2018 Graduate School of Economics Courses · important since they are either basic analytical tools that are used in many fields of economics or basic economic theories that will

1 Universidad del Rosario – Graduate School of Economics

http://www.urosario.edu.co/PhD-in-Economics/The-Program/

UNIVERSIDAD DEL ROSARIO

GRADUATE SCHOOL OF ECONOMICS

Course Catalog

Bogotá D.C., October 2018



Courses 1. Advanced Microeconomics ................................................................................................................... 4 2. Advanced Macroeconomics .................................................................................................................. 6 3. Advanced Econometrics ....................................................................................................................... 9 4. Topics in Microeconomics .................................................................................................................. 13 5. Topics in Macroeconomics ................................................................................................................. 18 6. Topics in Econometrics ....................................................................................................................... 21 7. Mathematical Economics .................................................................................................................... 33 8. Impact Evaluation ............................................................................................................................... 35 9. Economics of Conflicts ........................................................................................................................ 37 10. Political Economy ................................................................................................................................ 43 11. Experimental Economics (4 credits) .................................................................................................. 50 12. Contract Theory I ................................................................................................................................ 53 13. Topics in Market Design ...................................................................................................................... 55 14. Topics in Education and Health .......................................................................................................... 57 15. Behavioral Environmental Economics ................................................................................................ 61 16. Development Economics .................................................................................................................... 65 17. Seminar on Microeconometric Models and Methods ........................................................................ 73 18. Industrial Organization ....................................................................................................................... 76 19. Modern Bayesian Econometrics ......................................................................................................... 79 20. Health Economics ............................................................................................................................... 81 21. Labor Economics ................................................................................................................................. 87 22. Experimental Economics ..................................................................................................................... 93 23. Monetary Theory and Policy ............................................................................................................... 97 24. Topics in Economic Growth .............................................................................................................. 102 25. Topics in Public Economics ............................................................................................................... 105 26. Health Economics (4 credits) ............................................................................................................ 108 27. Public Economics .............................................................................................................................. 114 28. Financial Macroeconomics ............................................................................................................... 124 29. Industrial Organization II .................................................................................................................. 128 30. Topics in Economic Regulation ......................................................................................................... 131 31. Topics in Economic Regulation (4 credits) ........................................................................................ 134 32. Non-Parametric and Semiparametric Econometrics ........................................................................ 137 33. Topics in Monetary Policy ................................................................................................................. 141



34. Policy Competition ............................................................................................................................ 149 35. Labor Economics (2 credits) .............................................................................................................. 154 36. Behavioral Economics ....................................................................................................................... 157 37. Industrial Organization ..................................................................................................................... 160



1. Advanced Microeconomics

Course: Advanced Microeconomics Code: 92110005 (PhD) - 14700001 (MSc) Knowledge: Basic X Complementary Integral Formation

Course: Obligatory X (PhD and M.Sc.) Elective Hours: Hours of lectures with

the professors: 48 Hours of Individual study: 144

Total academic hours of study: 192

Credits Four (4)

Pre-requisite: None Co-requisite: None Professor: Çağatay Kayı

SUMMARY This course is aimed for students in the PhD in Economics and M.Sc. in Economics. The course introduces and explores theory of consumption, theory of production, theory of general equilibrium and the welfare properties of competitive equilibria, externalities, public goods, social choice theory, cooperative bargaining, and an application of competitive equilibrium. OBJECTIVES The purpose of the course is to introduce advanced theories and analytical tools as well as the types of questions that are used and answered in each area. The topics covered in this course are important since they are either basic analytical tools that are used in many fields of economics or basic economic theories that will be needed in your future study and bring you to the frontier of theoretical research. EXPECTED LEARNING OUTCOMES At the end of the course, students will be able to understand the fundamentals of consumer’s theory, producer’s theory and the general equilibrium to apply and solve economic and social problems. CONTENTS

1. Preference, Choice, and Utility. 2. Classical Demand Theory. 3. Aggregate Demand. 4. Production. 5. Choice under Uncertainty. 6. General Equilibrium. 7. General Equilibrium, Efficiency, and the Core. 8. General Equilibrium, Time, and Uncertainty.



9. Social Choice Theory. 10. Cooperative Bargaining. 11. An Application of Competitive Equilibrium: Housing Markets.

REFERENCES

• Kreps, D.M. (1990). A Course in Microeconomic Theory. Princeton University Press. • Kreps, D.M. (2013). Microeconomic Foundations I: Choice and Competitive Markets.

Princeton University Press. • Mas-Colell, A., Whinston, M.D., and Green, J.R. (1995). Microeconomic Theory. Oxford

University Press. • Rubinstein, A. (2006). Lecture Notes in Microeconomic Theory: The Economic Agent.

Princeton University Press.



2. Advanced Macroeconomics

Course: Advanced Macroeconomics Code: Knowledge: Basic X Complementary Integral Formation

Course: Obligatory X (PhD and M.Sc.) Elective Hours: Hours of lectures with



Credits Four (4)

Pre-requisite: None Co-requisite: None Professor: Juan José Ospina (Banco de la República) and Jean-Olivier Hairault (Paris

School of Economics) SUMMARY This is an obligatory macroeconomics course for master’s students and the first obligatory course of the macroeconomics sequence for Ph.D. students. In this course, advanced concepts of short-run macroeconomic analysis are presented. As such, the course focuses on economic cycle, rigidities, and the design of macroeconomic stabilization policies. OBJECTIVES • Facilitate the conceptual integration of the origins and the consequences of the household

decisions in real economic cycles • Introduce the use of the tools associated tools to use in DSGE models. • Provide students a coherent conceptual framework to recognize the different types of

rigidities that exist in the goods and factor markets. • Provide students a coherent conceptual framework to identify the role of rigidities initially

and during the dynamic evolution of economic cycles. • Provide students the tools to identify how to incorporate the different types of rigidities in

macroeconomic models. • Provide students to identify the economic stabilization tools of monetary and fiscal policy.

EXPECTED LEARNING OUTCOMES At the end of the course, students will be able to: • Analyze macroeconomics models with cycles. • Identify different sources of macroeconomic rigidities and the ways of incorporating them in

real business cycles models. • Utilize analytical model to develop and interpret real business cycles models.



• Utilize computational tools to solve real business cycles models. • Identify principal stabilization tools of fiscal and monetary policy. CONTENTS Part I: CYCLES

Optimal Growth under Uncertainty Ramsey-Cass-Koopmans’ Model Ramsey’s model with Uncertainty Real Business Cycle Model Real Business Cycle Model with two period Infinite horizon (DSGE)

Part 2: EMPLOYEMNET, CYCLES AND RIGIDITIES Employment and Labor Market Frictions in the Labor Market Efficient Wages Search and Matching Models Theory of Insider-Outsider Price and Wage Rigidities Rigidities in the Goods Market Nominal Rigidities and Fluctuations DSGE model with Price and Wage Rigidities

Part 3: POLICY Money and Monetary Policy Money in the Utility Function Cash-in-advance Model Inflation and Monetary Policy Stabilization Optimal Monetary Policy: Rules and Discretion Fiscal Policy Government’s Inter-temporal Budget Restriction: Public Spending, Deficit and Debt Optimal Imposition: Ramsey taxation

Part 4: FINANCIAL SECTOR AND OPEN ECONOMY Financial Sector and the Economy Complete Markets vs Incomplete Valuation of Assets Banks and Financial Crisis Open Economy Small and Open Economy Mobility of Capital and Political Economy: Exchange Rates Transmission of Shocks in Two-economy World



REFERENCES

• Bénassy, Jean Pascal. (2011); Macroeconomic Theory. Oxford University Press. • Blanchard, Olivier J. and Stanley Fischer. (1989); Lectures on Macroeconomics. MIT

Press. • Heijdra, Ben. (2009); Foundations of Modern Macroeconomics. Oxford University Press. • Romer, David. (2011); Advanced Macroeconomics 4/e. McGraw-Hill. • Sargent, Thomas J. and Lars Ljungqvist (2004); Recursive Macroeconomic Theory. MIT

Press.



3. Advanced Econometrics

Course: Advanced Econometrics Code: 14700003 Knowledge: Basic: X Complementary Integral formation

Course: Obligatory X (PhD and M.Sc.)

Elective

Hours: Hours of lectures with the professors: 48

Hours of Individual study: 144


Credits: Four (4)

Prerequisites: Corequisites: Professor: Jorge Flórez Acosta

SUMMARY The main object of econometrics is to study the data describing economic phenomena. For doing so, it combines economic theory, mathematical economics and statistics. Economic theory formulates questions, hypothesis and models, of a qualitative nature. Mathematical economics provides economic theory with mathematical expressions, without worrying about the measurement or the empirical verification of the theory. Statistics delivers models and methods to carry out the empirical analysis and tests. The econometrician seeks to measure and empirically prove the hypotheses provided by the economic theory, by using the equations proposed by mathematical economics. This course covers the basic topics of cross-section Econometrics, at an advanced level. COURSE OBJECTIVES

• To give students a solid and rigorous conceptual training on the subjects of the program. • To treat the main concepts and methods of Econometrics with the rigor expected for a

graduate level course. • To train students in the use of computational tools for working with data and for applying

concepts and methods that the course includes. • To emphasize in the importance of verifying the statistical and economic assumptions that

are implicit in the techniques reviewed in the course.

EXPECTED LEARNING OUTCOMES By the end of the course, the students should have acquired sufficient knowledge and skills in estimation methods and statistical inference for:

1. Continuing their training in specific areas of statistics and applied econometric such as: Time Series, Macroeconometrics, Microeconometrics, Financial Econometrics, Impact Evaluation, etc.



2. Being able to understand academic papers and documents with empirical analysis that use methods of statistical inference, econometric theory or applied econometrics.

3. Issuing critical and constructive concepts about said works. 4. Making use of the methods learnt in the course to build their own empirical analysis of

economic phenomena.

CONTENTS Part I. Review: basic concepts and methods 1. Linear Algebra

1.1. Linear Vector Spaces. 1.2. Inner product and orthogonality. 1.3. Determinant and inverse of a Matrix. 1.4. Positive (negative) definite and positive (negative) semi-definite matrix. 1.5. Eigenvalues and eigenvectors

2. Probability and Distribution 2.1. Random Variables. 2.2. Probability Distributions: marginal, joint and conditional, density. 2.3. Quantile 2.4. Moments (mean, variance, standard deviation, etc.). 2.5. Conditional mean and variance. 2.6. Estimation and hypothesis Testing.

Part II. Introduction 1. Introduction to Econometrics.

1.1. Econometric Modeling. 1.2. Identification, estimation and estimation methods.

2. Asymptotic theory. 2.1. Convergence in Probability. 2.2. Law of Large Numbers. 2.3. Convergence in Distribution. 2.4. Central Limit Theorems.

3. Linear Regression Model. 3.1. Basic aspects of the model. 3.2. Assumptions of the model.

Part III. Ordinary Least Squares 1. Regression by least squares. 2. Geometry of the OLS. 3. Partitioned Regression.



4. Goodness of fit and the analysis of the variance 5. OLS Estimator. 6. Hypothesis Testing in the linear regression model. Part IV. Linear model generalizations 1. Maximum Likelihood Estimation (MLE).

1.1. Specification of the model with probabilities. 1.2. Likelihood function. 1.3. Maximum Likelihood Estimator. 1.4. Identification, Score Function and information matrix. 1.5. Asymptotic Properties: consistency, normality y efficiency. 1.6. Statistical inference based on ML.

2. Heteroskedasticity and the generalized regression model. 2.1. Heteroskedasticity and the OLS estimation. 2.2. Generalized Least Squares (GSL). 2.3. Feasible Generalized Least Squares (FGLS). 2.4. Weighted Generalized Least Squares (WGLS). 2.5. Tests for Heteroskedasticity.

3. Estimation with Instrumental Variables 3.1. Models with latent variable and measurement errors. 3.2. Omitted explanatory variable. 3.3. Simultaneous equations models. 3.4. Consistent estimation and estimation by two stage least squares (2SLS).

4. Generalized Method of Moments (GMM) 4.1. GMM definition. 4.2. GMM based estimators. 4.3. Identification. 4.4. Asymptotic Properties: consistency, normality and efficiency. 4.5. Hypothesis Testing based on GMM

Part V. Hypothesis testing based on Simulations

1. Montecarlo 2. Bootstrap

MAIN REFERENCES – Hansen, Bruce (2016), Econometrics, University of Wisconsin, available at:

http://www.ssc.wisc.edu/~bhansen/econometrics/Econometrics.pdf – Greene, William (2012), Econometric Analysis, 7th edition, Prentice Hall. – Ruud, Paul (2000), Introduction to Classical Econometric Theory, Oxford University Press. – Davidson, Russell and MacKinnon, James (2004), Econometric Theory and Methods, Oxford

University Press.



COMPLEMENTARY REFERENCES – Cameron, C., Trivedi, P. (2005), Microeconometrics, Cambridge University Press. – Casella, G., Berger, R. (2002), Statistical Inference, Thomson Learning Inc. – Davidson, R., MacKinnon, J., (2004), Bootstrap Methods in Econometrics, Palgrave Handbooks

of Econometrics, Vol. 1 Econometric Theory or Manuscript. – Gourieroux, C., Monfort, A. (1995), Statistics and Econometric Models, vol. 1 & 2. Cambridge

University Press. – T. Hastie, R. Tibshirani, J. H. Friedman (2003), The Elements of Statistical Learning, Springer. – Horowitz, J. (2001), The bootstrap, in J.J. Heckman & E.E. Leamer (eds.) Handbook of

Econometrics, Volume 5 (52). Elsevier. – Hsiao, C. (1983), Identification, in Z. Griliches & M.D. Intriligator (eds.) Handbook of

Econometrics, Volume 1 (4). Elsevier. – Mittelhammer, R.C. (1996), Mathematical Statistics for Economics and Business, Springer. – Newey, W.K., McFadden (1994), Large Sample Estimation and Hypothesis Testing, Handbook

of Econometrics, Vol 4 (36), Elsevier. – Romano, J.P., Shaik, A.M., Wolf, M. (2010), Hypothesis testing in Econometrics, Annual Review

of Economics, 2:75-104. – White, H. (2000), Asymptotic theory for Econometricians, Academic Press. – Wooldridge, J. (2001), “Applications of generalized methods of moments estimation”, Journal

of Economic Perspectives, 15: 87-100. – Bickel P, Doksum, K. (2001), Mathematical Statistics: Basic Ideas and Selected Topics, Vol. 1,

Prentice Hall. – Greenberg, E. Webster, C. (1991), Advanced Econometrics: A Bridge to the Literature, Krieger

Pub. – Hayashi, F. (2000), Econometrics, Princeton University Press. – Judge, G., Hill, C., Griffiths, W., Lutkephol, H., & Lee, T., (1988), Introduction to the Theory and

Practice of Econometrics, Segunda Edición John Wiley.



4. Topics in Microeconomics

Course name: Topics in Microeconomics

Code: 14700002

Kind of knowledge: Basic X Complementary: Integral formation

Course type: Obligatory X Elective:

Credit type: Hours of work with direct support from professor: 64

Hours of independent work from student: 128

Total hours per academic period: 192

Credits Four (4)

Professor: Guillem Roig

SUMMARY Game theory is the field of studying about multipersonal decision problems which use mathematical models to analyze the individual interactions within incentives formalized structures (so-called games). Strategic behavior involves careful decision making in interactive scenarios between rational agents who are well aware of the dependence of interactions. The course will aim to study such strategic interaction and decision making.

OBJECTIVES This course aims to train students in the understanding, in a formal way, of topics related with game theory. The students will learn the equilibriums concepts and notions associated with different sort of games. Additionally, applications of game theory in mechanism design, industrial organization, bargaining and information economics will be reviewed. This course is not intended as an empirical or political economics approach, instead it aims to develop a general conceptual framework on which the students can build their economical thought and analysis. EXPECTED LEARNING OUTCOMES By the end of this module, students should be able to:

1. Develop capabilities in conceptual formalization (mathematics, logic and language). 2. Understand the simplifying role of the formalization. 3. Acquire capacity for analysis and synthesis. 4. Understand the limits of economics from a theoretical point of view.



5. Recognize the important link between analysis of rationality, the institutional framework and incentives.

6. Understand the role of strategic interactions between agents in an economy. COURSE OUTLINE

1. Introduction. (a) What is a Game? (b) Examples of Strategic Situation. (c) Decision Theory (one agent). (d) Decision Theory (two players): Game Theory. (e) Non-cooperative versus Cooperative Games. (f) Examples.

• Mas-Colell, A., M. Whinston, and J. Green. (1995) Microeconomic Theory. Oxford University Press. Sections: 1B, 6B, 6C, 6D, 7A and 7B.

• von Neumann, J. and O. Morgenstern. (1944) The Theory of Games and Economic Behavior. Princeton: Princeton University Press.

• Maschler, M., Solan, E., and Zamir, S. (2013) Game Theory, Cambridge University Press. Chapter

2. Normal Form Games of Complete Information. (a) Notation and Representation. (b) Dominant Strategies. (c) Nash Equilibrium. (d) Interpretations of Nash Equilibrium. (e) The Mixed Extension. i. Computation of Equilibria in Mixed Strategies. ii. Justification of Mixed Strategy Equilibrium. iii. Experiments on Mixed Strategies. (f) General Existence Theorems.

• Fudenberg, D. and Tirole, J. (1991) Game Theory, MIT Press. Chapter 1 and 2. • Glicksberg, I.L. (1952) “A Further Generalization of the Kakutani Fixed Point Theorem

with Applications to Nash Equilibrium Points,” Proceedings of the National Academy of Science 38.

• Hart, S. and A. Mas-Colell. (2000) “A Simple Adaptive Procedure Leading to Correlated Equilibrium,” Econometrica 68, 2000.

• Kakutani, S. (1941) “A Generalization of Brouwer’s Fixed Point Theorem,” Duke Mathematical Journal 8.

• Mas-Colell, A., M. Whinston, and J. Green. (1995) Microeconomic Theory. Oxford University Press. Sections: 7D, 8B, 8D, 8F and Appendix A.

• Maschler, M., Solan, E., and Zamir, S. (2013) Game Theory, Cambridge University Press. Chapter 4, 5 and 8.



• Milgrom, P. and J. Roberts. (1991) “Adaptive and Sophisticated Learning in Normal Form Games,” Games and Economic Behavior 3.

• Nash, J. (1950) “Equilibrium Points in n-Person Games,” Proceedings of the National Academy of Science 36.

• Nash, J. (1951) “Non-cooperative Games,” Annals of Mathematics 54. • Robinson, J. (1951) “An Iterative Method of Solving a Game,” Annals of Mathematics 54.

3. Extensive Form Games of Complete Information. (a) Structure and Notation. (b) Nash Equilibrium. (c) Subgame Perfect Nash Equilibrium. i. Backward Induction. ii. Behavioral strategies. (d) Illustrations. i. Bargaining. ii. The Hold-Up Game. (e) Additional Topics. i. Random Public Signals. ii. Simultaneous Moves.

• Fudenberg, D. and Tirole, J. (1991) Game Theory. MIT Press. Chapter 1 and 2. • Kuhn, W. (1953) “Extensive Games and the Problem of Information,” Annals of

Mathematical Study 28. • Mas-Colell, A., M. Whinston, and J. Green. (1995) Microeconomic Theory. Oxford

University Press. Section 7C. • Maschler, M., Solan, E., and Zamir, S. (2013) Game Theory. Cambridge University Press.

Chapter 4 and 5. 4. Nash Equilibrium and Related Issues. (a) Rationalizability. i. Iterated Elimination of Dominated Strategies. (b) Forward Induction. (c) Dominance Solvability and Sophisticated Equilibrium. (d) Perfect Equilibrium: Trembling Hand.

(e) Correlated Equilibrium. i. Experiments on Correlated Equilibrium. (f) Evolutionary Equilibrium. • Moulin, H. (1979) ‘Dominance Solvable Voting Schemes, Econometrica 47.



• Selten, R. (1975) “Reexamination of the Perfectness Concept for Equilibrium Points in Extensive Games,” International Journal of Game Theory, 4.

• Aumann, R. (1974) “Subjectivity and Correlation in Randomized Strategies,” Journal of Mathematical Economics, 1.

• Duffy, J. and Feltovich, N. (2010) “Correlated Equilibria, Good and Bad: An Experimental Study,” Inter- national Economics Review

5. Repeated Games.

(a) Introduction. (b) Finitely Repeated Games. (c) Infinitely Repeated Games. i. Notation. ii. Strategies and Payoffs. iii. Equilibrium. (d) “Folk” Theorem. (e) Experiments with Repeated Games. (f) Stochastic Games.

• Aumann, R. and L. Shapley (1979) “Long Term Competition - A Game Theoretic Analysis”, mimeo, The Hebrew University.

• Aumann, R. (1981) “Survey of Repeated Games,” in Essays in Game Theory and Mathematical Economics in Honor of Oskar Morgenstern.

• Benoit, J.P. and V. Krishna. (1985) “Finitely Repeated Games,” Econometrica 53. • Friedman, J. A (1971) “Non-cooperative Equilibrium for Supergames,” The Review of

Economic Studies 38, Chapter 5. • Fudenberg, D. and J. Tirole. (1991) Game Theory, MIT Press. Chapter 1 and 2. • Fudenberg, D. and E. Maskin. (1986) “The Folk Theorem in Repeated Games with

Discounting or with Incomplete Information,” Econometrica 54. • Maschler, M., Solan, E., and Zamir, S. (2013) Game Theory, Cambridge University Press.

Chapter 13 and 14. • Rubinstein, A. (1977) “Equilibrium in Supergames,” Mimeo, The Hebrew University.

6. Games of Incomplete Information. (a) The Harsanyi Solution. (b) Bayesian Nash Equilibrium. i. Examples of Bayesian-Nash Equilibrium. (c) Sequential Equilibrium. (d) Signaling Games. (e) Reputation Games. (F) Introduction to Contract Theory



• Fudenberg, D. and Tirole, J. (1991) Game Theory, MIT Press. Chapter 6, 8 and 9 and section 11.2.

• Harsanyi, J. (1967) “Games with Incomplete Information Played by Bayesian Players,” Management Science 14.

• Kreps, D. and R. Wilson. (1982) “Sequential Equilibria” Econometrica 50. • Kreps, D. and R. Wilson. (1982) “Reputation and Imperfect Information,” Journal of

Economic Theory 27. • Mas-Colell, A., M. Whinston, and J. Green. (1995) Microeconomic Theory. Oxford

University Press. Section 8E, 9A, 9B, 9C and 9D. • Maschler, M., Solan, E., and Zamir, S. (2013) Game Theory, Cambridge University Press.

Chapter 9. • Mertens, J.F. and S. Zamir. (1985) “Formulation of Bayesian Analysis for Games with

Incomplete Information,” International Journal of Game Theory 14. • Rubinstein, A. (1982) “Perfect Equilibrium in a Bargaining Model,” Econometrica 50.

7. Cooperative Games.

(a) Preliminaries. (b) Shapley Value. (c) Core. (d) Convex Games.

• Maschler, M., Solan, E., and Zamir, S. (2013) Game Theory, Cambridge University Press.

Chapter 17 and 18. • Shapley, L. (1953) “A Value for n-Person Games,” In Contributions to the Theory of

Games II, editors: H. Kuhn and A. Tucker. Princeton University Press. • Shapley, L. (1967) “On Balanced Sets and Cores,” Naval Research Logistics Quarterly 14.

TEXTBOOKS

• Osborne, Martin y Ariel Rubinstein (1994) A Course in Game Theory. MIT Press. • Maschler, Michael, Elion Solan y Shmuel Zamir (2013) Game Theory. Cambridge

University Press. COMPLEMENTARY TEXTBOOKS

• Osborne, Martin (2004) An Introduction to Game Theory. Oxford University Press. • Fudenberg, Drew y Jean Tirole (1991) Game Theory. MIT Press. • Gibbons, Robert (1992) A Primer in Game Theory. Prentice Hall.



5. Topics in Macroeconomics

Course name: Topics in Macroeconomics Code: 14710013 Kind of knowledge: Basic X Complementary: Integral formation Course type: Obligatory: PhD Elective: MSc Credit type: Hours of work with

direct support from professor: 48



Credits: Four (4) Professor: Mauricio Rodriguez

OVERVIEW This course is devoted to the study of economic growth models. The course starts with the Solow growth model, which is the basic reference point for all analyses of economic growth. The course then discusses the role of endogenous savings in the neoclassical growth model. Then the focus turns to the models of human capital accumulation and growth. After this the new growth theory is introduced. These models explore the sources of accumulation of knowledge (or technology), the allocation of productive resources to knowledge accumulation, and the effects of the latter on (sustained) growth. Finally, the OLG model is introduced. This model, of generational turnover, is used as a framework to study the dynamics of wealth distribution in a society.

OBJECTIVES This course aims to train students in the understanding of the process of economic growth and development. The course provides students with hands-on experience of economic modelling. Specifically, students will be trained in dynamic optimization techniques (in continuous and discrete time) applied to explain and describe different aspects of the process of economic growth and development (e.g., convergence/divergence of per capita income, technological progress as engine of economic growth) EXPECTED LEARNING OUTCOMES The students are expected to learn:

1. The concept of “balanced growth” and how to check for existence of a balanced growth path in dynamic macroeconomic models.

2. The role of product variety, entry of new firms, and innovation by incumbents and entrants in macroeconomic models of growth.

3. The concepts of “endogenous technical change”, “semi-endogenous growth”, and “endogenous growth”.

4. How to apply continuous-time dynamic optimization techniques to study the role of macroeconomic policies intended to foster R&D-driven growth.



5. How to apply OLG models to analyze the effect on economic activity of exogenous changes in technology, preferences, social security, and government finances.

6. How to apply OLG models with heterogeneous agents to analyze how the bequest motive affects the dynamics of income and wealth distribution

COURSE OUTLINE

Part I. Introduction and Neoclassical Growth

1. Economic growth – Introduction [Lecture 1] 2. Neoclassical growth theory [Lectures 2-4]

a. Exogenous savings: Solow model b. Endogenous savings: Ramsey-Cass-Koopmans model

3. Convergence and the empirics of neoclassical growth [Lecture 5] 4. First generation endogenous growth: The AK model [Lecture 6] 5. Human capital [Lecture 7]

Part II. Endogenous Growth - Endogenous Technological Change

6. Innovation and the variety expansion model [Lectures 8-9] 7. Growth with Creative destruction in production [Lecture 10] 8. Directed Technological Change [Lectures 11-12]

Part III. The Overlapping Generations (OLG) Model

9. Introduction to OLG [Lecture 13] a. Baseline OLG b. Canonical OLG c. Social security and intergenerational wealth

10. Altruism, Bequests, and Wealth Distribution [Lecture 14] a. The Dynamics of Wealth Distribution

TEXTBOOKS

• Acemoglu, Daron (2009); Introduction to Modern Economic Growth. Princeton: Princeton University Press.

• Aghion, Philippe and Peter Howitt (2009); The Economics of Growth, Cambridge: MIT Press

COMPLEMENTARY READING



• Atkinson, Anthony, Thomas Piketty, and Emmanuel Saez (2011); “Top Incomes in the Long Run of History”, Journal of Economic Literature, 49(1), 3-71.

