Appendix 1: Introduction to Economics for social science/European studies students
This is the Appendix to the case study "Targeting Introduction to Economics for European Studies at a diverse range of students" by Christopher J Gerry.
PART ONE : Economics – An introduction
Week 1: Lectures 1 and 2: The economic way of thinking
- What is ‘Introduction to Economics’ and how does it work?
- What is Economics?
The Economic Approach – an apparatus of the mind. Organisation of the market, underlying questions, Characterisation of economic method; economic models
Reading: Chapters 1 and 2 Stiglitz
Coursework I: Article issued on the Family and the economic approach
Week 2: Lectures 3 and 4: Markets and price determination
Demand, Supply and Price
Individual demand; market demand; shifts in demand; shifts v movements; policy perspective
Market supply; shifts in supply; shifts v movements; price determination in demand and supply
2. Using Demand and Supply
Elasticity; determinants of elasticity; policy perspective
Reading: Chapters 4 and 5 Stiglitz
Seminar week 2: Case study – the economic way of thinking.
Week 3: Lectures 5 and 6: Back to the individual
1. The consumption decision
The budget constraint; indifference curves; utility; deriving demand curves from individual behaviour.
2. Labour supply and savings: a further application of consumer theory
The work decision; the savings decision; human capital; wage differentials; more on the indifference curve
Reading: Chapters 8 and 9 Stiglitz
Seminar week 3: Seminar workshop - Indifference curve analysis
Week 4: Lectures 7 and 8: The free market debate
1. Exchange and the case for the free market
Pareto optimality; the invisible hand; markets as generators of the common good; Exchange and the Edgeworth Box; more on indifference curves
2. The Economic case for government
Market failure: externalities; public goods; missing markets. Government Failure
Incentives and the efficiency of government; public choice; politicians as economic agents; democracy, bureaucracy and the voting paradox.
Reading: Chapters 7 and 21 Stiglitz
Workshop week 4: Trading in a Pit Market: the free market solution
PART TWO: Perfect and Imperfect Markets
Week 5: Lectures 9 and 10: Introducing the firm
1. The Firms costs
Factors of production; cost curves; short run versus long run; economies of scale
2. Production and the competitive equilibrium
Competitive supply; entry, exit and market supply; extending the model; factor demand; General equilibrium model; competitive equilibrium and further reflections on economic efficiency.
Reading: Chapters 10 – 12 Stiglitz
Seminar week 5: Case study - small and beautiful
Week 6: READING WEEK
Week 7: Introducing the real world: Imperfect markets
11/12. Monopolies and imperfect competition
Market structures; monopoly outcomes; imperfect competition; the Soviet legacy
Reading: Chapter 13 Stiglitz
Seminar week 7: Case study - The sky’s the limit
Week 8: Oligopoly and Game theory
Collusion; co-ordination; entry and exit; the Prisoners Dilemma; Cournot and Bertrand competition; kinked demand curves
Reading: Chapter 14 Stiglitz
Workshop week 8: The prisoners Dilemma
Week 9: Monopoly, competition and government policy
15/16. Problems with imperfect competition
Why is monopoly undesirable? The natural monopoly; nationalisation versus privatisation; encouraging competition; the European Union.
Reading: Chapter 15 Stiglitz
Seminar week 9: Seminar workshop – Imperfect competition
Week 10: Extensions to imperfect competition
17. Imperfect information in product markets
Importance of information problem; the market for lemons; adverse selection; solutions and examples
18. Imperfections in the labour market
Trade unions and union power; insiders/outsiders; efficiency wages; the minimum wage.
Reading: Chapters 17 & 18 Stiglitz
Seminar week 10: Seminar workshop
Coursework II: 1200 word essay.
Week 11: Policy Issues
19. Externalities: An environmental example
Negative externalities and market failure; policy responses and solutions.
20. Inequality and the distribution of income
How is income distributed? Who is poor? The arguments for redistribution; Inequality and welfare in the countries of transition
Reading: Chapters 19 & 20 Stiglitz
Seminar week 11: Group work: Market Failures
PART THREE: Macroeconomics
Week 1: Macroeconomics and the full employment model
1. Linking macroeconomics and microeconomics
The goals of macro and microeconomics; micro foundations to macro theory; short run v long run; some macroeconomic issues.
