Courses in Economics (Division 358)

A. Introductory Courses

201. Principles of Economics I. No credit granted to those who have completed or are enrolled in 400. (4). (SS). (QR/2).

Economics 201 concentrates on the microeconomics of the modern economy: how prices and quantities of goods and services are determined under competitive conditions as well as in other types of markets; the determination of wage rates and the distribution of income; the public sector; and related topics of current interest. The course format consists of three one-hour lectures per week (either Section 100, 200, or 300) taught by the professor and one and a half hours of discussion per week (Section 101-116, 201-216, 301-312) taught by a teaching assistant. Grades are based largely on course-wide hour tests and the final exam, but there will be homework and possibly quizzes in the sections. Economics 201 is the first part of the two-term introduction to economics. Both 201 and 202 are required as prerequisites to the concentration and to upper level courses in economics. Cost:2 WL:None. For information about overrides, call the Undergraduate Office at 763-9242. (Section 100 and 300: Gerson; Section 200: Porter )

202. Principles of Economics II. Econ. 201. No credit granted to those who have completed or are enrolled in Econ. 400. (4). (SS). (QR/2).

Economics 201 and 202 are required as prerequisites to the concentration and to upper-level courses in Economics. In Economics 202, the fundamental concepts and theories of macroeconomics are developed and used to analyze problems of current interest. The major concerns of this course are the determinants of GDP, unemployment, inflation, international trade, and economic growth. The course format consists of three hours of lecture per week (either 100 or 200) by the professor and one and a half hours of section meetings (101-109 or 201-212) each week by a teaching assistant. The section meetings are limited to 35 students. Cost:2 WL:Contact Undergraduate Office, Dept. of Economics, 158 Lorch Hall (Section 100:Courant; Section 200:Stafford)

B. Economic Theory and Statistics

401. Intermediate Microeconomic Theory. Econ. 201 and 202, and Math. 115. (4). (SS). (QR/1).

This course deals with the theoretical analysis of consumers, firms, markets, and price determination. The analysis is rigorous, using the tools of algebra, geometry, and elementary calculus in constructing models. Prerequisites include Math 115 or equivalent, and Economics 201 (or permission of the instructor). Economics concentrators are required to elect this course and are encouraged to complete it early in their concentration program. It is not recommended that 401 and 402 be taken in the same term. Main lecture will meet twice a week. Sections will meet once a week. Cost:3 (Bergstrom)

402. Intermediate Macroeconomic Theory. Econ. 201 and 202, and Math. 115. (3). (SS). (QR/1).

This course in macroeconomics deals with the determination of broad economic aggregates such as national income, employment, the price level, and the balance of payments in both the short run and the long run. Rigorous analysis is used to understand the forces that determine these economic variables, and how they are affected by public policies. It is predominantly a lecture course, with grades based on hour test(s) and final exam. Prerequisites include one term of calculus. Economics 402 is a prerequisite for many other courses offered in Economics. Concentrators are required to elect this course and are encouraged to complete it early in their concentration program. It is strongly recommended that students take Economics 401 before 402. Cost:3 WL:3 (Johnson)

404. Statistics for Economists. Econ. 201 and 202 and Math. 115. No credit granted to those who have completed or are enrolled in 405 or Stat. 311, 402, or 412. (4). (Excl). (QR/1).

This course provides an introduction to the background in descriptive statistics, probability theory, statistical inference and regression theory needed to enable the large body of empirical work that is now undertaken in economics to be understood and appreciated. There are two lectures and one problem session per week. Grades are based on problem sets and exams. The course, which is self-contained, does not serve as a prerequisite to Economics 406. Cost:1 (Genius)

405/Statistics 405. Introduction to Statistics. Math. 116 or 118, or permission of instructor. Juniors and seniors may elect this course concurrently with Econ. 201 or 202. No credit granted to those who have completed or are enrolled in Stat. 311 or 412. Students with credit for Econ. 404 can only elect Econ. 405 for 2 credits and must have permission of instructor. (4). (Excl). (QR/1).

