1. health and fitness

Department
Of
Economics
Postgraduate Economics modules 2014-15
Autumn Semester
1
ECN6510
Personnel
Module
leader
Contact
details
Microeconomic Analysis
Professor Sarah Brown
Room Number: Room 531, Fifth Floor, Department of
Economics, 9 Mappin Street.
Email: [email protected]
Prerequisites
None.
Students are assumed to be familiar with microeconomics, especially consumer and
producer theory, as taught on standard undergraduate degree programmes in
economics at British universities. Knowledge of calculus and constrained
optimisation at a level associated with an undergraduate degree in economics will be
assumed – although there will be some revision of the basics at the start of the
module.
Module Aims and Objectives
Aims
Microeconomics is concerned with the behaviour of individuals, households and
firms, and their interactions. This module aims to:
 Develop the skills required to analyse microeconomic problems and theories;
 Provide an introduction to recent developments in advanced microeconomics;
 Develop the mathematical and analytical skills of students;
 Further develop students’ skills of critical evaluation and appraisal in the
context of advanced microeconomic theory.
The intended learning outcomes are that by the end of the module you should
demonstrate:
 A comprehensive understanding of constrained optimisation and equilibrium;
 The ability to use mathematical techniques to analyse the decision-making of
economic agents;
 The ability to evaluate and critically assess alternative theories.
Transferable Skills
This module will help students develop transferable skills such as:
 Team-working - students will be encouraged to work in teams for the
preparation of, as well as during, lectures and workshops.
 Critical evaluation and problem-solving.
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Timetable
There will be 5 workshops during Semester 1 on the dates specified below:
Workshop 1 Consumer Theory, Week 3
Workshop 2 Choice Under Uncertainty and Insurance, Week 5
Workshop 3 The Theory of the Firm, Week 7
Workshop 4 Imperfect Competition: Oligopoly, Week 9
Workshop 5 Competitive General Equilibrium, Week 11
Student Responsibilities
 This is a 15 credit module and therefore it is expected it will require 150 study
hours per student (including formal teaching hours). As a rough guideline this
means you should expect to devote about 10 hours of study time per week to
this module during a 15 week semester.
 Attendance at all lectures and workshops is compulsory and will be
monitored. If you miss a surgery due to illness or any other reason please
contact the module leader.
 Workshop exercises will be placed on MOLE at least one week prior to the
workshop session and you are expected to work through the exercises prior to
the workshop, and to bring your answers to the workshop.
 Workshops are NOT about giving out answers to the workshop problems, but
instead will focus on discussing particular aspects of the material presented
that students have found difficult. Students should make use of staff
consultation and feedback times to discuss any issues they have with the
module and which are not resolved in workshops.
 Note: each lecture builds on each lecture and each topic builds on each topic.
Hence, it is essential that after each lecture or workshop you spend time
ensuring that you fully understand the analysis covered. If this is not the case,
then you are unlikely to understand the next lecture. It is important to use
‘Consultation & Feedback Times’ throughout the semester to discuss any
problems you are having or to seek clarification if necessary. It is essential
that you work steadily throughout the semester, otherwise it is very difficult to
catch up.
Assessment
The assessment of this module will be by unseen exam (100%).
The exam will be 3 hours. A specimen paper is on the module website.
Note: The examination paper comprises five questions: with one question on each of
the 5 topics detailed below. You are required to answer three questions.
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The pass mark for this module is 50%.
Any change to assessment arrangements will be announced in lectures and also via
the website.
Note: the structure and content of this module changed in 2007/08. The module
leader will advise on the relevance of Exam Papers for 2005/05 and 2006/07. Past
papers prior to 2005/06 are NOT relevant. In academic years, 2011/12, 2012/13 and
2013/14, there was a different module leader and the content of the module was
slightly different. The module leader will advise on the relevance of the exam papers
for these years.
Reassessment
In the case of students who fail the assessment of this module, repeat assessment
will be by a three hour exam. The structure (but not the questions) of the resit exam
will be identical to the January exam. Resit marks will be capped at 50%. Resit
candidates must consult the website for further information, up until the time of the
reassessment, not merely in semester time.
Website
Students must read the module website regularly. The header on the homepage will
indicate new posts but students should also check regularly for announcements.
Lecture notes will be posted at least 24 hours before the lecture and workshop
assignments at least one week before the relevant session.
Note: Students are strongly encouraged to bring hard copies of the lecture notes to
annotate during lectures. The lecture notes are detailed, but they are not a substitute
for lecture attendance. In places, there are ‘gaps’ in the notes, which will be
discussed in the lectures. Key areas will be elaborated on during lectures and the
steps behind some of the technical areas will be given during lectures.
I will respond to students’ questions via email rather than via the website forum,
which I will leave for student interaction, which is strongly encouraged. I will not reply
to questions raised via the website, but I will respond to questions communicated via
email. Moreover, it is important to encourage discussion of questions during my
‘Consultation & Feedback Times’ and workshops rather than electronically –
microeconomics is a ‘visual’, as well as a technical, subject – it is often more
beneficial to discuss such concepts face-to-face rather than via a website. However,
students must look at the website on a regular basis in order to download lecture
notes, workshop exercises etc. Sometimes, additional notes will be posted on the
website as the module progresses. Since lectures are compulsory, announcements
will be made in lectures. Thus, although students are required to read the ECN6510
website on a regular basis, it is your responsibility to ensure that you are aware of
announcements made in lectures rather than on the website or via email.
Student Feedback
Feedback to students will be provided in the following four ways:

The module website has a Module Feedback Report which gives a detailed
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


account by the module leader of the student experience on this module in the
last academic year.
In addition, there will be a one hour formative feedback test in week 8 on
Thursday 20th November (14.15-15.15pm). This will be based on a past exam
paper. The test will be marked and returned to you. This assessment is purely
formative and will not count towards your final assessment. Further details will
be given on this later in the semester.
For workshops, sometimes questions will be set in advance and sometimes
questions will be set during workshops. During lectures, the group will be
often asked questions – this enables me to ascertain whether you understand
the analysis and also it provides you with the opportunity to assess your own
understanding so be sure to expect plenty of interaction during the lectures as
well as the workshops. This approach will provide feedback on your
understanding of each topic as the module progresses.
Additional feedback can be obtained at any time by using Consultation and
Feedback Hours, which you are strongly encouraged to make use of.
Course Outline
This module will provide a comprehensive exposition of some of the core issues of
advanced microeconomic theory. The course material is primarily theoretical in
nature and is characterised by a degree of technical sophistication. The module will
concentrate on five key areas of microeconomics and will cover these areas in
considerable depth. There is no one textbook which covers all aspects of the
module. Hence students will need to use a variety of sources to supplement the
lecture notes. The module does not directly follow a particular textbook. Students will
test their understanding and enrich their learning by reading more than one account
of any topic. For example, it may be particularly useful to read a less mathematical
and more intuitive account as well as a technically more rigorous discussion of a
topic. Guidance on reading will be given during lectures.
Core Reading:



Gravelle, H. and H. Rees (2004), Microeconomics, Third Edition, Harlow.
CORE/SLC 338.5 (G).
Nicholson, W. (2005), Microeconomic Theory: Basic Principles and
Extensions, 9th edition. Thomson, South-Western. CORE/SLC 338.5 (N).
There are older as well as newer versions of this text, which are all essentially
fine to use. Although, in my opinion the 2005 version presents the clearest
exposition of the key concepts. The latest version is:
Nicolson, W. and C. Snyder (2011) Microeconomic Theory: Basic Principles
and Extensions, Eleventh Edition, Thomson, South-Western. CORE/SLC
338.5 (S).
Supplementary and Background Reading
Revision:
For each topic, references will be made to the following text, which is a second year
undergraduate text. Please consult this text, if you feel that you need a refresher of
the key issues and concepts for each of the topics below. This is my preferred text
for this purpose as it combines intuition, diagrammatic analysis and mathematical
5
analysis – but you may consult any equivalent intermediate microeconomics
textbooks.

Varian, H. (2010) Intermediate Microeconomics, Eighth Edition, Norton.
CORE/SLC 338.5 (V). There are numerous editions of this textbook, which
are all fine to use. The references below refer to this edition.
Additional background reading:



Koutsoyiannis, K., (1979), Modern Microeconomics, Second Edition,
Macmillan. 338.018 (K).
Kreps, D.M., (1990), A Course in Microeconomic Theory, Harvester
Wheatsheaf. 338.018 (K).
Varian, H. R, (1992), Microeconomic Analysis, Norton. 338.5 (V).
The module will be set out as follows:
Overall Introduction (Lecture 1)
Recommended Reading:
 Gravelle and Rees, Chapter 1.
 Koutsoyiannis, Chapter 1.
 Kreps, Chapter 1.
 Nicholson, Chapters 1 & 2.
 Varian, Intermediate Microeconomics, Chapter 1.
Topic One: Consumer Theory (Lectures 2-5):
Rationality and choice, constrained optimisation and duality theory.
Recommended Reading:
 Gravelle and Rees, Chapters 2, 3 & 4.
 Koutsoyiannis, Chapter 2.
 Kreps, Chapter 2
 Nicholson, Chapters 2 to 6.
 Varian, Chapters 6, 7 & 8.
 Varian, Intermediate Microeconomics, Chapters 2, 3, 4, 5, 6, 8.
Topic Two: Choice Under Uncertainty and Insurance (Lectures 6-8):
Expected utility theory and risk preference, the demand for insurance, moral
hazard and adverse selection.
Recommended Reading:
 .
 Gravelle and Rees, Chapters 17 & 19.
 Kreps, Chapter 3.
 Nicholson, Chapter 18
 Varian, Chapter 11
 Varian, Intermediate Microeconomics, Chapters 12 & 30.
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Topic Three: The Theory of the Firm (Lectures 9-11):
Technology and production functions, profit and cost functions, and duality
approaches.
Recommended Reading:
 Gravelle and Rees, Chapters 5,6 & 7.
 Kreps, Chapters 7 & 8.
 Koutsoyiannis, Chapter3 & 4.
 Nicholson, Chapters 7, 8, & 9.
 Varian, Chapters 1,2,3, 4 & 5 .
 Varian, Intermediate Microeconomics, Chapters 18, 19, 20, 21 & 22.
Topic Four: Imperfect Competition (Lectures 12-14)
Oligopoly (classical and game theoretic), and static and dynamic models.
Recommended Reading:
 Gravelle and Rees, Chapters 15 & 16.
 Kreps, Chapter 10.
 Koutsoyiannis, Chapters 9, 10 & 19.
 Nicholson, Chapters 14 & 15.
 Varian, Chapters 15 & 16.
 Varian, Intermediate Microeconomics, Chapters 27, 28 & 29.
Topic Five: Competitive General Equilibrium (Lectures 15-19)
The market mechanism, the two fundamental theorems of welfare economics,
and market failure.
Recommended Reading:
 Gravelle and Rees, Chapters 12, 13, 14 & 21.
 Koutsoyiannis, Chapter 22 & 23.
 Kreps, Chapter 6.
 Nicholson, Chapter 12.
 Varian, Chapter 21, 22, 23 and 24.
 Varian, Intermediate Microeconomics, Chapters 31, 32 & 33.
Lecture 20: Summary, Revision & Exam Preparation
Discussion of relevant past exam papers and guidance regarding relevance of
past exam papers)
Prior to the lecture, students will be asked to request what they would like to
discuss in the last session.
Note that the schedule of topics may be altered.
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ECN6520
Macroeconomic Analysis
Personnel
Module leader
Contact details
Prof Christoph Thoenissen
Room 408
Prerequisites
A knowledge of advanced undergraduate macroeconomics will be assumed.
Module Aims and Objectives
Aims:
 To analyse the aims of monetary policy in advanced economies, including the
design of optimal monetary policy.
 To provide students with an advanced understanding of fiscal policy, debt
dynamics with references to sovereign debt crises.
 An introduction to the concept of financial frictions in the context of the recent
financial crisis.
 Setting up dynamic framework with which to analyse long-run economic
growth (Ramsey Model) as well as short-run fluctuations (real business cycle
theory)
 To examine the role of exchange rates and current accounts in dynamic open
economy macroeconomics.
The intended learning outcomes are that by the end of the module you should
demonstrate:





