Spring 2008 Undergraduate Course

Social Analysis 10: Principles of Economics, which is listed under the Core Curriculum, is the full-year introductory course in Economics. Social Analysis 10 is designed both for potential concentrators and for those who intend no further work in the field. The Department of Economics strongly encourages students considering concentration to take this course in their freshman year. This is a required course for all Economics concentrators and a prerequisite for higher level courses in economics.

General Economics; Economic Theory; History of Economics

Economics 1010b. Macroeconomic Theory
Catalog Number: 2924
Christopher L. Foote
Half course (spring term). M., W., F., at 9; and a one-hour weekly section to be arranged. EXAM GROUP: 2
Theories and evidence on economic growth and fluctuations. Determination of gross domestic product, investment, consumption, employment, and unemployment. Analysis of interest rates, wage rates, and inflation. Roles of fiscal and monetary policies. Extensions to the international economy.
Note: Economics 1010b fulfills the intermediate macroeconomic theory requirement for Economics concentrators. Students may take either Economics 1010b or Economics 1011b for credit. This course, when taken for a letter grade, meets the Core area requirement for Social Analysis.
Prerequisite: Social Analysis 10. While no specific mathematics course is required, knowledge of calculus at the level of Mathematics 1a is assumed.

Economics 1011b. Macroeconomic Theory
Catalog Number: 6993
Aleh Tsyvinski and Philippe Aghion
Half course (spring term). Tu., Th., 10-11:30, and a one-hour weekly section to be arranged. EXAM GROUP: 12, 13
The same topics as in 1010b, but with a more mathematical approach.
Note: Economics 1011b fulfills the intermediate macroeconomic theory requirement for Economics concentrators. Students may take either Economics 1010b or Economics 1011b for credit. This course, when taken for a letter grade, meets the Core area requirement for Social Analysis.
Prerequisite: Economics 1011a, Mathematics 21a, or permission of the instructor.

Economics 1018. Cultural Economics
Catalog Number: 1775
Alberto F. Alesina and Paola Giuliano (International Monetary Fund)
Half course (spring term). Tu., Th., 1–2:30. EXAM GROUP: 15, 16
Explores the importance of culture on economic outcomes, focusing on how heterogeneity of preferences affects economic choices and where those differences come from. Theoretical topics include group identity, social interactions and networks, evolutionary selection, the importance of the family. Empirical applications include international investment, savings, occupational choices, ethical norms, economic development, fertility decisions.
Prerequisite: Economics 1010a or 1011a, and Economics 1123..

Economics 1025. Theory of Capital and Income
Catalog Number: 0121
Martin L. Weitzman
Half course (spring term). M., W., 1–2:30; and a 1.5 hour weekly section 1–2:30 to be held Friday. EXAM GROUP: 6, 7
Mathematically advanced. Applies the maximum principle of optimal control theory to analyze a wide variety of dynamic economic models. Emphasizes basic principles and fundamental unity of all problems involving capital, investment, and time—including harvesting of renewable resources, extraction of non-renewable resources, analysis of dynamic environmental externalities, optimal growth, equilibrium of competitive stock markets, and the economic theory of the connection between income, accounting, sustainability, and share valuation.
Prerequisite: Economics 1011a and Mathematics 20.

Economics 1030. Psychology and Economics
Catalog Number: 4709 Enrollment: Limited to 80.
David I. Laibson and Andrei Shleifer
Half course (spring term). Tu., Th., 1–2:30. EXAM GROUP: 15, 16
Psychological concepts include social preferences, impulsivity, bounded rationality, loss-aversion, over-confidence, self-serving biases, hedonics, and neuroscience. Economic concepts include arbitrage, equilibrium, rational choice, utility maximization, Bayesian beliefs, game theory. Integrates these psychological and economic concepts to understand behavioral phenomena such as portfolio choice, saving, procrastination, addiction, asset pricing, auction bidding, labor supply, cooperation, persuasion.
Prerequisite: Social Analysis 10 and knowledge of univariate calculus.