This course is designed for economics concentrators but the discussion is sufficiently general to serve noneconomics concentrators as well. The emphasis is on understanding rather than on "cookbook" applications. Students are expected to know basic algebra and basic calculus. Since the content of the course does not extend much beyond establishing the foundations of statistical inference, it is recommended that after finishing the course students elect Economics 406 or a similar course in the Statistics Department to learn some applications and to get some experience with computer work. This course is designed for quantitatively oriented students who are comfortable with abstract concepts. Students who prefer a broader, less rigorous approach to statistics should elect Econ. 404. Evaluation of students in the course is based on two midterm tests and one final examination, and on homework assignments. There are 3 hours of lectures and 1 hour of discussion per week. Cost:3 WL:3 (Howrey)

C. Monetary and Financial Economics

310. Money and the Economy. Econ. 201 and 202. No credit granted to those who have completed or are enrolled in 411 or 412. (3). (Excl).
Section 001 Money and Banking.
The first half of the course is devoted to the study of financial intermediation, interest rates, money market instruments, and banking. Recent innovations in financial markets are integrated with the study of bank holding companies, savings and loan holding companies, and nonbank financial intermediation by industrial concerns such as Ford Motor Company and Sears. The second half of the course is devoted to the theory of monetary control, monetary policy, and Federal Reserve policy making. (Richter)

411. Monetary and Financial Theory. Econ. 402, and 404 or 405. No credit granted to those who have completed or are enrolled in 310. (3). (Excl).

Economics 411 focuses on modern financial markets and the role of monetary and fiscal policy in influencing asset prices and the economy. Monetary and financial economics are developed at a formal level. Topics covered can include financial institutions and markets, interest rate determination, portfolio theory, capital markets, the regulation of financial institutions, the money supply process, money demand, monetary policy, national saving and the national debt. Evaluation will be based on homework assignments, two midterms, and the final exam. Method of instruction is lecture and discussion. The required prerequisite is Econ 402, Intermediate Macroeconomics. Additional recommended prerequisite is Econ 401, Intermediate Microeconomics. WL:1 (Kimball)

412. Topics in Macroeconomics. Econ. 402. No credit granted to those who have completed or are enrolled in 310. (3). (Excl).

Economics 412 is an advanced undergraduate course in applied monetary theory and macroeconomics. Our focus will be on developing and using macroeconomic models for policy analysis and forecasting. We will first review and extend models introduced in intermediate macroeconomics (Econ 402) and then apply these models to issues such as inflation, economic growth, business cycles, and real wage growth. The second part of the course will focus on econometric modeling of the macro economy, including model specification, data issues, model estimation and evaluation, policy simulation experiments, and preparing, generating, and adjusting forecasts. Students will participate in small group projects where they will have computer experience with modeling and forecasting using the Michigan Quarterly Econometric Model. In addition to the official prerequisite (Econ 402), student should take intermediate microeconomics (Econ 401) and statistics (Econ 404 or 405) before taking this course. Cost:2 WL:1 (Barsky)

435. Financial Economics. Econ. 401 and 405, or equivalent. (3). (Excl).

This class introduces the economics analysis of financial markets and financial decision making. Topics covered include asset pricing theory (the valuation of stocks, bonds, and options), net present value analysis, portfolio management, and financial market organization and behavior. The course develops the capacity to analyze investment strategies and policy issues from the standpoint of economic theory (as opposed to conventional wisdom). Our main objectives are to understand why</U> the financial markets work the way they do, to develop useful tools for the analysis of investment opportunities, and to use economic methods to think critically about policy issues such as government regulation of financial markets and the taxation of investment returns. Students will gain experience with actual financial markets through guest lectures from market professionals, tracking their own "model portfolios," and regular reading of The Wall Street Journal. (Hussman)

D. Labor Economics

421. Labor Economics I. Econ. 401. No credit granted to those who have completed or are enrolled in 320 or 326. (3). (Excl).