• Galor, Oded and Omer Moav (2004); “From Physical to Human Capital Accumulation: Inequality and the Process of Development”, Review of Economic Studies, 71(4), 1001-1026.

• Oechslin, Manuel (2009); “Creditor Protection and the Dynamics of the Distribution in Oligarchic Societies”, Journal of Economic Growth, 14(4), 313-344.

• Piketty, Thomas and Gabriel Zucman (2014); “Wealth and Inheritance in the Long Run”, unpublished manuscript, Paris School of Economics.



6. Topics in Econometrics

Course name: Topics in Econometrics Code: 14700016 Kind of knowledge:

Basic X Complementary Integral formation

Course type: Obligatory X Elective Credit type: Hours of work with

direct support from course leader: 64

Hours of independent work by student: 128


Credits 4

Professor: Jesús Otero SUMMARY This course offers an advanced treatment of econometric principles for cross-sectional, panel and time-series data sets. While concentrating on linear models, some non-linear cases will also be covered, notably limited dependent variable models and generalized methods of moments. The course focuses on modern econometric techniques, addressing both technical derivations and practical applications. The practical side of the course involves applications in the areas of microeconomics, macroeconomics and finance. Students will also be conducting simulation experiments on the computer and undertaking an empirical project on a subject of their own interest. COURSE OUTCOMES It is expected that at the end of the course students will have gained understanding of advanced treatment of econometric principles for cross-sectional, panel and time-series data sets. Students are also expected to have a good intuitive and theoretical grasp of the dangers, pitfalls and problems encountered in doing applied econometric modelling. COURSE OUTLINE 1) Macroeconometrics

a) Univariate time series models i) Total and partial autocorrelation functions ii) Stationary models (white noise, AR, MA, ARMA, SAR, SMA) iii) Non-stationary models (deterministic versus stochastic trends) iv) Unit root tests (DF, PP, DF-GLS, DF-max, Dickey-Pantula) v) Stationarity tests (KPSS) vi) Seasonal unit roots (HEGY, BM, Franses) vii) Extensions: seasonal adjustment, structural breaks

b) Multivariate time series i) Vector autoregressions



ii) Cointegration (EG, ARDL, Johansen) iii) Error correction models (linear and non-linear) iv) Extensions: seasonal adjustment, temporal aggregation v) Smooth transition autoregressive models (SETAR, ESTAR, LSTAR)

c) Panel data i) Panel unit and stationarity root tests ii) Heterogeneous panel data

2) Microeconometrics a) Cross-section models

i) Binary discrete choice models (logit, probit, multinomial logit and probit, conditional logit, nested logit, ordered probit and logit)

ii) Limited dependent variable (Tobit) iii) Count data (Poisson, negative binomial)

b) Panel data i) Static models (pooled, fixed effects, random effects, specification tests) ii) Dynamic models iii) Discrete choice models

TEACHING Technical exposition of the topics by the course leader, complemented by practical sessions in which students meet every week with the course tutor. Since simulation plays an increasingly important role in both econometric theory and practice, a good deal of emphasis is placed on it. Specialized software that will be used in the course includes Eviews, PcGive, RATS and Stata. However, students are also encouraged to undertake their assignments using other software of their preference (such as R and Matlab). READING MATERIAL Amemiya, T. (1985). Advanced Econometrics. Cambridge MA: Harvard University Press. Anderson, T. W. and C. Hsiao (1981). Estimation of dynamic models with error components. Journal of the American Statistical Association 76, 598-606. Arellano, M. and S. Bond (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies 58, 277-297. Ashley, R. A. (2012). Fundamentals of Applied Econometrics. Hoboken NJ: John Wiley and Sons, Inc.



Baillie, R. T., C. Chung, and M. A. Tieslau (1996). Analyzing inflation by the fractionally integrated ARFIMA-GARCH model. Journal of Applied Econometrics 11, 23-40. Baltagi, B. H. (2013). Econometric Analysis of Panel Data. Chichester: John Wiley and Sons, Inc. Baltagi, B. H. (2009). A Companion to Econometric Analysis of Panel Data. Chichester: John Wiley and Sons, Inc. Banerjee, A., J. J. Dolado, J. W. Galbraith, and D. F. Hendry (1993). Co-Integration, Error Correction and the Econometric Analysis of Non-Stationary Data. Oxford: Oxford University Press. Banerjee, A., J. J. Dolado, D. F. Hendry, and G. W. Smith (1986). Exploring equilibrium relationships in econometrics through static models: Some Monte Carlo evidence. Oxford Bulletin of Economics and Statistics 48, 53-277. Banerjee, A. and D. F. Hendry (1992). Testing integration and cointegration: An overview. Oxford Bulletin of Economics and Statistics 54, 225-256. Banerjee, A. and M. Wagner (2009). Panel methods to test for unit roots and cointegration. In T. C. Mills and K. Patterson (Eds.), Palgrave Handbook of Econometrics. Volume 2: Applied Econometrics, pp. 632-726. Chippenham: Palgrave MacMillan. Beaulieu, J. and J. Miron (1993). Seasonal unit roots in aggregate U.S. data. Journal of Econometrics 55, 305-328. Bowsher, C. G. (2002). On testing overidentifying restrictions in dynamic panel data models. Economics Letters 77, 211-220. Box, G. E. P. and D. A. Pierce (1970). Distribution of residual autocorrelations in autoregressive-integrated moving average time series models. Journal of the American Statistical Association 65, 1509-1526. Breitung, J. and M. H. Pesaran (2008). Unit roots and cointegration in panels. In L. Mátyás and P. Sevestre (Eds.), The Econometrics of Panel Data, pp. 279-322. Berlin: Springer-Verlag. Cameron, A. C. and P. K. Trivedi (2005). Microeconometrics. Cambridge: Cambridge University Press. Cameron, A. C. and P. K. Trivedi (2010). Microeconometrics Using Stata. College Station, TX: Stata Press. Campbell, J. Y. and P. Perron (1991). Pitfalls and opportunities: What macroeconomists should know about unit roots. NBER Macroeconomics Annual 6, 141-201.



Caner, M. and L. Kilian (2001). Size distortions of tests of the null hypothesis of stationarity: Evidence and implications for the PPP debate. Journal of International Money and Finance 20, 639-657. Carrión-i-Silvestre, J., T. Del Barrio, and E. López-Bazo (2005). Breaking the panels: An application to the GDP per capita. The Econometrics Journal 8, 159-175. Carrión-i-Silvestre, J. and A. Sansó (2006). A guide to the computation of stationarity tests. Empirical Economics 31, 433-448. Cheung, Y. and K. S. Lai (1995a). Lag order and critical values of the augmented Dickey-Fuller test. Journal of Business and Economic Statistics 13, 277-280. Cheung, Y. E. and K. S. Lai (1993). Finite sample sizes of Johansen’s likelihood ratio tests for cointegration. Oxford Bulletin of Economics and Statistics 55, 313-328. Cheung, Y.-W. and K. S. Lai (1995b). Lag order and critical values of a modified Dickey and Fuller test. Oxford Bulletin of Economics and Statistics 57, 411-419. Choi, I. (2006). Nonstationary panels. In T. C. Mills and K. Patterson (Eds.), Palgrave Handbook of Econometrics. Volume 1, pp. 511-539. Houndmills: Palgrave Macmillan. Choi, I. and B. S. Chung (1995). Sampling frequency and the power of tests for a unit root: A simulation study. Economics Letters 49, 131-136. Clements, M. P. (2005). Evaluating Econometric Forecasts of Economic and Financial Variables. Houndmills: Palgrave Macmillan. Davidson, R. and J. G. MacKinnon (1993). Estimation and Inference in Econometrics. Oxford: Oxford University Press. Davidson, R. and J. G. MacKinnon (2004). Econometric Theory and Methods. Oxford: Oxford University Press. Dickey, D. A., W. R. Bell, and R. B. Miller (1986). Unit roots in time series models: Tests and implications. American Statistician 40, 12-26. Dickey, D. A. and W. A. Fuller (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association 74,427-431. Dickey, D. A. and W. A. Fuller (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica 49, 1057-1072.



Dickey, D. A., H. P. Hasza, and W. A. Fuller (1984). Testing for unit roots in seasonal time series. Journal of the American Statistical Association 79, 355-367. Dickey, D. A., D. W. Jansen, and D. L. Thornton (1994). A primer on cointegration with an application to money and income. In B. B. Rao (Ed.), Cointegration for the Applied Economist, pp. 9-45. Chippenham: St. Martin´s Press. Dickey, D. A. and S. G. Pantula (1987). Determining the order of differencing in autoregressive processes. Journal of Business and Economic Statistics 15, 455-461. Diebold, F. X. and R. S. Mariano (1995). Comparing predictive accuracy. Journal of Business and Economic Statistics 13, 253-263. Dolado, J. J., T. Jenkinson, and S. Sosvilla-Rivero (1990). Cointegration and unit roots. Journal of Economic Surveys 4, 249-273. Elliot, G., T. J. Rothenberg, and J. H. Stock (1996). Efficient tests for an autoregressive unit root. Econometrica 64, 813-836. Elliott, G. and A. Timmermann (2016). Economic Forecasting. Princeton: Princeton University Press. Enders, W. (2003). RATS Programming Language. www.estima.com. Enders, W. (2010). Applied Econometric Time Series. New York: John Wiley and Sons, Inc. Engle, R. F. and C. W. J. Granger (1987). Cointegration and error correction: Representation, estimation and testing. Econometrica 55, 251-276. Engle, R. F., C. W. J. Granger, and J. J. Hallman (1989). Merging short-and long-run forecasts: An application of seasonal cointegration to monthly electricity sales forecasting. Journal of Econometrics 40, 45-.62. Engle, R. F., C. W. J. Granger, S. Hylleberg, and H. S. Lee (1993). Seasonal cointegration: The Japanese consumption function. Journal of Econometrics 55, 275-298. Engle, R. F., D. F. Hendry, and J. Richard (1983). Exogeneity. Econometrica 51, 277-304. Ericsson, N. R. and J. G. MacKinnon (2002). Distribution of error correction tests for cointegration. The Econometrics Journal 5, 285-318. Franses, P. H. (1991). Seasonality, nonstationarity and the forecasting of monthly time series. International Journal of Forecasting 7, 199-208.



Franses, P. H., D. van Dick, and A. Opschoor (2014). Time Series Models for Business and Economic Forecasting. Cambridge: Cambridge University Press. Franses, P. H. and N. Haldrup (1994). The effects of additive outliers on tests for unit roots and cointegration. Journal of Business and Economic Statistics 12, 471-478. Franses, P. H. and R. Paap (2001). Quantitative Models in Marketing Research. Cambridge: Cambridge University Press. Fuller, W. (1976). Introduction to Statistical Time Series. New York, NY: Wiley. Ghysels, E. (1990). Unit root tests and the statistical pitfalls of seasonal adjustment: The case of U.S. post war real GNP. Journal of Business and Economic Statistics 8,145-152. Ghysels, E., H. S. Lee, and J. Noh (1994). Testing for unit roots in seasonal time series - Some theoretical extensions and a Monte Carlo investigation. Journal of Econometrics 62, 415-442. Ghysels, E. and D. R. Osborn (2001). The Econometrics Analysis of Seasonal Time Series. Cambridge: Cambridge University Press. Ghysels, E. and P. Perron (1993). The effect of seasonal adjustment filters on tests for a unit root. Journal of Econometrics 55, 57-98. Godfrey, L. G. (1979). Testing the adequacy of a time series model. Biometrika 66, 67-72. Greene, W. H. (2012). Econometric Analysis. New Jersey: Prentice Hall. Hadri, K. (2000). Testing for stationarity in heterogeneous panels. The Econometrics Journal 3, 148-161. Hadri, K. and E. Kurozumi (2012). A simple panel stationarity test in the presence of serial correlation and a common factor. Economics Letters 115, 31-34. Hadri, K. and R. Larsson (2005). Testing for stationarity in heterogeneous panel data where the time dimension is finite. The Econometrics Journal 8, 55-69. Hadri, K. and Y. Rao (2008). Panel stationarity test with structural break. Oxford Bulletin of Economics and Statistics 70, 245-269. Hall, A. and M. McAleer (1989). A Monte Carlo study of some tests of model adequacy in time series analysis. Journal of Business and Economic Statistics 7, 95-106. Hamilton, J. D. (1994). Time Series Analysis. Princeton: Princeton University Press.



Harris, R. (1995). Using Cointegration Analysis in Econometric Modelling. London: Prentice Hall. Harvester Wheatsheaf. Harris, R. and R. Sollis (2003). Applied Time Series Modelling and Forecasting. Chichester: John Wiley and Sons, Inc. Harvey, D., S. Leybourne, and P. Newbold (1997). Testing the equality of prediction mean squared errors. International Journal of Forecasting 13, 281-291. Hasza, D. P. and W. A. Fuller (1982). Testing for nonstationary parameter specifications in seasonal time series models. Annals of Statistics 10, 1209-1216. Hendry, D. F. and K. Juselius (2000). Explaining cointegration analysis: Part I. The Energy Journal 21, 1-42. Hendry, D. F. and K. Juselius (2001). Explaining cointegration analysis: Part II. The Energy Journal 22, 75-120. Hlouskova, J. and M. Wagner (2006). The performance of panel unit root and stationarity tests: Results from a large-scale simulation study. Econometric Reviews 25, 85-116. Holden, D. and R. Perlman (1994). Unit roots and cointegration for the economist. In B. B. Rao (Ed.), Cointegration for the Applied Economist, pp. 47-112. Chippenham: St. Martin’s Press. Holly, S., M. H. Pesaran, and T. Yamagata (2010). A spatio-temporal model of house prices in the USA. Journal of Econometrics 158, 160-173. Honda, Y. (1985). Testing the error components model with non-normal disturbances. Review of Economic Studies 52, 681-690. Hylleberg, S., R. F. Engle, C. W. J. Granger, and B. S. Yoo (1990). Seasonal integration +and cointegration. Journal of Econometrics 44, 215-238. Im, K., M. H. Pesaran, and Y. Shin (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics 115, 53-74. Jaeger, A. and R. M. Kunst (1990). Seasonal adjustment and measuring persistence in output. Journal of Applied Econometrics 5, 47-58. Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control 12, 231-254. Johansen, S. (1992). Testing weak exogeneity and the order of integration in UK money demand data. Journal of Policy Modeling 14, 313-334.



Johansen, S. (1995). Likelihood-Based Inference in Cointegrated Vector Auto-Regressive Models. Oxford: Oxford University Press. Johansen, S. and K. Juselius (1990). Maximum likelihood estimation and inference on cointegration: With applications to the demand for money. Oxford Bulletin of Economics and Statistics 52, 169-210. Johansen, S. and K. Juselius (1992). Testing structural hypotheses in a multivariate cointegration analysis of the PPP and the UIP for the UK. Journal of Econometrics 53, 211-244. Johnston, J. and J. DiNardo (1997). Econometric Methods. New York: McGraw-Hill. Judge, G. C., R. C. Hill, W. E. Griffiths, H. Lütkepohl, and T. Lee (1988). Introduction to the Theory and Practice of Econometrics. New York: John Wiley and Sons, Inc. Juselius, K. (2006). The Cointegrated VAR Model. Methodology and Applications. Oxford: Oxford University Press. Kennedy, P. (2008). A Guide to Econometrics. Cambridge, MA: The MIT Press. Kremers, J. J. M., N. R. Ericsson, and J. J. Dolado (1992). The power of cointegration tests. Oxford Bulletin of Economics and Statistics 54, 325-348. Kwiatkowski, D., P. C. B. Phillips, P. Schmidt, and Y. Shin (1992). Testing the null hypothesis of stationarity against the alternative of a unit root. Journal of Econometrics 54, 159-178. Lahiri, K. and N. Mamingi (1995). Testing for cointegration: Power versus frequency of observation: Another view. Economics Letters 49, 121-124. Levin, A., C.-F. Lin, and C.-S. J. Chu (2002). Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics 108, 1-24. Leybourne, S. (1995). Testing for unit roots using forward and reverse Dickey-Fuller regressions. Oxford Bulletin of Economics and Statistics 57, 559-571. Ljung, G. M. and G. E. P. Box (1978). On a measure of lack of fit in time series models. Biometrika 65, 297-303. Lütkepohl, H. (2005). New Introduction to Multiple Time Series Analysis. Heidelberg: Springer Verlag.



MacKinnon, J. G. (1991). Critical values for cointegration tests. In R. F. Engle and C. W. J. Granger (Eds.), Long-Run Economic Relationships: Readings in Cointegration, pp. 267-276. Oxford: Oxford University Press. MacKinnon, J. G. (1994). Approximate asymptotic distribution functions for unit-root and cointegration tests. Journal of Business and Economic Statistics 12, 167-176. Mackinnon, J. G., A. A. Haug, and L. Michelis (1999). Numerical distribution functions of likelihood ratio tests for cointegration. Journal of Applied Econometrics 14, 563-577. Maddala, G. S. and I. M. Kim (1998). Unit Roots, Cointegration, and Structural Change. Cambridge: Cambridge University Press. Maddala, G. S. and S. Wu (1999). A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics 61, 631-652. Martin, V., S. Hurn and D. Harris (2013). Econometric Modelling with Time Series. Cambridge: Cambridge University Press. McCoskey, S. and C. Kao (1998). A residual-based test of the null of cointegration in panel data. Econometric Reviews 17, 57-84. McCoskey, S. and T. Selden (1998). Health care expenditures and GDP: Panel data unit root test results. Journal of Health Economics 17, 369-376. Mills, T. C. (1990). Time Series Techniques for Economists. Cambridge: Cambridge University Press. Muscatelli, V. A. and S. Hurn (1992). Cointegration and dynamic time series models. Journal of Economic Surveys 6, 1-43. Nelson, C. R. and H. Kang (1984). Pitfalls in the use of time as an explanatory variable in regression. Journal of Business and Economic Statistics 2, 73-82. Nelson, C. R. and C. I. Plosser (1982). Trends and random walks in macroeconomic time series: Some evidence and implications. Journal of Monetary Economics 10,139-162. Newey, W. K. and K. D. West (1987). A simple, positive semi-definite, heteroskedastic and autocorrelation consistent covariance matrix. Econometrica 55, 703-708. Ng, S. and P. Perron (1995). Unit root tests in ARMA models with data-dependent methods for the selection of the truncation lag. Journal of the American Statistical Association 90, 268-281.



O’Connell, P. G. J. (1998). The overvaluation of purchasing power parity. Journal of International Economics 44, 1-19. Osterwald-Lenum, M. (1992). A note with quantiles of the asymptotic distribution of the maximum likelihood cointegration rank test statistics. Oxford Bulletin of Economics and Statistics 54, 461-472. Otero, J. and M. Ramírez (2006). Inflation before and after central bank independence: The case of Colombia. Journal of Development Economics 79, 168-182. Otero, J. and J. Smith (2000). Testing for cointegration: Power versus frequency of observation .further Monte Carlo results. Economics Letters 67, 5-9. Otero, J., J. Smith, and M. Giulietti (2005). Testing for seasonal unit roots in heterogeneous panels. Economics Letters 86, 229-235. Otero, J., J. Smith, and M. Giulietti (2007). Testing for seasonal unit roots in heterogeneous panels in the presence of cross section dependence. Economics Letters 97,179-184. Pankratz, A. (1983). Forecasting with Univariate Box-Jenkins Models. Concepts and Cases. New York: John Wiley and Sons, Inc. Patterson, K. (2000). An Introduction to Applied Econometrics. A Time Series Approach. Houndmills: Palgrave. Patterson, K. (2011). Unit Root Tests in Time Series. Volume 1: Key Concepts and Problems. Houndmills: Palgrave. Patterson, K. (2012). Unit Root Tests in Time Series. Volume 2: Extensions and Developments. Houndmills: Palgrave. Pedroni, P. (2000). Fully modified OLS for heterogeneous cointegrated panels. Advances in Econometrics 15, 93-130. Pedroni, P. (2001). Purchasing power parity tests in cointegrated panels. Review of Economics and Statistics 83, 727-731. Pedroni, P. (2004). Panel cointegration: Asymptotic and finite sample properties of pooled time series with an application to the PPP hypothesis. Econometric Theory 20, 597-625. Perron, P. (1988). Trends and random walks in macroeconomic time series: Further evidence from a new approach. Journal of Economic Dynamics and Control 12,297-332.



Perron, P. (1989). The great crash, the oil price shock and the unit root hypothesis. Econometrica 57, 1361-1401. Perron, P. (1994). Trend, unit root and structural change in macroeconomic time series. In B. B. Rao (Ed.), Cointegration for the Applied Economist, pp. 113-146. Chippenham: St. Martin.s Press. Perron, P. and T. J. Vogelsang (1992). Testing for a unit root in a time series with a changing mean: Corrections and extensions. Journal of Business and Economic Statistics 10, 467-470. Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross section dependence. Journal of Applied Econometrics 22, 265-312. Pesaran, M. H. (2015). Time Series and Panel Data Econometrics. Oxford: Oxford University Press. Pesaran, M. H. and Y. Shin (2002). Long-run structural modelling. Econometric Reviews 21, 49-87. Pesaran, M. H., Y. Shin, and R. Smith (2000). Structural analysis of vector error correction models with exogenous I(1) variables. Journal of Econometrics 97, 293-343. Pesaran, M. H., R. P. Smith, T. Yamagata, and L. Hvozdyk (2009). Pairwise tests of purchasing power parity. Econometric Reviews 28, 495-521. Phillips, P. C. B. and P. Perron (1988). Testing for a unit root in time series regression. Biometrika 75, 335-346. Schwert, G. W. (1989). Tests for unit roots: A Monte Carlo investigation. Journal of Business and Economic Statistics 7, 147-159. Sephton, P. S. (1995). Response surface estimates of the KPSS stationarity test. Economics Letters 47, 255-261. Smith, J. and J. Otero (1997). Structural breaks and seasonal integration. Economics Letters 56, 13-19. Sul, D., P. Phillips, and C. Choi (2005). Prewhitening bias in HAC estimation. Oxford Bulletin of Economics and Statistics 67, 517-546. Vandaele, W. (1983). Applied Time Series and Box-Jenkins Models. San Diego, CA: Academic Press. Verbeek, M. (2012). A Guide to Modern Econometrics. Chichester: John Wiley and Sons, Inc. Winkelmann, R. (2008). Econometric Analysis of Count Data. Berlin: Springer Verlag. Winkelmann, R. and S. Boes (2009). Analysis of Microdata. Heidelberg: Springer Verlag.



Wooldridge, J. M. (2010). Econometric Analysis of Cross Section and Panel Data. Cambridge, MA: The MIT Press. Wooldridge, J. M. (2015). Introductory Econometrics. A Modern Approach. Mason, OH: Thomson. South Western. Zivot, E. and D. W. K. Andrews (1992). Further evidence on the great crash, the oil price shock, and the unit root hypothesis. Journal of Business and Economic Statistics 10, 251-270.



7. Mathematical Economics

Course: Mathematical Economics Code: 92110008 (PhD) - 14700004 (MSc) Knowledge: Basic X Complementary Integral Formation

Course: Obligatory X (PhD) Elective X (M.Sc.) Hours: Hours of lectures with



Credits FOUR (4)


SUMMARY This course is aimed for students in the PhD in Economics and M.Sc. in Economics. The purpose of the course is to provide some basic mathematics tools used in economics research. OBJECTIVES The course provides an integrated treatment of mathematical foundations and its applications in economics. In the course, topological tools are studied for advances problems in economics as well as static and dynamic optimization problems in economics. Also, the content of the course is coordinated with the advanced courses in microeconomics, macroeconomics, and econometrics. EXPECTED LEARNING OUTCOMES At the end of the course, students are able to deal with mathematical structures behind economic models and solve problems of static and dynamic optimization, and difference equations. CONTENTS

1. Mathematical Preliminaries. 2. Optimization in Rn (Weirstrass’ Theorem, Lagrange’s Theorem, Karush-Kuhn-Tucker

Theorem, Envelope Theorem). 3. Convex Structures and Optimization. 4. Correspondences (Theorem of Maximum and Fixed Point). 5. Metric Spaces (Uniform Convergence Theorem, Contraction Mapping Theorem,

Blackwell’s Sufficiency Conditions). 6. Difference Equations.



7. Dynamic Optimization (Euler Equation, Bellman Equation, A Simple Model of Growth). 8. Measure Theory.

REFERENCES

• Sundaram, R. (1996) A First Course on Optimization. Cambridge University Press. • Stokey, N. L. y Lucas, Robert E. (1989) Recursive Methods in Economic Dynamics.

Harvard University Press. • Ok, E.A. (2007) Real Analysis with Economics Applications. Princeton University Press. • Escobar, D. (2005) Economía Matemática. Ediciones Uniandes, Alfaomega. • Pecha, A. (2012) Optimización Estática y Dinámica en Economía. Universidad Nacional de

Colombia.



8. Impact Evaluation

Course name: Impact Evaluation Code: 14700042 Kind of knowledge: Basic Complementary: X Integral formation Course type: Obligatory Elective:: X Credit type: Hours of work with




Credits: Four (4) Professor:

Overview This course reviews the main experimental and non-experimental methods used to assess the causal effect of policy interventions and public programs. The first part of the course will concentrate on the theoretical description of the different methods and the assumptions necessary for using each one of them. The second part of the course will review the empirical papers that apply such methods. Stata sessions will be conducted on how to implement the main empirical techniques. At the end of the course students must hand in a paper applying one or more of the methods discussed in class. COURSE OUTLINE 1. Introduction 2. Potential outcomes and causality 3. Inference in randomized experiments 4. Regression and Panel 5. Difference in differences 6. Regression discontinuity design 7. Instrumental variables 8. Matching 9. Topics TEXTBOOKS Angrist, Pischke (2008); Mostly Harmless Econometrics: An Empiricist's Companion Cameron, Trivedi (2005); Microeconometrics, methods and applications Shadish, Cook, Campbell (2002); Experimental and quasi-experimental designs Wooldridge (2002); Econometric analysis of cross section and panel data Cameron, Trivedi (2009); Microeconometrics using Stata Additional references:



Angrist, J., and A. Krueger, Empirical Strategies in Labor Economics, Chapter 36 Hand- book of Labor Economics, Chapter 23 Ashenfelter and Card, (eds.), Elsevier, North Holland, 1277-1366.



9. Economics of Conflicts

Course name: Economics of Conflicts Code: 14700030 Kind of knowledge:

Basic Complementary: X Integral formation

Course type: Obligatory Elective: X Credit type: Hours of work with




Credits: Two (2) Prerequisite: Professor:

OVERVIEW This is a course on the economic analysis of Conflicts and civil wars. We will cover the most important theoretical and empirical contributions and will study the current academic debates. Applications to Colombia will be covered whenever possible. COURSE TRAINING PURPOSES The main goal is to introduce the analytical tools used in the (recent) academic literature on the subject.

EXPECTED LEARNING OUTCOMES At the end of the course the students will be familiarized with the research frontier of the subject and will be able to make their own contribution.

