Economics

The course is divided into two equal components: microeconomics and macroeconomics. The first part of the course covers microeconomics, which focuses on the general equilibrium analysis under perfect competition and market failure (externalities, public goods, and imperfect information). It examines the dynamic interplay of behavior and institutions, and the outcomes produced through their interaction. The course draws attention to issues of distribution and market exclusion (issues of power and bargaining), as well as efficiency and issues such as land reform, water allocation, and funding for tertiary education. The macroeconomics module employs a microfoundations approach to macroeconomics. It first covers explanations for the business cycle in a closed economy model with money. The course then explores an open monetary economy model with foreign trade, capital flows, and an exchange rate. Students study the real business cycle model, the functioning of foreign trade and exchange rates, and the role of money and banking.  Assessment: coursework (50%) and final exam (50%).

Over the past century Israel has transformed from an agricultural colony, to a welfare state, and on to a globally integrated "market economy” characterized by great income disparities. What lies behind this transformation? How did egalitarianism give rise to inequality? What are the implications of a constant state of conflict on a country's economy? How does being an island of democracy surrounded by non-democratic regimes effect the development of a country's international economic relations? This course explores how different issues have affected the Israeli economy, including periods of economic growth or stagnation, the governments' domination of capital and credit markets in the 1970's and 1980's, the stabilization program of 1985, the implications of peace processes, and the wave of Russian immigration in the 1990's. The course concludes with an overview of the international economic relations between Israel and The European Union, The USA, and the global economic institutions (GATT and WTO, IMF and the World Bank, and the OECD).

This course introduces methods to analyze individual decision-making based on behavioral economics.  Behavioral economics uses cognitive and emotional factors to understand the economic decisions of individuals and societies.  From the 1990s, researchers in economics started expanding the scope of their formal (i.e., mathematical) models to encompass some types of behavior found in behavioral economics. However, they were at odds with the standard economic theory. 

This course mainly discusses behavioral decision-making theory.  Standard economics usually assumes the following two assumptions to analyze individual decision-making. First, an individual forms beliefs describing the probabilities of all choices, and after receiving new information, an individual updates his/her beliefs correctly according to probability theory.  Second, an individual acts as if they maximize an expected utility.  However, behavioral economics indicates that people do not behave as standard economics assumes.  

Although most of the arguments explored in this course have been carefully developed using the language of mathematics, the course does not assume any background other than high school algebra; however, participatns are expected to have some degree of comfort with the material presented formallyl (i.e., mathematical). Students are expected to have taken taken an Introduction to Microeconomics course.

Starting with the 2008 crisis and its consequences on the economy, this course traces the reactions of political authorities to escape the recession and reduce economic imbalances. In this context, it outlines the policies of structural politics and attempts to analyze their impacts on the growth perspectives in the years to come. Lastly, the course revisits the various economic policies (budgetary, monetary, and employment) put into place in the past twenty years in France, and their consequences on the French economy. It reviews the aid instruments that economists possess to examine their optimal economic policies: structural unemployment, production potential, output gap, and macroeconomic model.