An understanding of the aims and challenges faced by monetary policy
makers.
An understanding the role of fiscal policy and debt dynamics and be able to
comment on the origins of Europe’s debt crisis.
An understanding and knowledge of the role of financial frictions and financial
intermediation in macroeconomics.
An understanding and knowledge of dynamic macroeconomics models for
the analysis of both economic growth and short-run fluctuations.
An understanding of how the exchange rate and current account affect the
transmission mechanism in open economies.
Transferable Skills
 Problem solving
 Group work
 Presentation skills
 Analytical thinking
Student Responsibilities
This is a 15 credit module and therefore it is expected it will require 150 study hours
per student (including formal teaching hours). As a rough guideline this means you
should expect to devote about 10 hours of study time per week to this module during
8
a 15 week semester.
Attendance at all lectures and Workshops is compulsory and will be monitored.
Workshop exercises will be placed on MOLE at least one week prior to the
Workshop session and you are expected to work through the exercises prior to the
Workshop, and to bring your answers to the class.
Workshops are NOT about giving out answers to the Workshop problems, but
instead will focus on discussing particular aspects of the material presented that
students have found difficult. Students should make use of staff consultation and
feedback times to discuss any issues they have with the module and which are not
resolved in Workshops
Assessment
The assessment of this module will be by unseen exam (70%) and a by class tests
worth a total of 30%.
The exam will be 2 hours and the class test(s) will be 1 hour. A specimen exam
paper is on the module website – please note that the content of this course has
changed from previous years.
The pass mark for this module is 50% overall and there is a minimum mark required
for every component of 40%.
Any change to assessment arrangements will be announced in lectures and also via
the website.
Reassessment
In the case of students who fail the assessment of this module, repeat assessment
will be by 2 hour exam. Resit marks will be capped at 50%. Resit candidates must
consult the website for further information, up until the time of the reassessment, not
merely in semester time.
Website
Students must read the module website regularly. The header on the homepage will
indicate new posts but students should also check regularly for announcements.
Where students are expected to have access to lecture notes in the lecture these will
always be posted at least 24 hours before the lecture and Seminar/Workshop
assignments at least one week before the relevant session.
Student Feedback
The module website has a Module Feedback Report which gives a detailed account
by the module leader of the student experience on this module last year In addition
there will be feedback on your understanding of this module during the course of
module delivery. Feedback on your understanding as the module progresses as well
as on all the elements of module assessment can be obtained at any time by using
C&F hours.
9
Course Outline
A detailed course outline and relevant reading materials will be posted online once
the course has started. The first few lectures will be based on material presented in
Macroeconomics: Imperfections, Institutions and Policies, by Wendy Carlin and
David Soskice. OUP 2005. In addition to that, you will be required to consult other
text books, available in the University Library, as well as scholarly articles, as
directed.
Preliminary outline:
1. Inflation, unemployment and a framework for monetary policy analysis.
2. Monetary Policy in macroeconomic model.
3. The design of optimal monetary policy.
4. Fiscal policy, the role of state and debt dynamics
5. Debt crises & fiscal consolidation in the context of the recent European
experience.
6. Financial frictions in macroeconomics.
7. Ramsey’s model of economic growth.
8. Real business cycle theory.
9. Aspects of open economy macroeconomics
Note that the schedule of topics may be altered.
10
ECN6540
Econometric Methods
Personnel
Module leader
Contact details
Professor Karl Taylor
Room 505; email address: [email protected];
Prerequisites
none
Module Aims and Objectives
Aims:
 to provide thorough grounding in econometric techniques of the classical linear
regression model; hypothesis testing and problems of non-spherical disturbances;
 introduce students to topics in microeconometrics including modelling discrete
binary variables, censoring and sample selection;
 introduce students to topics in macroeconometrics
forecasting, stationarity, and cointegration;
including
economic
 enable students to grasp the essentials of regression output to allow them to
access journal articles;
 develop experience of using specialist econometric software STATA.
The intended learning outcomes are that by the end of the module you should
demonstrate:
 an understanding of how to conduct standard hypothesis tests;
 a knowledge of regression analysis and appraise the problems associated with
using OLS when classical assumptions are violated;
 how to interpret results under alternative functional forms;
 an ability to estimate and interpret multivariate regression models;
 an appreciation of the use of dummy i.e. binary controls as explanatory variables;
 a knowledge of how to model discrete dependent variables and the problems
associated with the linear probability model;
 an understanding of censored regression analysis and sample selection and
interpretation of results;
 a knowledge of non stationarity, unit root tests and spurious regression;
 an appreciation of cointegrating relationships between non stationary variables
and how this relates to economic theory.
Transferable Skills
11
 Experience of using dedicated empirical software.
 An ability to interpret empirical analysis in journal articles.
Student Responsibilities
This is a 15 credit module and therefore it is expected it will require 150 study hours
per student (including formal teaching hours). As a rough guideline this means you
should expect to devote about 10 hours of study time per week to this module during
a 15 week semester.
Attendance at all lectures and computer practicals is compulsory and will be
monitored.
The purpose of lectures is to provide an introduction and overview of concepts and
techniques. There is one two hour lecture per week plus four computer practical’s
consisting of hands on exercises using the STATA econometrics package
commencing in week 5.
Students will also be expected to prepare exercises using the STATA package in
their own time prior to classes. FOR EVERY ONE HOUR PRACTICAL STUDENTS
ARE EXPECTED TO WORK 5 HOURS IN THEIR OWN TIME.
Students should make use of consultation and feedback times to discuss any issues
they have with the module.
Assessment
The assessment of this module will be 100% by unseen examination. The exam will
be 3 hours in length with an additional 15 minutes to read the paper. A specimen
paper is on the module website. The pass mark for this module is 50%. Any change
to assessment arrangements will be announced in lectures and also via the website.
Reassessment
In the case of students who fail the assessment of this module, repeat assessment
will be by unseen 3 hour examination with an additional 15 minutes to read the
paper. Resit marks will be capped at 50%. Resit candidates must consult the website
for further information, up until the time of the reassessment, not merely in semester
time.
Website
Students must read the module website on MOLE regularly. The header on the
homepage will indicate new posts but students should also check regularly for
announcements.
12
Lecture notes will always be posted at least 24 hours before the lecture and practical
assignments at least one week before the relevant session.
Student Feedback
The module website has a Module Feedback Report which gives a detailed account
by the module leader of the student experience on this module last year. For the
class test soon after the marks are released, feedback will be given on the website
on performance in the test.
Feedback on your understanding as the module progresses as well as on all the
elements of module assessment can be obtained at any time by using C&F hours.
Recommended reading:
Dougherty, C. (2011) Introduction to Econometrics, Oxford: Oxford University Press.
Gujarati, D. (2003) Basic Econometrics, McGraw Hill.
Studenmund A.H. (2006), Using Econometrics: A Practical Guide. Addison Wesley.
Verbeek, M. (2005) A Guide to Modern Econometrics, Chichester: John Wiley.
Greene, W.H. (2003) Econometric Analysis, 5th edition. MacMillan.
Background Statistics – Week 1
TOPICS STUDIED:
1. Linear Regression Analysis – Week 2
Dougherty ch. 2-3; Studenmund
ch.2-5; Verbeek ch. 2.
2. Linear Regression Analysis & Hypothesis
Testing in the Linear Model – Week 3
Dougherty ch. 2-3; Studenmund
ch.2-5; Verbeek ch. 2.
3. Multiple Regression Analysis and Data
Transformations – Week 4
Dougherty ch. 4, 5; Studenmund
ch.7; Verbeek ch. 3.
4. Heteroscedasticity & Autocorrelation – Week 5
Dougherty ch. 8, 13; Studenmund
ch.9, 10; Verbeek ch. 4.
5. Dummy Variables – Week 6
Dougherty ch.6; Studenmund
ch.7
13
WEEK 7 CLASS TEST
6. Microeconometrics: Binary Dependent
Variables – Week 8
Dougherty ch.11; Studenmund
ch.13
7. Microeconometrics: Censored Regression
Analysis and Sample Selection – Week 9
Verbeek ch. 7, Greene ch. 21, 22;
Gujarati ch. 15; Studenmund
ch.13.
8. Macroeconometrics: Stationarity and Unit
Roots, ADF, KPSS tests – Week 10
Verbeek ch. 8, Greene ch. 20;
Gujarati ch. 21, 22; Studenmund
ch. 12, 14.
9. Macroeconometrics: Cointegration and
Spurious Regression, Engle-Granger
Analysis – Week 11
Verbeek ch. 9, Greene ch. 20;
Gujarati ch. 15; Studenmund ch.
12, 14.
WEEK 12 MOCK PAPER
Note that the schedule of topics may be altered.
14
ECN6570
Modern Theory Of Banking And Finance
Personnel
Module leader
Contact details
Alberto Montagnoli
Room no. 514, 9 Mappin Street.
Tutor
Email: [email protected]
Alberto Montagnoli
Prerequisites
None
Module Aims and Objectives
The aim of this module is to introduce students to concepts associated with money,
financial institutions, monetary policy and the economy. Particular attention will be paid
to the role of money and interest rates in the economy and how they are
interconnected to determine monetary policy.
Students will analyse the banking systems including how they currently work. The
module also explores the role of information in determining the equilibrium rate of
return for an asset, the concept of market efficiency, information asymmetries and their
implications for moral hazard and adverse selection problems. The module
emphasises both theoretical and practical considerations. On completing this module,
students will acquire a working knowledge of lexicon, theory, and tools associated with
monetary theory and understand of how the economy and financial markets fit
together.
The intended learning outcomes are that by the end of the module you should
demonstrate:
• An understanding of the recent research topics and debates in this area.
• An ability to critically discuss issues in Banking and Finance
• An appreciation and understanding of some simple econometric techniques
Transferable Skills
Analytical skills, individual research, effective communication, critical thinking.
Student Responsibilities
This is a 15 credit module and therefore it is expected it will require 150 study hours
per student (including formal teaching hours). As a rough guideline this means you
should expect to devote about 10 hours of study time per week to this module during a
15
15 week semester.
Attendance at all lectures and Workshops is compulsory and will be monitored.
Workshop exercises will be placed on MOLE at least one week prior to the Workshop
session and you are expected to work through the exercises prior to the Workshop,
and to bring your answers to the class.
Workshops are NOT about giving out answers to the Workshop problems, but instead
will focus on discussing particular aspects of the material presented that students have
found difficult. Students should make use of staff consultation and feedback times to
discuss any issues they have with the module and which are not resolved in
Workshops
Assessment
The assessment of this module will be by 100% unseen examination.
The exam will require the student to answer 3 out of 5 questions in three hours. A
specimen paper is on the module website
The pass mark for this module is 50% overall and there is a minimum mark required
for every component of 40%. Any change to assessment arrangements will be
announced in lectures and also via the website.
Reassessment
In the case of students who fail the assessment of this module, repeat assessment will
have the same structure as the main exam. Resit marks will be capped at 50%. Resit
candidates must consult the website for further information, up until the time of the
reassessment, not merely in semester time.
Website
Students must read the module website regularly. The header on the homepage will
indicate new posts but students should also check regularly for announcements.
Where students are expected to have access to lecture notes in the lecture these will
always be posted at least 24 hours before the lecture and Workshop assignments at
least one week before the relevant session.
Student Feedback
The module website has a Module Feedback Report which gives a detailed account by
the module leader of the student experience on this module last year. In addition there
will be feedback on your understanding of this module; this consists of a small essay
(see MOLE for all the details). Here, you will show your ability to critically discuss a
contemporary issue in Banking and Finance. Feedback on your understanding as the
module progresses as well as on all the elements of module assessment can be
obtained at any time by using C&F hours.
16
Reference textbook
Tirole, J. (2010). The theory of corporate finance. Princeton University Press.
Copeland, T.E., Weston, J.F. and Shastri, K. (2004). Financial Theory and Corporate
Policy, Addison-Wesley.
Other useful textbooks
Freixas, X., & Rochet, J. C. (1997). Microeconomics of banking. Cambridge, MA: MIT
Press.
Allen D. and Gale D. (2009) Understanding Financial Crises (Clarendon Lectures in
Finance), Oxford University Press, Oxford.
Other readings will be announced during the lectures.
Note that the schedule of topics may be altered.
Week Topic
1
Intro: The importance of finance. Financial System in
Europe The USA and Asia; financial system and
economic performance.
2
3
4
Consumption and Investment decisions without
capital markets
Implications of the model of investment under perfect
capital markets
Moral Hazard (Short Term)
1. The fixed-investment model
a. Credit rationing
b. Sensitivity of investment to cash flow
c .Debt overhang
Reading
- Allen, Franklin, Michael KF
Chui, and Angela Maddaloni.
"Financial Systems in Europe,
the USA, and ASIA." Oxford
Review of Economic Policy 20.4
(2004): 490-508.
- Greenwood, Robin, and
David Scharfstein. 2013.
"The Growth of Finance."
Journal of Economic
Perspectives, 27(2): 3-28.
- Tirole 2.5
Copeland and Weston 1
Copeland and Weston 1, 2
Tirole 3 - 3.1, 3.2 (3.2.1,
3.2.2, 3.2.7), 3.3, 3.4
2. The continuous-investment model
5
7
a. The equity multiplier (borrowing capacity)
b. Collateral (salvage values) and financial structure
Implications for macroeconomics of Asymmetric
information
Adverse Selection
17
Tirole 13.1, 13.2, 13.4, 13.5;
14 - 14.3
Tirole 6 - 6.1, 6.2 (6.2.1,
6.2.2 (only Application 1)),
6.3 (only Introduction).
8
9
10
Why do banks are special? Monitoring
Why do banks are special? Liquidity
TBA
18
Tirole 13.3
Tirole 12.1, 12.2 and 12.3
ECN6580
Personnel
Module leader
Contact details
Guest lecturer
Health Economics
