Fall Course Guide

Courses in Economics (Division 358)

Fall Term, 1998 (September 8-December 21, 1998)

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A. Introductory Courses

101(201). Principles of Economics I. No credit granted to those who have completed or are enrolled in 400. (4). (SS). (QR/2).
Economics 101 examines the microeconomics of capitalism the behavior of households and businesses and the generation of prices and outputs in markets. Specific topics in Economics 101 include: supply and demand; price controls; competition and efficiency; the differences between competition and monopoly; labor markets; environmental problems and policies; and government taxation and expenditure issues. Economics 101 is the first part of the two-term introduction to economics the second part (Economics 102, for which Economics 101 is a prerequisite) examines macroeconomics. Prerequisites for 101: high school algebra and geometry and a willingness to use them. The course format consists of large lectures taught by the professor and one small one-and-a-half-hour section meeting per week taught by a graduate student instructor. Cost:2 WL:1 (Gerson, Bogart, Malone)

Section 300 only. Economics 101 examines the microeconomics of capitalism the behavior of households and businesses and the generation of prices and outputs in markets. Specific topics in Economics 101 include: supply and demand; the differences between competition and monopoly; labor markets and discrimination; the distribution of incomes; environmental issues; and government taxation and expenditure. The course format consists of three large one-hour lectures per week taught by the professor and one small one-and-a-half-hour section meeting per week taught by a graduate student instructor. Final grades will be based on: two hour tests (total of 40%); four UNANNOUNCED quizzes given during section meetings (10%); weekly homework assignments that will be collected, graded, and discussed in the section meetings (10%); and the final exam (40%). NOTE the DATES and TIMES of the two hour tests and the final exam in the TIME SCHEDULE, and BE SURE that you can attend all three. Cost:2 (Porter)
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102(202). Principles of Economics II. Econ. 101. No credit granted to those who have completed or are enrolled in Econ. 400. (4). (SS). (QR/2).
Economics 101 and 102 are required as prerequisites to the concentration and to upper-level courses in Economics. In Economics 102, 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 graduate student instructor. The section meetings are limited to 35 students. Cost:2 WL:Contact Undergraduate Office, Dept. of Economics, 158 Lorch Hall (Section 100: Johnson; Section 200: Hurst)
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B. Economic Theory and Statistics

401. Intermediate Microeconomic Theory. Econ. 101 and 102, 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 one term of calculus. Economics 401 is a prerequisite for many other courses offered in Economics. Concentrators in economics 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 twice a week. WL:1 (Salant, Gerson)
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402. Intermediate Macroeconomic Theory. Econ. 101 and 102, 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), written exercises, and final exam. Economics 402 is a prerequisite for many other courses offered in Economics. Concentrators in economics 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.
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403. Advanced Economic Theory. Econ. 401. (3). (Excl).
To what extent does the market mechanism do a good job of allocating society's scarce resources? That is the fundamental issue of microeconomic theory. Economics 401 provided all the tools necessary to investigate this core question but time constraints prevented a thorough exploration. Economics 403 focuses on this big-picture question for those with a thorough command of their 401 tools. The course will also consider resource allocation problems over time, under uncertainty, and in the presence of informational constraints.
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404. Statistics for Economists. Econ. 101 and 102 and Math. 115. No credit granted to those who have completed or are enrolled in Econ. 405 or Stat. 265, 311, 402, 405, or 412. (4). (Excl). (BS). (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 (Howrey)
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405/Stat. 405. Introduction to Statistics. Math. 116 or 118. Juniors and seniors may elect this course concurrently with Econ. 101 or 102. No credit granted to those who have completed or are enrolled in Stat. 265, 311, or 412. Students with credit for Econ. 404 can only elect Econ. 405 for 2 credits and must have permission of instructor. (4). (MSA). (BS). (QR/1).
This course is designed for economics concentrators but 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 course emphasizes 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 gain experience with applications and computational methods. 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 examinations and homework assignments. There are three hours of lectures and one hour of discussion per week. Cost:3 WL:3 (Howrey)
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409. Game Theory. Math. 217. (3). (Excl). (BS).
This course will consist of an introduction to the subject of game theory. Game theory has become an important technique for studying competitive and cooperative phenomena in economics and the social sciences. Traditional economics emphasizes the two extremes of economic decision-making: perfect competition, in which no firm can affect market prices, and pure monopoly, in which one firm has complete price-setting power. Game theory is a technique which allows intermediate situations to be analyzed: for example, those that arise during wage negotiations or in price wars between two large firms. The same principles that govern the strategic interaction of players in parlor games like Chess or Poker turn out to be widely applicable to a whole range of such phenomena in economics, biology, and political science. The current course will explore the beginnings of the subject using simple illustrative examples. Some calculus and matrix algebra will be needed, but the mathematical requirement is more for some sophistication in methods of argumentation rather than for specific techniques.
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C. Monetary and Financial Economics