COURSE OUTLINE 1. Introduction: Why should economists care about studying conflict? 2. Economic modeling of Conflict 3. The causes of conflict

a. (Earlier) Cross-country evidence b. Economic Shocks c. The Resource Curse d. Foreign Aid e. Ethnicity, Inequality and Polarization f. State Presence g. Other causes

i. Population growth ii. Political participation

iii. Arms control and military experience 4. The costs of Conflict

a. Review



b. (Earlier) Cross-country evidence c. Economic Costs d. Conflict and private business e. Political consequences f. Other topics

i. Violence breeds violence ii. Victimization of civilians

iii. Conflict and drugs

REFERENCES Abadie, Alberto and Javier Gardeazabal (2003). \The Economic Costs of Conflict: A Case Study of the Basque Country" American Economic Review Vol. 93(1): 113132. Download from: http://www.hks.harvard.edu/fs/aabadie/eccp.pdf Acemoglu, Daron, James Robinson and Rafael Santos (2013). \The Monopoly of Violence: Evidence from Colombia" forthcoming Journal of the European Economic association. Download from: http://economics.mit.edu/files/8049. Acemoglu, Daron, Leopoldo Fergusson and Simon Johnson (2012). \Population and Social Conflict". mimeo. Angrist, Joshua and Adriana Kugler (2008). \Rural Windfall or a New Resource Curse? Coca, Income and Civil Conflict in Colombia" The Review of Economics and Statistics Vol. 90(2): 191-215.Download from: http://economics.mit.edu/files/2543. Becker, Gary (1968) \Crime and Punishment: An Economic Approach", The Journal of Political Economy 76: 169217. Download from: http://www.ww.uni-magdeburg.de/bizecon/material/becker.1968.pdf. Berman, Eli, Jacob N. Shapiro, and Joseph H. Felter (2011)\Can Hearts and Minds Be Bought? The Economics of Counterinsurgency in Iraq", Journal of Political Economy Vol. 119(4): 766-819. Blattman, Christopher and Edward Miguel (2010). \Civil War" Journal of Economic Literature 48 (1): 3-57. Download from: http://chrisblattman.com/documents/research/2010.CivilWar.JEL.pdf. Blattman, Christopher (2009). \From Violence to Voting: War and Political Participation in Uganda". American Political Science Review Vol. 103, No. 2 Vol. 103(2): 231-247. Download from: http://www.chrisblattman.com/documents/research/2009.V2V.APSR.pdf Camacho, Adriana (2008) \Stress and Birth Weight: Evidence from Terrorist Attacks" American Economic Review P&P 98 (2): 511-15.



Camacho, Adriana and Catherine Rodriguez (forthcoming) \Firm Exit and Armed Conflict in Colombia" Journal of Peace Research. Download from: http://ideas.repec.org/p/unu/wpaper/wp2010-94.html. Castañeda, Andrés and Juan F. Vargas (2012) \Sovereign Risk and Armed Conflict: An Event-study for Colombia" Defense and Peace Economics Vol. 23(2): 185-201. Long-run consequences Collier, Paul (1999). \On the Economic Consequences of Civil War", Oxford Economic Papers Vol. 51 (1): 168183. Collier, Paul and Anke Hoeffler (2004). \Greed and Grievance in Civil War" Oxford Economic Papers Vol 56 (4): 563-595. Crost, Benjamin, Joseph Felter and Patrick Johnston \Aid Under Fire: Development Projects and Civil Conflict". Download from: http://belfercenter.ksg.harvard.edu/files/Aid_Under_Fire.pdf Dal Bo, Ernesto and Pedro Dal Bo (2011). \Workers, Warriors and Criminals: Social Conflict in General Equilibrium" Journal of the European Economic Association. Vol. 9(4). Dell, Melissa \Insurgency and Long-Run Development: Lessons from the Mexican Revolution". Download from: http://economics.mit.edu/_les/7362. Dube, Oeindrila and Juan F. Vargas (2013). \Commodity Price Shocks and Civil Conflict: Evidence from Colombia" forthcoming Review of Economic Studies. Download from: https://sites.google.com/site/juanfvargas/research Dube, Oeindrila and Suresh Naidu \Bases, Bullets and Ballots: The Effect of U.S. Military Aid on Political Conflict in Colombia". Download from: https://files.nyu.edu/od9/public/papers/Dube_bases_bullets.pdf Dube, Arindrajit, Oeindrila Dube and Omar García. \Cross-Border Spillover: U.S. Gun Laws and Violence in Mexico" Download from: https://files.nyu.edu/od9/public/papers/Cross_border_spillover.pdf Esteban, Joan and Debraj Ray (2008) \On the Salience of Ethnic Conflict" American Economic Review Vol. 98, 2185-2202. Download from: http://www.econ.nyu.edu/user/debraj/Papers/EstebanRaySalience.pdf. Esteban, Joan and Debraj Ray (2011) \Linking Conflict to Inequality and Polarization" American Economic Review Vol. 101(4): 134574. Download from: http://www.econ.nyu.edu/user/debraj/Papers/ConPolIneq.pdf. Fearon, James (1995). \Rationalist Explanations for War" International Organization Vol. 49:



379-414. Download from: http://slantchev.ucsd.edu/courses/pdf/fearon-io1995v49n3.pdf. Fearon, James (2005). \Primary Commodity Exports and CivilWar" Journal of Conflict Resolution Vol. 49: 483507. Download from: http://jcr.sagepub.com/content/49/4/483.full.pdf+html. Fearon, James and David Laitin (2003). \Ethnicity, Insurgency, and Civil War" American Political Science Review Vol. 97: 75-90. Fergusson, Leopoldo and Juan F. Vargas (2009). \The Rich-poor Divide, Within-groups Inequality and Armed Conflict". mimeo. Fergusson, Leopoldo and Juan F. Vargas (2013) \Don't Make War, Make Elections: Franchise Extension and Violence in XIX-Century Colombia". mimeo. Fergusson, Leopoldo, James Robinson, Ragnar Torvik and Juan F. Vargas (2012) \The Need for Enemies", NBER Working Paper No. 18313. Download from: www.nber.org/papers/w18313 Fergusson, Leopoldo and Juan F. Vargas. \Sunlight Disinfects, but Beware of the Shade Free Media in Weakly Institutionalized Environments". Download from course website Galiani, Sebastian, Martn Rossi and Ernesto Schargrodsky (2011). \Conscription and Crime: Evidence from the Argentine Draft Lottery" American Economic Journal: Applied Economics, Vol. 3(2): 119-36. Grossman, Herschel (1991). \A General Equilibrium Model of Insurrections" American Economic Review Vol. 81 (4): 912-921. Guidolin, Massimo and Eliana La Ferrara (2007). \Diamonds Are Forever, Wars Are Not: Is Conflict Bad for Private Firms?" American Economic Review Vol. 97 (5): 1978-1993. Hirshleifer, Jack (1994). \The Dark Side of the Force" Economic Inquiry Vol. 32 (1): 1-10. Download from: http://www.econ.ucla.edu/people/papers/Hirshleifer/Hirshleifer172.pdf. Hirshleifer, Jack (1978). \Competition, Cooperation and Conflict in Economics and Biology" American Economic Review, P&P Vol. 68 (2): 238-243. Hirshleifer, Jack (1995). \Theorizing About Conflict" in Keith Hartley and Todd Sandler (eds.), The Handbook of Defense Economics Vol. 1: 165-189. Hirshleifer, Jack (1991). \The Technology of Conflict as an Economic Activity" American Economic Review, P&P Vol. 81 (2): 130-134. Hirshleifer, Jack (1991) \The Paradox of Power" Economics and Politics 3 (3):177-200. Download from: http://www.econ.ucla.edu/people/papers/hirshleifer/hirshleifer190.pdf



Humphreys, Macartan (2005). \Natural Resources, Conflict and Conflict Resolution: Uncovering the Mechanisms" Journal of Conflict Resolution Vol. 49: 508-537. Download from: http://jcr.sagepub.com/content/49/4/508.full.pdf+html. Ibáñez Ana Maria and Andrés Moya (2010). \Vulnerability of Victims of Civil Conflict: Empirical Evidence for the Displaced Population in Colombia" World Development Vol. 38(4): 647-663. Kaplan, Ethan, Arindrajit Dube and Suresh Naidu (forthcoming) \Coups, Corporations, and Classified Information" Quarterly Journal of Economics. Download from: urlhttp://people.su.se/ ekapl/coups.pdf. Lind, Jo, Karl Moene and Fredrik Willumsen. \Opium for the masses? Conflict-induced narcotics production in Afghanistan" mimeo. Download from: http://www.sv.uio.no/esop/english/research/publications/working-papers/OpiumfortheMasses.pdf. Mejía, Daniel (2005). \Conflict and Economic Growth: A Survey of the Theoretical Links". Download from: https://sites.google.com/site/danielmejialondono/research/conflict_growth.pdf?attredirects=0 Mejia, Daniel and Pascual Restrepo (2010). \The war on Illegal Drug Production and Trafficking: An Economic Evaluation of Plan Colombia" Documento CEDE 2006-19. Download from:http://economia.uniandes.edu.co/content/download/15750/98434/file/dcede2008-19.pdf. Miguel, Edward, Shanker Satyanath and Ernest Sergenti (2004). \Economic Shocks and Civil Conflict: An Instrumental Variables Approach" Journal of Political Economy Vol. 112 (4): 725-753. Download from: http://emlab.berkeley.edu/~emiguel/pdfs/miguel_conflict.pdf. Miguel Edward. (2005) \Poverty and Witch Killing" Review of Economic Studies Vol. 72(4): 1153-1172. Download from: http://emlab.berkeley.edu/~emiguel/pdfs/miguel_witch.pdf. Miguel, Edward and Gerard Roland (2011). \The Long Run Impact of Bombing Vietnam". Journal of Development Economics Vol. 96(1): 1-15. Miguel, Edward, Sebastian Saiegh and Shanker Satyanath (2011) \Civil War Exposure and Violence" Economics and Politics: Vol. 23(1): 59-73. Download from: http://elsa.berkeley.edu/~emiguel/pdfs/miguel_soccer.pdf Montalvo, José and Marta Reynal-Querol (2005). \Ethnic polarization, potential Conflict and civil war", American Economic Review, Vol. 95 (3): 796-816. Download from: http://www.econ.upf.edu/~reynal/aer_final_conflict.pdf.



Nielsen, Richard et al. (2011) \Foreign Aid Shocks as a Cause of Violent Armed Conflict", American Journal of Political Science, Vol. 55(2): 219232. Powell, Robert (2006). \War as a Commitment Problem" International Organization 60: 169-203. Qian, Nancy and Nathan Nunn \Aiding Conflict: The Impact of U.S. Food Aid on Civil War". Download from: http://www.economics.harvard.edu/faculty/nunn/files/Nunn_Qian_Food_Aid.pdf Rodriguez, Catherine and Fabio Sanchez (2011). \Armed Conflict Exposure, Human Capital Investments and Child Labor: Evidence from Colombia", Defense and Peace Economics Vol. 23(2): 161-184. Ross, Michael (2004). \What Do We Know about Natural Resources and Civil War?" Journal of Peace Research Vol. 41 (3): 337356. Download from: http://jpr.sagepub.com/content/41/3/337.full.pdf+html. Vargas, J. F. (2005). \El Lado Oscuro de la Fuerza. In Memoriam, Jack Hirshleifer (1925-2005)". Download from course website. Vargas, J. F. (2012), \Costos del Conflicto y Consideraciones Económicas para la Construcción de Paz" in Rettberg, Angelika (Ed.) Construcción de Paz en Colombia, Ediciones Uniandes, Bogotá 239-272. Download from course website. Vargas, Juan F. (2009). \Military Empowerment and Civilian Targeting in Civil War", mimeo. Download from course website. Voors, Maarten, Eleonora Nillesen, Philip Verwimp, Erwin Bulte, Robert Lensink and Daan Van Soest (2011). \Does Conflict affect Preferences? Evidence from field experiments in Burundi" forthcoming American Economic Review. Download from: http://www.microconflict.eu/publications/RWP21_MVetal.pdf.



10. Political Economy

Course name: Political Economy Code: 14700048 Kind of knowledge:






Número de Créditos:

4 (four)

Professor: OVERVIEW The purpose of this course is to analyze policy choices as equilibrium outcomes that result from the strategic interaction of politicians and citizens, with preferences, incentives, and institutions shaping their decisions. In the first part of the class we will study how this process occurs, by discussing how states are built and focusing on the role of elections, the role of conflict and post-conflict in building institutions, and in how media can be used to shape voters' preferences. In the second part of the course we will focus our attention on the state, by analyzing who selects into the public sector and their motivations, then we move to the interaction between firms and the state, and finally we focus on the strategic spending of the states and the role of audits as a way to prevent misallocation of public funds. In the last part of the course we focus on the persistence and changes of institutions. We focus our attention on the role of social movements, elites, and foreign interventions. COURSE TRAINING PURPOSES Improve the skills of students to understand the economic research, presented at seminars and participate in discussions on economic issues that are being discussed today. EXPECTED LEARNING OUTCOMES Understanding of the most relevant research in political economý.

Strengthening and learning skills to present, understand and address political economy issues.

COURSE OUTLINE AND REFERENCES Note: Students have to read at least the readings marked with *.

3.1 Introduction

*Buchanan, James (1987). “The Constitution of Economic Policy", The American Economic Review Vol. 77(3): 243-250.



Drazen, Allan (2000). Political Economy in Macroeconomics, New Jersey: Princeton. Chapter 1 (pages 3 to 19)

*Persson, Torsten and Guido Tabellini (2000). Political Economics, Cambridge: MIT Press. Chapter 1 (pages 1 to 14)

3.2 Social conict and aggregation of preferences

3.2.1 Aggregation of preferences in democracy

*Acemoglu, Daron and James Robinson (2005). Economic origins of Dictatorship and Democracy, Cambridge University Press. Chapter 4

Drazen, Allan (2000). Political Economy in Macroeconomics, New Jersey: Princeton. Chapter 2 and 3 (pages 20 to 98)

*Persson, Torsten and Guido Tabellini (2000). Political Economics, Cambridge: MIT Press. Chapter 2

3.2.2 Conflict, post-conflict and statebuilding

Acemoglu, Daron, Leopoldo Fergusson, James A. Robinson, Dario Romero and Juan F. Vargas (2017). “The Perils of Top-down State Building: Evidence from Colombia's False Positives", unpublished manuscript.

*Blattman, Christopher and Edward Miguel (2010). \Civil War" Journal of Economic Literature, Vol. 48(1), 3-57.

Ch, Rafael, Abbey Steele, Jacob N. Shapiro and Juan F. Vargas (2018). Endogenous Taxation in Ongoing Internal Conict: The Case of Colombia", Forthcoming American Political Science Review

*Dube, Oeindrila and Juan F. Vargas (2013). \Commodity Price Shocks and Civil Conict: Evidence from Colombia", The Review of Economic Studies 80(4): 1384-1421.

Fearon, James D. (1995). \Rationalist Explanations for War", International Organization 49(3): 379-414.

Miguel, Edward, Shanker Satyanath and Ernest Sergenti (2004). “Economic Shocks and Civil Conict: An Instrumental Variables Approach", Journal of Political Economy 12(4): 725-753.



Vargas, Juan F. (2016) \Strategic Atrocities. Civilians under Cross fire: Theory and Evidence from Colombia", in Charles Anderton and Jurgen Brauer (eds.) Economics Aspects of Genocides, Other Mass Atrocities, and their Prevention, Oxford University Press: 425-451.

Posconict and peacebuilding

*Blattman, Christopher, Julian Jamison and Margaret Sheridan (2017). “Reducing crime and violence: Experimental evidence on cognitive behavioral therapy in Liberia", American Economic Review Vol. 107(4): 1165-1206.

Annan, Jeannie and Christopher Blattman (2016). \Can employment reduce lawlessness and rebellion? A field experiment with high-risk men in a fragile state" American Political Science Review Vol. 110(1): 1-17.

*Fergusson, Leopoldo, Pablo Querub__n, Nelson Ruiz and Juan F. Vargas (2017). “The Real Winner's Curse", unpublished manuscript.

3.2.3 The role of media

*DellaVigna, Stefano, and Ethan Kaplan (2007) \The Fox News e_ect: Media bias and voting." The Quarterly Journal of Economics 122.3: 1187-1234.

*Enikolopov, Ruben, Maria Petrova, and Ekaterina Zhuravskaya (2011) \Media and political persuasion: Evidence from Russia." The American Economic Review 101.7: 3253-3285.

*Adena, Maja, et al (2015) \Radio and the Rise of the Nazis in Prewar Germany." The Quarterly Journal of Economics 130.4: 1885-1939.

DellaVigna, Stefano, et al. (2014) \Cross-border media and nationalism: Evidence from Serbian radio in Croatia." American Economic Journal: Applied Economics 6.3: 103-132.

Gonz_alez, Felipe and Mounu Prem (2017) \Can television bring down a dictator? Evidence from the Pinochet regime." Working paper.

Fergusson, Leopoldo, Juan F. Vargas and Mauricio A. Vela (2013) “Sunlight Disinfects? Free Media in Weak Democracies", unpublished manuscript.

3.3 State



3.3.1 State personnel

*Finan, Frederico, Benjamin A. Olken, and Rohini Pande (2015) “The personnel economics of the state." NBER Working paper No. w21825.

*Dal B_o, Ernesto, Frederico Finan, and Mart__n A. Rossi (2013) “Strengthening state capabilities: The role of _nancial incentives in the call to public service" The Quarterly Journal of Economics 128.3: 1169-1218.

*Colonnelli Emanuele, Mounu Prem, and Edoardo Teso (2017) “Patronage in the Allocation of Public Sector Jobs." Working paper.

Xu, Guo (2017) \The Costs of Patronage: Evidence from the British Empire." Working paper.

Dal Bo, Ernesto, et al. (2016) \Who Becomes a Politician?" The Quarterly Journal of Economics.

Ferraz, Claudio and Frederico Finan (2011) \Motivating Politicians." Working paper.

3.3.2 The state and firms

*Fisman, Raymond (2001) \Estimating the value of political connections." The American economic review 91.4: 1095-1102.

*Khwaja, Asim Ijaz, and Atif Mian (2005) \Do lenders favor politically connected firms? Rent provision in an emerging financial market." The Quarterly Journal of Economics 120.4: 1371-1411.

*Gonz_alez, Felipe and Mounu Prem (2017) “Losing your dictator: Firms during political transition." Working paper.

*Colonnelli, Emanuele and Mounu Prem (2017) “Corruption and Firms." Working paper.

*Vidal, Jordi Blanes I., Mirko Draca, and Christian Fons-Rosen (2012) “Revolving door lobbyists." The American Economic Review 102.7: 3731-3748

*Kim, In Song (2017) \Political cleavages within industry: Firm-level lobbying for trade liberalization." American Political Science Review 111.1: 1-20.

Borisov, Alexander, Eitan Goldman, and Nandini Gupta (2015) “The corporate value of (corrupt) lobbying." Review of Financial Studies

3.3.3 Government spending, audits, and tax evasion



*Burgess, Robin, et al. (2015) \The value of democracy: evidence from road building in Kenya." The American Economic Review 105.6: 1817-1851.

*Ferraz, Claudio, and Frederico Finan (2008) “Exposing corrupt politicians: the effects of Brazil's publicly released audits on electoral outcomes." The Quarterly Journal of Economics 123.2: 703-745.

*Fisman, Raymond, and Shang-Jin Wei (2004) “Tax rates and tax evasion: evidence from “missing imports" in China." Journal of political Economy 112.2: 471-496

Finan, Frederico, and Maurizio Mazzocco (2016) \Electoral Incentives and the Allocation of Public Funds." NBER Working paper.

Voigtlander, Nico, and Hans-Joachim Voth. (2014) \Highway to Hitler." NBER Working paper.

Gorodnichenko, Yuriy, Jorge Martinez-Vazquez, and Klara Sabirianova Peter (2009) “Myth and reality of at tax reform: Micro estimates of tax evasion response and welfare effects in Russia." Journal of Political economy 117.3: 504-554.

Avis, Eric, Claudio Ferraz, and Frederico Finan (2016) \Do Government Audits Reduce Corruption? Estimating the Impacts of Exposing Corrupt Politicians." NBER Working paper, 2016.

Ferraz, Claudio, Frederico Finan, and Diana B. Moreira (2012) “Corrupting learning: evidence from missing federal education funds in Brazil." Journal of Public Economics 96.9: 712-726.

3.4 Institutional change

3.4.1 Collective action

*Marco Manacorda and Andrea Tesei (2016) \Liberation technology: mobile phones and political mobilization in Africa." Working paper.

*Felipe Gonz_alez (2016) \Collective action in networks: evidence from the chilean student movement." Working paper.

*Davide Cantoni, David Yang, Noam Yuchtman, and Jane Zhang (2016) “The fundamental determinants of anti-authoritarianism." Working paper.

3.4.2 Persistence and gradual changes



*Acemoglu, Daron, Simon Johnson and James Robinson (2001) “The Colonial Origins of Comparative Development: An Empirical Investigation", American Economic Review Vol. 91(5): 1369-1401.

Acemoglu, Daron, and James A. Robinson (2008) “Persistence of power, elites, and institutions." The American Economic Review 98.1: 267-293

Buonanno, Paolo and Juan F. Vargas (2017) “Inequality, Crime, and the Long Run Legacy of Slavery", unpublished manuscript.

*Dell, Melissa (2010), \The Persistent E_ect of Peru's Mining Mita", Econometrica, 78(6): 1863-1903

*Engerman, Stanley and Kenneth Sokolo_ (1997). \Factor endowments, institutions, and differential paths of growth among new world economies: A view from economic historians of the United States" In S. Harber (Ed.), How Latin America fell behind: Essays on the economic histories of Brazil and Mexico, 1800-1914, Stanford University Press, p. 260-304.

Fergusson, Leopoldo, Carlos Molina, James A. Robinson and Juan F. Vargas (2017). “The Long Shadow of the Past: Political Economy of Regional Inequality in Colombia", unpublished manuscript.

Maloney, William and Felipe Valencia (2016). “The Persistence of (Subnational) Fortune", Economic Journal Vol. 126 (598): 2219-2445.

3.4.3 Interventions

*Acemoglu, Daron and James Robinson (2013) \Economics versus politics: pitfalls of policy advice." Journal of Economic Perspectives

*Dube Arin, Ethan Kaplan, and Suresh Naidu (2011) “Coups, corporations, and classified information." Quarterly Journal of Economics.

*Dube, Oeindrila and Suresh Naidu (2015) \Bases, bullets, and ballots: the effect of U.S. military aid on political conict in Colombia." Journal of Politics.

*Dell, Melissa and Pablo Querubin (2017) “Nation Building Through Foreign Intervention: Evidence from Discontinuities in Military Strategies." Working paper.

Casey, Katherine, Rachel Glennerster, and Edward Miguel (2012) “Reshaping institutions: evidence on aids impacts using a preanalysis plan." Quarterly Journal of Economics.





11. Experimental Economics (4 credits)

Course name: Experimental Economics Code: 14700037 Kind of knowledge:







Four (4)

Professor: OVERVIEW In this course, the student will learn experimental economics methods. Experiments in economics are a tool to study human behavior in a controlled laboratory setting. After taking this course, the student will be able to use scientific experiments to test what choices people make in specific circumstances. Experimental economics is not only used to help understand how and why markets function like they do. It is also a method that allows researchers to examine the effects of policy changes before they are implemented, and help policymakers make better decisions.

COURSE TRAINING PURPOSES

Learning college-level economics it is characterized by the high degree of abstraction with which economic problems are addressed. Students therefore often fail to find the relationship of what is taught with the "real world", hindering the learning process. This course will attempt to close this gap.

On the other hand, teaching in the social sciences such as psychology and political science and economics takes place in complete isolation from one another. This course will show the commonalities between these disciplines, in order to promote future interdisciplinary work.

The main objectives of the course are:

1. Introduce the use of laboratory experiments as a research tool.

2. Provide an alternative approach to addressing research questions.

3. Facilitate learning by exposing students to the problems discussed.



EXPECTED LEARNING OUTCOMES

Participants will be able to design, conduct and analyze data resulting from an experiment that allows answer his own research question.

COURSE OUTLINE

Throughout the course we will use articles published in international science journals and chapters from the following textbooks:

• Dan Friedman y Shyam Sunder (1994) “Experimental Methods: A Primer for Economists”, Cambridge University Press. (Fr&S) • Colin Camerer (2003), Behavioral Game Theory, Princeton University Press.(C)

Other interesting books, recommended for those who want to do research using tools of experimental economics are:

• Douglas Davis and Charlie Holt (1993), Experimental Economics, Princeton University Press.

• John Kagel and Alvin Roth (1995), Handbook of Experimental Economics, Princeton University Press.

Methodology • (*) Chapters 1 & 2 (Fr&S) • Friedman D. y Cassar A. (2004). “Economics Lab: An Intensive course in experimental

economics” ¿Why we use social science experiments?

• (*) Loewenstein, G. (1999) ”Experimental Economics from the Vantage-Point of Behavioural Economics” The Economic Journal, 109, 453, pp. F25-F34.

• (*) Rubinstein, A. (2001) ”A theorist’s view of experiments” European Economic Review,

(45) pp.615-628.

• (*) Starmer, C. (1999) ”Experimental Economics: Hard Science or Wasteful Tinkering?” The Economic Journal, 109, 453, pp. F5-F15.

Experimental Design

• (*) Chapters 3,4 & 5 (Fr&S) • (*) Friedman D. y Cassar A. (2004). “Economics Lab: An Intensive course in experimental

economics”



Analysis of experimental data

• Chapter 7 (Fr&S) • (*) Sidney Siegel y N. John Castellan Jr. (1988) “Nonparametric Statistics for The

Behavioral Sciences”

Classic Experiments

• (*) Camerer, 2003. Cap. 2

Theories of Distributive Justice

• (*) Fehr, E. and Schmidt, K.M. (1999). “A Theory of Fairness, Competition and Cooperation.” Quarterly Journal of Economics 114, 817-868.

• (*) Blanco, M., Engelmann, D. and Normann, H. (2011) “A Within-Subject Analysis of Other- Regarding Preferences” Games and Economic Behavior, (72), pp. 321-338.

Programming Z-tree

TEXTBOOKS


• Dan Friedman y Shyam Sunder (1994) “Experimental Methods: A Primer for Economists”, Cambridge University Press. (Fr&S)

• Colin Camerer (2003), Behavioral Game Theory, Princeton University Press.(C) • Douglas Davis and Charlie Holt (1993), Experimental Economics, Princeton University

Press. • John Kagel and Alvin Roth (1995), Handbook of Experimental Economics, Princeton

University Press.

The book of Friedman and Sunder is very useful as a basic introduction to the experimental methodology. The book is still extremely useful for those planning to drive your own experiment someday. The other books listed offer good reviews of the most important results in experimental economics in recent times.



12. Contract Theory I

Course: Contract Theory I Code: 14700050 Knowledge: Basic X Complementary Integral Formation

Course: Obligatory Elective X Hours: Hours of lectures with



Credits Two (2)


SUMMARY This course is aimed for students in the PhD in Economics and M.Sc. in Economics. The course This course deals with the Economics of Information, i.e. with the question of how people decide whenever their information is (in)complete, how they acquire new information, how they learn, and how relationships develop if the different parties have different information about their counterparts and/or the environment. Stated differently, we investigate how an economy adapts to new information, and how this information is disseminated, absorbed and used throughout the economy. OBJECTIVES In this course, we study the role of information in three dimensions.