Dr Tessa Peasgood
Room 2067, Regents Court
[email protected]
Dr Rodrigo Moreno-Serra
Prerequisites
None
Module Aims and Objectives
Aims
 to apply economic analysis to the market for health and health care and
 to develop the skills required for the analysis of key issues in health economics.
The intended learning outcomes are that by the end of the module you should
demonstrate:
 a comprehensive understanding of how advanced microeconomics can be used
to address issues relating to the financing and provision of health care;
 insight into the limitations of the neoclassical paradigm;
 the ability to understand, and critically assess the relevance of, recent
contributions to the literature.
Transferable Skills
 Presentation skills
 Independent research
 Critical thinking
 Report writing
Timetable
 Ten 2-hr lectures between wk1 and wk10
 One 2-hr student presentation session wk9
 One 3-hr student conference wk10
 One 2-hr revision and writing skills session wk11
Student Responsibilities
 This is a 15 credit module and therefore it is expected it will require 150 study
hours per student (including formal teaching hours). As a rough guideline this
means you should expect to devote about 10 hours of study time per week to this
module during a 15 week semester.
 Attendance at all lectures and the two Friday sessions is compulsory and will be
monitored.
 Students should make use of staff consultation and feedback times to discuss
any issues they have with the module.
19
Assessment
The assessment of this module will be by unseen exam (75%), and assignment
(25%).
Coursework
Coursework is in the form of an essay, and students set their own question. You are
strongly advised to choose a question which addresses a core part of the curriculum
of this module. This should be seen as an opportunity to take a more in-depth look at
the current research for a particular topic. Details of the coursework will be discussed
during the wk1 lecture.
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Deadline: TBC
Page limit is strictly 12 pages of A4 (including appendices and references). It
must be word-processed, and in Arial font 12, double spaced, with a minimum
2cm margins all around.
Harvard referencing must be used (see
https://librarydevelopment.group.shef.ac.uk/shefonly/referencing/economics_harvard.html)
Coursework must always be submitted by no later than 3.00pm on the day of the
deadline. Unauthorised late submissions will incur a penalty of 5% of the mark
per day for 5 working days and after that a mark of zero.
Coursework must be submitted with the electronic cover sheet, via Turnitin
(accessed through MOLE).
You should write your registration number in the 'essay title' box when you upload
coursework. If essays are uploaded without a registration number in the essay
title it may lead to delays in releasing your marks compared to other students.
You should download and retain all of your electronic feedback so that you have
a permanent record when the module ends and you no longer have MOLE
access.
Feedback and marks will be available within 3 working weeks.
The exam
The exam will be 2 hours long. A specimen paper is on the module website. You
may be examined on any aspect of the course.
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The pass mark for this module is 50% overall and there is a minimum mark
required for every component of 40%.
Any change to assessment arrangements will be announced in lectures and also
via the website.
Reassessment
 In the case of students who fail the exam of this module, repeat assessment will
be by re-sit exam. In the case of students who fail the coursework of this module,
repeat assessment will be by re-submission of the coursework.
 Resit marks will be capped at 50%.
 Resit candidates must consult the website for further information, up until the time
of the reassessment, not merely in semester time.
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Website
 Students must read the module website on MOLE regularly. The header on the
homepage will indicate new posts but students should also check regularly for
announcements.
 Where students are expected to have access to lecture notes in the lecture these
will always be posted at least 24 hours before the lecture. Any powerpoint
presentations used in the lectures will be posted after the lecture.
Student Feedback
 The module website has a Module Feedback Report which gives a detailed
account by the module leader of the student experience on this module last year.
 In addition there will be feedback on your understanding of this module during the
course of module delivery. The lectures will be informal with opportunities to ask
questions and seek clarification of understanding.
 Soon after coursework is returned to students, general feedback will be given on
the website on performance in the coursework, in addition to the individual
feedback given via Turnitin.
 Feedback on your understanding as the module progresses as well as on all the
elements of module assessment can be obtained at any time by using C&F
hours.
 The on-line discussion board via MOLE provides an opportunity for students to
ask (and respond to) questions and seek clarification of understanding. This will
be monitored regularly by the course leader.
 Feedback will be given both verbally and in writing on the student presentations.
 Students will complete a mock exam question which will be informally assessed
by the students themselves and the group in the Wk11 revision lecture. Students
will not be given a mark for this essay. Feedback will specifically focus on essay
technique.
Course Outline and Reading
One of the distinguishing features between taking a masters level health economics
course rather than undergraduate level is the expectation that you will read and
appraise research in its original form rather than rely on text books.
There is no single textbook that covers all the material of the course, but the
following books give basic introduction to a number of topics.
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Dolan P, Olsen JA (2002), Distributing Health Care: Economic and Ethical
Issues, Oxford University Press
Folland S, Goodman AC, Stano M (2009), The Economics of Health and Health
Care, 6th ed, Pearson Education
Jones, AM ed (2012), The Elgar Companion to Health Economics, 2nd ed,
Edward Elgar. Parts I to VI.
Morris S, Devlin N, Parkin D, Spencer A (2012), Economic Analysis in Health
Care, 2nd ed, John Wiley (Chapters 1 to 8). This text is used in the
Undergraduate course in Health Economics at Sheffield. If you have not
completed an undergraduate module on health economics, this would make
useful preparatory reading.
21
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Kweifel, P (2009) Health Economics, London Spriner, 2nd ed.
Other general references
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Culyer AJ, Newhouse JP eds. (2000), Handbook of Health Economics, Vols. 1A
& 1B, Elsevier Science [vol. 1A available as e-book from Library]
Donaldson C, Gerard K (2005), Economics of Health Care Financing: The Visible
Hand, 2nd ed, Palgrave McMillan
Glied S, Smith PC eds (2011), The Oxford Handbook of Health Economics,
Oxford University Press
McGuire A, Henderson J, Mooney G (1988), The Economics of Health Care: An
Introductory Text, Routledge [available as e-book from Library]
Mooney G (2009), Challenging Health Economics, Oxford University Press
[available as e-book from library]
Olsen JA (2009), Principles in Health Economics and Policy, Oxford University
Press
Rice T (2003), The Economics of Health Reconsidered, 2nd ed, Health
Administration Press
Specific reading by week
!!!!!Those marked with ** MUST be read prior to the lecture!!!!
How to prepare for the lecture:
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Carefully read the identified paper(s) – if necessary more than once.
Look up any concepts you are not familiar with (you may wish to use the
discussion board on MOLE to post questions) – and keep your own notes.
Make notes on the key points & highlight key text.
Think about how any arguments made relate to other papers/theories – including
those outside of health economics.
Consider your own opinion – Does any argument make sense? What are the
strengths/weakness of the argument? Are claims supported by empirical
evidence? Is it relevant to health care provision in your own country?
Be prepared to talk about the paper.
week 1: Introduction to Health Economics; & Characteristics of health and health
care
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Culyer AJ, Newhouse JP (2000), The state and scope of health economics, In
Handbook of Health Economics, Vol. 1B (Culyer AJ, Newhouse JP eds) Elsevier
Science (pp 1-7)
**Arrow KJ (1963), Uncertainty and the welfare economics of medical care,
American Economic Review, 53, 941-967. (the appendix is optional)
Savedoff WD (2004) Kenneth Arrow and the birth of health economics. Bulletin of
the World Health Organization, 82(2), 139-140. ( a very short commentary on the
Arrow paper from a public health perspective)
You may wish to look over this Special Journal Issue on Arrow’s contribution to
22
health economics - Journal of Health Politics, Policy and Law 26.5, October 2001,
Special Issue: Kenneth Arrow and the Changing Economics of Health Care
week 2: Production of health
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**Bolin K (2011), Health production, in Glied S, Smith PC eds , The Oxford
Handbook of Health Economics, Oxford University Press
**Leibowitz AA (2004), The demand for health and health concerns after 30
years, Journal of Health Economics, 23: 663-671
Evans RG, Stoddart GL (1990), Producing health, consuming health care, Social
Science and Medicine, 31(12): 1347-63
Jones, AM, Rice, N, Contoyannis, P & Jones, AM (ed.) 2012, 'The dynamics of
health'. in The Elgar Companion to Health Economics. Edward Elgar.
If you wish to explore some of the more recent debates on the Grossman model, the
following make interesting reading:
-
Zweifel, P. (2012) The Grossman model after 40 years. Eur J Health Economics,
13:677-682.
Kaestner, R. (2013). The Grossman model after 40 years: a reply to Peter Zweifel.
European Journal of Health Economics, 14, 357-360.
Zweifel, P. (2013). The Grossman model after 40 years: response to Robert Kaestner.
The European Journal of Health Economics, 14(2), 361-362.
Laporte, A. (2014). Should the Grossman model retain its Iconic status in health
economics?
week 3: Health care insurance
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**Pauly MV (1968), The economics of moral hazard: comment, The
American Economic Review, 58(3):531-537
**Nyman JA (1999), The economics of moral hazard revisited, Journal of
Health Economics, 18: 811-824
Nyman JA (2012) The value of health insurance in The Elgar Companion to
Health Economics. Edward Elgar. pp 93-103
**Rice T (1992), An alternative framework for evaluating welfare losses in
the health care market, Journal of Health Economics, 11:85-92
wk 4: Information
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-
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**Labelle R, Stoddart G, Rice T (1994), A re-examination of the meaning and
importance of supplier-induced demand, Journal of Health Economics, 13,
347-368
**Pauly MV (1994), Editorial: A re-examination of the meaning and
importance of supplier-induced demand, Journal of Health Economics, 13:
369-372
**Carlsen F, Grytten J, (2000), Consumer satisfaction and supplier induced
demand, Journal of Health Economics, 19(5): 731-753
Thomas Rice, The physician as the patients agent, Elgar Companion to Health
Economics, 2012 p271-178
Peacock and Richardson, Supplier-induced demand: re-examining identification
and misspecification in cross-sectional analysis, Eur J Health Econ, 2007, 8:26723
277
week 5: Welfarist and non-welfarist health economics
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-
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Tsuchiya A, Williams A (2001), Welfare economics and economic evaluation. in
Drummond M, McGuire A, eds, Theory and Practice of Economic Evaluation in
Health Care, Oxford University Press
**Birch S, Donaldson C (2003), Valuing the benefits and costs of health care
programmes: where's the ‘extra’ in extra-welfarism?, Social Science &
Medicine, 56(5): 1121-1133
Culyer AJ (1989), The normative economics of health care finance and provision,
Oxford Review of Economic Policy, 5(1) 34-58.
Hurley J (2000), An overview of the normative economics of the health sector, in
Culyer AJ, Newhouse JP eds Handbook of Health Economics, Vol. 1A, Elsevier
Science [available as e-book from Library]
Tsuchiya A, Miyamoto J (2009), Chapter 20 Social choice in health and health
care, in Anand P, Puppe C, Pattanaik P. eds, Handbook of Rational and Social
Choice, Oxford University Press
You may also wish to have a read of this book by Gavin Mooney. He tends of write in
a very accessible manner.
Mooney G (2009), Challenging Health Economics, Oxford University Press [available
as e-book from library]
week 6: Equity and equality
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**Culyer AJ Wagstaff A (1993), Equity and equality in health and health
care, Journal of Health Economics, 12, 431-457
**Fleurbaey M, Schokkaert E, Unfair inequalities in health and health care,
Journal of Health Economics, 28(1): 73-90
Wagstaff A (1994). QALYs and the equity-efficiency trade-off. In Layard A,
Glaister S, eds. Cost-Benefit Analysis. 2 ed. Cambridge University Press
(reprinted from Journal of Health Economics, 10:21-41, 1991, with corrections)
Williams A, Cookson R (2000), Equity in health, In Culyer AJ, Newhouse JP eds
Handbook of Health Economics, Vol. 1B, Elsevier Science.
week 7: CBA vs CEA/CUA
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-
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Garber AM, Phelps CE (1997), Economic foundations of cost-effectiveness
analysis, Journal of Health Economics, 16:1-31
**Johannesson M (1995), The relationship between cost-effectiveness
analysis and cost-benefit analysis, Social Science & Medicine, 41(4):483489
Brazier J, Ratcliffe J, Salomon J, Tsuchiya A. (2007), Measuring and Valuing
Health Benefits for Economic Evaluation, Oxford University Press; Chapter 3:
Foundations in welfare economics and utility theory: what should be valued?
**Richardson J (1994) Cost utility analysis: What should be measured?
Social Science and Medicine, 39:1 p7-21
24
wk 8: Incorporating public views in health care priority setting
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-
-
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Dolan P, Olsen JA, Menzel P, Richardson J (2003), An inquiry into the different
perspectives that can be used when eliciting preferences in health, Health
Economics, 12: 545-551
Nord E, Pinto JL, Richardson J, Menzel P, Ubel P (1999), Incorporating societal
concerns for fairness in numerical valuations of health programmes, Health
Economics, 8, 25-39.
Ratcliffe J. (2000). Public preferences for the allocation of donor liver grafts for
transplantation. Health Economics 9(2): 137-148
Richardson J, McKie J (2005), Empiricism, ethics and orthodox economic theory:
what is the appropriate basis for decision-making in the health sector? Social
Science & Medicine, 60: 265-275
Schwappach D (2003), Does it matter who you are or what you gain? An
experimental study of preferences for resource allocation, Health Economics.
12(4):255-262
**Tsuchiya A, (2012) "Distributional judgements in the context of economic
evaluation" in Jones, AM (ed), The Elgar Companion to Health Economics
2nd edition pp.406-414, Edward Elgar [Eoffprint available]
Additional interesting reading:
Health outcomes in economic evaluation: the QALY and utilities, Sarah J. Whitehead
and Shehzad Ali, British Medical Bulletin 2010; 96: 5–21 (easy read giving a
reasonable overview)