This course deals with the economics of labor supply and demand, wage and employment determination, investment in education and training, forms of compensation, and unemployment. The course develops microeconomic models of the labor market, presents relevant empirical evidence, and discusses applications to policy issues. Cost:2 WL:1 (Brown)

E. Industrial Organization and Public Control

333. Economic Analysis of Industrial Policy. Econ. 201 and 202. (3). (Excl).

The goal of the course is a broad analysis of the questions of what has come to be called "industrial policy" and other structural policies aimed at reversing the weak performance of the U.S. economy. We will attempt to examine the subject from several perspectives. The course topics include the definition of an industrial policy, whether American industry is in a condition that merits serious concern, the use of traditional macroeconomic and trade policies, labor's stake in industrial transition, new theories of the nature of the firm, the controversial role of corporate raiding and reorganization, examination of the experience in the specific industries (autos, computers, aircraft) and the role of technology and R and D activity. A final section of the course will evaluate some specific policies and proposed remedies. Many of the topics compare U.S. institutions with those in other countries. Cost:5 WL:1 (Stafford)

431. Industrial Organization and Performance. Econ. 401. No credit granted to those who have completed or are enrolled in 330. (3). (Excl).

An analysis of the behavior and social performance of firms. Emphasis is placed on understanding how firms compete with one another. Topics include oligopoly theory, differentiated products, entry deterrence, collusion, advertising, research and development, price discrimination and strategic rivalry using game theory. There will be a midterm and a final exam. Cost:3 WL:4 (Salant)

432. Government Regulation of Industry. Econ. 401. No credit granted to those who have completed or are enrolled in 330. (3). (Excl).

This course describes and analyzes the efforts of governments to control the market power of business enterprises. Topics include dominant position, oligopolistic cooperation, vertical restraint, and merger. Emphasis is placed in American policies, especially antitrust law and regulation by administrative commission. Econ 431 is not required, but knowledge of certain material it covers will be presumed. Students should be prepared to participate frequently in class discussions. Cost:2 WL:1

F. International Economics

441. International Trade Theory. Econ. 401 or the equivalent. (3). (Excl).
Section 001.
This course deals with the theory of international trade. It explores the important theories that explain what countries trade and why they gain from trade. These theories include the theory of comparative advantage and the factor-proportions theory of trade, as well as more recent theoretical developments. The course also deals with several other related topics, such as empirical tests and applications of trade theory, the theory of trade policy, preferential trading arrangements, international factor movements, and trade and economic development. Cost: 1-2 WL:1 (Levinsohn)

Section 002. This course deals with the theory of international trade. It explores the important theories that explain what countries trade and why they gain from trade. These theories include the theory of comparative advantage and the factor-proportions theory of trade, as well as more recent theoretical developments. The course also deals with several other related topics, such as empirical tests and applications of trade theory, the theory of trade policy, international factor movements, preferential trading arrangements, multilateralism, and trade and the environment. Cost:2 WL:4 (Stern)

442. International Finance. Econ. 402 or the equivalent. (3). (Excl).

This course analyzes the macroeconomic and financial interactions between countries. Theories of the balance of payments, the exchange rate, and the international component of income determination are developed. Examples of fixed and flexible exchange-rate regimes are covered, including the gold standard, Bretton Woods, and the EMS. There are graded homeworks, one midterm and a final exam. Cost:3 WL:1 (Oppers)

G. Comparative Economic Systems and National Economies

451. Comparative Analysis of Economic Systems. Econ. 401. No credit granted to those who have completed or are enrolled in 350. (3). (Excl).

Designed for students with a background in intermediate microeconomic theory. Covers: (1) methods and criteria for analyzing and comparing economic systems; (2) theoretical models and case studies of a capitalistic market economy, a socialist market economy (with and without workers' management of firms), and a centrally planned economy; (3) Comparative analysis of selected economies' policies and performance; and (4) analysis of current reforms in socialist economies. Reading assignments in various sources; lectures. Mid-term exam and option of final exam or presentation of study report in class. No papers. Cost:3 WL:1 (Dernberger)

