Courses in Economics (Division 358)

A. Introductory Courses

109. Laboratory Economics. (2). (Excl).

This course is designed for students who have not taken any previous economics courses. About half the class time will be spent in a laboratory, in which experimental auctions, markets, elections, and economic games are run. The other half of the time will be spent analyzing and explaining what happened in the lab. During the lab, students will participate in experiments. By participating in laboratory experiments involving auctions, markets, elections, and economic games, students will observe economic behavior in a controlled setting. Students will be required to prepare laboratory reports on the outcome of each experiment and attempt to develop theory to explain their observations. They will also be given readings about theories, experiments, and real-world applications of the ideas raised in the lab experiments. Interpreting these experiences in light of assigned readings and in class discussions, they will come to understand some fundamental principles of economics. A student who has taken this course and wants to study more economics could either take 201 and/or 202, or on the basis of strong performance would be advised to skip Econ. 201 and jump directly to Econ. 401 and other advanced courses. (Bergstrom)

195. Seminar in Introductory Economics. (3). (Excl).
Section 001 The Role of the United States in the Global Economy.
In the past four decades the United States has evolved from being the world's single economic superpower able to go it alone in economic decisions and often to impose its will on the rest of the world to being only one of several economic giants in a global economy where all nations, large and small, are interdependent. This seminar will address the meaning and implications of this economic interdependence, and its significance for the future of the United States. The course will be organized around a series of four to six paperback books, selected for their provocative and/or insightful perspectives on this issue. Students will discuss these books in class, perhaps making presentations to the class where appropriate, and will write a series of 3-5 page papers on the topics addressed by each. (Stern)

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 hours of lecture per week taught by the professor and one and a half hours of discussion per week taught by a teaching assistant. Grades are based largely on lecture-wide hour tests and the final exam, but there will be homework assignments. 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:Gerson; Section 200/300:Laitner)

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 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:Weisskopf; 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. (Varian)

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 (D'Arcangelis)

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). (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 (Barrington)

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). (BS). (QR/1).

See Statistics 405. (Hill)

406. Introduction to Econometrics. Econ. 405 or Statistics 426. (4). (Excl). (BS).

Economics 406 is an introduction to the statistical analysis of economic relationships. Most of the course focuses on the theory and application of regression analysis. Students are expected to be familiar with elementary calculus. The course work includes examinations and assignments including computer exercises involving economic data. (Barrington)

409. Game Theory. Math. 217, or permission of instructor. (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. (If in doubt about your mathematical background, consult Prof. Stacchetti.) A final examination will count 50%. The remaining 50% will based on weekly homework assignments. Cost:2 WL:4 (Stacchetti)

556/IPPS 556. Macroeconomics. Permission of instructor. (4). (Excl).

Consideration of a country's living standards and how a country can influence these by savings-investment policies. (Gramlich)

C. Monetary and Financial Economics

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)

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 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

422. The Structure of Labor Markets. Econ. 401. No credit granted to those who have completed or are enrolled in 320 or 326. (3). (Excl).

This course is the second term of a two-term offering in labor economics. The previous term covered the supply of and demand for labor, wage determination, investment in education and training, and some coverage of theories of unemployment. In this term we will offer a very brief review of supply and demand, and turn to labor demand, technology and trade, the structure of compensation, unions and collective bargaining, discrimination in the labor market, government employment policy, government policies which affect the labor market, and unemployment. WL:1 (Johnson)

E. Industrial Organization and Public Control

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 (Shaffer)

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

438/HSMP 661 (Public Health). Economics of Health Services. Econ. 401 or HSMP 660, or permission of instructor. (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. Three exams. Cost:3 WL:4 (Chernew)

F. International Economics

441. International Trade Theory. Econ. 401 or the equivalent. (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 second part of the course deals with barriers to free trade and trade policies. Various policies will be analyzed, such as the tariff, quota, voluntary export restraints, subsidies, and other international protective taxes. The third part includes various topics such as preferential trading arrangements, economic integration, and international factor movements. Cost:1-2 WL:1 (Shy)