• How is information transmitted in (economic) relations? We investigate different (contractual) relationships with asymmetrically distributed information and analyze the respective (private) benefits and (social) losses. Moreover, we discuss how information is (or can or should be) transmitted in these relationships.

• How is information processed? If we know how economic relations (or markets) transmit information, an obviously related question is how this information is processed by the respective receiver. This leads to theories of learning and up-dating (and their empirical qualifications from cognitive psychology). Finally, we will discuss how the strategic (abuse) of information influences processing (and transmission).

• How does market design influence information transmission?If different economic relations (or different institutional arrangements) influence information transmission in the market, it is important to analyze various market designs and their efficiency properties.

EXPECTED RESULTS



The course aims at the provision of a working knowledge in all three dimensions that enables students to identify and analyze problems of information transmission in economic relationships, to evaluate their welfare consequences, and to recommend institutional improvements. CONTENIDOS

1. Overview and Technicalities 2. Incentives, Contracts and Risk-Sharing 3. Moral Hazard. 4. Adverse Selection. 5. Information and Insurance Markets. 6. Signalling. 7. Empirical Tests of Contract Theory and Experiments on Contract Theory. 8. Auctions.

REFERENCES

1. Macho-Stadler, I. y D. Perez-Castrillo (2001) An Introduction to the Economics of Information 2nd edition Oxford University Press.

2. Bulow, J. y J. Roberts (1989) “The Simple Economics of Optimal Auctions” Journal of Political Economy 97(5), 1060-1090.

3. Chiappori, P.A. y B. Salanié (2002) “Testing Contract Theory: A Survey of Some Recent Work” CESifo Working Paper No. 738.

4. Fehr, E., A. Klein y K. Schmidt (2007) “Fairness and Contract Design” Econometrica 75(1), 121- 154.

5. Lazear, E. (2000) “Performance Pay and Productivity” American Economic Review 90, 1346-61.

6. Milgrom, P. (1989) “Auctions and Bidding: A Primer” Journal of Economic Perspectives 3(3), 3-22.

7. Rothschild, M. and J. Stiglitz (1976) “Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information” Quarterly Journal of Economics 40, 629-649.

8. Stiglitz, J. (2000) “The Contribution of the Economics of Information to Twentieth Century Economics” Quarterly Journal of Economics 115(4), 1441-1478.

COMPLEMENTARY REFERENCES

1. Salanié, B. (1997) The Economics of Contracts: A Primer 2nd edition MIT Press. 2. Bolton P. y Dewatripont M. (2005) Contract Theory MIT Press.



13. Topics in Market Design

Course name: Topics in market design Code: 14700051 Kind of knowledge: Basic X Complementary: Integral formation Course type: Obligatory Elective: X Credit type: Hours of work with





Two (2)

Professor: OVERVIEW Economists are interested in the allocation of scarce resources, and for this reason they design economic institutions such as markets and develop allocation mechanisms. Bilateral allocations (Matching) and auctions are frequently used in the design of markets. COURSE TRAINING PURPOSES Bilateral allocation mechanisms (Matching) have been successfully applied in many contexts such as assigning doctors to hospitals, the allocation of organs (kidney exchange and allocation of livers) , the admission of students to schools, job search and assigning objects. Auctions have long been used to sell a wide variety of objects; from raw materials (snuff , fish, and tulips) to scrap metal, treasury obligations, public tenders (reverse auctions), the electro - magnetic spectrum , etc. The course objective is to provide some applications where economic theory has been successful in practice. We explore the theory and practice of allocations through "matching". We try to understand why the auctions are as common as sales mechanisms. EXPECTED LEARNING OUTCOMES At the end of Mechanism Design course, students learn some applications where economic theory has been successful in practice and understand why the auctions are as common as sales mechanisms. COURSE OUTLINE

1. Matching a. Two-Sided Matching Markets

i. Marriage Market. ii. College Admissions Problem.

b. One-Sided Matching Markets- Roommate Problem. c. Object allocation. d. School Choice.



e. Kidney transplant Exchange when there are donations. f. Bilateral Agreements allocations.

2. Auctions.

a. Auction of a Single Object. i. Private Value auctions.

ii. Revenue Equivalence Principle. iii. Mechanism design and efficient mechanism. iv. Interdependent value auctions.

b. Auction of a Multiple Objects.

i. Balance and efficiency with private valuations. ii. Consecutive sales.

iii. Multiple Interdependent Objects Value.

BASIC TEXTBOOKS 1. Krishna, V (2002) Auction Theory Academic Press. 2. Roth, A.E. and Sotomayor, M.A. (1990) Two-Sided Matching: A Study in Game-Theoretic

Modeling and Analysis Cambridge University Press.



14. Topics in Education and Health

Course name: Topics in Education and Health Code: 14910005 Kind of knowledge:


Course type: Obligatory Elective: X Credit type: Horas de trabajo con

acompañamiento directo del Professor:32

Horas de trabajo independiente del estudiante:64



Two (2)

Professor: OVERVIEW This course aims to review several relevant topics in contemporary discussions in the literature on education and health, with clear implications of public policy. From the thematic point of view they will cover topics such as skills training (cognitive and socio-emotional) and human capital, risky behaviors (crime, adolescent pregnancy, drug use, etc.), diseases (dengue, HIV, stress, etc.) and gender. From the point of view of the policies, the power of information, policy design, monitoring (monitoring), early childhood policies, etc., and their short and long-term effects will be discussed. Not only will references be reviewed in the economic literature but also in psychology, medicine and neurosciences. At the end of the course the student will have an updated idea of the interrelationships between health and education in different aspects of human life, and the policies that may affect this relationship. COURSE TRAINING PURPOSES Review the recent advances in the economics of education and health related to the accumulation of human capital, risky behaviors, contagious diseases, social networks and gender.


1. Know the contemporary literature in education and health 2. Discuss in an informed manner about different problems in education and health 3. Prepare a policy report on education and / or health 4. Prepare and present a research paper

COURSE OUTLINE 1. Cognitive and socio-emotional skills



2. Gender 3. Risky behaviors 4. Diseases READINGS 1. Cognitive and socio-emotional skills 1.1. Introduction James J. Heckman & Stefano Mosso, 2014. "The Economics of Human Development and Social Mobility," Annual Review of Economics, Annual Reviews, vol. 6 (1), pages 689-733, 08. 1.2. Fetal origins Almond, Douglas, & Janet Currie. 2011. "Killing Me Softly: The Fetal Origins Hypothesis." Journal of Economic Perspectives, 25 (3): 153-72. Gabriella Conti & Christopher Hansman & James J. Heckman & Matthew FX Novak & Angela Ruggiero & Stephen J. Suomi, 2012. "Primate Evidence on the Late Health Effects of Early Life Adversity," NBER Working Papers 18002, National Bureau of Economic Research, Inc. 1.3. Interventions at an early age Paul Gertler, James Heckman, Rodrigo Pinto, Arianna Zanolini, Christel Vermeersch, Susan Walker, Susan M Chang, and Sally Grantham-McGregor, 2014. Labor market returns to an early childhood stimulation intervention in Jamaica. Science, 344 (6187): 998-1001. Nathalie, Charpak et al., 2017. Twenty-year Follow-up of Kangaroo Mother Care Versus Traditional Care. PEDIATRICS Volume 139, number 1, January 2017 Orazio Attanasio, 2015. The Determinants of Human Capital Formation During the Early Years of Life: Theory, Measurement and Policies. Forthcoming, JEEA 1.4. Skills at work Deming, David, 2015. The Growing Importance of Social Skills in the Labor Market. NBER WP 21473 Pablo Acosta, Noel Mueller and Miguel Sarzosa, 2015. Beyond Qualifications. Returns to Cognitive and Socio-Emotional Skills in Colombia. Policy Research WP 7430, The World Bank Group. (Available here) Rachid Laajaj and Karen Macours, 2017. Measuring Skills in Developing Countries. World Bank Group, Policy Research Working Paper 8000. 2. Gender Marianne Bertrand, 2010. New Perspectives on Gender in Handbook of Labor Economics, Vol 4b. 1545-1592 Muriel Niederle, 2014. Gender. NBER Working Paper 20788. In preparation for the Handbook of Experimental Economics, Vol.2 Johan Eriksson et al., 2010. Boys Live Dangerously in the Womb. American Journal of Human Biology 22: 330-335



Bertrand, Marianne, and Jessica Pan. 2013. The Trouble with Boys: Social Influences and the Gender Gap in Disruptive Behavior. American Economic Journal: Applied Economics, 5 (1): 32-64. 3. Risky behaviors 3.1. Evidence from neuroscience Stephanie Burnett et al., 2011. Pubertal Development of the Understanding of Social Emotions: Implications for Education. Learning and Individual Differences 21, 681-689 Jason Chein et al., 2011. Peers increase adolescent risk taking by enhancing activity in the brain's reward circuitry. Development Science. 14 (2) 1-10 3.2. Crime Chris Blattman et al., 2017. Reducing crime and violence: Experimental evidence on cognitive behavioral therapy in Liberia. American Economic Review 107 (4): 1165-1206. Anna Aizer and Janet Currie, 2017. Lead and Juvenile Deliquency: New Evidence from Linked Birth, School and Juvenile Detention Records. NBER Working Paper 23392 3.3. Teen pregnancy Darwin Cortes et al., 2015. On the Design of Educational Conditional Cash Transfer Programs and their Impact on Non-Education Outcomes: The Case of Teenage Pregnancy. BE Journal of Economic Analysis and Policy 3.4. Drugs Olivier Marie and Ulf Zolitz, 2017. High Achievers? Cannabis Access and Academic Performance. Review of Economic Studies, 84, 1210-1237. 4. Diseases 4.1. Introduction Pascaline Dupas, 2011. Health Behavior in Developing Countries. Annual Review of Economics Vol. 3, pp. 425-449. 4.2. HIV Pascaline Dupas, 2011. Do Teenagers Respond to HIV Risk Information? Evidence from a Field Experiment in Kenya. AEJ: Applied Economics 3 (1), pp.1-36 4.3. Parasites Miguel, Edward, and Michael Kremer. 2004. "Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities." Econometrica 72 (1): 159-217 4.4. Dengue Darwin Cortes et al., 2016. Health and Human Capital: Impacts of the 2010 Dengue Outbreak in Colombia on Standardized Test Results. Manuscript 4.5. Stress Jack Shonkoff et al., 2012 The Lifelong Effects of Early Childhood Adversity and Toxic Stress. Pediatrics, Technical Report. 129: e232-e246 Camacho, Adriana. 2008. "Stress and Birth Weight: Evidence from Terrorist Attacks." American Economic Review, 98 (2): 511-15. 4.6 Pollution Anna Aizer, et al., 2015. Lead Exposure and Racial Disparities in Test Scores. Manuscript



BASIC REFERENCES Blakemore and Frith (2005), The learning brain: Lessons for Education. Wiley-Blackwell Brewer y Macewan (2010), Economics of education. Elsevier. Heckman (2013). Giving Kids a Fair Chance. MIT University Press Lavecchia, A.M. et al., 2016. Behavioral Economics of Education: Progress and Possibilities. Handbook of the Economics of Education, Volume 5. Montenegro, Armando y Marcela Meléndez (compiladores), 2014. Equidad y Movilidad Social. Uniandes y Departamento Nacional de Planeación. Murnane, Richard J. and John B. Willett (2011). Methods Matter. Oxford University Press. Tough, Paul (2013). How Children Succeed: Grit, Curiosity, and the Hidden Power of Character. Mariner Books.



15. Behavioral Environmental Economics

Course name: Behavioral Environmental Economics Code: Kind of knowledge: Basic Complementary X Integral formation Course type: Obligatory Elective X Credit type: Hours of work with





Four (4)

Professor:

OVERVIEW Mankind is facing many challenging environmental problems, including air pollution, global warming and biodiversity loss. Identifying the effectiveness of the various policy instruments, ranging from top-down government interventions like environmental taxes and tradable permits to more subtle nudges like moral appeals, is a prerequisite for efficient government intervention.

COURSE TRAINING PURPOSES The first part of the course will cover the core concepts of environmental economics, including cost-benefit analysis, market failures in the environmental realm, management of natural resource stocks, and the principles and instruments of market-based environmental policy. The purpose is to provide students with the basic toolbox to study problems from an environmental economics perspective, mostly at the theoretical level but also with data-based elements. This toolbox constitutes the departure point for introducing behavioral regularities that affect environmental policy and its evaluation, the topic studied in the second part of the course. The second part of the course will address the key aspects of environmental economics and impact evaluation, ranging from theory (especially the relevance of behavioral economics for environmental economics) to the actual design and implementation of an impact evaluation in the field. Key to any impact evaluation of policy interventions is the question what the outcome would have been had the intervention not been implemented. So-called randomized controlled trials (RCTs) are able generate such a counterfactual by randomly assigning agents (firms, consumers of households) to either a treatment or a control group. This part of the course will then focus on the design and implementation of RCTs, with specific applications to environmental problems.




Upon the successful completion of this course, participants are expected to:

• Identify the methodological challenges and solutions of benefit-cost analyses involving non-marketable goods in the environmental context.

• Understand the management principles of non-renewable and renewable resources under different property regimes.

• Evaluate the relevance of environmental economic instruments in different contexts. • Design, interpret and assess the impact evaluation of an environmental policy.

COURSE OUTLINE

CONTENTS READING MATERIAL PART I

1.1. BENEFITS AND COSTS OF ENVIRONMENTAL PROTECTION

KO [Ch. 2+3], Arrow et al. (1996), Fullerton and Stavins (1998), Pasurka (2008)

1.2. MARKET FAILURES IN THE ENVIRONMENTAL REALM

KO [Ch. 5], Olmstead (2010), Stavins (2012)

1.3. MANAGING STOCKS: NON-RENEWABLE AND RENEWABLE RESOURCES

KO [Ch. 6+7], Livernois (2009), Helm and Hepburn (2012).

1.4. MARKET-BASED ENVIRONMENTAL POLICY: PRINCIPLES AND INSTRUMENTS

KO [Ch. 8+9+10], Goulder and Parry (2008), Aldy and Stavins (2012).

1.5. SUSTAINABILITY AND ECONOMIC GROWTH KO [Ch. 11], Frankel and Rose (2005), Ederington (2010).

PART II

2.1. BEHAVIORAL ECONOMICS AND THE ENVIRONMENT

Noussair and van Soest (2014), van Soest et al. (2016), Stoop et al. (2012)

2.2. KEY ELEMENTS IN THE DESIGN OF RANDOMIZED CONTROLLED TRIALS

Duflo et al. (2007)

2.3. ENVIRONMENTAL RCTS IN PRACTICE: RECYCLING INITIATIVES + DATA ANALYSIS PROJECT

Goldstein et al. (2008), Sunstein and Reisch (2014), Allcott and Rogers (2014), Bernedo et al. (2014), van Soest and Vollaard (2018)

2.4. ENVIRONMENTAL RCTS IN ACTION: FOREST CONSERVATION

Jayachandran et al. (2016), Wilebore et al. (2017), van Soest et al. (2018)

2.5. PRESENTATIONS OF THE OUTCOMES OF THE DATA ANALYSIS PROJECT

READING MATERIAL



Part I

Main text: Keohane, M. N. O., & Olmstead, S. M. (2016). Markets and the Environment. Island Press. [Listed in the Table above as “KO”] Additional readings: Aldy, J. E., & Stavins, R. N. (2012). The promise and problems of pricing carbon: Theory and

experience. The Journal of Environment & Development, 21(2), 152-180. Arrow, Kenneth J., Maureen L. Cropper, George C. Eads, Robert W. Hahn, Lester B. Lave, Roger

G. Noll, Paul R. Portney et al. (1996) Is there a role for benefit-cost analysis in environmental, health, and safety regulation? Science 272, no. 5259: 221-222.

Josh Ederington (2010) Should Trade Agreements Include Environmental Policy?, Review of Environmental Economics and Policy, 4(1), 84–102.

Frankel, J. A., & Rose, A. K. (2005). Is trade good or bad for the environment? Sorting out the causality. Review of Economics and Statistics, 87(1), 85-91.

Fullerton, D., & Stavins, R. (1998). How economists see the environment. Nature, 395(6701), 433.

Goulder, L. H., & Parry, I. W. (2008). Instrument choice in environmental policy. Review of Environmental Economics and Policy, 2(2), 152-174.

Helm, D., & Hepburn, C. (2012). The economic analysis of biodiversity: an assessment. Oxford Review of Economic Policy, 28(1), 1-21.

Livernois, J. (2008). On the empirical significance of the Hotelling rule. Review of Environmental Economics and Policy, 3(1), 22-41.

Olmstead, S. M. (2010). The economics of managing scarce water resources. Review of Environmental Economics and Policy, 4(2), 179-198.

Pasurka, C. (2008). Perspectives on pollution abatement and competitiveness: Theory, data, and analyses. Review of Environmental Economics and Policy, 2(2), 194-218.

Stavins, R. N. (2011). The problem of the commons: still unsettled after 100 years. American Economic Review, 101(1), 81-108.

Part II

Allcott, H. and Todd Rogers (2014), “The Short-Run and Long-Run Effects of Behavioral Interventions: Experimental Evidence from Energy Conservation”, American Economic Review 104(10): 3003-37.

Bernedo, María, Paul Ferraro and Michael Price (2014), “The Persistent Impacts of Norm-Based Messaging and Their Implications for Water Conservation,” Journal of Consumer Policy 37(3): 437-452.



Duflo, Esther, Rachel Glennerster and Michael Kremer (2007). “Using Randomization in Development Economics Research: A Toolkit”. Chapter 61 in T. Paul Schultz and John A. Strauss (2007), Handbook of Development Economics, Volume 4, 3895-3962.

Goldstein, Noah J., Robert B. Cialdini, and Vladas Griskevicius (2008), “A Room with a Viewpoint: Using Social Norms to Motivate Environmental Conservation in Hotels”, Journal of Consumer Research 35(2): 472-482.

Jayachandran, Seema, Joost de Laat, Eric F. Lambin, Charlotte Y. Stanton (2016), “Cash for carbon: A randomized trial of payments for ecosystem services to reduce deforestation”. Science 357 (6348): 267-273.

Noussair, C.N. and D.P. van Soest (2014), “Economic Experiments and Environmental Policy”, Annual Review of Resource Economics 6, 319-337.

Stoop, J.T.R., Ch. Noussair and D.P. van Soest (2012), “From the Lab to the Field: Cooperation among Fishermen”, Journal of Political Economy 120(6), 1027-1056.

van Soest, D.P., J.T.R. Stoop and J. Vyrastekova (2016), “Toward a Delineation of the Circumstances in which Cooperation can be sustained in Environmental and Resource Problems”, Journal of Environmental Economics and Management 77, 1-13.

van Soest, Daan, Ty Turley, Paul Christian, Eline van der Heijden and Rahel Kitessa (2018), “On the usefulness of Uniform Price Auctions in the Design of Payments for Ecosystem Services”. Working paper.

Van Soest, Daan and Ben Vollaard (2018), “Breaking Habits”, working paper. Sunstein, C.R. and L.A. Reisch (2014). “Automatically Green: Behavioral economics and

environmental protection”, Harvard Environmental Law Review 38: 128-158. Wilebore, Beccy , Maarten Voors, Erwin Bulte, David Coomes

and Andreas Kontoleon (2018),

“Unconditional Transfers and Tropical Deforestation. Experimental evidence from Sierra Leone”, Working paper.



16. Development Economics

Course name: Development Economics Code: 14700073 Kind of knowledge: Basic Complementary: X Integral formation Course type: Obligatory Elective: X Credit type: Hours of work with





Four (4)

Professor: OVERVIEW ¿What factor impede millions of households from escaping poverty? This course presents a discussion on frontier topics of micro economic development. First, we study the functioning of markets like credit and insurance. We then study issues of human capital accumulation (health and education), to conclude with topics like misallocation, corruption and pollution. We will have a strong emphasis on causal identification and its tools like randomized control trials, and quasi-experimental designs. The class is focus on research so students will prepare a research proposal for their tesis and refree reports. COURSE TRAINING PURPOSES 1. Use the main tools for causal analysis 2. Understand the main theories of economic development 3. Formulate and answer research questions EXPECTED LEARNING OUTCOMES 1 Research Proposal (25%) 1 Research Proposal Presentation (25%) 1 Problem Set (20%) 1 Class Presentation (10%) 2 Referee Reports or Policy Briefs (10% each) COURSE OUTLINE Tools: 1. Randomized Control Trials Glennerster, Rachel, and Kudzai and Takavarasha. (2013). “Running Randomized Evaluations: A Practical Guide”. Princeton University Press



Banerjee et al (2017) “From Proof of Concept to Scalable Policies: Challenges and Solutions, with an Application” Mostly Harmless Chapters 1 and 2 2. Regression Discontinuity Mostly Harmless Chapter 6 Lee, Davis S and Thomas Lemieux, “Regression Discontinuity Designs in Economics,” Journal of Economic Literature, 2010, 48, 281–355. https://www.princeton.edu/~davidlee/wp/RDDEconomics.pdf 3. Difference in differences Mostly Harmless Chapter 5 de Chaisemartin, D’HaultfŒuille (2018) “Fuzzy Differences-in-Differences” The Review of Economic Studies, Volume 85, Issue 2, 1 April 2018, Pages 999–1028, https://doi.org/10.1093/restud/rdx049 4. Instrumental Variables Mostly Harmless Chapter 4 5. Referee reports Berkeley ARE (2004) “Guidelines for Referee Reports” https://are.berkeley.edu/courses/ARE251/2004/assignments/RRGuidelines.pdf Berk et al (2015) “Preparing a Referee Report: Guidelines and Perspectives” https://www.aeaweb.org/content/file?id=222 6. Policy reports International Development Research Centre “How to write a policy brief” https://www.idrc.ca/sites/default/files/idrcpolicybrieftoolkit.pdf Reading list: 1. Introduction Clase 1 a. ** Banerjee, Abhijit, V., and Esther Duflo. 2007. "The Economic Lives of the Poor." Journal of Economic Perspectives, 21(1): 141-168 b. Explorar datos http://databank.worldbank.org/data/ c. Departamento Administrativo Nacional de Estadistica (DANE) (2016) “ Pobreza monetaria y multidimensional en colombia 2016” https://www.dane.gov.co/files/investigaciones/condiciones_vida/pobreza/bol_pobreza_16.pdf d. Colombia en movimiento 2010 - 2013 – 2016” Universidad de los Andes https://encuestalongitudinal.uniandes.edu.co/es/publicaciones/colombia-en-movimiento/2017 Clase 2 e. Henderson, J. Vernon, Adam Storeygard, and David N. Weil. (2012). “Measuring Economic Growth from Outer Space”, American Economic Review, 102(2), 994-1028



f. Young, A. (2012) “The African Growth Miracle” Journal of Political Economy, Vol. 120, No. 4 (August 2012), pp. 696-739 http://personal.lse.ac.uk/YoungA/TheAfricanGrowthMiracle.pdf g. Jean et al. (2016) “Combining satellite imagery and machine learning to predict poverty” Science 19 Aug 2016: Vol. 353, Issue 6301, pp. 790-794 2. Programs Clase 1 a. ** Banerjee et al (2015) “A multifaceted program causes lasting progress for the very poor: Evidence from six countries” Science 348 (6236) http://www.econ.yale.edu/~cru2/pdf/Science-2015-TUP.pdf b. J. Morduch, S. Ravi, J. Bauchet, (2012)“Failure vs. Displacement: Why an Innovative Anti-Poverty Program Showed No Net Impact” (CEI Working Paper Series 2012–05, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University, Tokyo, 2012); www.ier.hit-u.ac.jp/primced/documents/No32-dp_up_Pdf_2012_000.pdf. c. Banerjee et al (2018) “Unpacking a Multi-Faceted Program to Build Sustainable Income for the Very Poor” NBER Working Paper No. 24271 http://www.nber.org/papers/w24271.pdf d. M. Anderson (2008) “Multiple inference and gender differences in the effects of early intervention: A reevaluation of the Abecedarian, Perry Preschool, and Early Training Projects” J. Am. Stat. Assoc. 103, 1481–1495 (2008). doi: 10.1198/ 016214508000000841 (pg 14-16 to adjust p-values for multiple testing) Clase 2 a. (@) Olken et al. (2018) “Tangible Information and Citizen Empowerment: Identification Cards and Food Subsidy Programs in Indonesia” Journal of Political Economy https://economics.mit.edu/files/11877 b. Baird et al(2014) “Relative effectiveness of conditional and unconditional cash transfers for schooling outcomes in developing countries” https://www.campbellcollaboration.org/library/effectiveness-of-cash-transfers-for-schooling-outcomes.html c. Galama, Titus J. Robson Morgan, and Juan E. Saavedra (2017) “Wealthier, Happier and More Self-Sufficient: When Anti-Poverty Programs Improve Economic and Subjective Wellbeing at a Reduced Cost to Taxpayers” NBER Working Paper No. 24090 http://www.nber.org/papers/w24090.pdf Otros a. Kugler, A, e I. Rojas (2018) “Do CCTs Improve Employment and Earnings in the Very Long-Term? Evidence from Mexico” NBER Working Paper No. 24248 http://www.nber.org/papers/w24248.pdf b. Parker and Vogl (2018) “Do Conditional Cash Transfers Improve Economic Outcomes in the Next Generation? Evidence from Mexico” NBER Working Paper No. 24303 http://www.nber.org/papers/w24303.pdf c. Cash Learning Partnership (CaLP) (2018) “State of the World Cash Report” http://www.cashlearning.org/what-we-do/the-state-of-the-worlds-cash-2018 3. Institutions