454. Economics of Japan. Econ. 201 and 202. (3). (Excl).

Analysis of Japan's economic organization, structure and performance. Special emphasis is placed on the character of Japanese economic planning, the behavior of Japanese enterprises, the Japanese labor force, and the Japanese household. There will also be ample discussion of Japan's international economic relations. Attention will be given to bilateral and multilateral conflicts in overseas product, financial and technology markets. The class has a lecture format, but questions are welcomed. Course grade will be determined by two one hour exams and a final. Cost:4 WL:1 (Saxonhouse)

455. The Economy of the People's Republic of China. Econ. 201 and 202. (3). (Excl).

The course examines China's economic development and reform. The emphasis is on the events in the past 15 years. However, about 1/4 of the term will be spent to review the economic development from 1949 to 1978. The course is biweekly in lecture format due to class size. Midterm and final exams are used to determine course grade. Cost:2 WL:1 (Li)

H. Economic Development

360. The Developing Economies. Econ. 201 and 202. No credit granted to those who have completed or are enrolled in 461. (3). (Excl).

This course examines the structure and problems of the low-income nations. It analyzes the economic issues of development policy and discusses the economic relationships between the poor and rich nations of the world. Econ. 360 is designed for students who wish a relatively nontechnical introduction to the problems of economic development. (Dye)

461. The Economics of Development I. Econ. 401. No credit granted to those who have completed or are enrolled in 360. (3). (Excl).

This course will focus primarily on micro-economic issues in third world countries. It is intended for upper-division undergraduates in economics and graduate students from outside economics. The topics will cover discussions on rural markets, migration, poverty, population, health, gender issues, education, dual economics and labor markets. Besides the stated prerequisite, Economics 402 would be helpful background for this course. (Kossoudji)

I. Environmental Economics

471/Nat. Res. 571. Environmental Economics. Econ. 401. or Nat. Res. 570 or equivalent. (3). (Excl).

Economics 471 is a broad introduction to market failure, with theoretical, empirical, institutional, and historical perspectives on twentieth-century environmental problems. This course is intended primarily for upper-division undergraduates in the economics concentration and for graduate students from outside economics (but note carefully the prerequisite a solid intermediate microeconomic theory course is essential). The format for most classes is lecture-with-interruption, with time allocated for questions and discussions. The course has three (about equal) parts: (1) the theory of externalities and public goods (and "bads"); (2) current U.S. policy concerning air and water pollution, solid and hazardous waste disposal, and recycling (plus some comparison with other countries' policies); and (3) the application of benefit-cost analysis to the measurement and evaluation of environmental projects and policies. Students must acquire a small paperback and a large course pack. There will be periodic problem sets, several short quizzes, and a final exam. The overall course grade will be based on the problems (20%), the quizzes (30%), the final exam (45%), and the student's contribution to the classroom (5%). Cost:3 WL:1 (Porter)

J. Public Finance

481. Government Expenditures. Econ. 401. No credit granted to those who have completed or are enrolled in 380. (3). (Excl).

Economics 481 studies the productive and allocative role of government and of other aggregations of individuals, as well as the interactions among politics, economics, and ethics. Topics covered include welfare economics, the theory of public goods, collective choice, problems of group decision making, externalities and common pool problems, and cost-benefit analysis. Depending upon the time available, we may also consider in detail public policies in the areas of pollution and income redistribution. In considering these topics, emphasis will be placed on theoretical as well as on political issues. The class format will combine lecture and discussion. WL:1 (West)

K. Economic History

493/Hist. 493. European Economic History. Econ. 201 and 202. (3). (Excl).

This course covers European Economic History from the Middle Ages to the twentieth century. The course focuses on the causes of economic development in Europe, and the economic forces shaping social institutions in various periods. The first third examines pre-industrial Europe, the next third looks at the Industrial Revolution in Britain and its aftermath, and the final third considers the character and problems of European economies since World War I. Cost:2 WL:1 (Dye)

L. Other Topics in Economics

407. Marxist Economics. Econ. 201 and 202. (3). (Excl).

This course provides a critical introduction to Marxian economic analyses of capitalist society in general, of contemporary U.S. capitalism in particular, and of historical and potential alternative economic systems. The first part of the course examines "classical" Marxian theory, based on readings of Marx and Engels as well as recent interpreters. The second part of the course focuses on contemporary political economy examined within a variety of broadly Marxian frameworks. Substantial class discussion is devoted to application of economic theory to social practice. A very broad range of topics is open for the course term paper. Cost:2 WL:1 (Thompson)

476/CAAS 457. Political Economy of Black America. Econ. 201. (3). (Excl).