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

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)

457. Post-Socialist Transition in Central/Eastern Europe and the Former Soviet Union. Econ. 201 and 202. (3). (Excl).

This course is an introduction to current economic issues in the post-socialist transition which is currently taking place in Central/Eastern Europe and the Former Soviet Union. Starting with a description of the former socialist systems and their aftermath, the course discusses the short-term problems of transition. They are: price liberalization, macroeconomic stability, and international trade liberalization. Another topic will be the long-term goals of transition, including, among other things, privatization of state-owned enterprises, re-building the social safety net, and restructuring the financial and fiscal system. The course will end with an analysis of different strategies of transition. The Chinese experience shall be briefly treated as an alternatives approach to transition. (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)

462. The Economics of Development II. Econ. 401 and Econ. 360 or 461. (3). (Excl).

This course is the second part of a two-course sequence on the economic development of third world countries. Economics 462 examines in some detail selected topics on development. It focuses on policy issues by studying analytical approaches to policy determination and how policy change might affect different groups in the economy. On each of the topics the course will look at the experiences of individual countries. Three broad topics are slated for examination: (1) agricultural sector policies production, prices and marketing; (2) trade regimes and exchange rate policies; and (3) macroeconomic policy reform and structural adjustment. The countries are likely to be Ghana, Malaysia, Mexico and Morocco. The overall course grade will be based on a 10-page paper on a topic of the student's own choosing (40%), four brief quizzes (20%) and a final exam (40%). Students will be expected to purchase a course pack of readings and the "World Development Report 1992." A few additional readings and references will be on reserve. The method of instruction will primarily be lecture but there will be ample opportunity for discussion. Cost:2 WL:1 (Kossoudji)

I. Environmental Economics

370/NR&E 470. Natural Resource Economics. Econ. 201 and 202. No credit granted to those who have completed or are enrolled in Econ. 471 or 472. (3). (Excl).

A one-term introduction to Environmental and Natural Resource Economics. Topics include externalities, unpriced goods, cost-benefit analysis, resource scarcity, exhaustible resource depletion, renewable resource harvesting and common property problems.

472/NR&E 583. Intermediate Natural Resource Economics. Econ. 401 or NR&E 570. (3). (Excl).

This course explains the conceptual framework used by economists to analyze the usage over time of replenishable resources (such as water, trees, fish, and wildlife) and nonreplenishable resources (such as oil or minerals). For each of these resources, increased consumption today inevitably has future consequences. The course therefore emphasizes the theory of intertemporal choice. Comparisons will be made between the market outcome when self-interested agents interact over time and the efficient (surplus-maximizing) intertemporal exploitation of the resources. The courses presumes familiarity with elementary probability, calculus, and static microtheory at the level of Economics 401 or equivalent. Grades will be based on hour test(s), problem sets and a final exam. (Salant)

K. Economic History

491/Hist. 491. The History of the American Economy. Econ. 201 and 202. (3). (Excl).

This course examines the economic history of the United States from colonial settlement to World War II. We will focus on the sources of the country's economic growth, trends in income distribution, regional integration, and changes in political-economic institutions. We will pay particular attention to the role of government policy in influencing economic outcomes. Students will be evaluated on the basis of weekly essays, midterm and final exams, and class discussion. Cost:2 WL:1 (Levenstein)

494/Hist. 494. Topics in Economic History. Econ. 201 and 202. (3). (Excl).
Section 001 Economic History of Latin America and the Caribbean.
Many of the current economic problems and crises in Latin America have repeatedly arisen in Latin America's history. By looking at the past, we can learn much about the economic possibilities of the region's future. This course examines the economic history of Latin America and the Caribbean of the post-colonial period, from 1820 to the post-World War II era. The course will focus on the integration of Latin America and the Caribbean into the modern world economy and long-term trends in economic growth. We will also pay considerable attention to the role of international markets in Latin America and to the positions of the Latin American countries in the international context. The tools of economic theory will be used to analyze the issues that arise. (Dye)