Clase 1 a. ** Acemoglu, D., S. Johnson, and J. A. Robinson (2001): “The Colonial Origins of Comparative Development: An Empirical Investigation" American Economic Review, 91, 1369-1401 b. ** Albouy, David (2012). “The Colonial Origins of Comparative Development: An Empirical Investigation: Comment. “ American Economic Review, 102(6): 3059-3076. c. (Tools) Regression Discontinuity Clase 2 d. Dell, M. (2010) “The Persistent Effects of Peru's Mining Mita," Econometrica, 78, 1863-1903. e. (Andres Felipe Rivera) Dell, M. and B. Olken (2017) “The Development Effects of the Extractive Colonial Economy: The Dutch Cultivation System in Java” http://conference.nber.org/confer//2017/SI2017/DEV/Dell_Olken.pdf f. Martinez-Bravo, Monica, Priya Mukherjee, and Andreas Stegmann. 2016. “The Non-Democratic Roots of Elite-Capture: Evidence from Soeharto Mayors in Indonesia.” Centro de Estudios Monetarios y Financieros (CEMFI) Working Paper 1601. 4. Poverty traps a. Kremer, Michael (1993) “The O-Ring Theory of Economic Development.” Quarterly Journal of Economics 108 (3): 551–75. b. Nelson, Richard R. (1956) “A Theory of the Low-Level Equilibrium Trap in Underdeveloped Economies” American Economic Review 46(5): 894–908 c. Nunez Cuesta(2006) “Las trampas de pobreza en Colombia; ¿que hacer? diseño de un programa contra la extrema pobreza” https://economia.uniandes.edu.co/components/com_booklibrary/ebooks/d2006-19.pdf d. Barret et al (2017) Introduction to "The Economics of Poverty Traps" http://www.nber.org/chapters/c13828 Clase 2 e. Laajaj (2017) “Endogenous time horizon and behavioral poverty trap: Theory and evidence from Mozambique” f. Karlan_etal (2018) “Debt Traps? Market Vendors and Moneylender Debt in India and the Philippines” NBER Working Paper No. 24272 http://www.nber.org/papers/w24272.pdf 5. Risk and Insurance a. (**) Townsend(1994) “Risk and Insurance in Village India” Econometrica 62 (3): 539-591 b. (**) Udry, Christopher (1990), " Credit Markets in Northern Nigeria: Credit as Insurance in a Rural Economy," World Bank Economic Review 4 (3): 251-269 c. Udry, Christopher (1994), “Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria,” Review of Economic Studies Vol. 61, No. 3, pp. 495-526. d. Cole et al. (2014) “Dynamics of Demand for Index Insurance: Evidence from a Long-Run Field Experiment” American Economic Review: Papers & Proceedings 2014, 104(5): 284–290 http://dx.doi.org/10.1257/aer.104.5.284



e. Muralidharan et al. (2018) “General Equilibrium Effects of (Improving) Public Employment Programs: Experimental Evidence from India” http://econweb.ucsd.edu/~kamurali/papers/Working%20Papers/NREGS_GE%20(Current%20WP).pdf 6. Credit and savings a. (Tools) Instrumental variables b. Dupas and Robinson(2013) “Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya” American Economic Journal: Applied Economics 2013, 5(1): 163–192 https://web.stanford.edu/~pdupas/SavingsConstraints.pdf c. Dupas et al (2017) “Banking the Unbanked? Evidence from three countries” https://people.ucsc.edu/~jmrtwo/3countrysavings.pdf Clase 2 d. Banerjee, A., D. Karlan, and J. Zinman (2015). Six randomized evaluations of microcredit: Introduction and further steps. American Economic Journal: Applied Economics 7 (1), 1–21. e. Fafchamps, M., D. McKenzie, S. Quinn, and C. Woodruff (2014). Microenterprise growth and the flypaper effect: Evidence from a randomized experiment in Ghana. Journal of development Economics 106, 211–226 f. *Karlan, D., & Zinman, J. (2009). “Observing unobservables: Identifying information asymmetries with a consumer credit field experiment.” Econometrica, 77(6) g. McKenzie, D., S. de Mel, and C. Woodruff (2008). Returns to capital: Results from a randomized experiment. Quarterly Journal of Economics 123 (4), 1329–72. h. Abhijit V. Banerjee and Esther Duflo. (2010). “Giving credit where it is due.” Journal of Economic Perspectives, 24(3):61-80 7. Health a. Bai et al (2017) “Self-Control and Demand for Preventive Health: Evidence from Hypertension in India” NBER Working Paper 2017 http://www.nber.org/papers/w23727?utm_campaign=ntw&utm_medium=email&utm_source=ntw b. ** Jensen, Robert and Nolan Miller (2011). “Do Consumer Price Subsidies Really Improve Nutrition?” Review of Economics and Statistics, 93(4), p. 1205-1223 c. Dupas, P. and E. Miguel (2017) “Impacts and determinants of health levels in low-income countries," Handbook of Economic Field Experiments, 2017, 2, 3{93. d. Dean (2017) “Noise, Cognitive Function, and Worker Productivity” https://economics.mit.edu/files/13747 8. Education a. Mbiti et al (2018) “Inputs, Incentives, and Complementarities in Education: Experimental Evidence from Tanzania” NBER Working Paper 24876 http://www.nber.org/papers/w24876.pdf b. Attanasio, O., C. Meghir, and A. Santiago(2012) “Education choices in Mexico: using a structural model and randomized experiment to evaluate Progesa” Review of Economic Studies c. Romero et al (2017) “Outsourcing service delivery in a fragile state” https://www.dropbox.com/sh/nmm24jshyqurzlo/AABXYn2NZw6nuPgUE9EfO3DPa?dl=0&preview=Romero_JMP.pdf



Clase 2 d. (Tools) Diff-Diff e. Muralidharan, K, and N. Prakash (2016) “Cycling to School: Increasing Secondary School Enrollment for Girls in India “ http://econweb.ucsd.edu/~kamurali/papers/Published%20Articles/Cycling%20to%20School%20(Final).pdf f. ** Duflo, Esther (2001), “Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment,” American Economic Review 91(4): 795-813. g. Kremer, Michael and Alaka Holla (2010). “Improving Education in the Developing World: What Have We Learned from Randomized Evaluations?” Annual Review of Economics Vol. h. Duflo, Esther, Pascaline Dupas and Michael Kremer (2011). “Peer Effects, Teacher Incentives, and the Impact of Tracking: Evidence from a Randomized Evaluation in Kenya”. American Economic Review 101(5),pp. 1739-74. 9. Learning a. ** Conley, T. G., & Udry, C. R. (2010). “Learning about a new technology: Pineapple in Ghana.” The American Economic Review, 35-69. b. Dizon-Ross (2018) “Parents' Beliefs About Their Children's Academic Ability: Implications for Educational Investments” http://www.nber.org/papers/w24610?utm_campaign=ntw&utm_medium=email&utm_source=ntw c. Tessa Bold, Kayuki C. Kaizzi, Jakob Svensson, David Yanagizawa-Drott; “Lemon Technologies and Adoption: Measurement, Theory and Evidence from Agricultural Markets in Uganda” The Quarterly Journal of Economics, Volume 132, Issue 3, 1 August 2017, Pages 1055–1100, https://doi.org/10.1093/qje/qjx009 d. Foster, A. D., & Rosenzweig, M. R. (1995). “Learning by doing and learning from others: Human capital and technical change in agriculture.” Journal of political Economy, 1176-1209. e. Banerjee, Chandrasekhar, Duflo & Jackson (2013). “The diffusion of microfinance.” Science 341 (6144). 10. Missallocation a. (*) Hsieh, C. and P. Klenow (2009) “Misallocation and manufacturing TFP in China” The Quarterly Journal of Economics Vol. CXXIV November 2009 Issue 4 b. A Young. Inequality, the Urban-Rural Gap, and Migration. The Quarterly Journal of Economics, 2013. c. Douglas Gollin, David Lagakos, and Waugh Michael. The Agricultural Productivity Gap in Developing Countries. The Quarterly Journal of Economics, 129(2):939{993, 2014.



d. Hicks, Joan Hamory, Marieke Kleemans, Nicholas Y. Li, and Edward Miguel. (2017). “Reevaluating agricultural productivity gaps with Longitudinal Microdata”, unpublished working paper 11. Agriculture a. Adamopoulos and Restuccia(2018) “Geography and Agricultural Productivity: Cross-Country Evidence from Micro Plot-Level Data” NBER Working Paper No. 24532 http://www.nber.org/papers/w24532?utm_campaign=ntw&utm_medium=email&utm_source=ntw b. Ali, Daniel Ayalew, Klaus Deininger, and Markus Goldstein (2014) “Environmental and Gender Impacts of Land Tenure Regularization in Africa: Pilot Evidence from Rwanda.” Journal of Development Economics 110: 262–75. c. (Ricardo Bula) Moscona (2017) “The impact of India’s green revolution” https://sites.tufts.edu/neudc2017/files/2017/10/paper_161.pdf d. Burke et al (2018) “Selling low and buying high” http://www.nber.org/papers/w24476?utm_campaign=ntw&utm_medium=email&utm_source=ntw e. Fink et al (2018) “Seasonal Liquidity, Rural Labor Markets and Agricultural Production” http://www.nber.org/papers/w24564?utm_campaign=ntw&utm_medium=email&utm_source=ntw f. Kochar, Anjini (1999) “Smoothing Consumption by Smoothing Income: Hours-of-Work Responses to Idiosyncratic Agricultural Shocks in Rural India” February 1999Review of Economics and Statistics 81(1):50-61 g. Duflo, Esther, Michael Kremer, and Jonathan Robinson (2011) "Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya." American Economic Review, 101(6): 2350-90 12. Governance and Conflict a. Acemoglu, Daron, “Theory, General Equilibrium, and Political Economy in Development Economics,” Journal of Economic Perspectives, 2010, 24 (3), 17–32. b. (@) Depetris-Chauvin et al (2018) “Building Nations Through Shared Experiences: Evidence from African Football “ http://www.nber.org/papers/w24666.pdf c. McRae, Shaun. 2015. “Infrastructure Quality and the Subsidy Trap.” American Economic Review 105, (1): 35–66. Class 2 d. Blatman et al(2017) “Pushing Crime Around the Corner? Estimating Experimental Impacts of Large-Scale Security Interventions” NBER Working Paper No. 23941 http://www.nber.org/papers/w23941.pdf e. ** Dube, O. and J. Vargas (2013) “Commodity Price Shocks and Civil Conflict: Evidence from Colombia” The Review of Economic Studies Vol. 80, No. 4 (285) (October 2013), pp. 1384-1421 f. Fajardo-Gonzalez (2017) “Domestic Violence, Decision-Making Power and Female Employment in Colombia” https://pacdev.ucdavis.edu/files/conference-schedule/session/papers/2A/Fajardo-Gonzalez.pdf



g. Arias, M., Ibañez, A. M., and Zambrano, A. (2014). Agricultural production amid conflict: The effects of shocks, uncertainty, and governance of non-state armed actors. Documentos CEDE Universidad de los Andes. 13. Corruption a. Weaver J. “Jobs for Sale: Corruption and Misallocation in Hiring “ https://www.dropbox.com/s/6bktr62uondsenl/JeffWeaverJMPfinal.pdf?dl=0 b. Olken, B., “Monitoring Corruption: Evidence from a Field Experiment in Indonesia,”Journal of Political Economy, 2007,115(2). c. Olken, B., and P. Barron, “The Simple Economics of Extortion: Evidence from Trucking in Aceh,”Journal of Political Economy, 2009,117(3), 417–452 d. Burgess, Robin, Matthew Hansen, Benjamin A. Olken, Peter Potapov, and Stefanie Sieber. 2012. “The Political Economy of Deforestation in the Tropics.” Quarterly Journal of Economics 127 (4): 1707–54 e. Ferraz and Finan (2008) “Exposing corrupt politicians: the effects of Brazil’s publicly released audits on electoral outcomes” Quarterly Journal of Economics https://eml.berkeley.edu/~ffinan/Finan_Audit.pdf f. Colonnelli and Prem (2017) “Corruption and firms” http://web.stanford.edu/~emacol/CorruptionFirms_JMP.pdf 14. Environment a. **Greenstone, Michael, and B. Kelsey Jack. 2015. "Envirodevonomics: A Research Agenda for an Emerging Field." Journal of Economic Literature, 53(1): 5-42. b. Greenstone, Michael, and Rema Hanna. 2014. “Environmental Regulation, Air and Water Pollution, and Infant Mortality in India.” American Economic Review 104 (10): 3038–72 c. Jack et al. (2018) “Environmental Externalities and Free-riding in the Household” http://www.nber.org/papers/w24192.pdf d. Saavedra, S. and M. Romero (2017) “Local incentives and national tax evasion: Unintended effects of a mining reform in Colombia “ https://www.dropbox.com/s/qdppe9o2tcy1n5u/Paper_royalties_illegal.pdf?dl=0 e. Do et al (2018) “Can environmental policy reduce infant mortality? Evidence from theGanga Pollution Cases” Journal of Development Economics Volume 133, July 2018, Pages 306-325 f. Hsiang, S. and A. Jina “The Causal Effect of Environmental Catastrophe on Long-Run Economic Growth: Evidence From 6,700 Cyclones” NBER Working Paper No. 20352 http://www.nber.org/papers/w20352 g. Geruso and Spears (2018) “ Heat, Humidity, and Infant Mortality in the Developing World” NBER Working Paper No. 24870 http://www.nber.org/papers/w24870.pdf 15. Migration a. Bryan, Gharad, Chowdhury, Shyamal and Mobarak Mushfiq, Ahmed (2014) “Underinvestment in a profitable technology: the case of seasonal migration in Bangladesh” Econometrica, 82 (5). pp. 1671-1748 http://eprints.lse.ac.uk/60152/1/Bryan_Underinvestment%20in%20a%20profitable%20technology.pdf



b. Akram et al (2017) “Effects of Emigration on Rural Labor Markets” NBER Working Paper 23929 http://www.nber.org/papers/w23929?utm_campaign=ntw&utm_medium=email&utm_source=ntw c. Hanson, G. (2010) “International Migration and the Developing World” Handbook of Development Economics Volume 5, 2010, Pages 4363-4414 d. Morten, M. (2017) “Temporary Migration and Endogenous Risk Sharing in Village India” Accepted, Journal of Political Economy http://stanford.edu/~memorten/ewExternalFiles/Morten_IndiaMig.pdf e. Bryan, G. & Morten, M. (2018). The Aggregate Productivity Effects of Internal Migration: Evidence from Indonesia. Revised and resubmitted to the Journal of Political Economy http://stanford.edu/~memorten/ewExternalFiles/Bryan_Morten_Indonesia.pdf

17. Seminar on Microeconometric Models and Methods

Course name: Seminar on Microeconometric Models and Methods Code: 14700006 Kind of knowledge: Basic Complementary:: X Integral formation Course type: Obligatory Elective:: X Credit type: Hours of work with


Hours of independent work from student:128


Número de Créditos: Four (4) Professor:

OVERVIEW Despite of the greater availability (mainly micro data at the individual, household, firm, and similar levels) of data to perform empirical work, the need for developing and adopting properly econometric techniques to data chacracteristics persisits. In this way, this course seeks to study a series of techniques that serve as a reference for validation of hypotheses in fields such as labor economics, health economics, economics of education, industrial organization, among others. In addition to the classical microeconometric methods, this course covers non-parametric and semi-parametric methods, and simulation-based estimators for dynamic discrete-choice models.


Our aim is that students learn to identify the implications of the assumptions as well as advantages and limitations of the studied techniques.

GRADING



• First exam: 30\% (Tuesday September 19) • Second Exam: 30\% (Tuesday September 25) • Presentation: 10\%. Each students will choose a paper from a list provided by

instructors. Presentations will take place in the sessions 26 to 29 (November 9 to 21). The duration of each presentation will 30 min, and it should cover the motivation of the paper, the main contribution (considering existing literature), method (in detail) and main results. Students are encouraged to make a critical review of the paper and propose further question or methods.

• Final project: 30\%: The project can be developed by 1 or 2 students. A sort of proposal (research question, data sources and potential methods) should be presented in the session 24th-oct. As result, students will write a report/short paper containing and introduction (and literature review), method, and results; and elaborate a poster that will be presented in a poster sessions. Final grade will consider the two components (20\% report, 10\% poster session). The report is due on 29/11/2017 via e-aulas.

COURSE OUTLINE This course is divided into 3 segments. First, Andrés García will cover six topics of high relevance in applied work. Second, Paul Rodriguez will make an introduction to the estimation of structural models with dynamic components. Finally, the last part of the course will be a seminar in which students will present papers related to the studied topics and a final project. Although the work has a high component of econometric theory, the topics will include practical sessions in R, Python and Stata.

• Part I: Microeconometric Methods:

o Maximum Likelihood and asymptotic theory: Review o Censoring and truncation: Tobit model, Roy model, self-selection (Selection

models). o Right Censoring models: Kaplan-Meier CDF estimator, proportional hazard

models and competing risk o Quantile regression and distributional regression o Density estimation o Other possible topics: Semiparametric partially linear model and single index

model, Local regression models, fractional regression, (micro)-spatial models, Bootstrapping and clustering

• Part II: Dynamic Economics

o Dynamic Programming:

§ Markov chaings § Bellman and finite-horizon models § Infinite-horizon models and stochastic models



o Numeric Methods § Introduction to Python: functions, loops and pointers § Introduction to Python: data handling and arrays § Function approximation: polynomicals, splines § Numeric integration and optimisation § Solving dynamic models with numerical techniques

o Estimation techniques § Maximum likelihood and method of moments § Simulated methods and indirect inference

o Applied work: health, education and consumption

• Part III: Students Seminar on selected literature by students

REFERENCES Adda, J., and Russell,C. (2003). Dynamic economics: quantitative methods and applications. MIT press. Cameron, A. C., and Trivedi, P. K. (2005)."Microeconometrics: methods and applications". Cambridge university press. Cameron, A. C., and Trivedi, P. K. (2010). Microeconometrics using stata (Vol. 2). College Station, TX: Stata press. Carroll, C. "Solution methods for microeconomic dynamic stochastic optimization problems." http://www.econ2.jhu.edu/people/ccarroll/solvingmicrodsops.pdf Durlauf, Steven and Blume, L (2009). Microeconometrics. Palgrave Macmillan. Hansen, B., (2017). Econometrics. Manuscript. Li, Q., and Racine, J. S. (2007). Nonparametric econometrics: theory and practice. Princeton University Press. Ljungqvist, Sanrgent (2004). Recursive Macroeconomic Theory. Rust, J. (1987). "Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher". Econometrica, 55, 999-1033.



18. Industrial Organization

Course name: Industrial Organization Code: 14700054 Kind of knowledge: Basic X Complementary: Integral formation Course type: Obligatory X Elective: Credit type: Hours of work with





Two (2)

Professor: OVERVIEW Presentation of the recent theories of Industrial Organization and competition policy applications COURSE TRAINING PURPOSES Introduce students to the main theories of Industrial Organization.

EXPECTED LEARNING OUTCOMES:

• In this course the students will achieve maturity in their knowledge of the main themes of Industrial Organization.

• Students apply a deep and critical thinking with respect to market behavior. • Students advance to the academic frontier in Industrial Organization.

COURSE OUTLINE Introduction: History of Industrial Organization. What is industrial organization? What is a company? What objectives does the company have? What kind of problems we are going to study?

PART: MONOPOLY

Monopoly In a static model: Uni- product monopoly. Multi-product monopoly. Monopoly and quality. Monopoly and advertising.



In a dynamic model: Effect goodwill. Quality and duration. Durable goods.

Monopoly and price discrimination: Linear prices vs nonlinear First degree price discrimination Second degree price discrimination Third degree price discrimination

Monopoly and vertical control: Linear prices and vertical controls Vertical controls and externalities Competition on downstream markets

PART: STRATEGIC INTERACTIONS

Short-term competition and oligopoly Quantity competition: Cournot Stackelberg Price competition: Bertrand Model Capacity restriction Concentration index, profits and welfare

Competition and collusion: Repeated games and collusion Factors that benefit collusion Lag monitoring Stochastic demand and collusion Reputation problems Multi-market contact

Product differentiation: Spatial competition: Linear city: Hotelling model (1929) Circular city: Salop model (1929) Competition and publicity Competition and vertical differentiation

Market entry and exit: Fixed cost: Natural monopoly and contestability: Maumol et al. model (1982) Predation vs Accommodation



Firm’s strategies Sunk cost and barrier to entry: Stackelberg-Spence-Dixit model TEXTBOOKS

• Tirole Jean, the Theory of Industrial Organization, MIT Press, 1993. • Shy Oz, The economics of Networks Industry, Cambridge University Press, 2001. • Motta Massimo, Competition Policy, 2004. • Cabral, Luis, Economía Industrial. McGraw Hill, 2000 • Belleflamme Paul y Peitz Martin. Industrial Organization: Markets and Strategy.

Cambridge University Press, 2010. • Jeffrey R. Church and Roger Ware. Industrial Organization: A Strategic Approach. New

York: McGraw-Hill, 2000.



19. Modern Bayesian Econometrics

Course name: Modern Bayesian Econometrics Code: 14700057 Kind of knowledge: Basic Complementary: X Integral formation Course type: Obligatory Elective: X Credit type: Hours of work with





Four (4)

Prerequisites: Basic Econometrics, Linear Algebra, Statistics. Professor:

OVERVIEW Bayesian econometrics plays an academic and professional important role in several fields in economic theory. Particularly, this empirical topic embrace concepts related mainly with quantitative economics, finance and modern marketing. The course is intended to analyze and discuss the basic tools related with Bayesian econometrics. In this regard, first, it begins with the exploration of the contrast between frequentist and Bayesian approach. Subsequently, the course reviews the Bayesian parameters estimation method and the forecasting and judgment of Bayesian inference hypothesis, which is focus in univariates and multivariates models. Additionally, the knowledge of modern simulations methods and techniques are fundamental in the Bayesian analyses. Regarding this, part of the course will involve topics related with Markov Chain Monte Carlo (including Gibs Sampler, data augmentation and Monte Carlo integration), which is showed to the students using computational examples during the classes. COURSE TRAINING PURPOSES This course meets the following core objectives:

- Understand the basic concepts of Bayesian statistical inference and identify the differences/similarities with traditional inference approach (frequentist).

- Use several Bayesian methodologies to estimate different econometrics models and compare the results with those obtain using traditional techniques.

- Study the advantages gain from Bayesian inference. EXPECTED LEARNING OUTCOMES Upon the successful completion of this course, students should be able to:

- Understand technical and scientific articles related with Bayesian econometrics in economics, finances and marketing.



- Implement standard Bayesian analysis in different computational software. COURSE OUTLINE:

1. Fundamentals of Bayesian Inference. 2. Bayesian normal linear regression model with different Priors. 3. Prediction and critics of the model. 4. Bayesian computation. 5. Univariate time series models introduction. 6. Nonlinear regression models (Probit and Logit). 7. Vector autoregressive models. 8. Bayesian state-space models estimation. (*) 9. Data panel models. (*)

(*) Only one of these two topics is reviewed during the course. It depends on students interests. TEXTBOOKS Bauwens, L., M. Lubrano and J.F. Richard (1999) Bayesian Inference in Dynamics Econometric Models, Oxford University Press. Canova, Favio. (2007), Applied Methods for Macroeconomic Research, Princeton University Press. Hamilton J. D. (1994), Time Series Analysis, Princeton N.J., Princeton University Press. Koop, G. (2003) Bayesian Econometrics, John Wiley. Lancaster, Tony. (2004) An Introduction to Modern Bayesian Econometrics, Blackwell Pub. Lütkepohl, H. (2005) New Introduction to Multiple Time Series Analysis, Berlin, Sprnger-Verlag. Poirier, D. (1995) Intermediate Statistics and Econometrics, MIT Press. Zellner, A. (1971) Introduction to Bayesian Inference in Econometrics, Wiley and Sons.



20. Health Economics

Course name: Health Economics Code: 14700039 Kind of knowledge:







Two (2)

Professor: OVERVIEW

i. Theory and empirical evidence on typical problems of health markets: moral hazard, adverse selection and risk selection in insurance markets, and doctor´s induced demand.

ii. Econometric models for estimating demand for medical services: count regression models.

iii. Impact evaluation methodologies to quantify the effects of policy interventions that affect health and utilization of medical services. Related topics: education, health, development and health, among others ...

iv. Analysis of health inequalities using data from household surveys. COURSE TRAINING PURPOSES

- Introduce master level students on issues related to health economics, with a special emphasis on empirical applications. - Encourage the development of independent lines of research.

Since the main objective of the course is to focus on empirical applications , particular attention to the type of data used in these applications , the appropriate econometric methods to test the implications of economic models as well as the limitations of different empirical strategies will be provided.

EXPECTED LEARNING OUTCOMES Acquisition of tools and methodology to organize the empirical analysis on issues related to health economics and empirical analysis framework. COURSE OUTLINE 1. Introduction to health economics. Particularities of good "health" and health markets

II. Health insurance markets: moral hazard



a. Basic insurance demand model b. The problem of moral hazard c. Optimal design of insurance

III. Health insurance markets: adverse selection

a. Rothschild and Stiglitz model IV. Health insurance, moral hazard and adverse selection: empirical applications

a. Difficult to separate the effect of moral hazard of adverse selection b. Strategies to identify the presence of moral hazard c. Strategies to identify the presence of adverse selection d. Empirical strategies to measure the effect of health insurance on health.

V. Econometric models for data utilization of medical services

a. Count models b. Stata applications

VI. Supply of medical services

a. Information asymmetries patient-doctor b. Supplier-induced demand model c. Empirical strategies to detect supplier-induced demand d. Solutions to reduce information asymmetries

VII. Empirical Strategies to measure the causal effect of factors affecting health and health care use, and health effects of socioeconomic variables

a. Effects of policy interventions on the health and use of medical services b. Effect of education on health c. Effect of health on education

VIII. Measuring health inequality

a. Nature of the data b. Concentration curves and concentration indices c. Health inequalities associated with socio-economic factors d. Stata applications

REFERENCES Books Health Economics

• Barros and Martinez-Giralt (2012). Health Economics. An industrial organization perspective. Routledge.

• Jack W. Principles of Health Economics for Develping Countries (1999). World Bank.



• Jones A, N Rice, T Bago dʼUva and S Balia (2007). Applied Health Economics, London: Routledge.

• Nyman, J. (2002) The Theory of Demand for Health Insurance. Stanford University Press. • Sloan and Kasper, Ed (2008) Incentives and Choice in Health Care. The MIT Press.

Cambridge, Massachusetts. • Zweifel, Breyer, and Kiffman (2009). Health Economics. Second Edition. Springer.

Econometrics

• Angrist, J.D. and J.-S. Pischke (2009). Mostly Harmless Econometrics: An Empiricists’s Companion. Princeton University Press.

• Cameron, A.C., and P.K. Trivedi. Microeconometrics: Methods and Applications. Cambridge University Press, 2005.

• Cameron, A.C., and P.K. Trivedi. Microeconometrics Using Stata. Stata Press, 2008. • Jones, Andrew M (2000). “Health Econometrics.” In Anthony Culyer and Joseph

Newhouse, editors. Handbook of Health Economics. Volume 1A, pp. 265-344. • Wooldridge, J. Econometric Analysis of Cross Section and Panel Data. MIT Press, 2002.

Readings

Introduction: particularities in health markets

• Zweifel, Breyer, and Kiffman (2009). Chapters 1 and 5. • Kenneth J. Arrow, “Uncertainty and the Welfare Economics of Medical Care,” American

Economic Review, 53:5 (December, 1963), 941-973. Health insurance markets: moral hazard

• [B] Sloan and Kasper, Ed (2008) Capítulos 4 y 5 • Zweifel, Breyer, and Kiffman (2009). Capítulos 5 y 6. • Mark V. Pauly, “The Economics of Moral Hazard: Comment,” American Economic Review

58:3, Part 1 (June, 1968), 531-537. • Cutler and Zeckhauser (2000) “The anatomy of health insurance”, Chapter 11, Handbook

of Health Economics, Elsevier. Health insurance markets: adverse selection

• [B] Sloan and Kasper, Ed (2008) Capítulos 4 y 5 • Zweifel, Breyer, and Kiffman (2009). Capítulo 6. • Liran Einav and Amy Finkelstein (2011) “Selection in Insurance Markets: Theory and

Empirics in Pictures”. Journal of Economic Perspectives—Volume 25, Number 1—Winter 2011—Pages 115–138

• *Rothschild, Michael and Joseph E. Stiglitz (1976). “Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information.” Quarterly Journal of Economics 90(4): 630-49.