More recent research:
-
-
Executive Summary from: Brazier J, Rowen D, Mukura C, Whyte S, Keetharuth
A, Risa Hole A, Tsuchiya A, Shackley P (2013) 'Eliciting societal preferences for
burden of illness, therapeutic improvement and end of life for value based pricing:
a report of the main survey. Report for the Department of Health.
(http://www.eepru.org.uk/VBP%20survey%20research%20report.pdf)
The social value of a QALY: raising the bar or barring the raise? Cam Donaldson
et al (2011), BMC Health Services Research
Lancsar et al (2011) ‘Deriving Distributional Weights for QALYs through Discrete
Choice Experiments’, Journal of Health Economics; 30: 466-478
Mason H, Jones-Lee M, Donaldson C. Modelling the monetary value of a QALY:
a new approach based on UK data. Health Econ 2008
Week 9: Health care systems and equity in finance
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Wagstaff A, van Doorslaer E (1992), Equity in the finance of health care: Some
international comparisons, Journal of Heath Economics, 11: 361-387
**Wagstaff A, van Doorslaer E, et al (1999), Equity in the finance of health
care: some further international comparisons, Journal of Health
Economics, 18: 263-290
Chapter 3. Risk pooling mechanisms. Health Financing Revisited. The World
Bank. (p73-114)
** Wagstaff, A. (2010) Social Health Insurance Reexamined, Health
Economics, 19: 503-517
25
NHS:
These are some on-line resources to help understand the structure of the NHS. You
will not be expected to know details of the NHS structure, but some general
background on how the NHS operates and commissions services helps set the
context for the debates around financing and commissioning.
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http://www.nhs.uk/NHSEngland/thenhs/Pages/thenhshome.aspx <accessed 2
July 2014> (see links for NHS explained)
25 page document from NHS England. http://www.england.nhs.uk/wpcontent/uploads/2014/06/simple-nhs-guide.pdf
Kings Fund cartoon guide to NHS (only about 6 minutes long)
https://www.youtube.com/watch?v=8CSp6HsQVtw&feature=player_detailpage
Some useful resources on international health care financing can be found here:
http://www.who.int/topics/health_economics/en/ (accessed 15th August, 2014)
Affordable care act:
It’s also interesting to have a look at some of the recent changes in America through
the Affordable Care Act (and some of the resistance to it!).
-
You can get some fun youtube videos setting out the changes in the health care
reforms, e.g. http://www.youtube.com/watch?v=Dqabs9xysYA
This paper offers a reasonable summary; Gruber, J. (2011). The Impacts of the
Affordable Care Act: How Reasonable Are the Projections? (No. w17168).
National Bureau of Economic Research.
Week 10: Competition in health care provision. A case study
Dr Rodrigo Moreno-Serra
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**Gaynor M, Moreno-Serra R, Propper C (2013), Death by market power:
reform, competition, and patient outcomes in the National Health Service,
American Economic Journal: Economic Policy, 5(4):134-166.
You may want to have a look at two other studies which also evaluate the impacts of
pro-competition reforms in the English NHS:
-
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Cooper Z, Gibbons S, Jones S, McGuire A (2011), Does hospital competition
save lives? evidence from the English NHS patient choice reforms, The
Economic Journal, 121(554):F228-F260.
Propper C, Burgess S, Gossage D (2008), Competition and quality: evidence
from the NHS internal market 1991-1996, The Economic Journal 118:138-170.
Two good overviews of the state-of-the art of the economic research on healthcare
provider competition are:
-
Propper C, Leckie G (2011), Increasing competition between providers in health
26
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care markets: the economic evidence. In Glied S, Smith PC, Oxford Handbook of
Health Economics, 432-462, New York, Oxford University Press [Less technical]
Gaynor M, Town RJ (2012), Competition in health care markets, Centre for
Market and Public Organisation Working Paper 12/282, January.
(http://www.bristol.ac.uk/cmpo/publications/papers/2012/wp282.pdf) [More
technical]
Key databases for finding Health Economics papers
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EconLit
MedLine
EMBASE
Social Science Citation Index (SSCI)
SCOPUS
NHS Economic Evaluations Database (NHS EED)
Health Economic Evaluations Database (HEED)
Key journals in health economics
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Value in Health
Health Economics
Journal of Health Economics
Applied Health Economics and Health Policy
European Journal of Health Economics
Health Economics, Policy and Law
Medical Decision Making
Pharmacoeconomics
Social Science and Medicine
Additional reading may be given at a later stage.
Note that the schedule of topics may be altered.
[version 20 Sep 2014]
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MGT6097: Corporate Finance
Semester:
Credits:
Autumn
15
Core/Approved:
Core
Module Leader:
Dr. Shuxing Yin
Contact details:
[email protected]
Other teaching staff: Dr. Oleksandr Talavera
Dr. Neng Jiang
Nature of Subject and Aims
The purpose of the course is to give a solid foundation in principles of corporate finance and
asset pricing to understand and analyse the major issues affecting the financial policies of
corporations. More specifically, the following topics will be dealt with: the time value of
money, valuation of bond and equity, risk/return tradeoffs, portfolio theory, initial public
offerings, capital structure, payout policy and market efficiency. The course focuses on the
quantitative and advanced aspects of finance and is aimed at those students who intend to
specialise in finance.
Learning Outcomes
On successfully completing this module students will
1) understand:
a) valuation techniques for stocks and bonds
b) pricing anomalies in initial public offerings
c) the impact that decisions on capital structure and dividend policy have on firm value
d) the importance of asymmetric information and tax for financial decisions
e) how financial decisions may convey new information on the firm’s prospects
f)
different forms of market efficiency
28
2) be able to:
g) value bonds and shares
h) provide possible theoretical explanations for the pricing anomalies experienced by initial
public offerings and critically evaluate these critically
i)
assess the rationales, assumptions and predictions of both the pecking order theory of
capital structure and the trade-off model
j)
interpret financial decisions as signals of firm’s quality
k) use the concepts of EMH to judge the appropriateness of corporate decisions
Indicative Content
The time value of money, valuation of bond and equity, risk/return tradeoffs, portfolio theory,
initial public offerings, capital structure, payout policy and market efficiency.
Teaching Methods
The module will be delivered in a weekly three-hour teaching session. This comprises 2 hours
of a formal lecture and 1 hour seminar. The lecture will introduce a new topic each week and
signpost additional reading available in addition to the formal lecture notes. The seminar time
will be devoted to discussion of a topic covered in previous lectures and will involve both lecturer
and student-led discussion and analysis. This will allow the lecturer to gauge student progress
as well as provide students with the opportunity to seek any clarification of material already
covered. You should work through all the questions before each seminar.
Lectures
Week 1
Week 2
Week 3
Tutorials
Introduction
[HRWJJ]1,2
Dr. S Yin
[BMA] 1, 2
Time value of money
[HRWJJ] 4
Dr. S Yin
[BMA] 3
Valuation of bond and equity
Time value of money
Dr. S Yin
Week 4
Recommended
Readings
Risk/return tradeoffs
[HRWJJ] 5
[BMA] 4,5
Valuation of bond and equity
29
[HRWJJ] 9, 10
Dr. S Yin
Week 5
Portfolio theory
[BMA] 8, 9
Risk/return tradeoffs
Dr. O Talavera
Week 6
Week 7
Equity financing
[HRWJJ] 10, 12
[BMA] 8, 9
Portfolio theory
[HRWJJ] 19
Dr. S Yin
[BMA] 15,16
Capital structure: basic
concepts
[HRWJJ] 15
[BMA] 18, 19
Dr. O Talavera
Week 8
Capital structure: limits to the
use of debt
Capital structure: basic
concepts
[HRWJJ] 16
[BMA] 18, 19
Dr. O Talavera
Week 9
Payout policy
Dr. O Talavera
Week 10
Market efficiency hypothesis
Capital structure: limits to the
use of debt
[HRWJJ] 18
Payout policy
[HRWJJ] 13
Dr. S Yin
Week 11
[BMA] 17
[BMA] 14
Revisions
Equity financing
Dr. S Yin & Dr. O Talavera
Group presentation
Assessments
A group presentation (25%)
A two-hour formal examination (75%)
Communications
Staff will communicate with students via announcements in lectures, tutorials and MOLE.
You should regularly check your email and MOLE. If you need to meet teaching staff
during term time, please go to their offices during the student consultation and feedback
hours posted on their office doors without an appointment. To arrange a meeting outside
their consultation hours, please email in advance. Please do make use of the discussion
board in MOLE for all matters related to the module. This will enable all students to
see our replies (this avoids the problem of emails clogging up our mailbox with the
same query!). We will check MOLE on a daily basis and will attempt to answer every query
to our best of abilities within the shortest period of time.
30
Recommend Textbooks
Hillier, D., Ross, S., Westerfield, R., Jaffe, J., and B. Jordan, (2010), Corporate Finance,
European Edition, McGraw-Hill.
Brealey, R. A., Myers S. C., and F. Allen, (2008), Principles of Corporate Finance, 9th edition,
Boston: McGraw-Hill.
31
MGT6105 Modern Finance
Module leader
Credits
Semester
Pre-requisites
& Co-requisites
Professor Chris Adcock ([email protected], room 508)
15
Autumn
ECN6540, good quantitative skills.
The subject is analytical and involves the use of mathematics, econometrics and
statistics. It also includes numerous numerical examples.
Course Objectives
The aim is to introduce some of the main principles of modern finance.
This is an analytical module, which reflects the quantitative nature of the subject and
in which each topic is developed from first principles.
Learning Outcomes
On completion of this course, students will have gained an understanding of some of
the key principles of modern finance and how they are applied.
They will also be able to carry out basic empirical work using these principles.
Teaching Methods
10 two-hour lectures.
5 one-hour seminar/tutorials.
Assessment
Three hour unseen examination with supplied formula sheet.
Reading Weeks
There are two reading weeks.
These will be scheduled later in the term.
It is likely, but not definite, that they will take place in weeks 11 and 12.
32
Department
Of
Economics
Postgraduate Economics modules 2014-15
Spring Semester
33
ECN601 Applied Microeconometrics
Personnel
Module leader
Contact details
Other Lecturers
Contact details
Arne Risa Hole
Email: [email protected]
Anita Ratcliffe
Email: [email protected]
Tutors Arne Risa Hole and Anita Ratcliffe
Prerequisites
ECN6540 Quantitative Methods in Economics
Module Aims and Objectives
The aim of the module is to build on the skills provided in ECN6540 Quantitative
Methods in Economics in order to develop further students' econometric skills, using
examples from different areas of applied microeconomics.
The intended learning outcomes are that by the end of the module you should
demonstrate an ability to:
· Critically evaluate existing studies in applied microeconometrics
· Develop and test your own models and hypotheses using econometric
techniques
· Produce basic original applied microeconometric studies
Transferable Skills
· Doing individual research on a policy-relevant topic in economics
· Data analysis using appropriate software
· Report writing
Timetable
A preliminary timetable for the module is attached to this outline.
34
ECN602
Applied Macroeconometrics
Personnel
Module leader
Contact details
Dr Georgios Efthyvoulou
[email protected]
Prerequisites
ECN6540 Econometric Methods
This module requires a strong background in econometrics, and therefore assumes
that students have taken and achieved a good grade in ECN6540.
Module Aims and Objectives
Aims
macroeconomics and finance which uses time series methods;
The intended learning outcomes are that by the end of the module you should be able
to:
and financial data;
analyse
macroeconomic and financial data by scholars and market analysts;
selected model;
-varying models may capture the changing properties of
macroeconomic variables over business cycle expansions and contractions;
some of the problems associated with estimating time series data;
c software to analyse macroeconomic and
financial data.
Transferable Skills
The skills that will be acquired/enhanced in the course of this module are:
- data analysis and interpretation;
- individual research;
- report writing.
Timetable
Lectures: There will be ten lectures over the semester, two hours each.
The purpose of lectures is to provide an introduction and overview to concepts and
techniques but should not be interpreted as a definitive coverage of all relevant
applications.
Computer labs: There will be four computer labs over the semester, one hour each.
The weeks in which labs will be held will be announced at the beginning of the
semester.
35
Student Responsibilities
This is a 15 credit module and therefore it is expected it will require 150 study hours
per student (including formal teaching hours). As a rough guideline this means you
should expect to devote about 10 hours of study time per week to this module during a
15 week semester.
Attendance at all lectures and computer labs is compulsory and will be monitored.
Computer lab exercises will be placed on MOLE2 at least one week prior to the lab
session and you are expected to work through the exercises prior to the lab.
Computer labs are NOT about giving out answers to the lab problems, but instead will
focus on discussing particular aspects of the material presented that students have
found difficult. Students should make use of staff consultation and feedback times to
discuss any issues they have with the module and which are not resolved in labs.
Assessment
The assessment of this module will be by an assignment (50%) and an unseen exam
(50%).
Coursework questions will be available no later than Wednesday 26th February, week
3. Submission date will be Wednesday 2nd April, week 8. All assignments shall adhere
to the following specifications: font type: Arial; font size: 12; line spacing: double;
referencing style: Harvard. All tables and figures must be labelled (numbered) and
must have self-explanatory titles. Further details about the length and the nature of
assignment will be given closer to the date.
Coursework must always be submitted in hard copy to the Enquiry Office, and by no
later than 3.00pm on the day of the deadline. Unauthorised late submissions will incur
a penalty of 5% of the mark per day for 5 working days and after that a mark of zero. A
Turnitin submission should be made within 5 working days of the paper copy deadline.
Failure to submit an assessment to Turnitin by this date will lead to a zero mark for the
assessment. Marked coursework will be returned within 3 working weeks. The exam
will be 2 hours. A specimen paper will be available on the module website at the
beginning of the semester.
The pass mark for this module is 50% overall and there is a minimum mark required
for every component of 40%. Any change to assessment arrangements will be
announced in lectures and also via the website.
Reassessment
In the case of students who fail the assessment of this module, reassessment will be
on the element(s) of the assessment that they have failed (exam/assignment). Resit
marks will be capped at 50%. Resit candidates must consult the website for further
information, up until the time of the reassessment, not merely in semester time.
36
Website