310. Money and Banking. Econ. 101 and 102. (3). (SS).
This course studies the role of money, banking, and finance in the economy. At the macroeconomic level, we will study how monetary policy influences interest rates, prices, and overall economic activity. At the microeconomic level, the course will introduce topics in portfolio theory, risk management, and banking regulation. The nature of banks and problems of their supervision and control are linked to the recent banking crisis in the United States. We will also examine in detail how the Federal Reserve operates monetary policy, and the problems it faces in pursuing objectives such as economic growth, low inflation, and the containment of financial crises.
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411. Monetary and Financial Theory. Econ. 402, and 404 or 405. (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 Economics 402, Intermediate Macroeconomics. Additional recommended prerequisite is Economics 401, Intermediate Microeconomics.
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418. Business Cycles. Econ. 402. (3). (Excl).
This course will look at business cycle theory in a way that combines macroeconomics and microeconomics. It will emphasize economic dynamics, particularly the reactions of output, consumption, investment, the real wage, the real interest rate, and inflation to fiscal, monetary, and technological shocks. Prerequisites: Economics 401 and 402. Calculus will be used extensively for maximization. (Kimball)
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435. Financial Economics. Econ. 401 and 405. (3). (Excl).
This class introduces the economic 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 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.
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D. Labor Economics

320. Survey of Labor Economics. Econ. 101 and 102. (3). (SS).
This course surveys the demand and supply of labor, investment in human capital, market structure and the efficiency of labor markets, discrimination, collective bargaining, the distribution of income, and unemployment.
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421. Labor Economics I. Econ. 401. (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
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E. Industrial Organization and Public Control

330. American Industries. Econ. 101 and 102. (3). (SS).
The essential features of large-scale business enterprise in the United States today. Considerable attention is devoted to particular industries, including petroleum, beer, prescription drugs, air transport, and telephonic communication. Emphasis is placed on market structure and government policy as determinants of business behavior and performance. Students should be prepared to participate frequently in class discussions. WL:1 (Adams)
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431. Industrial Organization and Performance. Econ. 401. (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
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432. Government Regulation of Industry. Econ. 401. (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. Economics 431 is not required, but knowledge of certain material it covers will be presumed. Students should be prepared to participate frequently in class discussions.
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438/Health Management and Policy 661 (Public Health). Economics of Health Services. Econ. 401 or HMP 660. (3). (Excl).
This course will introduce students to the fundamental concepts of the field of health economics. The basic framework of economics will be used to analyze the behavior of hospitals, physicians, insurers, and health care consumers. The tools of economics will be applied to managerial issues such as make-or-buy decisions or pricing decisions. Additionally these economic tools will be used to analyze how various parties might respond to changes in the health care system. By the end of the course students should be able to assess the potential impact of hypothetical changes in the health care system on costs and access as well as on the well-being of hospitals, physicians, and insurers. Lecture format. Two exams. Cost:2 WL:4 (Chernew)
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F. International Economics

340. International Economics. Econ. 101 and 102. (3). (SS).
The course provides a general overview of international economics. Topics covered include: the reasons for and the effects of international trade; trade policies such as tariffs, quotas, and voluntary export restraints; trade arrangements and institutions such as the NAFTA and WTO; determination of exchange rates; the role of the international economy in influencing national income, unemployment, and inflation; and international constraints on macroeconomic policy. Emphasis is on concepts, ideas and institutions, rather than on rigorous analysis. Course grade is based on a midterm exam, a final exam, several homework assignments requiring access to the World Wide Web, and an optional 5-10 page paper. Students are also expected to stay abreast of international economic news by reading the New York Times or the Wall Street Journal, and class includes weekly class discussions of the current news. Cost:2 WL:1 (Deardorff)
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441. International Trade Theory. Econ. 401. (3). (Excl).
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. A special emphasis is placed on current policy issues in international trade. WL:1 Cost:1-2 (Levinsohn)
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442. International Finance. Econ. 402. (3). (Excl).
This course analyzes the macroeconomic and financial linkages between countries. The structure of the foreign exchange market, offshore markets, international bond and equity markets is reviewed and analyzed. The course also covers theories of exchange rate determination and the problems and policy implications of alternative exchange rate regimes. Course evaluations are based on graded problem sets, two midterms, and a final exam. Cost:2 WL:2 (Tesar)
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G. Comparative Economic Systems and National Economies