Health insurance, moral hazard and adverse selection: empirical applications



Moral Hazard • Almond and Doyle (2011) “After Midnight: A Regression Discontinuity Design in Length of

Postpartum Hospital Stays”, American Economic Journal: Economic Policy. • Aviva Aron-Dine, Liran Einav, and Amy Finkelstein (2013) “The RAND Health Insurance

Experiment, Three Decades Later”, Journal of Economic Perspectives, Volume 27, Number 1—Winter 2013—Pages 197–222

• *Barros, Pedro P., Machado, Matilde P., and Sanz-de-Galdeano, Anna: “Moral hazard and the demand for health services: a matching estimator approach,” Journal of Health Economics, vol 27, July 2008, pp 1006-1025.

• Chandra, Gruber and McKnight, 2010: “Patient Cost-Sharing and Hospitalization Offsets in the Elderly” American Economic Review. 100: 193-213.

• *Chiappori, Pierre-André, Durand, Frank, Geoffard, Pierre-Yves (1998): “Moral Hazard and the Demand for physician services: First Lessons from a French Natural Experiment,” European Economic Review, 42, pp 499-511.

• *Manning, W. G. et al. (1987). “Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment.” American Economic Review. 77: 251-277.

• [B] Sloan and Kasper, Ed (2008) Capítulos 4 y 5

Information asymmetries in insurance markets • *Chiappori, Pierre-André, Salanie B. (2001): “Testing for Asymmetric Information in

Insurance Markets,” Journal of Political Economy, vol 108(1), pp 56-79. • [B] Cohen, P Siegelman (2009), “Testing for adverse selection in insurance markets“,

Journal of Risk and Insurance. • Gardiol, Geoffard, and Grandchamp (2005) "Separating Selection and Incentive Effects in

Health Insurance," CEPR Discussion Papers 5380. • *Liran Einav and Amy Finkelstein (2011) “Selection in Insurance Markets: Theory and


• *Fang, Hanming, Keane, Michael P., and Dan Silverman (2008): “Sources of Advantageous Selection: Evidence from the Medigap Insurance Market,” JPE, 116(2), 303-350.

• Finkelstein, K McGarry (2006) ”Multiple dimensions of private information: evidence from the long-term care insurance market”, The American economic review.


Health insurance: effects on medical services use and health • Camacho, Adriana and Emily Conover. “Effects of Subsidized Health Insurance on

Newborn Health in a Developing Country”. Forthcoming Economic Development and Cultural Change.

• Card, David, Dobkin, Carlos and Nicole Maestas, 2008: “The Impact of Nearly Universal Insurance Coverage on Health Care Utilization: Evidence from Medicare” AER, 98(5), 2242-2258

• Card, David, Dobkin, Carlos and Nicole Maestas, 2009: “Does Medicare Save Lives?” The Quarterly Journal of Economics, 124 (2): 597-636



• Currie and Gruber, 1996: “Saving Babies: The Efficacy and Cost of Recent Expansions of Medicaid Eligibility for Pregnant Women”. Journal of Political Economy, 104(6), p. 1263-1296.

• Finkelstein, 2007: “The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare”. The Quarterly Journal of Economics, 122 (1).

• [B] Levy, H and Meltzer: “The Impact of Health Insurance on Health”. Annual Review of Public Health. Vol. 29: 399-409.

• Miller, Pinto, and Vera-Hernández: “Risk Protection, Service Use, and Health Outcomes under Colombia’s Health Insurance Program for the Poor” American Economic Journal: Applied Economics. Forthcoming.

Econometric models for data utilization of medical services

• Cameron, A.C., and P.K. Trivedi. Microeconometrics Using Stata. Stata Press, 2008. Chapter 10 and 17.

• Deb and P.K. Trivedi (2002) “The Structure of Demand for Medical Care: Latent Class versus Two-Part Models", Journal of Health Economics.

• Jones A, N Rice, T Bago dʼUva and S Balia (2007). Applied Health Economics, London: Routledge. Chapter 11.

Medical services supply • Zweifel, Breyer, and Kiffman (2009). Chapter 8. • *Dranove, David, Kessler, Daniel P., McClellan, Mark, and Satterthwaite, Mark (2003). “Is

More Information Better? The Effects of ‘Report Cards’ on Health Care Providers,” Journal of Political Economy, 111(3): 555-588.

• *Gruber and Owings (1996), “Physician Financial Incentives and Cesarean Section Delivery”, RAND Journal of Economics.

• *Iizuka, Toshiaki (2007): “Experts’ agency Problems: Evidence from Japan” RAND Journal of Economics, 38(3), 844-862.

Empirical strategies to measure the causal effect of factors affecting health and health care use , and health effects of socioeconomic variables

• Almond, Doug, “Is the 1918 Influenza Pandemic Over? Long-Term Effects of In Utero Exposure in the Post-1940 US Population,” Journal of Political Economy, 2006, 114(4), 672-712.

• Almond, Doug, Lena Edlund, and Mårten Palme, “Chernobyl’s Subclinical Legacy: Prenatal Exposure to Radioactive Fallout and School Outcomes in Sweden,” Quarterly Journal of Economics, 2009, 124(4), 1729-1772.

• Beakley, Hoyt (2007): “Disease and Development: Evidence from Hookworm Eradication in the American South,” QJE, February 2007.

• *Cutler, David M., Winnie Fung, Michael Kremer, Monica Singhal, and Tom Vogl, “Early-life Malaria Exposure and Adult Outcomes: Evidence from Malaria Eradication in India,” American Economic Journal: Applied Economics, 2010, 2(2), 72-94,



• Camacho, Adriana. 2008."Stress and Birth Weight: Evidence from Terrorist Attacks" American Economic Review p&p 98(2)pp. 511-15.DOI:10.1257/aer.98.2.511

• *Gertler, Paul, “Do Conditional Cash Transfers Improve Child Health? Evidence from PROGRESA’s Control Randomized Experiment,” American Economic Review, 2004, 94(1), 336-341.

• [B] Kremer and Glennerster (2012) “Improving Health in Developing Countries: Evidence from Randomized Evaluations”. Handbook of Health Economics, Volume 2

• Lucas, Adrienne, “Malaria Eradication and Educational Attainment: Evidence from Paraguay and Sri Lanka,” American Economic Journal: Applied Economics, 2010, 2(2), 46-71.

• Maccini, Sharon and Dean Yang, “Under the Weather: Health, Schooling and Socioeconomic Consequences of Early Life Rainfall, American Economic Review, 2009, 99(3), 1006-1026.

• *Miguel, Edward and Michael Kremer (2004), “Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities,” Econometrica, 72(1), 159-217.

Measuring health inequality O’Donnell, van Doorslaer, Wagstaff and Lindelow (2008). Analyzing Health Equity Using Household Survey Data. A Guide to Techniques and Their Implementation.



21. Labor Economics

Course name: Labor Economics Code: 14700008 Kind of knowledge:







Four (4)

Professor: OVERVIEW This master-level course cover applied problems in the field of labor economics. It is designed to address four major components: group differences (racial and gender) in the labor market; family economics, decisions on marital status and fertility; family background, neighborhood effects, social connections and identity; and changes in the wage structure and income inequality. COURSE TRAINING PURPOSES To know and use appropriately the main models of labor market theory, also to know and use properly econometrics concepts and methods used for the study of labor markets. It is important that the student be able to understand how individual decision and family decisions can affect the labor market outcomes. EXPECTED LEARNING OUTCOMES This course is designed to help students to apply their knowledge in economics and statistics on particular topics in the area of labor economics. The purpose is to help students to train as a rigorous thinker, able to recognize complex problems and identify theoretical and statistical tools to solve them, as well as being a clear speaker of their ideas. COURSE OUTLINE (Sessions): The course is based on the following methodological components: introduction of the topic by the professor; constant analytical discussion between professor and students as each topic is developed; presentation of internationally relevant articles by students; short article applied to the Colombian labor market. I. Differences between groups in the labor market

a. Theory and measurement of discrimination in the labor market



b. Racial differences c. Gender differences

II. Family economics, marital and fertility decisions

a. Choice of marital status and fertility b. Making family decisions

III. Family background, neighborhood effects, social connections and identity

a. Theory and measures of intergenerational mobility b. Social interactions (non- market) c. Theory and evidence of neighborhood and peer effects d. Segregation e. Economics and identity

IV. Changes in the wage structure and income inequality

a. Understanding changes in the wage structure: general aspects, demand-supply- institutions framework b. Technological change, organizational change and wage inequality c. Labor market institutions and wage inequality d. Globalization: Immigration, trade, offshoring and labor market

BIBLIOGRAPHY References

I. Differences between groups in the labor market a. Theory and measurement of discrimination in the labor market

• Arrow, Kenneth, “The Theory of Discrimination,” in Ashenfelter and Rees, eds., Discrimination in Labor Markets. Princeton: Princeton University Press, 1973.

• Aigner and Cain, “Statistical Theories of Discrimination in Labor Markets,” Industrial and Labor Relations Review, 30(2), 1977, 175 – 187.

• J. Altonji and R. Blank (1999), "Race and Gender in the Labor Market," in O. Ashenfelter and D. Card, eds., Handbook of Labor Economics, vol. 3C, North Holland, 3143-3259.

• Becker, Gary, The Economics of Discrimination, 2nd ed.. Chicago: University of Chicago Press, 1971.

• Lang, Kevin. Poverty and Discrimination. Princeton University Press, 2007. ISBN: 9780691119540.

• Phelps, Edmund, “The Statistical Theory of Racism and Sexism,” American Economic Review, 62(4), 1972, 533-539.



b. Racial differences

• Fershtman, Chaim and Uri Gneezy, “Discrimination in a Segmented Society.” Quarterly Journal of Economics, 116(1), 2001, 351-377.

• Bertrand, Marianne and Sendhil Mullainathan, “Are Emily and Brendan More Employable than Latoya and Tyrone? A Field Experiment on Labor Market Discrimination,” NBER Working Paper No. 9873, July 2003.

• Neal, Derek A. and William R. Johnson, “The Role of Premarket Factors in Black-White Wage Differences,” Journal of Political Economy, 104(5), 1996, 869 – 895.

c. Gender differences • F. Blau and L. Kahn (2000), "Gender Differences in Pay," JEP 14 (Fall), 75-99. • F. Blau and L. Kahn (1997), "Swimming Upstream: Trends in the Gender Wage Differential

in the 1980s," Journal of Labor Economics 15 (January, Part 1), 1-42. • Goldin, Claudia and C. Rouse, “Orchestrating Impartiality: The Impact of Blind Auditions

on the Sex Composition of Orchestras.” American Economic Review 90(4), 2000, 715-41.

II. Family economics, marital and fertility decisions a. Choice of marital status and fertility

• Angrist, Joshua. "How Do Sex Ratios Affect Marriage and Labor Markets? Evidence from America's Second Generation." Quarterly Journal of Economics 117, no. 3 (2002): 997-301.

• C. Goldin and L. Katz (2002), "The Power of the Pill: Oral Contraceptives and Women’s Career and Marriage Decisions," Journal of Political Economy 110 (August), 730-70.

• Hotz V.J. and Miller R.A. (1988) “An Empirical Analysis of Life Cycle Fertility and Female Labor Supply,” Econometrica 56, 91-118, 1988

• R. Fryer. (2007) “Guess Who’s Coming to Dinner? Trends in Interracial Marriage over the 20th Century,” Journal of Economic Perspectives 21 (Winter); http://www.economics.harvard.edu/faculty/fryer/papers/ b. Making family decisions

• Becker G. S. “A Treatise on the Family”, Cambridge, Mass.:Harvard University Press, 1991. • Hotz V. J., Klerman J.A. and Willis R.J. (1997), “The Economics of Fertility in Developed

Countries”. Handbook of Population and Family Economics, Chapter 7, eds. Rosenzweig M.R. and Stark O.

• Qian, Nancy. "Missing Women and the Price of Tea in China: The Effect of Sex-Specific Income on Sex Imbalance." Quarterly Journal of Economics 123, no. 3 (2008): 1251-1285. (PDF)#



III. Family background , neighborhood effects , social connections and identity

a. Theory and measuring intergenerational mobility • G. Solon (1999), "Intergenerational Mobility in the Labor Market," in O. Ashenfelter and D • Card, eds., Handbook of Labor Economics, vol. 3A, 1761-1800.

b. Social interactions (non- market)

• E. Glaeser and J. Scheinkman (2000), "Non-Market Interactions," NBER WP No. 8053. • V. Bala, and S. Goyal (1998), "Learning from Neighbours," Review of Economic Studies 65,

pp. 595-621. • P. Bolton and C. Harris (1999), “Strategic Experimentation,” Econometrica 67(2), 349-374.

G. Becker and K. Murphy (2000), Social Economics, Belknap/Harvard University Press.

c. Theory and evidence of neighborhood and peer effects • L. Katz, J. Kling, and J. Liebman (2001), "Moving to Opportunity in Boston: Early Results of

a Randomized Mobility Experiment," Quarterly Journal of Economics 116 (May), 607-54. • S. Mayer and C. Jencks (1989), "Growing Up in a Poor Neighborhood: How Much Does it

Matter?," Science, (March 17), pp. 1441-45. • A. Case and L. Katz (1991), "The Company You Keep: The Effects of Family and

Neighborhood on Disadvantaged Youths," NBER WP No. 3706, May. • C. Hoxby (2000), "Peer Effects in the Classroom: Learning from Gender and Race

Variation," NBER WP No. 7867, August. • J. Angrist and K. Lang (2004), "How Important are Classroom Peer Effects? Evidence from

Boston’s Metco Program," American Economic Review 94 (December).

d. Segregation • F. Echenique and R. Fryer (2007), "A Measure of Segregation Based on Social Interactions,"

Quarterly Journal of Economics 122 (May); http://www.economics.harvard.edu/faculty/fryer/papers/ech_fryer_qje.pdf

• F. Echenique, R. Fryer, and A. Kaufman (2006), "Is School Segregation Good or Bad?," American Economic Review, May 2006.

e. Economics and Identity • D. Austen-Smith and R. Fryer (2005), "An Economic Analysis of "Acting White," Quarterly

Journal of Economics 120 (May), 551-583. • R. Fryer and M. Jackson (2007), “A Categorical Model of Cognition and Biased Decision

Making”; http://www.economics.harvard.edu/faculty/fryer/papers/fryer_jackson2007.pdf



• R. Fryer and S. Levitt (2004), "The Causes and Consequences of Distinctively Black Names," Quarterly Journal of Economics 119 (August), 767-805.

IV. Changes in the wage structure and income inequality

a. Understanding changes in the wage structure: general aspects, demand-supply-institutions framework

• L. Katz and D. Autor (1999) "Changes in the Wage Structure and Earnings Inequality," in O.Ashenfelter and D. Card, eds., Handbook of Labor Economics, vol. 3A, pp. 1463-1555.

• C. Juhn, K.M. Murphy, and B. Pierce (1993) "Wage Inequality and the Rise in the Returns to Skill." Journal of Political Economy 101 (June): 410-42.

• L. Katz and K.M. Murphy (1992) "Changes in Relative Wages, 1963-87: Supply and Demand Factors," Quarterly Journal of Economics, February, 35-78.

b. Technological change , organizational change and wage inequality • D. Acemoglu (2002), "Technical Change, Inequality and the Labor Market," Journal of

Economic Literature 40 (March), 7-72. • D. Autor, F. Levy, and R. Murnane (2003), "The Skill Content of Recent Technological

Change: An Empirical Exploration," Quarterly Journal of Economics 118 (November), 1279-1333.

• D. Autor, L. Katz, and A. Krueger (1998) "Computing Inequality: Have Computers Changed the Labor Market?" Quarterly Journal of Economics 113 (November), 1169-1213.

• D. Card and J. DiNardo (2002), "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics 20 (October), 733-83.

c. Labor market institutions and wage inequality • DiNardo, John, Nicole Fortin and Thomas Lemieux (1996). “Labor Market Institutions, and

the Distribution of Wages, 1973-1992: A Semiparametric Approach,” Econometrica, Vol. 64, No. 5, pp. 1001-1044.

d. Globalization : Immigration , trade, offshoring and labor market • P. Krugman (2000) "Technology, Trade and Factor Prices," Journal of International

Economics 50 (February), 51-71. • G. Johnson and F. Stafford (1999) "The Labor Market Implications of International Trade,"

in O. Ashenfelter and D. Card, eds., Handbook of Labor Economics, vol. 3B, pp. 2215-88. • G. Borjas, R. Freeman, and L.Katz (1997) "How Much Do Immigration and Trade Affect

Labor Market Outcomes?" Brookings Papers on Economic Activity, no. 1, 1-90.



• D. Card (1990) "The Impact of the Mariel Boatlift on the Miami Labor Market," ILRR, Jan.



22. Experimental Economics

Course name: Experimental Economics Code: 14700041 Kind of knowledge:







Two (2)

Professor: OVERVIEW The course of experimental methods for social sciences will introduce the participants into the experimental method used in various social sciences like economics, psychology and political science, providing basic necessary tools to develop an experiment like part of their research plan. Thus, emphasis will be placed not only in the experimental method, but also in the specific statistical analysis and the use of software for the design and implementation of an experiment. COURSE TRAINING PURPOSES Learning college-level economics it is characterized by the high degree of abstraction with which economic problems are addressed. Students therefore often fail to find the relationship of what is taught with the "real world", hindering the learning process. This course will attempt to close this gap.

On the other hand, teaching in the social sciences such as psychology and political science and economics takes place in complete isolation from one another. This course will show the commonalities between these disciplines, in order to promote future interdisciplinary work.

The main objectives of the course are:

1. Introduce the use of laboratory experiments as a research tool.

2. Provide an alternative approach to addressing research questions.

3. Facilitate learning by exposing students to the problems discussed.


Participants will be able to design, conduct and analyze data resulting from an experiment that allows answer his own research question.

COURSE OUTLINE




• Dan Friedman y Shyam Sunder (1994) “Experimental Methods: A Primer for Economists”, Cambridge University Press. (Fr&S) • Colin Camerer (2003), Behavioral Game Theory, Princeton University Press.(C)

Other interesting books, recommended for those who want to do research using tools of experimental economics are:

• Douglas Davis and Charlie Holt (1993), Experimental Economics, Princeton University Press.

• John Kagel and Alvin Roth (1995), Handbook of Experimental Economics, Princeton University Press.

Methodology • (*) Chapters 1 & 2 (Fr&S) • Friedman D. y Cassar A. (2004). “Economics Lab: An Intensive course in experimental

economics” ¿Why we use social science experiments?

• (*) Loewenstein, G. (1999) ”Experimental Economics from the Vantage-Point of Behavioural Economics” The Economic Journal, 109, 453, pp. F25-F34.

• (*) Rubinstein, A. (2001) ”A theorist’s view of experiments” European Economic Review,

(45) pp.615-628.

• (*) Starmer, C. (1999) ”Experimental Economics: Hard Science or Wasteful Tinkering?” The Economic Journal, 109, 453, pp. F5-F15.

Experimental Design

• (*) Chapters 3,4 & 5 (Fr&S) • (*) Friedman D. y Cassar A. (2004). “Economics Lab: An Intensive course in experimental

economics”

Analysis of experimental data

• Chapter 7 (Fr&S) • (*) Sidney Siegel y N. John Castellan Jr. (1988) “Nonparametric Statistics for The

Behavioral Sciences”



Classic Experiments

• (*) Camerer, 2003. Cap. 2

Theories of Distributive Justice

• (*) Fehr, E. and Schmidt, K.M. (1999). “A Theory of Fairness, Competition and Cooperation.” Quarterly Journal of Economics 114, 817-868.

• (*) Blanco, M., Engelmann, D.i and Normann, H. (2011) “A Within-Subject Analysis of Other- Regarding Preferences” Games and Economic Behavior, (72), pp. 321-338.

Programming Z-tree

TEXTBOOKS


• Dan Friedman y Shyam Sunder (1994) “Experimental Methods: A Primer for Economists”, Cambridge University Press. (Fr&S)

• Colin Camerer (2003), Behavioral Game Theory, Princeton University Press.(C) • Douglas Davis and Charlie Holt (1993), Experimental Economics, Princeton University

Press. • John Kagel and Alvin Roth (1995), Handbook of Experimental Economics, Princeton

University Press.

The book of Friedman and Sunder is very useful as a basic introduction to the experimental methodology. The book is still extremely useful for those planning to drive your own experiment someday. The other books listed offer good reviews of the most important results in experimental economics in recent times.





23. Monetary Theory and Policy

Course name: Monetary Theory and Policy Code: 14700065 Kind of knowledge: Basic Complementary: X Integral formation Course type: Obligatory Elective: X Credit type: Hours of work with





Four (4)

Professor: OVERVIEW In recent years, most developed and developing countries have experienced the benefits and costs of living in a globalized economy. In particular, recently there have been interesting phenomena to study like the financial crisis of the late nineties and most recently in 2008, the Euro crisis (which is generated mainly by the lack of coordination between fiscal and monetary policy in some countries of the European Union) and the exchange conflict between the US and China. Therefore, the economists are called to clearly understand these phenomena in order to provide economic and political authorities, in each of their respective economies, different policy alternatives that allow to ensure the welfare of its inhabitants. COURSE TRAINING PURPOSES Understand the interaction between monetary and fiscal policy and the need to continue those policies aligned to avoid problems such as hyperinflation and currency crises. Identify and understand the transmission mechanisms of monetary policy between countries in order to provide rules to the monetary authorities of optimal decision, that allow them to carry out objectives such as maximizing the welfare of their respective economies. Quantify the effects that each of the various shocks affecting the economy, have on key macroeconomic variables such as product, inflation, interest rates, exchange rates, etc. Understand and derive largely numerically cases, different rules of optimal monetary policy according to the structure of each economy. This requires resolve and understand how the different families of macroeconomic models are estimated forefront and identify its scope and limitations to analyze different economic phenomena facing fiscal and monetary authorities EXPECTED LEARNING OUTCOMES Develop research papers that help to understand the interaction between monetary and fiscal policy for any type of economy.



Know which are the main questions and answers that exist in the literature related to interaction between monetary and fiscal policy. Define your thesis topic. COURSE OUTLINE Topics: 1. Money and Public Finance

1.1. Fiscal Budget and Central Bank Suggested reading: Chapter 4 in Walsh (2010).

1.2. Fiscal Deficit and Inflation Suggested Readings: Chapters 10 and 20 in Ljungqvist and Sargent (2004) and Chapter 4 in Walsh (2010).

1.3. Fiscal Theory of General Price Level Suggested reading: Chapter 4 in Walsh (2010).

2. Theory and Monetary Policy in the short term 2.1. Models with sticky prices Suggested reading: Bejarano (2012), Chapter 6 in Walsh (2010) and Chapters 2 and 3 in Gali

(2008). 2.2. Optimal Monetary Policy Suggested reading: Bejarano (2012), Chapters 4 and 5 in Gali (2008), Lubik and Schorfheide

(2004). 3. Models for Open Economies

3.1. Models with a single well Suggested reading: Backus et al. (1992), Baxter and Crucini (1993), Chapter 9 in Walsh (2010) and Wang and Wen (2007). 3.2. Models with two goods Suggested reading: Corsetti and Pesenti (2004), Corsetti and Pesenti (2005), Corsetti et al. (2008), Devereux and Engel (2003) and Bejarano (2010). 3.3. Models Indexing choice Exports Suggested readings: Obstfeld and Rogoff (1995), Devereux and Engel (2003) Devereux et al. (2004), Corsetti and Pesenti (2004) and Bhattarai (2009). 3.4. International Monetary Policy: Cooperative Cooperative vs No Suggested reading: Benigno and Benigno (2008), Corsetti and Pesenti (2005) Gali (2010) and Bejarano (2010).

4. Models and Small Open Economies 4.1. Models of complete markets Suggested reading: Gali and Monacelli (2005), Chapter 9 Walsh (2010), Chapter 7 in Gali (2008) and Chapter 2 in Uribe (2012).



4.2. Models of Incomplete Markets Suggested reading: Mendoza (1991), Chapter 4 in Uribe (2012) Gonzalez et al. (2011) and Mendoza and Asea (1994) 4.3. Models with Endogenous Financial Constraints Suggested reading: Durdu et al. (2009), Benigno et al. (2010), Korinek (2011) and Bianchi and Mendoza (2011)

5. models with financial frictions Suggested reading: Curdia and Woodford (2010) and Bernanke et al. (1999)

TEXTBOOKS Backus, D., Kehoe, P., Kydland, F., 1992. International real business cycles. Journal of Political Economy 100 (4), 745-775. Baxter, M., Crucini, M., Jun 1993. Explaining saving-investment correlations. The American Economic Review 83 (3), 416-436. Bejarano, J., 2010. Optimal monetary policy under endogenous currency invoicing. Tech. rep., Mimeo - TAMU, available at http://econweb.tamu.edu/bejaranoj/Research_files/Job_Market_Paper.pdf. Bejarano, J., 2012. Topics in international monetary policy. Lecture Notes. Benigno, G., Benigno, P., April 2008. Implementing international monetary cooperation through inflation targeting. Macroeconomic Dynamics 12, 45 - 59. Benigno, G., H, C., Otrok, C., Rebucci, A., Young, E., Jun. 2010. Revisiting overborrowing and its policy implications. CEPR Discussion Papers 7872, C.E.P.R. Discussion Papers. URL http://ideas.repec.org/p/cpr/ceprdp/7872.html Bernanke, B. S., Gertler, M., Gilchrist, S., 1999. The financial accelerator in a quantitative business cycle framework. In: Taylor, J. B., Woodford, M. (Eds.), Handbook of Macroeconomics. Handbook of Macroeconomics. Elsevier, Ch. 21, pp. 1341-1393. Bhattarai, S., 2009. Optimal currency denomInflation of trade: Theory and quantitative exploration. Tech. rep., Princeton University, available at http://www.princeton.edu/~sbhattar/Research/JMP.pdf. Bianchi, J., Mendoza, E. G., Feb. 2011. Overborrowing, financial crises and macro-prudential policy? IMFWorking Papers 11/24, International Monetary Fund. Corsetti, G., Dedola, L., Leduc, S., 2008. International risk sharing and the transmission of productivity shocks. Review of Economic Studies 75, 443- 473.



Corsetti, G., Pesenti, P., 2004. Endogenous pass-through and optimal monetary policy: A model of self-validating exchange rate regimes. Tech. rep., CEPR Working Paper No. 8737, available at http://www.econ.cam.ac. uk/faculty/corsetti/research_files/svoca.pdf. Corsetti, G., Pesenti, P., 2005. International dimensions of optimal monetary policy. Journal of Monetary Economics 52 (2), 281- 305. Curdia, V., Woodford, M., 2010. Credit spreads and monetary policy. Journal of Money, Credit and Banking 42 (s1), 3- 35. Devereux, M., Engel, C., 2003. Monetary policy in the open economy revisited: Price setting and exchange rate exibility. Review of Economics Studies 70 (4), 765-783. Devereux, M., Engel, C., Storgaard, P., 2004. Endogenous exchange rate pass-through when nominal prices are set in advance. Journal of International Economics 63, 263-291. Durdu, C. B., Mendoza, E., Terrones, M., July 2009. Precautionary demand for foreign assets in sudden stop economies: An assessment of the new mercantilism. Journal of Development Economics 89 (2), 194-209. Gali, J., 2008. Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework. Princeton University Press, Princeton, NY,USA. Gali, J., 2010. International Dimensions of Monetary Policy. University of Chicago Press, Chicago,IL,USA. Gali, J., Monacelli, T., 2005. Monetary policy and exchange rate volatility in a small open economy. Review of Economics Studies 72, 707 -734. Gonzalez, A., Mahadeva, L., Prada, J., RodrAguez, D., 2011. Policy analysis tool applied to colombian needs: Patacon model description. Tech. rep.,Borradores de Economía - Banco de la Republica, available at http://www.banrep.gov.co/docum/ftp/borra656.pdf.