Focuses on the economic life of African Americans in the U.S. including the role of economics in the social construction to race, and the relationship between the evolution of the U.S. economy and the changing status of African Americans. (Whatley)

485. Law and Economics. Econ. 401. (3). (Excl).

This course analyzes legal issues from an economic perspective. It covers topics in a variety of legal areas, including torts, contracts, property law, and legal procedure and dispute resolution. For example, the course will ask the question of who should be liable for damage in automobile accident cases in order to give drivers incentives to take an economically efficient level of precaution against accidents. It will ask under what circumstances buyers or sellers should be encouraged to breach contracts and what penalties for breach will encourage them to breach only when such behavior is economically efficient. It will ask how the availability of insurance changes behavior in uncertain situations such as these. It will examine how the high costs of litigation influence the outcomes of legal disputes and also will analyze various methods of resolving disputes outside of the legal system and their effects. A "truth in advertising" proviso: students intending to go to law school should be cautioned that this course will not help in getting admitted any more than any other economics course. There will be midterm and final exams, but no paper. Readings include Polinsky's INTRODUCTION TO LAW AND ECONOMICS. (White)

M. Honors Program, Seminars, and Independent Research

395. Topics in Economics and Economic Policy. Econ. 201 and 202. (3). (Excl).
Section 001 Economics and the Automobile.
The course will be divided into three broad segments. (1) Professor Courant will consider effects of automobile production and use on urban, regional, and national economies. Topics include urban decline and suburban growth, traffic congestion, and the importance of the auto in regional economies and the business cycle. (2) Professor Levinsohn will examine the degree to which the U.S. auto industry has monopoly power, pricing policies of automobile firms, trade policy and the domestic auto industry and technical change and international competitiveness in the auto industry. (3) Professor Porter will present the economic analysis of safety, speed limits, pollution, recycling of waste products from the industry, liability and insurance laws, and road construction and pricing. The entire course will stress the policy implications of the economic analysis. The course will be a lecture course. Grades will be based on three midterms, a final, and (possibly) a short paper. Cost:2 WL:1 (Porter, Levinsohn, Courant)

495. Seminar in Economics. Econ. 401, 402, and 404 or 405; and permission of instructor. (3). (Excl). May be elected for a total of 6 credits.

Admission information for all 495 Seminars: Closed at CRISP. To apply for admission into the 495 Seminar, students must provide both an Academic Term Report (unofficial transcript) and a completed application no later than Thursday, March 24. The Academic Term Report should be requested from the General Information Windows in the LS&A lobby and should be sent to the Undergraduate Economics Office (158 Lorch). The fee is $1.00. Application forms are available from the Undergraduate Economics Office (158 Lorch Hall) and the completed forms should be returned there. Admission will be the decision of the instructor and will be posted outside 158 Lorch by Thursday, March 31.

Section 001 Quantitative Research in Macroeconomics. This advanced undergraduate seminar is intended for students who wish to do original research on topics in applied macroeconomics. Subjects will be chosen according to student interest. A partial list of possible topics includes: the determinants of economic growth and the sources of income differences among nations, the reasons for the post-1970 "productivity slowdown" in the U.S. and abroad, the reasons why productivity fluctuates over business cycles, the determinants of inventory behavior by firms, labor market practices and institutions relevant for macroeconomics, the interplay between macroeconomics and politics, and theories of consumption and saving and their interaction with public policy. Papers and oral presentations required, individually and in groups. Prerequisites: 401 and 402 with B+ or better (except in special cases), competence in elementary calculus, and concurrent or prior enrollment in 405-406 (preferable) or 404. Economics 411 and 412 provide useful background, but are not required. (Basu)


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