Students must read the module website regularly. The header on the homepage will
indicate new posts but students should also check regularly for announcements.
Where students are expected to have access to lecture notes in the lecture these will
always be posted at least 24 hours before the lecture and lab exercises at least one
week before the relevant session.
Students are encouraged to use the discussion forum on the module website to
discuss queries about the module or the material covered in class. The lecturer will
check and respond, if necessary, to queries posted on the discussion forum.
Student Feedback
The module website has a Module Feedback Report which gives a detailed account
by the module leader of the student experience on this module last year. In addition
there will be feedback on your understanding of this module during the course of
module delivery. Soon after coursework is returned to students, generic feedback will
be given on the MOLE website on performance in the coursework, in addition to the
detailed individual feedback given on the pink cover sheet which accompanies
returned coursework.
Feedback on your understanding as the module progresses as well as on all the
elements of module assessment can be obtained at any time by using C&F hours.
Course Outline
In the case of students who fail the assessment of this module, reassessment will be
on the element(s) of the assessment that they have failed (exam/assignment). Resit
marks will be capped at 50%. Resit candidates must consult the website for further
information, up until the time of the reassessment, not merely in semester time.
Website
Students must read the module website regularly. The header on the homepage will
indicate new posts but students should also check regularly for announcements.
Where students are expected to have access to lecture notes in the lecture these will
always be posted at least 24 hours before the lecture and lab exercises at least one
week before the relevant session.
Students are encouraged to use the discussion forum on the module website to
discuss queries about the module or the material covered in class. The lecturer will
check and respond, if necessary, to queries posted on the discussion forum.
Student Feedback
The module website has a Module Feedback Report which gives a detailed account
by the module leader of the student experience on this module last year. In addition
there will be feedback on your understanding of this module during the course of
module delivery. Soon after coursework is returned to students, generic feedback will
be given on the MOLE website on performance in the coursework, in addition to the
37
detailed individual feedback given on the pink cover sheet which accompanies
returned coursework.
Feedback on your understanding as the module progresses as well as on all the
elements of module assessment can be obtained at any time by using C&F hours.
Recommended Books:
. John Wiley and
Sons Inc.
Sons Inc.
Press.
List of Topics
1. Fundamental concepts: white noise processes, stationarity, autocovariance and
autocorrelation functions.
2. Stationary time series: autoregressive models (AR), moving average models (MA),
autoregressive moving average models (ARMA).
3. Model building: identification, estimation, diagnostic checking, model selection
criteria.
4. Non-stationary time series: trends, unit roots, testing for unit roots, structural
change.
5. Time series models of heteroscedasticity: autoregressive and generalized
autoregressive conditional heteroscedasticity models (ARCH and GARCH).
6. Multivariate time series models: cointegration, error correction mechanisms,
vector autoregressive models (VAR) - estimation, identification and causality.
7. Multivariate time series models: cointegration in a VAR, vector error correction
models (VEC), illustration: money demand, Fisher relation and risk premium.
8. Forecasting: properties of optimal forecasts, computation of forecasts, updating
forecasts.
Note that the schedule of topics may be altered.
38
ECN603
Asset Pricing
Personnel
Module leader
Contact details
Lawrence Leger
[email protected],
Prerequisites
ECN6540, MGT6105
Module Aims and Objectives
Aims
 To introduce advanced principles of derivative asset pricing in finance theory and
to understand the use of derivatives in risk management.
The intended learning outcomes are that by the end of the module you should
demonstrate
 knowledge of the nature of derivative assets
 understanding of pricing models in modern finance for important derivative
assets
 knowledge of the principles of hedging using derivative assets
Transferable Skills
 Numeracy
 Analytic thinking
Student Responsibilities
This is a 15 credit module and therefore it is expected it will require 100 study hours
per student (including formal teaching hours). As a rough guideline this means you
should expect to devote just over 10 hours of study time per week to this module
during a 15 week semester.
Attendance at all lectures and workshops is compulsory and will be monitored.
Lecture notes will be placed on MOLE in advance of the lectures, from week 2
onwards.
Workshop exercises will be placed on MOLE at least one week prior to the relevant
session and you are expected to work through the exercises before class.
Students should make use of staff consultation and feedback times to discuss any
issues they have with the module and which are not resolved in workshops
Assessment
The assessment of this module will be by unseen exam (75%), class test (25%).
The exam will be 2 hours. A specimen exam will be posted on the module website.
The test will be 50 minutes. A specimen test will be posted on the module website.
Class test marks will be published within 3 working weeks.
The pass mark for this module is 50% overall and there is a minimum mark required
for every component of 40%.
Any change to assessment arrangements will be announced in lectures and also via
the website.
The pass mark for this module is 50% overall and there is a minimum mark required
39
for every component of 40%.
Any change to assessment arrangements will be announced in lectures and also via
the website.
Reassessment
In the case of students who fail to achieve credit in this module, re-assessment will
be by exam only if both components are failed, otherwise only the failed component
will be re-assessed. If the coursework component (class test) is to be re-assessed
this will be by essay to be completed in the student’s own time prior to a submission
deadline. Resit marks will be capped at 50%.
Re-sit candidates must consult the website for further information, up until the time of
the reassessment, not merely in semester time.
Website
Students must read the module website regularly. The header on the homepage will
indicate new posts but students should also check regularly for announcements.
Where students are expected to have access to lecture notes in the lecture these will
always be posted at least 24 hours before the lecture and Seminar/Workshop
assignments at least one week before the relevant session.
Student Feedback
The module website has a Module Feedback Report which gives a detailed account
by the module leader of the student experience on this module last year. In addition
there will be feedback on your understanding of this module during the course of
module delivery. For the class test, soon after the marks are released feedback will
be given on the website on performance in the test. Aspects of the test will be
discussed in class to clarify points of misunderstanding. Feedback on your
understanding as the module progresses as well as on all the elements of module
assessment can be obtained at any time by using C&F hours.
Course Outline
The module will cover both theoretical models of derivatives pricing and the practical
use of these models, drawn from the following:
Introduction to derivatives, forwards, futures, swaps and options
Forward and futures pricing, hedging
Binomial and Black Scholes Merton option pricing and the Greeks
Hedging applications
Most of the material will be drawn from
Hull, J.C. (2009) Options Futures and Other Derivatives, 7th Edition, Pearson
Prentice-Hall, Upper Saddle River, New Jersey.
Further reading may be given later.
Note that the list and schedule of topics may be altered.
40
ECN604
Business Finance
Personnel
Module leader
Dr Vassilis Sarantides
Contact details
[email protected]
Other Lecturers
Dr Georgios Efthyvoulou
Contact details
[email protected]
Prerequisites
None
Module Aims and Objectives
Aims
principles of Business/Corporate Finance.
by firms with particular reference to the time value of money, the implications of risk
and return, investment appraisal, methods of long-and short-term financing and
associated theoretical and empirical issues.
Objectives
The intended learning outcomes are that by the end of the module you should be
able to understand:
olicy and the firm’s ability to finance new
investments and thereby grow;
common ratios;
lues, yields and ratings, what they mean and why they fluctuate;
acceptable or not;
and the risk-return trade off;
41
University of Sheffield Department of Economics ECN604
Transferable Skills
-solving skills
lls
Student Responsibilities
This is a 15 credit module and therefore it is expected it will require 150 study hours
per student (including formal teaching hours). As a rough guideline this means you
should expect to devote about 10 hours of study time per week to this module during
a 15-week semester.
Attendance at all lectures and workshops is compulsory and will be monitored.
The purpose of lectures is to set out the general framework of the course, facilitate
understanding of the principles of Business Finance, and provide a foundation for
further learning. The lectures should not be interpreted as a definitive coverage of all
relevant topics and applications.
There are four (five if needed) workshops arranged over the semester to support
lectures. The purpose of the workshops is to discuss a set of questions and help the
students practice for the final exam. Workshops exercises will be placed on MOLE at
least one week prior to the workshop session and you are expected to work through
the exercises prior to workshop, and to bring your answers to the class. Workshops
are NOT about giving out answers to the exercise problems, but instead will focus on
discussing particular aspects of the material presented that students have found
difficult. Students should make use of staff consultation and feedback times to
discuss any issues they have with the module and which are not resolved in
workshops.
Assessment
The assessment of this module will be unseen exam (100%). The exam will be three
hours. A specimen paper is on the module website. The pass mark is 50%. Any
change to assessment arrangements will be announced in lectures and also via the
website.
Reassessment
In the case of students who fail the assessment of this module, repeat assessment
will be by resit exam. Resit marks will be capped at 50%. Resit candidates must
42
consult the website for further information, up until the time of the reassessment, not
merely in semester time.
Website
Students must read the module website regularly. The header on the homepage will
indicate new posts but students should also check regularly for announcements.
Where students are expected to have access to lecture notes in the lecture these will
always be posted at least 24 hours before the lecture and workshop assignments at
least one week before the relevant session.
Student Feedback
The module website has a Module Feedback Report which gives a detailed account
by the module leader of the student experience on this module last year. In addition
there will be feedback on your understanding of this module during the course of
module delivery. A set of questions (Question Set 4) will be available on MOLE in
week 6 and students are expected to submit it before the Easter break (end of week
8). The coursework will be marked, returned to the students and general feedback
will be given on the website on performance in this question set. The results of this
coursework DO NOT have any weight on the assessment of this module. However,
failure to submit this coursework will lead to an unauthorised absence in the register
and on your records.
Feedback on your understanding as the module progresses as well as on all the
elements of module assessment can be obtained at any time by using C&F hours.
Main textbook
Hillier, D. and Clacher, I., 2011. Fundamentals of Corporate Finance: European
Edition, 1st Edition, McGraw Hill, ISBN: 9780077125257.
Further reading
Brealey, R., Myers, S., and Allen F., 2011. Principles of Corporate Finance: Global
Edition, 11th Edition, McGraw Hill, ISBN: 0077151569.
Topics 1. Introduction: The Business Finance Environment 2. Financial Statement
Analysis and Modelling 3. Time Value of Money 4. Bonds and Stocks Valuation 5.
NPV and Alternative Investment Appraisal Criteria 6. Making Capital Investment
Decisions 7. Risk and Return Analysis 8. The Cost of Capital and the Capital
Structure Decision 9. Mergers and Acquisitions
Note that the schedule of topics may be altered.
43
ECN605 INTERNATIONAL TRADE
Personnel
Module leader
Francisco Requena-Silvente
Contact details
Email: [email protected]
Module Aims and Objectives
International trade and investment have grown dramatically in recent years, while
international institutions such as the WTO have expanded to include new members
and regional trade agreements have increased drastically.
This course covers the key theoretical models in international trade and search for
evidences for and against them. The course puts the same weight on theory and on
empirics. During the course we will use a number of analytical tools as well as
different empirical methods for analysing international trade, and its related policy
issues.
The intended learning outcomes are that by the end of the module you should
demonstrate
- a familiarity with and an understanding of the classical models of trade theory
relying on perfect competition
- a familiarity with and an understanding of the new models of trade theory relying on
imperfect competition and increasing returns to scale
- demonstrate a familiarity with and an understanding of models of foreign direct
investment and outsourcing
- use these models as a basis for interpreting the trade experience of countries
- use general-equilibrium models as a basis for assessment of the gains from trade
- use general-equilibrium models as a basis for policy analysis
Transferable Skills
Students at the end of the course will be able to:
1. Elaborate meaningful discussions.
2. Solve analytically real world problems.
3. Read research papers with a critical thinking.
Student Responsibilities
44
This is a 15 credit module and therefore it is expected it will require 150 study hours
per student (including formal teaching hours). As a rough guideline this means you
should expect to devote just over 10 hours of study time per week to this module
during a 15 week semester.
Attendance at all lectures and workshops is compulsory and will be monitored.
Assessment
The assessment of this module will be by Coursework (15% of final mark),
Presentations (5%+5%) and Final Exam (75% of final mark).
Coursework will be submitted in weeks 4 and 8.
Presentations will take place in the class.
The exam will last for 180 minutes. A specimen paper will be on the module website.
The pass mark for this module is 50% overall. Any change to assessment
arrangements will be announced in lectures and also via the website.
Website
Students must read the module website regularly. The header on the homepage will
indicate new posts but students should also check regularly for announcements.
Where students are expected to have access to lecture notes in the lecture these will
always be posted at least 24 hours before the lecture and workshop assignments at
