Economics

Economics is divided into two major subfields, microeconomics and macroeconomics. This course provides an introduction to microeconomics, which attempts to understand the behavior of individual entities such as markets, firms, and households. Consistent with the idea of a “principles” class, the course focuses on a core set of fundamental concepts to understand various microeconomic issues such as scarcity; tradeoffs; opportunity cost; incentive; marginal thinking; exchange; efficiency; information, and so on.

This course elaborates on the macroeconomic topics and theories that have been discussed in prior courses. A key concern is the coordination between the goods market, the labor market, and financial markets in a closed economy framework. Coordination failures play a central role in explaining macroeconomic fluctuations and providing roles for fiscal and monetary policy. The courses develops a new Keynesian view of macroeconomics, developing theories and models for the short- and medium-run. Using recent OECD Economic Outlooks, macroeconomic theory is applied to a wide variety of recent macroeconomic problems and policy dilemmas. The course also includes some critical reflections on the standard new Keynesian model.

This course is an undergraduate level investments course. It is designed to provide a framework for understanding the modern investment theory and practice. The course covers financial markets, portfolio theory, asset pricing models, market efficiency and behavioral finance, bond and equity valuation, investment performance evaluation, financial derivatives, and other special topics. 

The course introduces the basic principles and methods of investment decisions, financing decisions and asset management to familiarize students with possible theoretical explanations of these practices. It emphasizes the present value theory, capital structure theory, dividend policy, corporate governance, corporate control theory and other major corporate finance theories and the possible theoretical explanations of corporate financial decisions.

Public economics (or public finance) is the study of the role of government in the economy. It deals with the formulation, execution, and effects of government policy, or more generally with non-market mediated policies. This study involves answering the following four broad questions: When should the government intervene in the economy? How might the government intervene? What is the effect of those interventions on economic outcomes? Why do governments choose to intervene in the way that they do? The government differs from other organizations because it can use legal instruments to enact policies and may also have different goals than other actors in the economy. The typical allocation mechanism for scarce resources in markets is the price mechanism, which – under particular circumstances – aggregates information and preferences of many different individuals in an efficient way. If these assumptions are not met or Pareto efficiency alone is not a sufficient criterion since a particular allocation is "unfair", there might be room for intervention by the public sector. We will discuss arguments for when government intervention is warranted and whether such intervention is beneficial. This course provides basic knowledge of the functioning and the relevance of the public sector. The topics include (i) market failures such as incomplete information, public goods, and externalities, (ii) issues with fairness, inequality, poverty, redistribution, and taxation, and (iii) political decision-making and elections. These topics will be analyzed from a normative (welfare economic) as well as from a positive (explanatory) perspective, with emphasis on the relevance and limitation of traditional economic theory. After the course, you should be able to reflect and recognize the strength but also some of the limitations of traditional economic theory and interpret some basic empirical evidence. You should also be able to critically assess political and economic discussions pertaining to the public sector.

This course introduces the principles of microeconomics. It serves as an introduction of economics to an audience that is not familiar with calculus. (Those who have taken calculus should consider taking microeconomics instead). There are various classroom experiments throughout the semester, and students are expected to participate actively in them. Topics: production possibility frontier and gains from trade; supply and demand; elasticity and intervening the market; markets and welfare; classical market failure; competitive markets; monopoly; monopolistic competition; oligopoly; factor market, wage differentials, and discrimination; asymmetric information, political economy, and behavioral economics. Text: Mankiw, PRINCIPLES OF ECONOMICS. Assessment: final exam, midterm exam, homework and quiz, classroom experiment participation.