Korinek, A., August 2011. The new economics of prudential capital controls. IMF Economic Review 59 (3). Ljungqvist, L., Sargent, T. J., 2004. Recursive Macroeconomic Theory, 2nd Edition. Vol. 1 of MIT Press Books. The MIT Press.URL http://ideas.repec.org/b/mtp/titles/026212274x.html Lubik, T., Schorfheide, F., 2004. Inflation targeting and optimal monetary policy. Review, Federal Reserve Bank of St. Louis, 15-42. Mendoza, E., Sep 1991. Real business cycles in a small open economy. American Economic Review 81 (4), 797-818.



Mendoza, E., Asea, P., 1994. The balassa-samuelson model: A general-equilibrium appraisal. Review of International Economics 2 (3), 244-267. Obstfeld, M., Rogo_, K., 1995. Exchange rate dynamics redux. Journal of Political Economy 103, 624-660. Uribe, M., 2012. Open economy macroeconomics. Available at http://www.columbia.edu/~mu2166/GIM/lecture_notes.pdf. Walsh, C., 2010. Monetary Theory and Policy. The MIT Press, Cambridge, MA,USA. Wang, P., Wen, Y., 2007. Inflation dynamics: A cross-country investigation. Journal of Monetary Economics 54, 2004-2031.



24. Topics in Economic Growth

Course name: Topics in Economic Growth Code: 14700063 Kind of knowledge: Basic Complementary: X Integral formation Course type: Obligatory Elective: X Credit type: Hours of work with





Two (2) Créditos

Professor: OVERVIEW This course analyzes recent debates on the major challenges facing poor countries in their development process. The course presents theoretical and empirical implementation aspects in order to introduce students to recent discussions in the analysis of economic growth. The focus of the course is mainly macroeconomic with microeconomic instruments. COURSE TRAINING PURPOSES The main objective is to establish a connection between theory and practice.

COURSE OUTLINE: Basic Model: Malthusian growth model (1 Session) Miller, M. and Merton, C. (1986) “An Introduction to Macroeconomic Reasoning: The Malthusian Model,” in Macroeconomics, A Neoclassical Introduction, Univ. of Chicago Press Ashraf, Q. and Galor, O. (2011) “Dynamics and Stagnation in the Malthusian Epoch,” American Economic Review, Vol. 101(4), 2003-2041. Clark, G. (2008) A Farewell to Alms: A Brief Economic History of the World, Princeton University Press. Clark, G. (2005) “The Condition of the Working Class in England, 1209-2004," Journal of Political Economy, Vol. 113(6), 1307-1340. Capital and neoclassical growth (2 Sessions) Young, A. (2005) “The Gift of the Dying: The Tragedy of AIDS and the Welfare of Future African Generations,” Quarterly Journal of Economics, Vol. 120(1), 423-466. Klenow, Peter and Andres Rodriguez-Clare (1997) “The Neoclassical Revival in Growth Economics: Has it Gone too Far?” NBER Macroeconomics Annual, Vol. 12, 73-103. Caselli, F. and J. Feyrer (2007) “The Marginal Product of Capital,” Quarterly Journal of Economics, Vol. 122(2), 535-568.



Weil, D. (2007) “Accounting for the Effect of Health on Economic Growth,” Quarterly Journal of Economics, Vol. 122(4), 1265-1306. Mankiw, G., Romer D., and Weil, D.N. (1992) “A Contribution to the Empirics of Economic Growth,” Quarterly Journal of Economics, Vol. 107(2), 407-437. Fogel, R. (1971) “Railroads and American Economic Growth,” in Fogel, R. and Engerman, S. (Eds.), Reinterpretation of American Economic History, Harper & Row, 187-204 Misallocation (2 sesiones) Hayashi, F. and Prescott, E. (2008) “The Depressing Effect of Agricultural Institutions on the Prewar Japanese Economy,” Journal of Political Economy, Vol. 116(4), 573-632. Parente, S.L. and Prescott, E. (1999) “Monopoly Rights: A Barrier to Riches,” American Economic Review, Vol. 89(5), 1216-1233. Restuccia, D. and Rogerson, R. (2008) “Policy Distortions and Aggregate Productivity with Heterogeneous Plants” Review of Economic Dynamics, Vol. 11(4), 707-720. Hsieh, C.-T. and Klenow, P.J. (2009) “Misallocation and Manufacturing TFP in China and India” Quarterly Journal of Economics, Vol. 124(4), 1403-1448. Structural change (2 Sessions) Matsuyama, K. (1992), “Agricultural Productivity, Comparative Advantage, and Economic Growth,” Journal of Economic Theory, Vol. 58, 317-334. Acemoglu, D. and Guerrieri, V. (2008) “Capital Deepening and Nonbalanced Economic Growth” Journal of Political Economy, Vol. 116(3), 467-498. Ngai, L.R. and Pissarides, C. (2007) “Structural Change in a Multi-Sector Model of Growth,” American Economic Review, Vol. 97(1), 429-443. China and East Asian Miracles (2 Sessions) Song, Z.M., Storesletten, K., and Zilibotti, F. (2011) “Growing Like China,” American Economic Review, Vol. 101(1), 196–233. Young, A. (1995) “The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience.” Quarterly Journal of Economics, Vol. 110(3), 641-680. Young, A. (2003) “Gold into Base Metals: Productivity Growth in the People’s Republic of China during the Reform Period,” Journal of Political Economy, Vol. 111(4), 1220-1261 Welfare and growth (1 Session) Becker, G.S., Philipson, T.J., and Soares, R.R. (2005) “The Quantity and Quality of Life and the Evolution of World Inequality,” American Economic Review, Vol. 95(1), 277-291. Jones, C. and Klenow, P. (2010) “Beyond GDP? Welfare across Countries and Time” NBER Working paper. Historical legacies (2 Sessions) Nunn, N. (2008) “The Long-Term Effects of Africa’s Slave Trades,” Quarterly Journal of Economics, Vol. 123(1), 139–176. Herbst, J. (2000) States and Power in Africa. Princeton Univ. Press. Putterman, L. and Weil, D. (2010) “Post-1500 Population Flows and the Long Run Determinants of Economic Growth and Inequality”, Quarterly Journal of Economics 125(4), (4), 1627-1682.



Wacziarg, R. and Spolaore, E. (2009) “The Diffusion of Development”, Quarterly Journal of Economics, Vol. 124(2), 469-529. TEXTBOOKS Acemoglu, D. (2009) Introduction to Modern Economic Growth, Princeton University Press. Aghion, P. and Howitt, P. (1998) Endogenous Growth Theory, MIT Press Romer, P. (2003) Advanced Macroeconomics, McGraw Hill Aghion, P. and S. Durlauf (2005) Handbook of Economic Growth (2 volumes), North-Holland: Amsterdam T. Schultz and John Strauss (2008) Handbook of Development Economics IV, North-Holland, Amsterdam



25. Topics in Public Economics

Course name: Topics in Public Economics Code: 14700035 Kind of knowledge:







Two (2)

Professor: OVERVIEW This is an economics masters level course that covers traditional topics in public economics and makes emphasis in applications of public economics for the design of optimal environmental policy. The course lasts 28 hours; the first twenty hours will give students basic knowledge of the established theory in Public Economics; the last ten hours will cover the design of environmental taxation. In the first part (given by Darío Maldonado) students will study market imperfections (public goods and imperfect competition) and optimal taxation (consumption, income, linear and non-linear).

The second part (given by Helmuth Cremer) starts by recalling some basic results concerning externalities and their remedies. In particular, it presents the Pigouvian rule for environmental taxation. We start looking at the first-best world, where the externality is the only market failure. Then we turn to a (second-best) setting where other distortions are present in the economy. The design of environmental taxes then has to account for the tax revenue that is collected and for its redistributive impact. In other words, environmental taxation has to be determined as part of the tax mix within an fully edged optimal taxation problem. We will present both the theoretical aspects and an empirical application. Finally, we will consider two additional topics: political economy and international issues. COURSE TRAINING PURPOSES At the end of the lecture students must master the main models in public economics and must understan its applications ot environmental issues. COURSE OUTLINE 1. First part: Classic results in public economics

(a) Introduction (b) Perfect competition and public economics: the two theorems of welfare economics (c) Public goods



(d) Imperfect competition (e) Taxation

i. Incidence ii. Consumption taxes iii. Income taxation (linear and non-linear) iv. Are consumption taxes useful? v. Capital taxation

(f) Public provision of private goods (g) Political economy

2. Second part: Optimal environmental tax design (a) Externalities: basics

i. Introduction ii. Definitions and examples iii. Efficient allocation and market equilibrium iv. Remedies v. Example 1: Pigouvian tax in a partial equilibrium setting vi. Example 2: Production externalities and markets for pollution rights

(b) Environmental taxes and optimal taxation i. Introduction: environmental taxation in second-best ii. Linear taxation: Sandmo's analysis iii. General taxation: Cremer and Gahvari

A. Taxation of final goods B. Taxation of inputs and emissions

iv. Empirical illustration: taxation of energy (c) The political economy of environmental taxation

i. Majority voting approach ii. Political competition

(d) Some international issues i. Environmental taxation and tax competition ii. Tax harmonization





26. Health Economics (4 credits)

Course name: Health Economics Code: 14700012 Kind of knowledge:







Four (4)

Professor: OVERVIEW

i. Theory and empirical evidence on typical problems of health markets: moral hazard, adverse selection and risk selection in insurance markets, and doctor´s induced demand.

ii. Econometric models for estimating demand for medical services: count regression models.

iii. Impact evaluation methodologies to quantify the effects of policy interventions that affect health and utilization of medical services. Related topics: education, health, development and health, among others ...

iv. Analysis of health inequalities using data from household surveys. COURSE TRAINING PURPOSES

- Introduce master level students on issues related to health economics, with a special emphasis on empirical applications . - Encourage the development of independent lines of research.

Since the main objective of the course is to focus on empirical applications , particular attention to the type of data used in these applications , the appropriate econometric methods to test the implications of economic models as well as the limitations of different empirical strategies will be provided.

EXPECTED LEARNING OUTCOMES (ELA) Acquisition of tools and methodology to organize the empirical analysis on issues related to health economics and empirical analysis framework. CONTENTS 1. Introduction to health economics. Particularities of good "health" and health markets



II. Health insurance markets: moral hazard

a. Basic insurance demand model b. The problem of moral hazard c. Optimal design of insurance

III. Health insurance markets: adverse selection

a. Rothschild and Stiglitz model IV. Health insurance, moral hazard and adverse selection: empirical applications

a. Difficult to separate the effect of moral hazard of adverse selection b. Strategies to identify the presence of moral hazard c. Strategies to identify the presence of adverse selection d. Empirical strategies to measure the effect of health insurance on health.

V. Econometric models for data utilization of medical services

a. Count models b. Stata applications

VI. Supply of medical services

a. Information asymmetries patient-doctor b. Supplier-induced demand model c. Empirical strategies to detect supplier-induced demand d. Solutions to reduce information asymmetries

VII. Empirical Strategies to measure the causal effect of factors affecting health and health care use, and health effects of socioeconomic variables

a. Effects of policy interventions on the health and use of medical services b. Effect of education on health c. Effect of health on education

VIII. Measuring health inequality

a. Nature of the data b. Concentration curves and concentration indices c. Health inequalities associated with socio-economic factors d. Stata applications

BIBLIOGRAPHY Books Health Economics

• Barros and Martinez-Giralt (2012). Health Economics. An industrial organization perspective. Routledge.

• Jack W. Principles of Health Economics for Develping Countries (1999). World Bank.



• Jones A, N Rice, T Bago dʼUva and S Balia (2007). Applied Health Economics, London: Routledge.

• Nyman, J. (2002) The Theory of Demand for Health Insurance. Stanford University Press. • Sloan and Kasper, Ed (2008) Incentives and Choice in Health Care. The MIT Press.

Cambridge, Massachusetts. • Zweifel, Breyer, and Kiffman (2009). Health Economics. Second Edition. Springer.

Econometrics

• Angrist, J.D. and J.-S. Pischke (2009). Mostly Harmless Econometrics: An Empiricists’s Companion. Princeton University Press.

• Cameron, A.C., and P.K. Trivedi. Microeconometrics: Methods and Applications. Cambridge University Press, 2005.

• Cameron, A.C., and P.K. Trivedi. Microeconometrics Using Stata. Stata Press, 2008. • Jones, Andrew M (2000). “Health Econometrics.” In Anthony Culyer and Joseph

Newhouse, editors. Handbook of Health Economics. Volume 1A, pp. 265-344. • Wooldridge, J. Econometric Analysis of Cross Section and Panel Data. MIT Press, 2002.

Readings

Introduction: particularities in health markets

• Zweifel, Breyer, and Kiffman (2009). Chapters 1 and 5. • Kenneth J. Arrow, “Uncertainty and the Welfare Economics of Medical Care,” American

Economic Review, 53:5 (December, 1963), 941-973. Health insurance markets: moral hazard

• [B] Sloan and Kasper, Ed (2008) Capítulos 4 y 5 • Zweifel, Breyer, and Kiffman (2009). Capítulos 5 y 6. • Mark V. Pauly, “The Economics of Moral Hazard: Comment,” American Economic Review

58:3, Part 1 (June, 1968), 531-537. • Cutler and Zeckhauser (2000) “The anatomy of health insurance”, Chapter 11, Handbook

of Health Economics, Elsevier. Health insurance markets: adverse selection

• [B] Sloan and Kasper, Ed (2008) Capítulos 4 y 5 • Zweifel, Breyer, and Kiffman (2009). Capítulo 6. • Liran Einav and Amy Finkelstein (2011) “Selection in Insurance Markets: Theory and


• *Rothschild, Michael and Joseph E. Stiglitz (1976). “Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information.” Quarterly Journal of Economics 90(4): 630-49.

Health insurance, moral hazard and adverse selection: empirical applications



Moral Hazard • Almond and Doyle (2011) “After Midnight: A Regression Discontinuity Design in Length of

Postpartum Hospital Stays”, American Economic Journal: Economic Policy. • Aviva Aron-Dine, Liran Einav, and Amy Finkelstein (2013) “The RAND Health Insurance

Experiment, Three Decades Later”, Journal of Economic Perspectives, Volume 27, Number 1—Winter 2013—Pages 197–222

• *Barros, Pedro P., Machado, Matilde P., and Sanz-de-Galdeano, Anna: “Moral hazard and the demand for health services: a matching estimator approach,” Journal of Health Economics, vol 27, July 2008, pp 1006-1025.

• Chandra, Gruber and McKnight, 2010: “Patient Cost-Sharing and Hospitalization Offsets in the Elderly” American Economic Review. 100: 193-213.

• *Chiappori, Pierre-André, Durand, Frank, Geoffard, Pierre-Yves (1998): “Moral Hazard and the Demand for physician services: First Lessons from a French Natural Experiment,” European Economic Review, 42, pp 499-511.

• *Manning, W. G. et al. (1987). “Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment.” American Economic Review. 77: 251-277.


Information asymmetries in insurance markets • *Chiappori, Pierre-André, Salanie B. (2001): “Testing for Asymmetric Information in

Insurance Markets,” Journal of Political Economy, vol 108(1), pp 56-79. • [B] Cohen, P Siegelman (2009), “Testing for adverse selection in insurance markets“,

Journal of Risk and Insurance. • Gardiol, Geoffard, and Grandchamp (2005) "Separating Selection and Incentive Effects in

Health Insurance," CEPR Discussion Papers 5380. • *Liran Einav and Amy Finkelstein (2011) “Selection in Insurance Markets: Theory and


• *Fang, Hanming, Keane, Michael P., and Dan Silverman (2008): “Sources of Advantageous Selection: Evidence from the Medigap Insurance Market,” JPE, 116(2), 303-350.

• Finkelstein, K McGarry (2006) ”Multiple dimensions of private information: evidence from the long-term care insurance market”, The American economic review.


Health insurance: effects on medical services use and health • Camacho, Adriana and Emily Conover. “Effects of Subsidized Health Insurance on

Newborn Health in a Developing Country”. Forthcoming Economic Development and Cultural Change.

• Card, David, Dobkin, Carlos and Nicole Maestas, 2008: “The Impact of Nearly Universal Insurance Coverage on Health Care Utilization: Evidence from Medicare” AER, 98(5), 2242-2258

• Card, David, Dobkin, Carlos and Nicole Maestas, 2009: “Does Medicare Save Lives?” The Quarterly Journal of Economics, 124 (2): 597-636



• Currie and Gruber, 1996: “Saving Babies: The Efficacy and Cost of Recent Expansions of Medicaid Eligibility for Pregnant Women”. Journal of Political Economy, 104(6), p. 1263-1296.

• Finkelstein, 2007: “The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare”. The Quarterly Journal of Economics, 122 (1).

• [B] Levy, H and Meltzer: “The Impact of Health Insurance on Health”. Annual Review of Public Health. Vol. 29: 399-409.

• Miller, Pinto, and Vera-Hernández: “Risk Protection, Service Use, and Health Outcomes under Colombia’s Health Insurance Program for the Poor” American Economic Journal: Applied Economics. Forthcoming.

Econometric models for data utilization of medical services

• Cameron, A.C., and P.K. Trivedi. Microeconometrics Using Stata. Stata Press, 2008. Chapter 10 and 17.

• Deb and P.K. Trivedi (2002) “The Structure of Demand for Medical Care: Latent Class versus Two-Part Models", Journal of Health Economics.

• Jones A, N Rice, T Bago dʼUva and S Balia (2007). Applied Health Economics, London: Routledge. Chapter 11.

Medical services supply • Zweifel, Breyer, and Kiffman (2009). Chapter 8. • *Dranove, David, Kessler, Daniel P., McClellan, Mark, and Satterthwaite, Mark (2003). “Is

More Information Better? The Effects of ‘Report Cards’ on Health Care Providers,” Journal of Political Economy, 111(3): 555-588.

• *Gruber and Owings (1996), “Physician Financial Incentives and Cesarean Section Delivery”, RAND Journal of Economics.

• *Iizuka, Toshiaki (2007): “Experts’ agency Problems: Evidence from Japan” RAND Journal of Economics, 38(3), 844-862.

Empirical strategies to measure the causal effect of factors affecting health and health care use , and health effects of socioeconomic variables

• Almond, Doug, “Is the 1918 Influenza Pandemic Over? Long-Term Effects of In Utero Exposure in the Post-1940 US Population,” Journal of Political Economy, 2006, 114(4), 672-712.

• Almond, Doug, Lena Edlund, and Mårten Palme, “Chernobyl’s Subclinical Legacy: Prenatal Exposure to Radioactive Fallout and School Outcomes in Sweden,” Quarterly Journal of Economics, 2009, 124(4), 1729-1772.

• Beakley, Hoyt (2007): “Disease and Development: Evidence from Hookworm Eradication in the American South,” QJE, February 2007.

• *Cutler, David M., Winnie Fung, Michael Kremer, Monica Singhal, and Tom Vogl, “Early-life Malaria Exposure and Adult Outcomes: Evidence from Malaria Eradication in India,” American Economic Journal: Applied Economics, 2010, 2(2), 72-94,



• Camacho, Adriana. 2008."Stress and Birth Weight: Evidence from Terrorist Attacks" American Economic Review p&p 98(2)pp. 511-15.DOI:10.1257/aer.98.2.511

• *Gertler, Paul, “Do Conditional Cash Transfers Improve Child Health? Evidence from PROGRESA’s Control Randomized Experiment,” American Economic Review, 2004, 94(1), 336-341.

• [B] Kremer and Glennerster (2012) “Improving Health in Developing Countries: Evidence from Randomized Evaluations”. Handbook of Health Economics, Volume 2

• Lucas, Adrienne, “Malaria Eradication and Educational Attainment: Evidence from Paraguay and Sri Lanka,” American Economic Journal: Applied Economics, 2010, 2(2), 46-71.

• Maccini, Sharon and Dean Yang, “Under the Weather: Health, Schooling and Socioeconomic Consequences of Early Life Rainfall, American Economic Review, 2009, 99(3), 1006-1026.

• *Miguel, Edward and Michael Kremer (2004), “Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities,” Econometrica, 72(1), 159-217.

Measuring health inequality O’Donnell, van Doorslaer, Wagstaff and Lindelow (2008). Analyzing Health Equity Using Household Survey Data. A Guide to Techniques and Their Implementation.



27. Public Economics

Course name: Public Economics Code: 14700023 Kind of knowledge:







Four (4)

Professor: OVERVIEW This is a doctoral level course in economics. It can be taken by students in master's and doctorate in economics. Requirements are good foundation in microeconomic theory and optimization. The course lasts 32 hours distributed in 16 two-hour sessions. The first 3 sessions will be used for the presentation of some basic elements of optimal taxation and redistribution; these sessions will be presentations by Professor.

The other 13 sessions will be discussion sessions items that students should read and discuss. For each session we will choose two articles; all students must meet all of the items before each session. The class starts with summaries of the two articles made by two students chosen randomly, after that two students chosen previously presented to their peers and the teacher in detail the contents of the two articles.

Grading is based mainly the presentations of assigned articles (50%) and a written text individually (50%).

The topics discussed in the course are as follows:

COURSE OUTLINE

1. Basic Theory 2. Taxes to labor incomes 3. Indirect taxes 4. Evasion, avoidance, etc 5. Taxes (application) 6. Redistribution and transfers in kind 7. Conditional transfers in cash



8. Education 9. Social security

9.1 Topics in design of social security systems 9.2 Annuity market 9.3 Effect of social security in labor supply

REFERENCES

1. Basic Theory

Atkinson and Stiglitz (1980). Lectures on Public Economics. McGraw- Hill.

Cornes and Sandler (1995). The theory of externalities, public goods and club goods. Cambridge University Press.

Laónt (1988). Fundamentals of Public Economics. The MIT Press.

Salanié (2003). Economics of Taxation. The MIT Press.

Salanié (2000). Microeconomics of market failures. The MIT Press

Myles (1995). Public Economics. Cambridge University Press

2. Taxes to labor incomes

Baumol and Bradford (1970). Optimal Departures From Marginal Cost Pricing. American Economic Review 60, 265-283.

Mirrlees (1971). An Exploration of the Theory of Optimal Income Taxation. Review of Economic Studies, 175-208.

Slemrod, Yitzhaki and Mayshar (1994). The Optimal Two-bracket Linear Income Tax. Journal of Public Economics 53, 269-290.

Varian (1980). Redistributive Taxation as Social Insurance. Journal of Public Economics,

49-68.

3. Indirect taxes

Atkinson and Sandmo (1980). Welfare implications of the taxation of savings. Economic Journal 800, pp. 529-549.

Atkinson and Stiglitz (1976). The design of tax structure: direct versus indirect taxation. Journal of Public Economics 6, pp. 55-75.



Boiteux (1956). Sur la gestion des monopoles publics astreints á l'équilibre budgétaire. Econometrica 24, 22-40.

Cremer, Pestieau, and Rochet (2001). Direct versus indirect taxation: the design of the tax structure revisited. International Economic Review, 42, 781-799.

Deaton and Stern (1986). Optimally uniform commodity taxes, taste diérence and lump-sum grants. Economics letters 20, 263-266.

Diamond (1975). A many person Ramsey tax rule. Journal of Public Economics 4, 335-342.

Diamond and Mirrlees (1971). Optimal Taxation and Public Production, I: Production e_ciency. American Economic Review 61, 8-27.

Diamond and Mirrlees (1971). Optimal Taxation and Public Production, II: Tax rules. American Economic Review 61, 261-278.

Myles (1987). Tax design in the presence of imperfect competition: an example. Journal of Public Economics 34, 367-378.

Naito (1999). Re-examination of uniform commodity taxes under a non-linear income tax system and its implications for production e_ciency. Journal of Public Economics 71, 165-188.

Ramsey (1927). A contribution to the theory of taxation. Economic Journal 37, 47- 61.

Stiglitz (1982). Self-Selection and Pareto E_cient Taxation. Journal of Public Economics 17, 213-240.

4. Evasion, avoidance, etc

Slemrod and Yitzhaki (2002). tax avoidance, evasion and administration. In Handbook of Public Economics 3 Edited by A. Auerbach and M. Feldstein. North Holland, 1423-1470.

Cowell (1990). Cheating the government : the economics of evasion. MIT Press.

Schneider and Enste (2000). Shadow economies: Size, cause and consequences. Journal of Economic Literature, 38, 77-114.

Scotchmer (1987). Audit classes and tax enforcement policy. American Economic Review, 77, 229-233.

5. Taxes (application)

Bernheim (2002). Taxation and Savings. In Handbook of Public Economics 3. Edited by A. Auerbach and M. Feldstein. North Holland, 1174-1249.



Cremer, Gahvari and Lozachmeur (2009). Tagging and Income Taxation: Theory and an Application. American Economic Journal: Economic Policy, forthcoming.

Diamond (1998). Optimal Income Taxation: An Example with a U-Shaped Pattern of Optimal Marginal Tax Rates. American Economic Review 88, 83-95.

Feldstein (1995). The Eéct of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform Act, Journal of Political Economy 103, 551-572.

Gale and Scholz (1994). IRAs and Household Savings American Economic Review 84, 1233-60.

Goolsbee (2000). What Happens When You Tax the Rich? Evidence from Executive Compensation Journal of Political Economy 108, 352-78.

Gruber and Saez (2002). The Elasticity of Taxable Income: Evidence and Implications. Journal of Public Economics 84, 1-32.

Gruber J. and B. Koszegi (2004). Tax incidence when individuals are time- inconsistent: the case of cigarette excise taxes. Journal of Public Economics 88, 1959-1987.

Kanbur, Keen, and Toumala (1994). Optimal non-linear income taxation for the alleviation of income poverty. European Economic Review 38, 1613-1632.

O.Donoghue and Rabin (2003). Studying optimal paternalism, illustrated by a model of sin taxes. American Economic Review (Papers and Proceedings) 93, 186-191.

O.Donoghue and Rabin (2006). Optimal sin taxes. Journal of Public Economics 90, 1825-1849.

Saez (1998). Using Elasticities to Derive Optimal Income Tax Rates. Review of Economic Studies 68, 205-229.

Venti and Wise (1990). Have IRAs Increased U.S. Savings? Evidence from Consumer Expenditure Surveys. Quarterly Journal of Economics 105, pages 661-98.

6. Redistribution and transfers in kind

Besley and Coate (1991). Public provision of private goods and the redistribution of income. American Economic Review 81, 979-984.

Cremer and Gahvari (1997). In-kind transfers, self-selection and optimal tax policy. European Economic Review 41, 97-114, 1997.



Epple and Romano (1996). Public provision of private goods. Journal of Public Economics 104, 57-84.