2. The full-employment model
Macroeconomic equilibrium; labour, product and capital markets; key assumptions; aggregate supply and aggregate demand; savings, investment and interest rates; policy perspectives
Reading: Chapters 22 & 23 Stiglitz
Seminar week 1: Seminar workshop – full employment economics
Week 2: The open economy and the dropping of key assumptions3. Applying the full employment equilibrium to the open economy
Trade balance; capital flows; exchange rates; economic policy perspectives
4. Unemployment Macroeconomics
Wages are rigid; the economy is below capacity; the supply side; lessons from post-war Britain
Reading: Chapters 24 & 25 Stiglitz
Seminar week 2: Seminar workshop – unemployment economics
Week 3: Consumption, Investment and Aggregate Demand
5. Aggregate Demand
National income = national output; aggregate expenditure and 45 degree diagram; marginal propensities; the government sector; foundations for IS-LM
6. Consumption and Investment
The consumption function – alternative perspectives; investment; inventories
Reading: Chapters 26 & 27 Stiglitz
Seminar week 3: Seminar workshop – aggregate demand.
Coursework III issued – short answer questions on weeks 1-5.
Week 4: Money and Monetary theory
7. Money, Banking and Credit
What is money? The money supply; money and credit; money creation; financial intermediaries; monetary policy instruments
8. Monetary Theory
Money supply; money demand; money velocity; how do interest rates effect the economy? Monetary policy effectiveness.
Reading: Chapters 28 & 29 Stiglitz
Workshop week 4: Fiscal and Monetary policy
Week 5: Inflation and Unemployment
9. A key relationship: unemployment and inflation
Understanding inflation; The Phillips curve; expectations; the NAIRU; linking back to AD/AS analysis; more on wage and price rigidities
10. Approaches to policy
The trade-off; economic fluctuations; political incentives (reflections on public choice); rules versus discretion; when fiscal policy ruled; when anti-inflation policy ruled; return to history?
Reading: Chapters 31 & 33 Stiglitz
Seminar week 5: Case study – Beating inflation: Is it really worth it?
Week 6: READING WEEK
PART FOUR: Other issues in macroeconomics: The long–run and the International perspective
Week 7: Trade, Trade Policy and Globalisation
11. A rationale for international trade
Interdependence; gains from trade; trade levels; multilateral trade; comparative advantage.
12. Trade Policy
Tariffs; quotas; Voluntary export restraints; subsidies; dumping; fair trade; beggar-thy-neighbour; free trade versus protectionism;
Reading: Chapters 3 & 36 Stiglitz
Workshop week 7: The International Trade game.
Week 8: Growth Theory
13. A basic model of economic growth
Basic neo-classical approach to economic growth; steady state; convergence; predictions of the model; successes/failures
14. The Soviet growth model
Reading: Chapter 34 Stiglitz
Seminar week 8: Seminar workshop - Economic Growth
Week 9: Central Planning and the Communist Economic System
15. Alternative Economic systems
Socialist and Communist roots; how the Soviet economy operated; failure of Soviet Command system and reasons for its downfall
16. Transition issues
Reforming Socialist economies; macroeconomic stabilisation; gradualism v shock therapy; privatisation and competition.
Reading: Chapter 37 Stiglitz
Seminar week 9: Case study - East European Economic Reforms
Week 10: Economic Development and the Market
17/18. Issues in Development
IMF and World Bank perspectives; the Washington Consensus; the Developmental state; GDP, Poverty, Inequality – a global perspective; government failure;
Reading: Chapter 38 Stiglitz
Seminar week 10: Seminar workshop – The Developmental state
Week 11: The European Union: Integration and monetary union
17. European Integration
Free trade areas; customs unions; common market; the European Union
18. European Monetary Union
The European Monetary System; Maastrict Treaty and Monetary Union; Costs and Benefits; fiscal policy
Reading: Chapter 35 Stiglitz
Seminar week 11: General revision seminar and issue of commentaries.