how it is optimally done, and how it depends on the particular institutional setting.

This note is assigned in Darden's course elective, "Global Economics of Water." There is more than enough fresh water to satisfy the world's needs. The primary concern, however, is the geographical mismatch between water needs and the availability of water to communities who need it. Hence, a major challenge for the 21st century is to better manage this mismatch. In this note, we focus on one particular factor-climate change-and how it may contribute to future stress on water resources. We lay out the basics of climate change and the hydrological cycle, and we point to some of the intricate ways in which both phenomena are connected. This note does not contain blanket policy recommendations as to how to fight global warming beyond the general statement that the rational response to the risk and uncertainty of higher global temperatures and their associated environmental changes is to take actions that ensure against potentially adverse effects.

Simon Caufield and Bob Phillips had just put the finishing touches on the business plan for Nomis Solutions, a start-up company that planned to offer price-optimization solutions to financial service firms. Nomis aimed to use advanced analytic techniques to help its clients to set prices for consumer loans and deposits. Was there a market for the products and services that Nomis planned to offer? If so, how large was the market? What would persuade potential clients that Nomis's product and services would add value?

Supplement to case CU125.

This case asks students to wear the hat of a policymaker to explore the politically charged issues around corporate tax reform in the U.S.