Advanced Microeconomics

This module provides students with a thorough treatment of advanced microeconomic theories and related applied policy debates. This course examines contending approaches to microeconomic theories and their applications focusing on the issues including, but not limited to, consumer behaviour, networks, business cycles, role of the state and micro-foundations of macroeconomic models. Multiple analytical techniques -mathematical, descriptive, graphical, narrative, and historical- will be employed to explain the nature and scope of microeconomic problems and their policy implications.

Students are expected to understand and critically examine theoretical frameworks and arguments so that they can develop analytical skills to deal with real world applied problems. Competing explanations and policy suggestions will be considered especially, heterodox ideas and approaches are stressed. Throughout the course students are frequently asked to think about following principal questions: 1) Is the law of demand-supply relevant to the account of real world economic activities? 2) Are individual consumers rational and sovereign? 3) Is making greater business profits good for the public? 4) Does the state always serve public interests?

Objectives and learning outcomes of the module

On successful completion of the course, students will be expected to:

• Demonstrate a good understanding of key microeconomic concepts, their explanatory power and limitations;
• Summarise and present different theoretical models in a conceptually and analytically rigorous form, also with references to theoretical studies and applied researches;
• Form an opinion on the scope and limitations of the theoretical models;
• Understand, replicate and extend the econometric models.

Scope and syllabus

This module consists of one weekly lecture (2 hours) and one weekly tutorial (1 hour). The material to be covered is vast, and we will have to move quickly.

In each class, the topic will be tackled from several points of view: by using a theoretical approach, looking at the historical context and by investigating on the policy implication of the topic. Most of the case studies will come from developing countries examples, in order to illustrate problems and to compare the explanatory power of different concepts/frameworks/theories. A background in economics is important, and familiarity with mathematics is desired. In any case, conceptual and analytical rigor will be given priority over mathematical treatments.

Assessments

AS1 - 20% / AS2 - 20% / AS3 -20% / AS4 - 40%

Suggested reading

• Calvo-Armengol, Antoni, and Matthew O. Jackson. "The effects of social networks on employment and inequality." American economic review 94.3 (2004): 426-454.
• Cohen, A. and G. Harcourt (2003) ‘Whatever Happened to the Cambridge Capital Theory Controversies?’, Journal of Economic Perspectives, vol. 17, no. 1, pp. 199–214.
• Cohn, S. (2000). Telling other stories: Heterodox critiques of neoclassical micro principles texts (pp. 00-06). Tufts University.
• Douglas, P. H. (1976). The Cobb-Douglas production function once again: its history, its testing, and some new empirical values. Journal of Political Economy, 84(5), 903-915.
• Easterlin, R. A. (1995). Will raising the incomes of all increase the happiness of all?. Journal of Economic Behavior & Organization, 27(1), 35-47.
• Hardin, Garrett. "The tragedy of the commons." Journal of Natural Resources Policy Research 1.3 (2009): 243-253.
• Jackson, M. O., Rogers, B. W., & Zenou, Y. (2017). The economic consequences of social-network structure. Journal of Economic Literature, 55(1), 49-95.
• Jaynes, E.T. (1978). Where do we stand on maximum entropy? in The Maximum Entropy Formalism,  R. D. Levine and M. Tribus (eds.), M. I. T. Press, Cambridge, pp. 1-61. Available at: https://bayes.wustl.edu/etj/articles/stand.on.entropy.pdf

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