453. The European Economy. Econ. 401. (3). (Excl).
The structure, function, and performance of the European economy since World War II. Emphasis is placed on description and analysis of European economic integration. Topics include the origins and institutions of the European Community, creation of the customs union, unification of the internal market, implementation of common policies for agriculture and competition, prospects for monetary union, and progress toward social Europe. Students should be prepared to participate frequently in class discussions. WL:1 (Adams)
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454. Economics of Japan. Econ. 101 and 102. (3). (Excl).
Analysis of Japan's economic organization, structure, and performance. Special emphasis is placed on the history and 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:3 WL:1 (Saxonhouse)
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H. Economic Development

461. The Economics of Development I. Econ. 401. No credit granted to those who have completed or are enrolled in 360. (3). (Excl).
If the economy is globalized, what does development mean? This course explores the economic issues related to development in a globalized economy. What is of economic relevance to developing and emerging nations? This course is structured as alternating lectures and discussion groups set up to explore such topics as emerging export economies, NAFTA and North America, population and economic issues, poverty and income inequality, the changing role of international migration, gender issues in development, micro-lending and exploratory policies, and restructuring and the World Bank. (Kossoudji)
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I. Environmental Economics

471/NR&E 571. Environmental Economics. Econ. 401 or NR&E 570. (3). (Excl).
Economics 471 is a broad introduction to market failure, with theoretical, empirical, institutional, and historical perspectives on current U.S. 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 comfort with calculus and a recent, challenging intermediate microeconomic theory course are essential). The format for most classes is lecture-with-interruption, with time allocated for questions and discussions. The course deals with: (1) the economic theory of externalities and public goods (and "public bads"); and (2) the economic analysis of current U.S. environmental policy, emphasizing air and water pollution and waste problems - generation, collection, recycling, and disposal (emphasizing municipal solid waste, low-level radioactive waste, and Superfund). There will be regular unannounced short quizzes and a cumulative final exam. Cost:2 WL:1 (Porter)
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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 role of government in the economy. Topics covered include public goods, collective choice, externalities, income redistribution, and social insurance. In considering these topics, emphasis will be placed on both theoretical issues and applications to current policy. The class format will combine lecture and discussion. (Cullen)
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K. Economic History

493/Hist. 493. European Economic History. Econ. 101 and 102. (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
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494/Hist. 494. Topics in Economic History. Econ. 101 and 102. (3). (Excl).
Section 001 East Asian Economic History.
This course surveys the development of East Asian economies (China, Japan, Korea, and Taiwan) over the long term. It aims at providing a historical and comparative perspective on the changes in institutions, technology, and economic structure in the region. Some of the main topics to be examined are: agriculture in the traditional economy; population and labor markets in East Asia; the industrialization of Japan; imperialism and East Asian economies; and the industrial growth and the catching-up of Taiwan and Korea. The course will follow a discussion format and the grade will be based on two one-hour tests, the final exam, and class discussion. (Gill)
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496. History of Economic Thought. Econ. 101 and 102. (3). (Excl).
This course provides an overview of the development of economics from the origins of modern capitalism to the present. The aim of the course is to deepen understanding of contemporary economic questions by situating them in the context of how such questions have arisen and been debated in the history of economic thought. Topics include: (1) Classical political economy from Adam Smith through Karl Marx; (2) Neoclassical economics from Jevons, Menger, and Walras through Marshall and his followers; (3) Keynesian economics and the neoclassical synthesis; (4) more recent New Classical, New Keynesian, Post Keynesian, and neomarxist developments. Economic theory will be situated in the broader historical contexts in which they developed. Attention will be focused on the scientific status of economic theories as well as their relation to policy and normative considerations. Cost:2 WL:4 (Thompson)
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L. Other Topics in Economics