Economics 1051. Game Theory in Economics
Catalog Number: 3692
Attila Ambrus
Half course (spring term). Tu., Th., 10–11:30. EXAM GROUP: 12, 13
The course will provide participants with an introduction to the modern game theory, focusing on its use in economics. Main ideas of game theory are introduced and illustrated using examples from industrial organization, labor economics, and macroeconomics.
Prerequisite: Economics 1010a or 1011a.

Economics 1052. Introduction to Game Theory
Catalog Number: 2634
Markus M. Möbius
Half course (spring term). Tu., Th., 10–11:30, and a one-hour weekly section to be arranged. EXAM GROUP: 12, 13
An introduction to game theory and its applications to economics at a high level of rigor. Topics include extensive form and strategic form games, Nash equilibrium and Nash’s existence theorem, subgame-perfect equilibrium, Bayesian equilibrium, and applications to repeated games, auctions, and bargaining.
Prerequisite: Economics 1011a and Mathematics 21a, or equivalent.

Econometrics and Quantitative Methods

Economics 1123. Introduction to Econometrics
Catalog Number: 0813
Rustam Ibragimov (spring term)
Half course (fall term; repeated spring term). Fall: Tu., Th., 11:30–1; Spring: Tu., Th., 1–2:30; and a one-hour weekly section to be arranged. EXAM GROUP: Fall: 13, 14; Spring: 15, 16
An introduction to multiple regression techniques with focus on economic applications. Discusses extensions to discrete response, panel data, and time series models, as well as issues such as omitted variables, missing data, sample selection, randomized and quasi-experiments, and instrumental variables. Aims to provide students with an understanding of and ability to apply econometric and statistical methods using computer packages.
Note: Students may take either Economics 1123 or Statistics 139 for credit. Statistics 139 will not count as econometrics requirement. Also, Economics 1123 may not be taken for credit if taken after Economics 1126, but credit will be given for both courses if Economics 1123 is taken first.
Prerequisite: Statistics 100.

Economics 1126. Quantitative Methods in Economics
Catalog Number: 4076
Gary Chamberlain
Half course (spring term). Tu., Th., 11:30–1. EXAM GROUP: 13, 14
Topics include elements of statistical decision theory and related experimental evidence; some game theory and related experimental evidence; maximum likelihood; logit, normal, probit, and ordered probit regression models; panel data models with random effects; omitted variable bias and random assignment; incidental parameters and conditional likelihood; demand and supply.
Note: Economics 1123 may not be taken for credit if taken after Economics 1126, but credit will be given for both courses if Economics 1123 is taken first.
Prerequisite: Statistics 100 or preferably 110; Mathematics 20.

Economics 1127. Statistical Methods for Evaluating Causal Effects - (New Course)
Catalog Number: 9967
Guido W. Imbens and Donald B. Rubin
Half course (spring term). Tu., Th., 2:30–4. EXAM GROUP: 16, 17
Statistical methods discussed for inferring causal effects from data from randomized experiments or observational studies. Students will develop expertise to assess the credibility of causal claims and the ability to apply the relevant statistical methods for causal analyses. Examples will come from many disciplines: economics, education, other social sciences, epidemiology, and biomedical science. Evaluations of job training programs, educational voucher schemes, changes in laws such as minimum wage laws, medical treatments, smoking, military service.
Prerequisite: Statistics 100 or preferably Statistics 111; Mathematics 20.

Cross-listed Courses

Statistics 100. Introduction to Quantitative Methods
Statistics 104. Introduction to Quantitative Methods
Statistics 110. Introduction to Probability

Economic History; Development Economics

Economics 1389. The Economics of Health and Development - (New Course)
Catalog Number: 1900
Amitabh Chandra (Kennedy School) and Erica M. Field
Half course (spring term). Tu., Th., 1–2:30; F., 1–2:30. EXAM GROUP: 15, 16
Examines health issues in developing countries from the standpoint of economics, with focus on applied microeconomic research and econometric methods. Specific topics include private and social returns to health, the effect of health on growth and development, gender differences in health, structural problems in delivery, health finance, technology adoption and behavioral change, infant mortality, worms, AIDS, malaria, and the long-run impact of disease. For each topic, special attention is paid to the identifying causal effects that inform the design of public policies, and contrast the lessons learnt from this approach to those obtained from observational studies.
Note: Offered jointly with the Kennedy School as PED-318.
Prerequisite: Economics 1010a (or 1011a) and 1123 (or 1126).