least one week before the relevant session.
Student Feedback
Unfortunately this is a new module so there is no Module Feedback Report which
gives a detailed account by the module leader of the student experience on this
module last year. However there will be feedback on your understanding of this
module during the course of module delivery. This feedback will be delivered with
your coursework grade in week 6 and week 9. It will include how many points you
get on each part and general comments on the way you performed in these
exercises.
The main text we will use in this course is:
Feenstra, R.C. (2003), Advanced International Trade: Theory and Evidence,
Princeton, Princeton University Press.
Feenstra, R.C. and Taylor, A. M. (2012), International Trade, 2on ed., Worth
Publishers.
45
Helpman, E. (2011), Understanding Global Trade, Cambridge, Harvard University
Press.
BLOC 1. STYLISED FACTS ON INTERNATIONAL TRADE. GAINS FROM TRADE
‐ TOPIC1. AN OVERVIEW OF WORLD TRADE
o Stylised facts about international trade flows
o Measuring globalisation
‐ TOPIC 2. GAINS FROM TRADE AND LAW OF COMPARATIVE ADVANTAGE
o Empirical evidence of the law of comparative advantage
o How much do countries gain from trading?
o Does trade cause growth?
References:
Helpman (2011), chapter 1
Feenstra and Taylor (2012), chapter 1
Feenstra (2003), pages 50-60 and 174-188.
Bernhofen, D.M. and J.C. Brown (2005), “An Empirical Assessment of the
Comparative Advantage Gains from Trade: Evidence from Japan”, American
Economic Review (95), 208-225.
Frankel and Romer (1999), “Does Trade cause Growth?” American Economic
Review,
89(3), pp. 379-399
University of Sheffield Department of Economics ECN605
BLOC 2. THE NEOCLASSICAL MODELS OF INTERNATIONAL TRADE
‐ TOPIC 3. RICARDIAN MODEL OF TRADE
o Dornbush-Fisher-Samuelson (DFS) Model
o Empirical evidence
‐ TOPIC 4. SPECIFIC FACTORS MODEL OF TRADE
o Short-run distributive effects of trade
‐ TOPIC 5. HECKSCHER-OHLIN MODEL OF TRADE
46
o The Classic Theorems: Stolper-Samuelson, Rybcynski, Factor Price Equalisation
and Heckscher-Ohlin
o Measuring the factor content of trade. Empirical evidence on the Heckscher-OhlinVanek (HOV) Equation
References:
Feenstra (2003), chapter 2.
Feenstra and Taylor (2012), chapter 2, 3, 4.
Dornbusch, R., S. Fischer and P.A. Samuelson (1977), “Comparative Advantage,
Trade and Payments in a Ricardian Model with a Continuum of Goods”,
American Economic Review, 823-39 (Sections I-II-III)
Nunn,N. (2007), "Relationship-Specificity, Incomplete Contracts, and the Pattern of
Trade," Quarterly Journal of Economics, 122(2), 569-600
Romalis, J. (2004), “Factor Proportions and the Structure of Commodity Trade”,
American Economic Review, 94(1), 67-97
Trefler, D. (1995), “The case of Missing Trade and other mysteries”, American
Economic Review, 85(5), 1029-1046
University of Sheffield Department of Economics ECN605
BLOC 3. “NEW TRADE THEORY”. IMPERFECT COMPETITION, SCALE
ECONOMIES, PRODUCT DIFFERENTIATION AND TRADE
‐ TOPIC 6. MONOPOLISTIC COMPETITION
o Krugman’s model (1980)
o Empirical evidence of the “home bias” effect
o Measuring the gains from trade under monopolistic competition
‐ TOPIC 7. GRAVITY MODEL AND TRADE COSTS
o Theoretical Foundations of the Gravity Equation (Anderson and van Wincoop,
2003)
o Empirical applications of the gravity equations: border effect, RTA effect, ethnic
network effect
47
References:
Feenstra (2003), chapter 5
Feenstra and Taylor (2012), chapter 6
Anderson J. and E. Van Wincoop (2003) “Gravity with Gravitas: A solution to the
Border Puzzle”, American Economic Review, 93, 170-192
Hummels, D. and Levinsohn, C. (1995), “Monopolistic Competition and International
Trade: Reconsidering the Evidence”, Quarterly Journal of Economics, 110 (3),
799-836
Davis, D. and Weinstein, D. E. (1999), "Economic geography and regional
production structure: An empirical investigation," European Economic Review,
43(2), 379-407.
Feenstra, R.C., (2010), “Measuring the Gains from Trade under Monopolistic
Competition”, Canadian Journal of Economics 43(1): 1-28
Krugman, P.R. (1980), “Scale Economies, Product Differentiation and the Pattern of
Trade”, American Economic Review, 70(5), 950-59
BLOC 4. “NEW NEW TRADE THEORY”. FIRM HETEROGENEITY,
MULTINATIONALS AND GLOBAL FRAGMENTATION OF PRODUCTION
‐ TOPIC 8. GLOBAL FRAGMENTATION OF VALUE ADDED CHAIN
o Concept, measurement and implications
‐ TOPIC 9. FIRM HETEROGENEITY
o New stylised facts on international trade using firm level data: the extensive and
intensive trade margins
o Melitz’s model (2003) / Chaney’s model (2008)
o Empirical evidence on trade and productivity
‐ TOPIC 10. MULTINATIONALS, OUTSOURCING AND OFFSHORING
o Brainard’s simple model of FDI and trade
o Feenstra’s simple model of outsourcing
o Empirical evidence on the impact of outsourcing on labour market
(Hanson and Feenstra)
48
o Multinationals and “internalisation” advantages
Lecturas obligatorias:
Helpman, E. (2011), chapter 4, 5, 6, 7.
Feenstra and Taylor (2012), chapter 7.
Feenstra (2003), chapter 3.
Brainard, S.L (1993), “A Simple Theory of Multinational Corporations and Trade with
a Trade-Off Between Proximity and Concentration, NBER Working Paper No.4269
Costinot, A., Oldenski, L., Rauch, J. (2011), “Adaptation and the Boundary of
Multinational Firms”, The Review of Economics and Statistics, 93 (1), 298-308
Eaton, J., Kortum, S. and Kramarz, K. (2004), "Dissecting Trade: Firms, Industries,
and Export Destinations," American Economic Review, 94(2),150-154
Feenstra, R.C and Hanson, G.H. (1996), "Globalization, Outsourcing, and Wage
Inequality," American Economic Review, 86(2), 240-45
Helpman, E., M.J. Melitz and S.R. Yeaple, (2004), “Export versus FDI with
Heterogeneous Firms”, American Economic Review, 300-316
Pavcnik, N. (2002), “Trade Liberalization, Exit, and Productivity Improvements:
Evidence from Chilean Plants,” Review of Economics and Statistics, 69, 24576.
University of Sheffield Department of Economics ECN605
BLOC 5. THEORY OF PROTECTION.
‐ TOPIC 11. TARIFF, IMPORT QUOTA AND EXPORT SUBSIDY
o Tariff, quota and export subsidy under perfect competition
o Tariff, quota and export subsidy under imperfect competition
‐ TOPIC 12. OTHER PROTECTION ARGUMENTS
o Strategic trade policy
o Antidumping
Reading:
49
Feenstra (2003), chapters 7, 8, 9.
Aw, B.Y. and M. J. Roberts (1986), "Measuring Quality Change in QuotaConstrained Import markets: The Case of U.S. Footwear," Journal of International
Economics, 8, 45-60.
Feenstra, R (1988), “Quality Change under trade restraints: theory and evidence
from Japanese autos” Quartely Journal of Economics, Jun, 131-146.
BASIC READING
Feenstra, R.C. (2003), Advanced International Trade: Theory and Evidence,
Princeton, Princeton University Press.
Feenstra, R.C. y Taylor, A. M. (2012), International Trade, 2on ed., Worth
Publishers.
Helpman, E. and Krugman, P- (1985), Market Structure and Foreign Trade, Harvard
University Press (Cambridge, MA, and London, The MIT Press)
Helpman, E. (2011), Understanding Global Trade, Cambridge, MA: Belknap for
Harvard University Press.
Recommended Reading List for gains from trade
Bernhofen, D.M. and J.C. Brown (2004), “A Direct Test of the Theory of Comparative
Advantage: The Case of Japan”, Journal of Political Economy, 112 (1), 48-67
Dixit, A. and V. Norman (1980), Theory of international trade, Cambridge U. Press,
capítulo 3
Deardorff, A. (1980), "The General Validity of the Law of Comparative Advantage",
Journal of Political Economy, 941-57.
Dixit,A. and V. Norman (1986), "The gains from trade without lump-sum
compensation", Journal of International Economics, Aug., 111-22.
Feyrer, J. (2009), “Trade and Income -- Exploiting Time Series in Geography”, NBER
Working Papers 14910, forthcoming American Economic Review
Feyrer, J. (2009) “Distance, Trade, and Income – The 1967 to 1975 Closing of the
Suez Canal as a Natural Experiment”, NBER Working Papers 15557, National
Bureau of Economic Research, forthcoming Quarterly Journal of Economics
Grossman, G.M. (1984), “The Gains from International Factor Movements”, Journal
of International Economics, Aug., 73-83.
Recommended Reading List for Ricardian model of trade
50
Costinot, A. Donaldson, D. and Komunjer, I. (2012), “What goods do countries
trade? A Quantitative Exploration of Ricardo´s ideas”, Review of Economics Studies,
79(2), 109-144
Eaton, J. and S. Kortum (2002), “Technology, Geography, and Trade”,Econometrica,
70, 1741-1779.
McDougall, G.D.A (1951), “British and American Exports: A Study Suggested by the
Theory of Comparative Costs: Part I,” Economic Journal, 61, 697-724
McDougall,G.D.A., (1952), “British and American Exports: A Study Suggested by the
Theory of Comparative Costs”, Part II, Economic Journal, 62, 487-521.
Stern, R.M. (1962), “British and American Productivity and Comparative Costs in
International Trade”, Oxford Economic Papers, 14(3), 275-96.
Wilson, C. (1980), “On the General Structure of Ricardian Models with a Continuum
of Goods,” Econometrica, 48, 1675-1702
Recommended Reading List for Specific Factors Model
Jones, J.W. (1971), “A Three Factor Model in Theory, Trade and History”, in
Bhagwati, J., R.W. Jones, R. Mundell and J. Vanek (eds.), Trade, Balance of
Payments and Growth. Mussa, M. (1978), “Dynamic Adjustment in the HeckscherOhlin-Samuelson Model,” Journal of Political Economy, 775-91.
Neary, J.P. (1978), “Short-Run Capital Specificity and the Pure Theory of
International Trade”, Economic Journal, 88, 488-510
Recommended Reading List for Heckscher-Ohlin Model
Davis, D. (1995), “Intra-industry Trade: A Heckscher-Ohlin-Ricardo Approach”
Journal of International Economics, 39, 201-226.
Davis, D.R., D.W. Weinstein, S.C (2001), "An Account of Global Factor Trade,"
American Economic Review, 91(5), 1423-1453
Deardorff, A. (1982), “The General Validity of the Heckscher-Ohlin
Theorem”,American Economic Review, 75, 683-94
Harrigan, J. (1995), “Factor Endowments and the International Location of
Production: Econometric Evidence from the OECD, 1970-1985”, Journal
ofInternational Economics, 39, 123-141.
Helpman E. and Krugman, P. (1985), Market Sturcture and Foreign Trade,
MITPress, 1985, capítulo 1.
Trefler, D. (1993), "International factor price differences: Leontief was right!", Journal
of Political Economy, 101, 961-87.
51
Trefler, D. (1995), “The Case of the Missing Trade and Other HOV
Mysteries”,American Economic Review, 85, 1029-46
Trefler, D. and S.C. Zhu (2010), “The Structure of Factor Content Predictions”,
Journal of International Economics, 82, 195-207.
Recommended Reading List for external economies and trade
Ethier, W.J. (1979), “Internationally Decreasing Costs and World Trade”, Journal of
International Economics,
Ethier, W.J. (1982), “National and International Returns to Scale in the Modern
Theory of International Trade”, American Economic Review,
Ethier, W.J. (1982), “Decreasing Costs in International Trade and Frank Graham’ s
Argument for Protection”, Econometrica, 1982.
Grossman, G.M. and E. Rossi-Hansberg (2009), “External Economies and
International Trade Redux”,
Recommended Reading List for oligopoly and trade
Bernhofen, D.M. (1999), “Intra-industry trade and strategic interaction: theory and
evidence”, Journal of International Economics. 47, 225-244
Brander, J.A. (1981), “Intra-Industry Trade in Identical Commodities”, Journal of
International Economics, XXX.
Brander, J.A., and Krugman, P.R. (1983), “A Reciprocal Dumping Model of
International Trade”, Journal of International Economics, 15(3/4), 313-21.
Recommended Reading List for monopolistic competition and trade
Debaere, P. (2005) "Monopolistic Competition and Trade, Revisited: Testing the
Model without Testing for Gravity,” Journal of International Economics, 249-266
Head, K. and Ries, J. (2001), "Increasing Returns versus National Product
Differentiation as an Explanation for the Pattern of U.S.-Canada Trade," American
Economic Review, 91(4), 858-876
Helpman, E. (1987), “Imperfect competition and International Trade: Evidence from
Fourteen Industrial Countries”, Journal of the Japanese and International
Economies, 1(1), 62-81
Krugman , P.R. (1979), "Increasing Returns, Monopolistic Competition and
International Trade”, Journal of International Economics, 11, 469‑79
Krugman, P.R. (1981), “Intra-Industry Specialization and the Gains from Trade”,
Journal of Political Economy,
52
Hummels, D. and M. Klenow. (2005), “The Variety and Quality of Nation’s Exports”,
American Economic Review, 95, 704-723
Broda, Ch. and Weinstein, D. E. (2006), “Globalization and the Gains from Variety”,
Quarterly Journal of Economics, 131 (2), 541-585.
Recommended Reading List for trade costs and gravity equation
Anderson, J. and E. van Wincoop (2004) “Trade Costs”, Journal of Economic
Literature, 42(3), pp 691-751. Baier, Scott L. & Bergstrand, Jeffrey H. (2009) "Bonus
vetus OLS: A simple method for approximating international trade-cost effects using
the gravity equation," Journal of International Economics, 77(1), 77-85
Baldwin R. and D. Taglioni (2006) “Gravity for Dummies and Dummies for
GravityEquations”, NBER WP 12516
Head K. (2003) ”Gravity for Beginners”, mimeo, University British Columbia
Helpman, E., Melitz, M. and Rubinstein, Y. (2008) “Trading Partners and Trading
Volumes, Quarterly Journal of Economics, 123, 441-487
McCallum, J. (1995), "National Borders Matter: Canada-U.S. Regional Trade
Patterns," American Economic Review, 85(3), 615-23
Stephen R. and Venables, A.J. (2004), "Economic geography and international
inequality," Journal of International Economics, 62(1), 53-82
Recommended Reading List for firm heterogeneity and trade
Bernard, A.B., S. Redding and P. Schott (2007), “Comparative Advantage and
Heterogeneous Firms”, Review of Economic Studies 74: 31-66..
Besedes, T. and Prusa, Th, (2006), "Ins, outs, and the duration of trade", Canadian
Journal of Economics, 39(1), 266-295
Eaton, J., F. Kramarz and S. Kortum, (2011) “An Anatomy of International Trade:
Evidence from French Firms”, Econometrica 79, 1453-1498.
Melitz, M. (2003), "The Impact of Trade on Intra-Industry Reallocations and
Aggregate Industry Productivity," Econometrica, 71(6), 1695-1725.
Yeaple, S. (2005), “A Simple Model of Firm Heterogeneity, International Trade and
Wages”, Journal of International Economics 65 (1), 1-20.
Recommended Reading List for multinationals and global production
53
Antràs, P. (2003), “Firms, Contracts and Trade Structure,” Quarterly Journal of
Economics, 118 (4), 1375-1418
Antràs, P. and E. Helpman, (2004), “Global Sourcing”, Journal of Political Economy
112: 552-580
Dunning, J.H., (1978) “Trade, Location of Economic Activity and the Multinational
Enterprise: In Search for an Electric Approach”, in B. Ohlin, P.O. Hesselborn and
P.M. Wijkman (eds.) The International Allocation of Economic Activity, Macmillan
Yeaple, S.R. (2003), “The Role of Skill Endowment in the Structure of U.S.
OutwardForeign Direct Investment”, Review of Economics and Statistics, 85 (3),
726- 734.
Recommended Reading List for theory of protection
Brander, J. and B. Spencer (1985), “Export Subsidies and International Market
Share Rivalry,” Journal of International Economics, 18, 83-100.
Grossman, G.M. and H. Horn (1988), “Infant-industry Protection Reconsidered: The
Case of Informational Barriers to Entry”, Quarterly Journal of Economics, 103 (4),
767-87.
Grossman, G.M. and E. Helpman (1994), “Protection for Sale”, American Economic
Review 84, 833-50.
Koujianou Goldberg, P. and G. Maggi (1999), “Protection for Sale: An Empirical
Investigation”, American Economic Review 89, 1135-55.
54
ECN 6002
Personnel
Module leader
Contact details
Development Finance
Paul Mosley
Room 418, 9 Mappin Street; 0114-222 3397, internal extension
23397, [email protected]
Module Aims and Objectives
We aim to teach the skills necessary to analyse the main sources of financing for
development and the manner in which they may optimally contribute to the
development process. On completion of the course you should have:


The ability to understand the structure of international capital flows and
domestic sources of financing.
The ability to analyse the effect of national and international policy measures
on these capital flows, and their ability to overcome ‘market failure’ in the
capital market, at every level from global capital markets to the village
economy.
Transferable skills
 Individual research
 Group work
 Analysis of the functioning of financial markets at both the macro and the
micro level in the context of developing countries
Syllabus and timetable
The course is split into four parts:
(i)
(ii)
(iii)
(iv)
the global financial system and proposals for its reform in a context of
chronic vulnerability to crisis (weeks 1-3);
the finance of the domestic private sector in developing and ‘emerging’
countries (weeks 4-6);
the finance of the domestic public sector in developing and transitional
countries (weeks 7 and 8)
interconnections between the above; a return to global themes (weeks 9
and 10)
Student responsibilities
This is a 15 credit module and therefore it is expected it will require 150 study hours
per student (including formal teaching hours). As a rough guideline this means you
should expect to devote just over 10 hours of study time per week to this module
during a 15 week semester.
Attendance at all lectures and workshops is compulsory and will be monitored.
Workshops are very important for mutual support, for discussing specialised material
which we are not able to discuss in sufficient depth in lectures and for mastering
skills which are required for assessment, including concise and well-organised
55
exposition. The workshops will also give you support in writing the extended essay
(see Assessment below).
Feedback on your understanding as the module progresses as well as on all the
elements of module assessment can also be obtained at any time by using
consultation and feedback (C and F) hours.
Assessment:
50% by exam in May-June (you will answer 3 questions in 2 hours) and 50% by
extended essay (the essay list will be announced in week 2 or 3 of the semester).
Coursework must always be submitted in through TURNITIN to the Enquiry Office,
and by no later than 3.00pm on the day of the deadline. Unauthorised late
submissions will incur a penalty of 5% of the mark per day for 5 working days and
after that a mark of zero.
Marked coursework will be returned within 3 working weeks. The pass mark for this
module is 50% overall and there is a minimum mark required for every component of
40%. Any change to assessment arrangements will be announced in lectures and
also via the website.
Reassessment
In the case of students who fail the assessment of this module, repeat assessment
will be on the part of the assessment (examination or essay) that has been failed..
Resit candidates must consult the website for further information, up until the time of
the reassessment, not merely in semester time.
Website
Students must read the module website regularly. The header on the homepage will
indicate new posts but students should also check regularly for announcements.
Where students are expected to have access to lecture notes in the lecture these will
always be posted at least 24 hours before the lecture and workshop assignments at
least one week before the relevant session.
Student Feedback
The module website has a Module Feedback Report which gives a detailed account
by the module leader of the student experience on this module last year. For each
class test soon after the marks are released, feedback will be given on the website
on performance in the test. Soon after coursework is returned to students, generic
feedback will be given on the MOLE website on performance in the coursework, in
addition to the detailed individual feedback given either on the pink cover sheet
which accompanies returned coursework or through online marking. Feedback on
your understanding as the module progresses as well as on all the elements of
56
module assessment can be obtained at any time by using office consultation and
feedback (‘C and F’) hours. C and F hours are your time, when we are at your
disposal one-to-one for as long as you require – please make good use of them.
Course Outline and Reading
This is a bare minimum only. A more detailed reading list will be placed on the module website.
There is no textbook for the course. The following material, however, covers much of the
course in a general way, and provides a useful introduction:
Theme 1: The global financial system
B. Eichengreen, Towards a new international financial architecture: a
practical post-Asia agenda, Washington DC: Institute for International Economics, 1999.
Complete issue of Journal of Economic Perspectives for fall (autumn) 1999, essays
by Mishkin, Rogoff, Caprio, Edwards.
April 1998 issue of IMF World Economic Outlook on crisis forecasting.
A.B. Atkinson(ed) New sources of development finance, Oxford University Press, 2005.
G. Ranis, J. Vreeland and S. Kosack(eds) (2005) Globalisation and the national state:
the impact of the IMF and World Bank, London: Routledge.
S. Spratt, Development Finance, Routledge, 2009.
D. Lawson(ed) (2013). Symposium on the impact of the global economic crisis
(2000- ) on developing countries. Journal of International Development, December 2013.
Also (possibly more useful than any of the above) most issues of
Princeton Papers in International Finance and IMF Staff Papers.
Theme 2: The finance of the private sector in developing countries
(historically) World Bank, World Development Report 1989 on financial
systems and development.
World Bank, Global Development Finance, annual publication.
Theme 3: The finance of the public sector in developing countries
E. Ahmad and N. Stern, The theory and practice of tax reform for
developing countries, Cambridge U.P. 1993.
D. Brautigam, O.-H. Fjeldstad and M. Moore(eds) Taxation and state-building
in developing countries, Cambridge U.P. 2008.
57
P.Mosley, ‘Fiscal composition and aid-effectiveness’,
forthcoming World Development, 2014, on MOLE.
Theme 4: Private capital flows, public capital flows and development
P. Mosley, J. Hudson, Aid, poverty reduction and the ‘new conditionality’,
Economic Journal, 114(June 2004), 217-244.
R.G. Rajan and A. Subramaniam(2008) ‘Aid and growth:
what does the cross-section evidence really show?’,
Review of Economics and Statistics, 90, 643-665.
M. Clemens, S. Radelet, R. Bhavnani and S. Bazzi(2012)
’Counting chickens when they hatch: timing and the effects of aid on growth’,
Economic Journal, 122, 590-618.
58
ECN6620
International Money and Finance
Personnel
Module leader
Dr Tom Warke
Contact details
E-mail: [email protected]
Tutor
Dr Tom Warke
Prerequisites