395. Topics in Economics and Economic Policy. Econ. 101 and 102. (1-3). (Excl). May be repeated for a total of six credits.
Section 001 Economics of Crime. (3 credits).
Study of crime and criminal behavior as rational economic choices; costs of crime to the community; optimal resource allocation within the criminal justice system; monopolized markets and organized crime. Prerequisite: Microeconomic Principles. (Malone)

Section 002 Seminar on Controversial Economic Policy Issues. (3 credits). This seminar will address a series of economic policy issues which have given rise to sharp debate among economists and policy-makers. Among the issues we will confront are: environmental protection; labor rights and international trade; reform of the U.S. social security system; market-based choice in education; and affirmative action. Students will be expected to defend their positions on these issues with cogent argument, economic analysis, and relevant empirical information. Readings will be selected from a variety of sources and compiled in a set of course packs. Requirements include coming to each class prepared to discuss and debate the issue under consideration; grading will be based on participation in classroom and computer conference discussions, a series of in-class quizzes, and several short papers. Cost:2 WL:1 (Weisskopf)

Section 003 The Korean Economy. (3 credits). This course examines the transformation of the Korean economy from its colonial past to the present time. Special emphasis is placed on the role of government relative to that of market in the growth process. Topics include: the structure of the colonial economy; the developmental role of the foreign sector and aid; the role of government; the growth of big business (chaebol); employment and the labor market; and the debt crisis. The course will follow a discussion format and the grade will be based on two one-hour tests, the final exam, and class discussion. (Gill)
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398. Strategy. Econ. 101. (3). (SS).
Section 001 Strategy and Equity.
This course is an introduction to the science of strategic thinking and the art of equity. Basics of non-cooperative as well as cooperative game theory will be covered via simple cases in business, international crises, mass elections, legislative voting, cost sharing, college admissions, housing lotteries, kidney allocation, etc. Cost:2 WL:3 (Sönmez)
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407. Marxist Economics. Econ. 101 and 102. (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.
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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.
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555/Public Policy 555. Microeconomics. Permission of instructor. (4). (Excl).
See Public Policy 555. (Levinsohn)
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573/Public Policy 573. Benefit-Cost Analysis. Econ. 555. (4). (Excl).
See Public Policy 573. (Courant)
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M. Honors Program, Seminars, and Independent Research

495. Seminar in Economics. Econ. 401, 402, and 404 or 405; and permission of instructor. (3). (Excl). May be repeated for a total of six credits.
Admission information for all 495 seminars: Closed at CRISP. Applications will be available at the Undergraduate Economics Office, 158 Lorch Hall. Admission will be the decision of the instructor. Contact the Undergraduate Economics Office for further information.

Section 001 The United States Macroeconomy, 1970-1994. This seminar will involve an intensive consideration of the major economic problems of the U.S. economy that emerged in the 1970's and 1980's, and will culminate in quantitative research projects. Class members will work in groups of two or three on topics chosen from a list suggested by the instructor at the beginning of the term. One of the end goals will be empirical papers which might eventually be eligible for publication in professional journals. The course is not a survey of the economic history of the period, but rather will concentrate on some of the dominant themes in economic policy during this period. Among the topics that we may emphasize are: inflation and disinflation; labor market changes and the evolution of the natural rate of unemployment; changes in real interest rates, stock prices, and other asset prices; the experience with flexible exchange rates; fiscal and current account deficits; the conduct of monetary policy; issues of productivity growth; and changes in the distribution of income and wealth. Data for the research projects need not be limited to the U.S. in this limited time period. Comparative studies of other time periods, and possibly other countries, that address the conceptual problems discussed in the course are encouraged. Only quantitative projects will be accepted. Students should have taken Econ 405 or a comparable statistics course, and at least be concurrently enrolled in Econ 406 or a comparable econometrics course. (Barsky)
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498. Honors Independent Research. Open only to students admitted to Honors concentration in economics. (1-4). (Excl). (INDEPENDENT). May be repeated for a total of eight credits.
This course is for undergraduates writing senior Honors theses. Each student's grade for the course and levels of Honors achieved will depend entirely on the quality of the thesis, as evaluated by the thesis advisor with whom the student has arranged to work.
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499. Independent Research. Written permission of staff member supervising research, and permission of the economics concentration advisor. (1-4). (Excl). No more than four credits may be used in an economics concentration program. (INDEPENDENT). May be repeated for a total of eight credits.
Student and instructor agree on a substantial piece of work involving reading or research. Evaluation is based on the written work, either papers or examinations.
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