Economics 1393. Poverty and Development
Catalog Number: 6516
Nathan J. Nunn
Half course (spring term). M., W., 1–2:30; and a one-hour weekly section to be arranged. EXAM GROUP: 6, 7
Studies the relationship between economic growth, poverty, and income distribution. Discusses how globalization affects poverty and inequality. Studies the main theories of economic growth and the main potential sources of economic development, from physical capital accumulation, to education, to technology, to the role of government. Discusses various global issues such as public global health (e.g., the impact of malaria and AIDS on Africa), corruption and institutions, natural resources, the environment, international donor institutions, and population growth.
Prerequisite: Economics 1010a (or 1011a) and 1010b (or 1011b).

Monetary and Fiscal Theory and Policy; Public Sector Economics

Economics 1400. The Contents of Globalization: Issues, Actors, and Decisions - (New Course)
Catalog Number: 5906
Lawrence H. Summers and Lant Pritchett (Kennedy School)
Half course (spring term). Tu., Th., 11:30–1. EXAM GROUP: 13, 14
Course will cover the economics and politics of globalization across an array of topics: international trade, development assistance, international financial flows, global warming, immigration/labor mobility, foreign investment. Within each topic we will discuss three elements: what are the important issues, illuminating the economic analytics crucial to understanding the topic; who plays a role in each of the issues to understand the motivations and constraints facing the actors engaged in globalization.
Note: Jointly offered with the Kennedy School as ITF-225

Economics 1410. Public Sector Economics
Catalog Number: 6136
David M. Cutler, Mihir A. Desai (Business School), and Martin Feldstein
Half course (spring term). M., W., F., at 9, and a one-hour weekly section to be arranged. EXAM GROUP: 2
An economic analysis of taxation and government spending. Fundamental principles of taxation are developed and applied to current issues of tax policy. Discussion of government spending focuses on issues of health, education, and social security.
Note: Offered jointly with the Kennedy School as API-125.
Prerequisite: Economics 1010a or 1011a or permission of instructor.

Economics 1420. American Economic Policy
Catalog Number: 8110
Martin Feldstein and Jeffrey B. Liebman (Kennedy School)
Half course (spring term). M., W., F., at 10, and a one-hour weekly section to be arranged. EXAM GROUP: 3
Analyzes major issues in American economic policy including taxation, Social Security, welfare reform, budget policy, monetary and fiscal policy, and exchange rate management. Current economic issues and policy options discussed in detail and in the context of current academic thinking.
Note: Offered jointly with the Kennedy School as API-126.
Prerequisite: Economics 1010a or 1011a, or permission of instructo

Economics 1460. Economics of Health Care Policy
Catalog Number: 4540
Joseph P. Newhouse (Kennedy School, Medical School, Public Health)
Half course (spring term). M., W., 8:40–10. EXAM GROUP: 1, 2
Policy issues related to the following: the demand for medical care services, especially as a function of insurance; the demand for insurance and issues of selection; reimbursement policies of Medicare and other payers toward health plans, hospitals, and physicians; effects of health maintenance organizations and managed care; and malpractice and tort reform. Focus on federal policy, although state and local perspectives will receive some attention.
Note: Students may not take both Economics 1460 and Quantitative Reasoning 24: Health Economics and Policy for credit. Offered jointly with the Kennedy School as HCP-272.
Prerequisite: Economics 1010a or 1011a. A statistics course is highly desirable.

International Economics

Economics 1531. Economics of International Financial Policy
Catalog Number: 7018
Jeffrey A. Frankel (Kennedy School)
Half course (spring term). M., W., 2:40–4; and review section F., 10:10–11:30. EXAM GROUP: 7, 8
This course examines the macroeconomics of open economies. It covers models appropriate to major industrialized countries. Topics include the foreign exchange market, devaluation, and import and export elasticities; simultaneous determination of the trade balance, national income, balance of payments, money flows, and price levels; capital flows and our increasingly integrated financial markets; monetary and fiscal policy in open economies; international macroeconomic interdependence; supply relationships and monetary policy targets; exchange rate determination; and international portfolio diversification.
Note: Offered jointly with the Kennedy School as ITF-220. May not be taken for credit with Economics 1530.
Prerequisite: Economics 1010/1011. Knowledge of international trade theory and econometric techniques is also desirable, but not essential. Students must be very comfortable with algebra.