L. Other Topics in Economics

483. Positive Political Economy. Econ. 401. (3).

This course is an introduction to positive political economy/public choice. It focuses on the game theoretic analysis of political institutions and their impact on economic policies. Traditional normative economics studies a benevolent social planner's optimization problem, ignoring the fact that many economic policies are made or influenced by political institutions - the legislature, the bureaucrats, the interest groups, etc. The tools of game theory will be used to study different voting mechanisms, legislative games, the bureaucracy and interest groups, and explicitly incorporate these political institutions into the analysis of income taxation and public goods provision, privatization, and political business cycle. Prerequisite: Econ 401; Evaluation: 40% homework, 60% exams. (Chen)

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, and several problem sets. Readings include Polinsky's INTRODUCTION TO LAW AND ECONOMICS. (White)

487. Urban Economics. Econ. 401. (3). (Excl).

This course uses economic analysis to explain why cities exist, where they develop, how they grow and how different activities are arranged within cities. It also explores the economics of various urban problems. The first part of the course focuses on the determinants of location of economic activity within and among urban areas. Topics include comparative advantage and regions, urbanization and economic growth in the United States, and the theoretical analysis of urban structure. The second part of the course uses economic analysis to examine problems of special interest to urban areas. Topics discussed include the economics of poverty, housing markets, racial discrimination and segregation, transportation systems and local public finance. EVALUATION: The course grade will be based on two midterm examinations and a final examination. (Courant)

573/IPPS 573. Benefit-Cost Analysis. Econ. 555 or the equivalent; or permission of instructor. (4). (Excl).

This course teaches students how to evaluate government programs. It covers the mechanics of benefit-cost analysis, how scarce or unemployed resources should be priced, the choice of proper time-discount rates, treatment of income distribution issues, human capital, environmental benefits, inter-governmental grants, tax expenditures, and regulatory problems. An essential part of the course is a term project each student selects a program and evaluates it. A midterm, final, and regular problems sets are given. Cost:3 WL:3 (Courant)

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 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 Friday, October 28. 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 Friday, November 11.

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 405 or a comparable statistics course, and at least be concurrently enrolled in 406 or a comparable econometrics course. (Barsky)

Section 002 Information Superhighway Economics. Seminar on economic issues surrounding the development of the future information network infrastructure. What should be on the superhighway? Should it look like the Internet, or like local cable TV? Are we likely to end up with a single wire into the home or office that carries voice, video and data (and electricity?), or will we continue to have multiple, overlapping networks? How should the new infrastructure be paid for? Should the government provide subsidies? How should we allocate scarce network resources, including bandwidth, information services, and information itself? Both price and non-price mechanisms will be considered. What are the tradeoffs between efficiency, technological growth and innovation, and equity? What part of the information network should be regulated, and how? There will be a small course pack of readings; most materials will be found online, using the Internet. Students will prepare class presentations and an online, digital term project. Cost:1 WL:1 (MacKie-Mason)

Section 003 Applied Microeconomic Modeling. This seminar will illustrate how elementary microeconomic tools can be used to illuminate observed real-world phenomena and to evaluate alternative policy interventions. Students will be required as part of a team of approximately 3 people to investigate in depth a single local, national, or international topic. Last year, for example, the local topic was the current competition among copyshops for course pack materials differing in size and in the number of copywritten articles. The national topic was Senator Moynihan's proposal to control gun violence by taxing bullets. The international topic was the analysis of a World Bank scheme intended to reduce the monopoly power of property registries in Argentina. In addition to mainstream economics topics, students in previous seminars have crossed disciplinary boundaries modeling biological or anthropological problems using the tools of microeconomics. The list of suggested topics will be presented at the first meeting. Emphasis will be on the accurate understanding of real-world institutional details and the art of isolating salient aspects of problems in a formal but tractable model. Papers and oral presentations will be required. Economics 401 is a prerequisite. (Salant)

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