ECN6520 (Macroeconomic Analysis); ECN6540 (Econometric Methods)

Basic familiarity with international trade concepts is also assumed, including
comparative advantage, gains from trade, and the effects of trade on relative
factor rewards
Module Aims and Objectives
Aims:

To acquire an understanding of the relationship between domestic and
international economic activity in an open economy

To relate the various motives underlying international financial flows to their
effects on real economic variables

To become familiar with mainstream theories of the determination of
equilibrium exchange rates, both in the short run and the long run

To explore the causes of the 2007-8 global financial crisis
Objectives: By the end of the module you should demonstrate:

Awareness of circumstances under which Mundell-Fleming analysis is
appropriate, and the manner in which its conclusions depend upon the
exchange rate regime and the degree of international financial mobility

Knowledge of the operation of covered interest parity, and the use of forward
foreign exchange contracts by hedgers and speculators

An ability to explain alternative monetary theories of nominal exchange rate
determination, including the role of purchasing power parity

An ability to relate currently proposed reforms of the international monetary
system with the events that preceded the 2007-8 financial crisis
Transferable Skills



Familiarity with international financial instruments and institutions
Alertness to arbitrage opportunities in international transactions
Awareness of risk versus rate of return trade-offs in international finance
59
Student Responsibilities
This is a 15 credit module and therefore, as a rough guideline, is expected to require
about 10 hours of study time per week during a 15 week semester.
Attendance at all lectures and workshops is compulsory and will be monitored.
Workshop exercises will be placed on MOLE at least one week prior to the workshop
session; students are expected to complete the exercises prior to the workshop, and
to bring their answers to the class.
Students should make use of consultation and feedback times to discuss any issues
they have with the module which have not been resolved in the workshops.
Assessment
The assessment of this module will be by an unseen final examination (70%) and a
mid-term class test (30%). The pass mark for this module is a weighted average of
50.
The final examination will be 3 hours long. A specimen paper (the 2012-13 final
examination) is available on the MOLE site.
The mid-term class test will be 1½ hours long. It will be held in a special session,
beginning at 9:30 am, during the Friday Workshop in Week 7.
Any change to assessment arrangements will be announced in lectures and also via
the website.
Reassessment
In the case of students who fail the assessment of this module, repeat assessment
will be by a resit examination covering material from the entire semester, with no
weight given to the class test mark. Resit marks will be capped at 50. Resit
candidates should consult the website for further information up until the time of the
reassessment, not merely in semester time.
Website
Students should read the module website regularly. The header on the homepage
will indicate new posts but students should also check regularly for announcements.
Lecture powerpoint slides will be posted at least 24 hours before the lecture and
workshop exercises will be posted at least one week before the relevant session.
Student Feedback
The module website has a Module Feedback Report which gives an account by the
module leader of the student experience on this module last year.
Each workshop session will provide feedback on the topics and exercises that have
been assigned for that week. Individual feedback for the mid-term class test will be
available by appointment; generic feedback will be on the MOLE website.
Advice and assistance with your understanding as the module progresses can be
obtained at any time by using consultation and feedback hours.
60
Course Outline
Note that the schedule of topics may be altered.
Core Reading
Keith Pilbeam, International Finance (Palgrave MacMillan, 4th edition, 2013)
Robert Peston, How do we Fix this Mess? (Hodder, 2013)
Joseph Stiglitz, Freefall: Free Markets and the Sinking of the Global Economy
(Allan Lane, 2010)
The Pilbeam textbook contains detailed explanations of most topics covered in the
module. The Peston and Stiglitz books each provide comprehensive analyses of the
global financial crisis of 2007-8, written for a non-professional readership. Although
the topic does not arise until the end of the module, you would be well advised to
begin reading one of these books right away.
More detailed reading for some of the topics is indicated below; these references
explore the issues in more depth, usually with greater mathematical formalism, and
include samples of empirical tests for competing hypotheses.
Week 1.
Adding "the rest of the world" to Macroeconomic Models
Flow chart models of market economies. The X – M = S – I identity. The market for
foreign exchange: alternative representations of bilateral exchange rates and the
effective exchange rate. The foreign exchange market response to shocks. The
forward exchange rate: arbitrage, hedging and speculation.
Basic Reading: Pilbeam, Chs. 1, 2 & 3.1 – 3.4
Peston, Introduction & Chs. 1-3
[Supplementary Lecture: Basic Concepts of International Trade]
The basis for trade. The gains from trade. Sources of comparative advantage:
relative labour productivity; relative factor endowments; scale economies; technology
and learning spillovers. Explanations for intra-industry trade. The real exchange
rate. Instruments of trade policy
Paul Krugman, Maurice Obstfeld and Marc Melitz, International Economics: Theory
and Policy (Pearson, 9th edition, 2012), Chs. 2 – 12
Week 2. Open Economy Macroeconomics with Keynesian Assumptions
How Keynesian assumptions differ from neoclassical and monetarist assumptions,
leading to a justification for government intervention to reach full employment. The
Mundell-Fleming (M-F) model: Keynesian assumptions in an open economy.
Illustrating the M-F model in (Y, r) space: IS, LM and BP curves.
Basic Reading: Pilbeam, Ch. 4, Sections 1 – 8
61
Week 3. Attainment of Full Employment in the Mundell-Fleming Model
Alternative exchange rate policies. The M-F model with a free floating exchange
rate. The M-F model with a fixed exchange rate. The effect of financial capital
mobility.
Basic Reading: Pilbeam, Ch. 4, Sections 9 – 15
Week 4: The Macroeconomic Trilemma, Covered Interest Parity, and
Purchasing Power Parity
The "impossible trinity" of policy objectives. Sterilisation of foreign exchange market
operations. The attainment of covered interest parity via arbitrage among holders of
risk-free interest-earning assets. Speculation in forward foreign exchange. Hedging
with forward foreign exchange contracts. Goods arbitrage and purchasing power
parity (PPP). Absolute and relative purchasing power parity.
Basic Reading: Pilbeam, Ch. 4, Box 4.1; Chapter 1, Sections 9 – 10; Chapter 6
Further Reading: Rogoff, K. [1996], ‘The purchasing power puzzle’, Journal of
Economic Literature, vol. 34, no. 2, pp. 647-668
Taylor, A. and Taylor, M.P. [2004], ‘The purchasing power parity debate’, Journal of
Economic Perspectives, vol. 18, no. 4, pp. 135-158
Week 5: Open Economy Macroeconomics with Monetarist Assumptions
Monetarist versus Keynesian macroeconomics. General observations on economic
models: the strengths and weaknesses of mathematical formulations. Monetarist
macroeconomic policy. PPP theory in monetarist models. Taking account of
uncovered interest parity.
Basic Reading: Pilbeam, Ch. 5; Ch. 7, Sections 1 – 4
Week 6: Monetary Models of Exchange Rate Determination
The flexible-prices monetary model: covered interest parity and uncovered interest
parity, acting together with rational expectations in efficient markets. Monetarist
exchange rate theory with short-run sticky prices. The Frankel model.
Basic Reading: Pilbeam, Ch. 7, Sections 1 – 12
Week 7. Empirical Evidence on Exchange Rates
Procedures for testing alternative theories of exchange rate determination. The
Efficient Market Hypothesis (EMH) and the Rational Expectations Hypothesis (REH).
Model predictions vs a random walk. The "news" approach to exchange rate
models. Model predictions in the long run and the short run. "Chartists" vs
"Fundamentalists". Testing alternative mechanisms for formulating expectations.
Basic Reading: Pilbeam, ch. 9
Further Reading: Olmo, J. and Pilbeam, K. [2011] 'Uncovered interest parity and the
62
efficiency of the foreign exchange market: a re-examination of the evidence,'
International Journal of Finance and Economics, vol. 16, pp. 189-204
Rapach, D. and Wohar, M. [2002] ‘Testing the monetary model of exchange rate
determination: new evidence from a century of data’, Journal of International
Economics, vol. 58, pp. 359-85
Frankel, J. and Froot K. [1989] ‘Chartists, fundamentalists, and trading in the foreign
exchange market’, American Economic Review Papers and Proceedings, vol. 80,
pp. 181-185
Mid-Term Examination: 9:30 – 11:00 (Friday of Week 7)
Week 8. The Role of Risk and Recent Innovations in International Finance:
Derivatives, Deregulation and Eurocurrency
Types of risk. Concepts of risk premia and their determination. The portfolio balance
model. Currency derivatives: futures; options; swaps. Non-currency derivatives:
credit default swaps; collateralized debt obligations. Eurocurrency and financial
deregulation.
Basic Reading: Pilbeam, Chs. 12 & 13
Further Reading: Stolz, R. [2004] 'Should we fear derivatives?' Journal of Economic
Perspectives, vol. 18, no. 3, pp. 173-192
Stolz, R. [2010] 'Credit default swaps and the credit crisis," Journal of Economic
Perspectives, vol. 24, no. 1, pp. 73-92
Week 9. The Chinese RMB as an International Exchange Currency;
Optimal Currency Areas and the Eurozone Crisis
The current role of the Renminbi in international transactions. Chinese capital
account liberalisation and RMB internationalization. The theory of optimum currency
areas. The evolution of the European single currency. The eurocurrency and
eurobond markets. Proposals to resolve the European debt crisis.
Basic Reading: Eichengreen, B., and M. Kawai. [2014] 'Issues for Renminbi
Internationalization: An Overview,' ADBI Working Paper 454. Tokyo: Asian
Development Bank Institute. Available at http://www.adbi.org/workingpaper/2014/20/6112.issues.renminbi.internationalization overview/
Pilbeam, Ch. 16
Further Reading: Hooley, J. [2013] 'Bringing down the Great Wall? Global
Implications of capital account liberalisation in China,' Bank of England Quarterly
Bulletin, Q4, pp. 304-316
Beetsma, R. and Giuliodori, M. [2010] 'The macroeconomic costs and benefits of the
EMU and other monetary unions: an overview of recent research,' Journal of
Economic Literature, vol. 48, no. 3, pp. 603-641
Lane, P. [2012] 'The European Sovereign Debt Crisis,' Journal of Economic
Perspectives, vol. 26, no. 3, pp. 49-67
63
Week 10. The Current Global Financial Crisis:
Future Crises Feasible?
Are Reforms to Prevent
Financial deregulation, speculation, and casino banking: how much blame can be
assigned to mainstream economic theory? Moral hazard in financial services.
National self-interest and free riding as impediments to reform.
Basic Reading: Pilbeam, ch 18
Stiglitz, Freefall
Peston, How do We Fix This Mess?
Further Reading: Obstfeld, M. and Rogoff, K. [2009] 'Global Imbalances and the
Financial Crisis: Products of Common Causes'. Available at:
http://elsa.berkeley.edu/~obstfeld/santabarbara.pdf
Borio, C. and Disyatat, P. [2011] Global imbalances and the financial crisis: Link or
no link? BIS Working Papers no. 346. Available from: http://www.bis.org/
Brunnermeier, M. [2009] ‘Deciphering the liquidity and credit crunch, 2007-08’,
Journal of Economic Perspectives, vol. 23, no. 1, pp. 77-100
Krishnamurthy, A. [2010] 'How debt markets have malfunctioned in the crisis,'
Journal of Economic Perspectives, vol. 24, no. 1, pp. 3-28
Symposium (various authors) [2010] 'Macroeconomics after the financial crisis,'
Journal of Economic Perspectives, vol. 24, no. 4, pp. 3-102
Symposium (various authors) [2011] 'Financial Regulation after the crisis,' Journal of
Economic Perspectives, vol. 25, no. 1, pp. 3-113
64
ECN6650
Industrial Organisation
Personnel
Module leader
Contact details
Ian Gregory-Smith
[email protected]
Prerequisites
None
Module Aims and Objectives
This module covers contemporary topics in Industrial Organisation (IO) with a
particular emphasis on the role of economic analysis in strategic decision making by
senior managers.
After completing the course the student will:
 be able to use and appraise the use by others of a range of economic
techniques to enable managers to make better strategic decisions;
 understand the importance of taking into account rivals’ reactions to a
manager’s decisions when he or she is planning strategies; and
 appreciate the implications of differences in objectives and information
between members within an organisation and between different organisations
for decision making.
Transferable Skills
The module will encourage the development of the following transferable skills:
 Analytical ability through intense engagement with the relevant literature. This
is a key component of the assessment;
 Initiative is required as students are encouraged to find their own unique
sources and reading;
 Oratory will be improved as students discuss, debate and defend ideas in
class; and
 Time management as students will have to prioritise topics and undertake
sufficient revision to pass an unseen examination.
Timetable
2-hour lectures each week (20 hours total).
Additionally, there will be two, 2-hour workshops during the semester.
Student Responsibilities
This is a 15 credit module and therefore it is expected it will require 150 study hours
per student (including formal teaching hours). As a rough guideline this means you
should expect to devote about 10 hours of study time per week to this module during
a 15 week semester.
Attendance at all lectures workshops is compulsory and will be monitored.
65
Assessment
ECN6650 assessment is 100% on an unseen exam.
Students will have 3 hours to answer 3 essay style questions from a choice of six
questions. A specimen paper is on the module website. The pass mark for this
module is 50%.
Any change to assessment arrangements will be announced in lectures and also via
the website.
Reassessment
In the case of students who fail the assessment of this module, repeat assessment
will be by 100% unseen exam. Resit marks will be capped at 50%.
Resit candidates must consult the website for further information, up until the time of
the reassessment, not merely in semester time.
Website
Students must read the module website (MOLE) regularly. The header on the
homepage will indicate new posts but students should also check regularly for
announcements.
Where students are expected to have access to lecture notes in the lecture these will
always be posted at least 24 hours before the lecture and workshop assignments at
least one week before the relevant session.
Student Feedback
The module website has a Module Feedback Report which gives a detailed account
by the module leader of the student experience on this module last year. In addition
there will be feedback on your understanding of this module during the course of
module delivery. Formative feedback will be given by the module leader during the
class discussions and on the tasks conducted during the workshops. This will include
feedback on an answer prepared by the students to a question on the prior year’s
exam paper. This will take place during the second workshop.
Feedback on your understanding as the module progresses as well as on all the
elements of module assessment can be obtained at any time by attending C&F
hours at 9:30am on Tuesday and Wedensday. Please note that the department is
now located at Edgar Allen House. If you would like to see me, go to reception on
the ground floor and ask for me there.
Course Outline
The course is structured around the text by D. Besanko, D. Dranove, M. Shanley,
and S. Schaeffer (BDSS) Economics of Strategy 6th Edition International Student
Version, John Wiley & Sons Ltd, New York and Chichester, 2013. It is unique in
incorporating the modern emphasis on strategic decision-making in economics into
an accessible text. The book is the standard text for similar courses run by top
ranking schools in North America (such as Kellog Graduate School of Business).
Besanko does not have much detail on game theory. A better text for these lectures
(weeks 5, 6 and 7) is K. Binmore’s Playing for Real. Note that you do not need to
learn the technical material in this text that goes beyond the scope of the course.
66
Please be aware that other versions of the textbook exist. There is a hardback
version for the US market which is more expensive. The US book is fine, but you do
not need to buy this. There are also earlier editions which are cheaper if buying online. All of the essential material is included in the earlier editions but the examples
are not as recent and the chapters are organised differently and will not match table
below.
Week
Lecture Topics
Reading
1
Strategic Positioning 1
Chpt 9 p291-307
2
Strategic Positioning 2
Chpt 9 p308-332
3
Innovation
Chpt 11
4
Vertical Boundaries
Chpt 3
5
Game theory 1
6
Game theory 2
Primer p31-35
Chpt 6 p206-225
Binmore Chpt 1
7
Game theory 3
Binmore Chpt 6.1 – 6.3
8
Agency
Chpt 12 p399-403
Jensen & Meckling (1976) p305333
9
Incentives 1
10
Incentives 2
Chpt 12 p404-420
Prendergast (1999) p7-21
Chpt 12 p421-p434
Prendergast (1999) p33-37
Easter Break
Additional Reading by Topic
Please note the resources below are for guidance only. Students are strongly
encouraged to build upon the material covered in the lectures and core text with
their own reading.
Strategic Positioning
McGahan, A. M. and M. E. Porter (1997). How much does industry matter, really?
Strategic Management Journal 18, 15–30.
Miller, D. and P. H. Friesen (1986). Porter’s (1980) generic strategies and
performance: An empirical examination with American data. Organization Studies
7(1), 37–55.
Porter, M. E. (1980). Competitive Strategy: Techniques for Analysing Industries and
Competitors. The Free Press.
Innovation:
Arrow, K. (1962). Economics Welfare and the Allocation of Resources for Inventions,
in Nelson (ed.) The Rate and Direction of Inventive Activity, Princeton University
Press.
67
Vertical Boundaries of the firm:
Coase, R. H. (1992). The institutional structure of production. The American
Economic Review 82(4), pp. 713–719.
Klein, B., R. G. Crawford, and A. A. Alchian (1978). Vertical integration, appropriable
rents, and the competitive contracting process. Journal of Law and Economics 21(2),
pp. 297–326.
Game Theory
K Binmore (2007) Playing for Real: A Text on Game Theory. Oxford University
Press.
A.K. Dixit and B.J. Nalebuff (1991) “Thinking Strategically”, N.York, W.W. Norton and
Co.
Agency and Incentives:
Principal-agent framework, agency costs, pay, performance and risk, efficiency
wages, tournament & promotion incentives, managerial power.
Jensen & Meckling (1976) ‘Theory of the firm: Managerial behaviour, agency costs
and ownership structure. Journal of Financial Economics 3(4) p305-360.
Prendergast (1999): “The Provision of Incentives in Firms,” Journal of Economic
Literature, 37, 7–63.
Jensen, M. and K. J. Murphy, (1990) “ Performance Pay and Top Management
Incentives,” Journal of Political Economy, 98, 225-264.
Bebchuk & Fried (2003): “Executive Compensation as an Agency Problem,” Journal
of Economic Perspectives, 17(3), 71–92.
68
ECN6660
Monetary Economics
Personnel
Module leader
Contact details
Dr. Juan Paez-Farrell
j.paez-farrell@sheffield .ac.uk
Other Lecturers
Contact details
Prof. Christoph Thoenissen
Consultation and feedback times:
Mondays and Wednesdays at 9-10
Prerequisites
It will be assumed that students enrolling onto this module have a working knowledge
of the following:
– including determinants, inversion, eigenvalues and eigenvectors.
Module Aims and Objectives
Aims
• To provide a formal analysis of Monetary Economics and an understanding of how
monetary policy works
• To provide an understanding of the role of monetary policy in the macro economy
• To expose students to the latest theoretical developments in monetary theory and
policy
• To equip students with the analytical framework for solving dynamic stochastic
general equilibrium (DSGE) models.
• To understand some of the limitations of monetary policy
The intended learning outcomes are that by the end of the module you should
demonstrate
• An understanding of the role of money in both the short run and the long run
• The ability to solve DSGE models
• The aims of the world’s major central banks
• An understanding of the monetary transmission mechanism
Transferable Skills
• Problem solving and numerical skills
• Analytical skills
• Communication skills
• Critical thinking
• Individual research
69
Student Responsibilities
This is a 15 credit module and therefore it is expected it will require 150 study hours
per student (including formal teaching hours). As a rough guideline this means you
should expect to devote about 10 hours of study time per week to this module during
a 15 week semester.
Attendance at all lectures Workshops is compulsory and will be monitored.
Seminar/Workshop exercises will be placed on MOLE at least one week prior to the
Seminar/Workshop session and you are expected to work through the exercises
prior to the Seminar/Workshop, and to bring your answers to the class.
Seminar/Workshops are NOT about giving out answers to the Seminar/Workshop
problems, but instead will focus on discussing particular aspects of the material
presented that students have found difficult. Students should make use of staff
consultation and feedback times to discuss any issues they have with the module
and which are not resolved in Workshops
Assessment
The exam will be a two-hour exam (70%) and there is also an assignment (30%) to
be submitted by 28 April 2014. The limit for the assignment is 10 pages.
A specimen paper will be uploaded onto the module website. The pass mark for this
module is 50%.
Any change to assessment arrangements will be announced in lectures and also via
the website
Reassessment
In the case of students who fail the assessment of this module, repeat assessment
University of Sheffield Department of Economics ECN6660
will be by exam. Resit marks will be capped at 50%. Resit candidates must consult
the website for further information, up until the time of the reassessment, not merely
in semester time.
Website
Students must read the module website regularly. The header on the homepage will
indicate new posts but students should also check regularly for announcements.
Where students are expected to have access to lecture notes in the lecture these will
always be posted at least 24 hours before the lecture and Workshop assignments at
least one week before the relevant session.
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Student Feedback
The module website has a Module Feedback Report which gives a detailed account
by the module leader of the student experience on this module last year In addition
there will be feedback on your understanding of this module during the course of
module delivery.
Feedback on your understanding as the module progresses as well as on all the
elements of module assessment can be obtained at any time by using C&F hours.
Course Outline
Note that the schedule of topics may be altered.
• Empirical evidence on money, prices and output
• Representative agent models and money
• Solving real business cycle models
• The role of money in the short run: business cycle models
• New Keynesian monetary economics
• Monetary policy and time inconsistency
• Open economy monetary models
Reading List
A relevant reading list for each topic and additional lecture notes will also be
provided.
Most of the material covered will be based on Walsh (2010).
University of Sheffield Department of Economics ECN6660
Bofinger, P., J. Reischle, and A. Schachter, Monetary policy: goals, institutions,
strategies, and instruments, Oxford University Press, 2001.
Clarida, Richard, Jordi Gali, and Mark Gertler, “The Science of Monetary Policy: A
New Keynesian Perspective,” Journal of Economic Literature, December 1999, 37
(4), 1661–1707.
Eden, B., A course in monetary economics: sequential trade, money, and
uncertainty, Blackwell Pub., 2005.
Gali, J., New perspectives on monetary policy, inflation and the business cycle
National Bureau of Economic Research Working paper series, National Bureau of
Economic Research, 2002.
Gali, J., Monetary policy, inflation, and the business cycle: an introduction to the new
Keynesian frame-work, Princeton University Press, 2008.
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McCallum, B.T., Monetary economics: theory and policy Business & Economics,
Macmillan, 1989.
Minford, P. and D. Peel, Advanced macroeconomics: a primer, E. Elgar, 2002.
Carl E. Walsh, 2010. ‘Monetary Theory and Policy, Third Edition’ MIT Press Books,
The MIT Press, edition 3, volume 1, number 0262013770, August.
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