Economics 1545. International Financial and Macroeconomic Policy
Catalog Number: 5166 Enrollment: Limited to 30.
Kenneth Rogoff
Half course (spring term). M., W., 1–2:30; and a one-hour weekly section to be arranged. EXAM GROUP: 6, 7
Advanced theoretical and empirical analysis of contemporary international macroeconomic policy issues in both industrialized and developing economies. Topics include exchange rates, international capital flows, debt crises, growth, and policy coordination.
Prerequisite: Economics 1010b or 1011b.

Industrial Organization and Regulation; Environmental Economics

Economics 1641. Industrial Organization: Theory and Practice
Catalog Number: 9099 Enrollment: Limited to 30.
Ariel Pakes (spring term), and Gregory M. Lewis (spring term)
Half course (fall term; repeated spring term). Fall: M., W., 1–2:30; Spring: M., W., 4–5:30. EXAM GROUP: Fall: 6, 7; Spring: 9
Theoretical and empirical analysis of contemporary topics in industrial organization. Uses economic theory to analyze important issues facing firms, and examines the practical challenges of empirical applications of theory. Topics include horizontal relationships and mergers, vertical integration and control through contractual arrangements, price discrimination, information and search costs, innovation and intellectual property rights, and network externalities. Each topic combines theoretical analysis with a study of actual firm behavior.
Note: Students may not take both Economics 1640 and Economics 1641 for credit.
Prerequisite: Economics 1010a or 1011a.

Economics 1661. Environmental and Resource Economics and Policy
Catalog Number: 2115
Robert N. Stavins (Kennedy School)
Half course (spring term). M., W., 1–2:30; with optional review section F., 1–2:30. EXAM GROUP: 6, 7
Provides a survey, from the perspective of economics, of environmental and natural resource policy. Combines lectures on conceptual and methodological topics with examinations of public policy issues. Topics include principles of environmental and resource economics, nonrenewable resources (minerals and energy), renewable resources (water, forests, land, fisheries), air pollution (stationary and mobile sources, acid rain, and global climate change), water pollution (point and nonpoint sources), waste management, and sustainable development and political aspects of environmental policy.
Note: Offered jointly with the Kennedy School as ENR-201.
Prerequisite: Social Analysis 10 or permission of instructor.

Financial Economics

Economics 1745. Corporate Finance
Catalog Number: 5889
Efraim Benmelech
Half course (spring term). T., Th., 1–2:30, and a one-hour weekly section to be arranged. EXAM GROUP: 15, 16
Introduction to corporate finance, including capital budgeting, capital structure of firms, dividend policy, corporate governance, and takeovers.
Prerequisite: Economics 1010a or 1011a, Mathematics 20, and Statistics 100.

Labor, Human Resources, and Income Distribution; Urban Economics

Economics 1812. The US Labor Market
Catalog Number: 0421
James L. Medoff
Half course (spring term). M., W., (F.), at 10. EXAM GROUP: 3
Presents the tools employed in research on the operation of the labor market and then uses them to discuss issues such as the determinants of earnings differentials, the impact of various firm characteristics on labor-market outcomes, discrimination, and unemployment.
Prerequisite: Economics 1010a (or 1011a) and Economics 1010b (or 1011b).

Economics 1818. Economics of Discontinuous Change
Catalog Number: 3029
Richard B. Freeman
Half course (spring term). Tu., Th., 1–2:30; and a one-hour weekly section to be arranged. EXAM GROUP: 15, 16
Explores discontinuous changes in the economic position of groups and countries and presents mathematical and computer simulation models designed to illuminate these changes. Examples include growth/decline of trade unions, segregation of groups, development of linkages on the internet, changes in corporate work culture, growth of social pathologies in neighborhoods, and Malthusian concerns about the environment. Models include nonlinear simulations, neural networks, finite automata, evolutionary stable strategies, causal conjunctures, agent-based simulations, and genetic algorithms.
Note: A research paper is required. Students should have some mathematical background, but there is no prerequisite.

Tutorials, Junior Seminars, and Senior Thesis Seminars in Economics

*Economics 910r. Supervised Reading and Research
Catalog Number: 1020
Jeffrey A. Miron
Half course (fall term; repeated spring term). Hours to be arranged.
Supervised reading leading to a long term paper on a topic or topics not covered by regular courses.
Note: Does not count for concentration credit and may not be taken Pass/Fail. Requires signatures of the adviser and of the Director of Undergraduate Studies. Application available at the Economics Undergraduate Office at Littauer Center, North Yard.

*Economics 970. Tutorial — Sophomore Year
Catalog Number: 7923
Jeffrey A. Miron
Half course (spring term). Hours to be arranged. EXAM GROUP: 9
A series of small seminars focusing on applications of economic theory to real problems.
Note: One term required of all Economics concentrators. Enrollment limited to concentrators.
Prerequisite: Both terms of Social Analysis 10 (or equivalent); Statistics 100, 104, or 110; Economics 1010a or 1011a and current enrollment in Economics 1010b or 1011b.

Economics 980 Junior Seminars

Junior seminars are designed to introduce students to research in a particular area of economics and to prepare students to undertake their own research project. All junior seminars require a major research paper. The seminar prerequisites are intermediate microeconomic and macroeconomic theory, statistics, and concurrent enrollment in econometrics; any additional prerequisites are listed with the individual seminar. These seminars are limited to 16 participants with preference given to Economics and Applied Math/Economics concentrators in their junior year. Enrollment in these seminars is determined by a lottery based on student preferences. Other Economics concentrators and undergraduate non-concentrators with the appropriate prerequisites may enroll in junior seminars on a space-available basis.

*Economics 980f. Economics of Social Problems
Catalog Number: 7655
Lawrence F. Katz
Half course (spring term). M., W., 1–2:30. EXAM GROUP: 6, 7
This course applies the tools of economics to understand key US social problems and to evaluate alternative market and government policies to address them. Issues to be studied include poverty and inequality; economics of the family; crime; neighborhood effects; low-wage labor markets; immigration; discrimination; homelessness; charitable behavior and welfare reform and other antipoverty strategies.

*Economics 980g. Topics in Economic Development
Catalog Number: 3368
Michael R. Kremer
Half course (spring term). Th., 4–6. EXAM GROUP: 18
Recent research on economic development. Social service delivery in health and education. Industrial sector. Goal is to enable students to identify research topics in economic development, learn how to define and analyze a problem. Emphasis on modeling and econometric techniques. Topics include returns to human capital, incentives on education, school choice, health service contracting, R&D. Firm related: business environment and firm responses, industry dynamics, effect of trade, FDI on productivity, wages.

*Economics 980h. The Industrial Organization of Health Care
Catalog Number: 9901
Richard G. Frank (Medical School)
Half course (spring term). W., 2–4. EXAM GROUP: 7, 8
The seminar will apply economic theory and review empirical analyses of markets in health care. Four specific areas will be examined: 1) physician behavior and markets for physician services; 2) the role of non-profit hospitals; 3) price competition in the prescription drug market; and 4) markets for health insurance.

*Economics 980j. Europe and the US: Comparative Economic Anaylsis - (New Course)
Catalog Number: 1892
Nicola C. Fuchs-Schündeln
Half course (spring term). W., 3–5. EXAM GROUP: 8, 9
This seminar explores differences in the economic systems, preferences, and outcomes between Europe and the US. Topics include the welfare system, taxation, labor markets, female labor force participation, fertility, preferences for redistribution, migration.

*Economics 980o. Health, Education, and Development - (New Course)
Catalog Number: 7373 Enrollment: Limited to 16.
Erica M. Field
Half course (spring term). Tu., Th., 10–11:30. EXAM GROUP: 12, 13
Advanced course addresses health and education issues in developing countries from the standpoint of economics, with a focus on modeling techniques and econometric methods. General topics include demographic transition, household models of production, and the role of health and educational inputs. Specific topics include: the return to education in developing countries, structural problems in delivery, education finance, health inequality, technology adoption and behavior, AIDS, and the impact of disease.
Note: A research paper is required. Concentrators may not take pass/fail.
Prerequisite: Economics 1010a (or 1011a) and 1123 (or 1126).

Economics 985 Senior Thesis Seminars

These seminars are limited to seniors writing senior honor theses. Each seminar focuses on the research topics of interest to the participants. Emphasis is placed on research design, methodological problems, literature review, and sources of data. Regular student presentations of work in progress are required. An Economics 985 seminar taken in the senior year substitutes for Economics 990, and seniors will not be allowed to enroll concurrently in both courses. All 985 seminars are limited to 16 students.

*Economics 985a. Research in Microeconomics
Catalog Number: 7166
Jeffrey A. Miron
Full course. W., 2:30–4:30.
Workshop for seniors writing theses in theoretical and applied microeconomics. Emphasis on choice of research topics, methodology, and data sources. Written and oral presentations of work in progress leading toward completion of a major research paper or senior honors thesis are required.

*Economics 985c. Research in Labor Economics
Catalog Number: 5409
Jeffrey A. Miron
Full course. Fall: F., 3–5. EXAM GROUP: Fall: 8, 9
Workshop for seniors writing theses in labor economics and related topics. Emphasis on choice of research topics, methodology, and data sources. Written and oral presentations of work in progress leading toward completion of a major research paper or senior honors thesis are required.

*Economics 985d. Research in Economic Development
Catalog Number: 4989
David Canning (Public Health)
Full course. Tu., 4:30–6:30.
Workshop for seniors writing theses in the areas of economic history and economic development, including health and population issues. Emphasis on choice of research topics, methodologies, and data sources. Written and oral presentations of work in progress leading toward completion of a major research paper or senior honors thesis are required.

*Economics 985e. Research in Macroeconomics
Catalog Number: 3740
Jeffrey A. Miron
Full course. Tu., 4–6.
Workshop for seniors writing theses in the fields of monetary and fiscal policy, business cycles, and economic growth. Emphasis on choice of research topics, methodology, and data sources. Written and oral presentations of work in progress leading toward completion of a major research paper or senior honors thesis are required.

*Economics 985f. Research in International Trade and Finance
Catalog Number: 7157
Richard N. Cooper
Full course. M., 3–5:30.
Workshop for seniors writing theses in international trade and finance. Emphasis on choice of research topics, methodology, and data sources. Written and oral presentations of work in progress leading toward completion of a major research paper or senior honors thesis are required.

*Economics 985g. Research in Behavioral and Experimental Economics
Catalog Number: 2566
Jeffrey A. Miron
Full course. W., 6–8 p.m.
Workshop for seniors writing theses in behavioral and experimental economics. Emphasis on choice of research topics, methodology, and data sources. Written and oral presentations of work in progress leading toward completion of a major research paper or senior honors thesis are required.

*Economics 985h. Research in Financial Markets
Catalog Number: 0350
Jeffrey A. Miron
Full course. Th., 4–6.
Workshop for seniors writing theses in finance. Emphasis on choice of research topics, methodology, and data sources. Written and oral presentations of work in progress leading toward completion of a major research paper or senior honor thesis are required. Topics include asset pricing and corporate finance.

*Economics 985k. Research in Public Economics
Catalog Number: 0871
Jeffrey A. Miron
Full course. Th., 3–5.
Workshop for seniors writing theses in public economics. Emphasis on choice of research topics, methodology, and data sources. Written and oral presentations of work in progress leading toward completion of a major research paper or senior honors thesis are required. Topics have included taxation, health economics, environmental and resource economics, and education.

*Economics 990. Tutorial — Senior Year
Catalog Number: 7342
Jeffrey A. Miron and members of the Department
Full course. Hours to be arranged.
Note: Students who are writing a senior thesis out of sequence (i.e., beginning in the spring) must enroll in Economics 990 in the spring and complete the course in the fall. Students must write a 25-page paper at the end of the first term of Economics 990. Students currently enrolled in Economics 985 may not enroll in Economics 990.