Gahvari and Currie (2008). Transfers in Cash and In-Kind: Theory Meets the Data. Journal of Economic Literature 46, 333-383.

Gahvari and de Mattos, (2007). Conditional cash transfers, public provision of prívate goods and income redistribution. American Economic Review 97, 491-502.

7. Conditional transfers in cash

Blank, Card, and Robins (2000). Financial Incentives for Increasing Work Among Low-Income Families. In Finding Jobs:Work andWelfare Reform. Edited by Rebecca Blank and David Card. Russell Sage.

Blank and Ruggles (1996). When Do Women Use Aid to Families with Dependent Children and Food and Food Stamps? The Dynamics of Eligibility versus Participation.

Journal of Human Resources 31, 57-89.

Gruber (2000). Cash Welfare as a Consumption Smoothing Device for Single Mothers. Journal of Public Economics 75, 157-182.

Gruber and Yelowitz (1999). Public Health Insurance and Private Savings. Journal of Political Economy 107, 1249-1274.

Gueron (1990). Work and Welfare: Lessons on Employment Programs. Journal of Economic Perspectives 4, 79-98.

Hotz, Mullin, and Scholz (2002). Welfare, Employment and Income: Evidence on the Eécts of Bene_t Reductions in California. American Economic Review 92, 380-384.

Hoynes and MaCurdy (1994). Has the Decline in Bene_ts Shortened Welfare Spells? American Economic Review 84, 43-48.

Michalopoulos, Tattrie, Miller, Robins, Morris, Gyarmati, Redcross, Foley and Ford (2002). Making Work Pay: Final Report on the Self-Su_ciency Project for Long- Term Welfare Recipients. Human Resources Development, Canada. Social Research and Demonstration Corporation.

Meyer (1999). Do the Poor Move to Receive Higher Welfare Bene_ts? Mimeo. Mo_tt (1992). Incentive Eécts of the U.S. Welfare System: A Review. Journal of Economic Literature 30, 1-61.



Nichols and Zeckhauser (1982). Targeting Transfers Through Restrictions on Recipients. American Economic Review 72, 372-377.

Powers (1998). Does Means Testing Welfare Discourage Saving? Evidence from the National Longitudinal Survey of Women. Journal of Public Economics 68, 1-151.

8. Education

Bearse, Glomm, and Ravikumar (2000). On the political economy of means-tested education vouchers. European Review of Economics 44, 904-915.

Benabou (1996). Equity and e_ciency in human capital investment: The local connection. Review of Economic Studies 63, 237-264.

Betts (1998). The impact of educational standards on the level and distribution of earnings. American Economic Review 88, 266-275.

Bovenberg and Jacobs (2005). Redistribution and education subsidies. Journal of Public Economics 89, 2005-2035.

Costrell (1994). A simple model of educational standards. American Economic Review 84, 956-971.

de Bartolome (1990). Equilibrium and ine_ciency in a community model with peer group eécts. Journal of Political Economy 98, 110-133.

De Fraja (2002). The design of optimal education policies. Review of Economic Studies 69, 437-466.

Epple and Romano (1996a). Ends against the middle: Determining public service provision when there are private alternatives. Journal of Public Economics 62, 297-325.

Epple and Romano (1996b). Public provision of private goods. Journal of Public Economics 104, 57-84.

Epple and Romano (1998). Competition between private and public schools, vouchers and peer-group eécts. The American Economic Review 88, 31-62.

Fernandez (1998). Education and borrowing constraints: test vs prices. NBER,Working paper 6588.



Fernandez (2001). Sorting, education and inequality. NBER, Working paper 8101. Fernandez and Gali (1999). To each according to...? markets, tournaments and the matching problem with borrowing constraints. Review of Economic Studies 66, 779-824.

Fleurbaey, Gary-Bobo, and Maguain (2002). Education, distributive justice and adverse selection. Journal of Public Economics 84, 113-150.

Glomm and Kaganovich (2003). Distributional eécts of public education in an economy with public pensions. International Economic Review 44, 917-937.

Lazear (2001). Educational production. Quarterly journal of economics 116, 777-803. Maldonado (2008). Education Policies and optimal taxation. International Tax and Public Finance 15, 131-143.

9. Social security 9.1 Topics in design of social security systems

Atkinson (1987). Income Maintenance and Social Insurance. In Handbook of Public Economics 2. Edited by A. Auerbach and M. Feldstein. North Holland, 779-908.

Diamond and Koszegi (2003). Quasi-Hyperbolic Discounting and Retirement. Journal of Public Economics 87, 1839-1872.

Cremer, De Donder, Maldonado and Pestieau (2007). Voting over the type and generosity of the pension system when some individuals are myopic. Journal of Public Economics 91, 2041-2061.

Cremer, De Donder, Maldonado and Pestieau (2009). Forced saving, redistribution and non linear social security scheme. Southern Economic Journal 76, 86-98.

Diamond (1977). A Framework for Social Security Analysis. Journal of Public Economics 8, 275-298.

Diamond (1995). Government Provision and Regulation of Economic Support in Old Age. In Proceedings of the Seventh Annual World Bank Conference on Development Economics. Edited by Bruno and Pleskovic. Washington DC: The World Bank, 83- 103.

Diamond (2004). Social Security. American Economic Review 94, 1-24.

Feldstein (1977). Social Insurance. Public Policy 25, 81-115.

9.2 Annuity market



Brown (2000). How Should We Insure Longevity Risk in Pensions and Social Security? Center for Retirement Research Issue in Brief.

Brown (2001). Private Pensions, Mortality Risk, and the Decision to Annuitize. Journal of Public Economics 82, 29-62.

Brown (2001). Are the Elderly Really Over-Annuitized? New Evidence on Life Insurance and Bequests. In Themes in the Economics of Aging. Edited by D. Wise. University of Chicago Press for NBER.

Brown (2001). Redistribution and Insurance: Mandatory Annuitization with Mortality Heterogeneity. Journal of Risk & Insurance 70, 17-41.

Brown, Mitchell, Poterba and Warshawsky (2001). The Role of Annuity Markets in Financing Retirement. Cambridge, MIT Press.

Brown, Mitchell, Poterba, andWarshawsky, (1999). Taxing Retirement Income: Non- Qualiéd Annuities and Distributions from Qualiéd Accounts. The National Tax Journal 52, 563-592.

Brown and Poterba (2000). Joint Life Annuities and the Demand for Annuities by Married Couples. The Journal of Risk and Insurance 67, 527-54.

Brown and Warshawsky. Longevity-Insured Retirement Distributions from Pension Plans: Regulatory and Market Issues. In Public Policies and Private Pensions. Edited by W. Gale, J. Shoven and M. Warhsawsky. Brookings Institution.

Diamond (1997). A Framework for Social Security Analysis. Journal of Public Economics 8, 275-298.

Davido, Brown, and Diamond (2003). Annuities and Individual Welfare. American Economic Review 95, 1573-1590.

Diamond (1995). Government Provision and Regulation of Economic Support in Old Age. In Proceedings of the Seventh Annual World Bank Conference on Development Economics. Edited by Bruno and Pleskovic. The World Bank, 83-103.

Feldstein (1997). Social Insurance. Public Policy 25, 81-115.

Friedman and Warshawsky (1990). The Cost of Annuities: Implications for Saving Behavior and Bequests. Quarterly Journal of Economics 105, 135-154.



Kotliko_ and Spivak (1981). The Family as an Incomplete Annuities Market. Journal of Political Economy 89, 372-291.

9.3 Effect of social security in labor supply

Chan and Stevens (2008). What You Don't Know Can't Help You. Pension Knowledge and Retirement Decision Making. The Review of Economics and Statistics 90, 253-266.

Coile and Gruber (2000). Social Security and Retirement. NBER Working Paper 7830.

Diamond and Gruber (1999). Social Security and Retirement in the United States. In Social Security and Retirement Around the World. Edited by Jonathan Gruber and David Wise. University of Chicago Press, 437-474.

Friedberg (2000). The Labor Supply Eécts of the Social Security Earnings Test. Review of Economics and Statistics 82, 48-63.

Gruber and Wise (1999). Social Security Programs and Retirement Around the World: Introduction and Summary. In Social Security and Retirement Around the World. Edited by Jonathan Gruber and David Wise. Chicago, IL: University of Chicago Press, pp. 1-36.

Gruber and Orszag (2000). Does the Social Security Earnings Test Aéct Labor Supply and Bene_ts Receipt? NBER Working Paper 7923.

Kahn (1998). Social Security, Liquidity, and Early Retirement. Journal of Public Economics 35, 97-118.

Krueger and Pischke (1992). The Eéct of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation. Journal of Labor Economics 10, 412-437.

Samwick (1998). New Evidence on Pensions, Social Security, and the Timing of Retirement. Journal of Public Economics 70, 207-236.

Stock and Wise (1990). Pensions, the Option Value of Work, and Retirement. Econometrica 58, 1151-1180.

Stewart (1995). Do Older Workers Respond to Changes in Social Security Bene_ts? A Look at the Time Series Evidence. Working Paper, O_ce of Employment Research and Program Development, U. S. Department of Labor.





28. Financial Macroeconomics

Course name: Financial Macroeconomics Code: 14700038 Kind of knowledge:







Two (2)

Professor: OVERVIEW In recent years, finance and the economy have been coinciding both analytical tools and research topics. Given this relationship, this course combines topics of macroeconomics and finance with an emphasis on the development and empirical evaluation of the most recent for the assessment and analysis of financial assets theories. These methods are based on dynamic and stochastic models to analyze the profitability and the volatility of the stock market, bond and foreign currency and its relationship to different macroeconomic variables. The use of these models to measure and understand the market risk and to calculate optimal portfolios are analyzed. In the empirical part applications using recent econometric methods to the study of financial assets are reviewed: GMM, factor models and maximum likelihood. This course revolves around three ideas that have revolutionized finance in recent years. First, it is necessary to explain the observed predictability of financial returns through the economic cycle. Second, it is necessary to study economic models that explain risk premium vary over time in response to changes in the macroeconomic environment. Third, all financial assets can be studied under the analysis of stochastic discount factor or marginal rate of intertemporal substitution arising from the first-order conditions of profit maximization problem.


The course evaluation is based on the realization of 3 workshops exercises during the semester and in the presentation of a final written assignment on a topic previously agreed with the teacher. The workshops allow students to understand details of the financial economy by conducting theoretical and econometric exercises. The written work is a literature review that will allow students to examine a specific topic of interest. Additionally, the work must include a short essay in which potential research topics will be identified. The final working note also includes a preliminary presentation in class in which students will explain the generalities of the chosen theme.



COURSE OUTLINE Topic 1: Overview of the Assessment and Analysis of Financial Assets Topic 2: Discount Factors and Border Media-Variance Topic 3: Factor-based models: CAPM and APT ICAPM Topic 4: Based on Consumption Patterns: CRRA, Habits and Preferences Recursive Topic 5: Empirical Evaluation of Asset Pricing Models Topic 6: Options and Bonds Topic 7: Portfolios Theory Topic 8: Currency exchange and exchange risks. REFERENCES Reference book: Cochrane, J. (2005). “Asset Pricing,” Princeton University Press, Revised Edition. Topic 1: Overview of the Assessment and Analysis of Financial Assets

• Cochrane, J. (2005): Capítulos 1 y 2 • Cochrane, J. (2006). “Financial Markets and the Real Economy,” Mimeo, University of

Chicago, Graduate Business School. • Campbell, J. Y., and R. J. Shiller (1988): “The Dividend-Price Ratio and Expectations of

Future Dividends and Discount Factors,” Review of Financial Studies, 1, 195–228. • Cochrane, J. (2007): “The Dog that Did Not Bark: A Defense of Return Predictability,”

Review of Financial Studies, Forthcoming.

Topic 2: Discount Factors and Border Media-Variance • Cochrane, J. (2005): Capítulos 3,4,5 y 6 • Hansen, L. P., and R. Jagannathan (1991): “Implications of Security Market Data for Models

of Dynamic Economies,” Journal of Political Economy, 99(2), 225–262. • Hansen, L. P., and S. F. Richard (1987): “The Role of Conditioning Information in Deducing

Testable Restrictions Implied by Dynamic Asset Pricing Models,” Econometrica, 55(3), pp. 587–613.

Topic 3: Factor-based models: CAPM and APT ICAPM • Cochrane, J. (2005): Capítulo 9 • Fama, E. F., and J. D. MacBeth (1973): “Risk, Return, and Equilibrium: Empirical Tests,” The

Journal of Political Economy, 81, pp. 607–636.

Topic 4: Based on Consumption Patterns: CRRA, Habits and Preferences Recursive • Cochrane, J. (2005): Capítulo 21 • Bansal, R., and A. Yaron (2004): “Risks for the Long Run: A Potential Resolution of Asset

Prizing Puzzles,” The Journal of Finance, 59, 1481–1509. • Campbell, J. Y., and J. H. Cochrane (1999): “By Force of Habit: A Consumption-Based

Explanation of Aggregate Stock Market Behavior,” Journal of Political Economy, 107(2), pp. 205–251.

• Verdelhan, A. (2006): “A Habit Based Explanation of the Exchange Rate Risk Premium,” Working Paper, Boston University.



• Epstein, L. G., and S. Zin (1989): “Substitution, Risk Aversion and the Temporal Behavior of Consumption and Asset Returns: A Theoretical Framework,” Econometrica, 57, 937–969.

• Bansal, R., R. F. Dittmar, and C. Lundblad (2006): “Consumption Dividends and the Cross-Section of Equity Returns,” Journal of Finance, forthcoming.

Topic 5: Empirical Evaluation of Asset Pricing Models • Cochrane, J. (2005): Capítulos 10 al 15. • Hansen, L. P., and K. Singleton (1982): “Generalized Instrumental Variable Estimation of

Nonlinear Rational Expectation Models,” Econometrica, 50, 1269–1286. • Hansen, L. P., and R. Jagannathan (1997): “Assessing Specification Errors in Stochastic

Discount Factor Models,” Journal of Finance, 57(2), 557–590. • Lettau, M., and S. Ludvigson (2001): “Resurrecting the (C)CAPM: A Cross-Sectional Test

When Risk Premia Are Time-Varying,” The Journal of Political Economy, 109(6), 1238–1287.

• Yogo, M. (2006): “A Consumption-Based Explanation of the Cross-Section of Expected Stock Returns,” Journal of Finance, 61(2).

• Shanken, J., and G. Zhou (2007): “Estimating and Testing Beta Pricing Models: Alternative Methods and Their Performance in Simulations,” Journal of Financial Economics, 84, 4086.

• Jagannathan, R., and Y. Wang (2007): “Lazy Investors, Discretionary Consumption, and the Cross-Section of Stock Returns,” Journal of Finance, 62(4), 1623–1661.

Topic 6: Options and Bonds • Cochrane, J. (2005): Capítulos 17 al 19. • Wachter, J. (2006): “A Consumption-Based Model of the Term Structure of Interest Rates,”

Journal of Financial Economics, 79, 365–399. • Piazzesi, M., and M. Schneider (2006): “Equilibrium Yield Curves,” National Bureau of

Economic Analysis Macroeconomics Annual.

Topic 7: Portfolios Theory • Cochrane, J. (2007). “Portfolio Theory,” Mimeo, University of Chicago, Graduate Business

School. • Merton, R. C. (1971): “Optimum Consumption and Portfolio Rules in a Continuous-Time

Model,” Journal of Economic Theory, 3, 373–413. • Campbell, J. Y., and L. M. Viceira (1999): “Consumption and Portfolio Decisions when

Expected Returns are Time Varying,” Quarterly Journal of Economics, 114, 433–495.

Topic 8: Currency exchange and exchange risks • Verdelhan, A. (2006): “A Habit Based Explanation of the Exchange Rate Risk Premium,”

Working Paper, Boston University. • Colacito, R. and M. Croce (2007). “Risks for the Long Run and the Real Exchange Rate,”

Manuscript, University of North Carolina at Chapel Hill, Kenan-Flager Business School.



• Brandt, M., J. Cochrane and P. Santa-Clara (2006). “International Risk Sharing is better than You Think, or Exchange Rates are Too Smooth,” Journal of Monetary Economics, 53, pp. 671-698.

• Lustig, H. and A. Verdelhan (2007). “The Cross-Section of Foreign Currency Risk Premia and Consumption Growth Risk,” The American Economic Review, 97(1), pp. 89-117.



29. Industrial Organization II

Course name: Industrial Organization II Code: 14700055 Kind of knowledge:







Two (2)

Professor:

OVERVIEW

Presentation of the recent theories of Industrial Organization and presentation of advanced topics related with Industrial Organization, with some competition policy applications.


Introduce students to the main modern theories of Industrial Organization and presentation of advanced topics of Industrial Organization.


In this course the students will achieve maturity in their knowledge of the main themes of Industrial Organization.


COURSE OUTLINE

1. Introduction a. Review OI 1

2. Market entry and exit: a. Fixed cost: Natural monopoly and contestability: Maumol et al. model (1982) b. Predation vs Accommodation c. Firms strategies d. Sunk cost and barrier to entry: Stackelberg-Spence-Dixit model



3. Information and business strategies : Reputation, price limit and predation: a. Static competition under asymmetric information b. Accommodation and tacit collusion c. Price strategy limits : the model of Milgrom –Roberts

4. Network economics and 2-sided markets: a. Rochet and Tirole definition (2005) b. Simple model: Amstrong model (2005) c. Two applications d. Competition between health networks: Model of Bardey and Rochet (2009) e. Competition between hospitals: Model of Barde, Cremer and Lozachmeur (2010)

5. Franchising a. Main characteristics b. Alternative vertical relationships c. Agency problems

6. Warranty: a. Main characteristics b. Focus extraction. c. Focus signaling quality. d. Focus of incentives to provide quality e. Double moral hazard: producer vs. consumer effort

7. Publicity: a. Main characteristics b. Publicity and quality signals c. Publicity and persuasion demand d. Effects on competition: Grossmann y Shapiro

8. Media a. Main characteristics. b. Focus of both sides. c. Applications.

9. R & D and innovation : a. Incentives to innovate as the market structure. b. The patents. c. Analysis of welfare.

TEXTBOOKS

• Tirole Jean, The Theory of Industrial Organization, MIT Press, 1993. • Shy Oz, The economics of Networks Industry, Cambridge University Press, 2001. • Motta Massimo, Competition Policy, 2004. • Cabral, Luis, Economía Industrial. McGraw Hill, 2000 • Belleflamme Paul y Peitz Martin. Industrial Organization: Markets and Strategy.

Cambridge University Press, 2010.



• Jeffrey R. Church and Roger Ware. Industrial Organization: A Strategic Approach. New York: McGraw-Hill, 2000.



30. Topics in Economic Regulation

Course name: Topics in Economic Regulation Code: 14700049 Kind of knowledge: Basic Complementary: X Integral formation Course type: Obligatory Elective: X Credit type: Hours of work with





Two (2)

Professor: OVERVIEW The analysis of the recent literature on the theory of economic regulation is vital to generate conceptual abilities allowing the student to review, analyze, criticize and propose strategies in environments in which the state and the private sector meet for the provision of goods and services that neither the one nor the other could provide independently. Also, the design of efficient mechanisms of government administration and the provision of public services such as energy, transport, water and sanitation, education, health and research is of great relevance. This importance stems from the tendency, both in developed and in-developing countries, to delegate the provision of these services to the private sector. The study of these issues has been priority on the agenda of the designers of economic policy and simultaneously has generated a new wave of theoretical and applied research that redefines the understanding of the limits of interaction between the public and private sector. COURSE TRAINING PURPOSES To create a space for the discussion and analysis in the rigorous study of recent advances in the design of governance arrangements in the provision of public services by private agents. It also aims to gain a comprehensive view of the issue through confrontation of the theoretical advances with the reality faced by policy makers. COURSE OUTLINE One (but not limited) indicative list of topics to be studied in the series of directed readings is: Alternatives of public or private ownership of public services infrastructure, Local governments and their relationship with the private sector: "Governance or Government”



Agreements between the public and private sectors in developing countries, Design of concession contracts, Private Finance Initiatives: Current status and perspectives, empirical analysis and sector studies. REFERENCES Laffont, J.J. and J. Tirole, 1993, A Theory of Incentives in Pro- curement and Regulation, MIT Press. Laffont, J.J. and J. Tirole, 2000, Competition in Telecommunications, MIT Press.

List of Specialized Lectures Athias, L. and S. Saussier, 2005, “Contractual Design of Toll Ad- justment Processes in Infrastructure Concession Contracts: What Matters?,.ATOM, University of Paris 1, mimeo.

Bennett, J. and E. Iossa, 2005, “Contracting Out Public Service Provision to Not-For-Profit Firms,”Brunel Business School, mimeo.

Bentz, A., Grout, P. and M. Halonen, 2005, “What Should Go- vernments Buy from the Private Sector,U¨ niversity of Bristol, mimeo. Calvaras, A., Ganuza, J.J. and G. Llobet, 2005, “Regulation and Opportunism: How Much Activism Do We Need?,U¨ niversity of Pompeu Fabra, mimeo. Calzolari, G. and C. Scarpa, 2006, “Regulating a Multi-Utility Firm,U¨ niversity of Bologna, mimeo. Calzolari, G. and G. Spagnolo, 2005, “Reputation and Collusion in Procurement,U¨ niversity of Bologna, mimeo.

Chong, E. and F. Huet, 2005, “Yardstick Competition, Franchise Bidding and Collusive Incentives,.ATOM, University of Paris 1, mimeo.

Chong, E., Huet, F. and S. Saussier, 2005, “Auctions, Ex Post

Competition and Prices: The Efficiency of Public-Private Partnerships,.ATOM, University of Paris 1, mimeo.

Desrieux, C., 2005, “Governance Structures and Relational Con- tracting in Local Public Services: A Comparison of French and American Public-Private Partnerships,.ATOM, Univer- sity of Paris 1, mimeo.

Ellman, M., 2005, “Does Privatisation of Public Services Redu- ce Government Accountability for Quality Problems?,U¨ niversity of Pompeu Fabra, mimeo.

Engel, E., Fischer, R. and A. Galetovic, 2005, “The Basic Pu- blic Finance of Public-Private Partnerships,”Yale University, mimeo.

Fang, H. and P. Norman, Peter, 2005, “Public Provision of a Private Good as a Constrained Efficient Outcome,U¨ niversity of British Columbia, mimeo.



Garcia, S., Moreaux, M. and A. Reynaud, 2005, “Measuring Eco- nomies of Vertical Integration in Network Industries: An Ap- plication to the Water Sector,U¨ niversity of Toulouse, IDEI, mimeo. Hyytinen, A., Lundberg, S. and O. Toivanen, 2005, “Favoritism in Public Procurement: Evidence from Sweden,U¨ niversity of Helsinki, mimeo. Lavile, R. and A. Schmutzler, 2005, “Competition for Railway Markets: The Case of Baden-Wu¨rttemberg, U¨ niversity of Zu- rich, mimeo.

Levin, J. and S. Tadelis, 2005, “Contracting for Government Ser- vices: Theory and Evidences from the U.S. Cities,U¨ niversity of California at Berkeley, mimeo.



31. Topics in Economic Regulation (4 credits)

Course name: Topics in Economic Regulation Code: 14700010 Kind of knowledge: Basic Complementary: X Integral formation Course type: Obligatory Elective: X Credit type: Hours of work with





Four (4)

Professor: OVERVIEW The analysis of the recent literature on the theory of economic regulation is vital to generate conceptual abilities allowing the student to review, analyze, criticize and propose strategies in environments in which the state and the private sector meet for the provision of goods and services that neither the one nor the other could provide independently. Also, the design of efficient mechanisms of government administration and the provision of public services such as energy, transport, water and sanitation, education, health and research is of great relevance. This importance stems from the tendency, both in developed and in-developing countries, to delegate the provision of these services to the private sector. The study of these issues has been priority on the agenda of the designers of economic policy and simultaneously has generated a new wave of theoretical and applied research that redefines the understanding of the limits of interaction between the public and private sector. COURSE TRAINING PURPOSES To create a space for the discussion and analysis in the rigorous study of recent advances in the design of governance arrangements in the provision of public services by private agents. It also aims to gain a comprehensive view of the issue through confrontation of the theoretical advances with the reality faced by policy makers. COURSE OUTLINE One (but not limited ) indicative list of topics to be studied in the series of directed readings is: Alternatives of public or private ownership of public services infrastructure, Local governments and their relationship with the private sector: "Governance or Government "



Agreements between the public and private sectors in developing countries , Design of concession contracts, Private Finance Initiatives : Current status and perspectives, empirical analysis and sector studies. REFERENCES Laffont, J.J. and J. Tirole, 1993, A Theory of Incentives in Pro- curement and Regulation, MIT Press. Laffont, J.J. and J. Tirole, 2000, Competition in Telecommunications, MIT Press.

List of Specialized Lectures Athias, L. and S. Saussier, 2005, “Contractual Design of Toll Ad- justment Processes in Infrastructure Concession Contracts: What Matters?,.ATOM, University of Paris 1, mimeo.

Bennett, J. and E. Iossa, 2005, “Contracting Out Public Service Provision to Not-For-Profit Firms,”Brunel Business School, mimeo.

Bentz, A., Grout, P. and M. Halonen, 2005, “What Should Go- vernments Buy from the Private Sector,U¨ niversity of Bristol, mimeo. Calvaras, A., Ganuza, J.J. and G. Llobet, 2005, “Regulation and Opportunism: How Much Activism Do We Need?,U¨ niversity of Pompeu Fabra, mimeo. Calzolari, G. and C. Scarpa, 2006, “Regulating a Multi-Utility Firm,U¨ niversity of Bologna, mimeo. Calzolari, G. and G. Spagnolo, 2005, “Reputation and Collusion in Procurement,U¨ niversity of Bologna, mimeo.

Chong, E. and F. Huet, 2005, “Yardstick Competition, Franchise Bidding and Collusive Incentives,.ATOM, University of Paris 1, mimeo.

Chong, E., Huet, F. and S. Saussier, 2005, “Auctions, Ex Post

Competition and Prices: The Efficiency of Public-Private Partnerships,.ATOM, University of Paris 1, mimeo.

Desrieux, C., 2005, “Governance Structures and Relational Con- tracting in Local Public Services: A Comparison of French and American Public-Private Partnerships,.ATOM, Univer- sity of Paris 1, mimeo.

Ellman, M., 2005, “Does Privatisation of Public Services Redu- ce Government Accountability for Quality Problems?,U¨ niversity of Pompeu Fabra, mimeo.

Engel, E., Fischer, R. and A. Galetovic, 2005, “The Basic Pu- blic Finance of Public-Private Partnerships,”Yale University, mimeo.

Fang, H. and P. Norman, Peter, 2005, “Public Provision of a Private Good as a Constrained Efficient Outcome,U¨ niversity of British Columbia, mimeo.



Garcia, S., Moreaux, M. and A. Reynaud, 2005, “Measuring Eco- nomies of Vertical Integration in Network Industries: An Ap- plication to the Water Sector,U¨ niversity of Toulouse, IDEI, mimeo. Hyytinen, A., Lundberg, S. and O. Toivanen, 2005, “Favoritism in Public Procurement: Evidence from Sweden,U¨ niversity of Helsinki, mimeo. Lavile, R. and A. Schmutzler, 2005, “Competition for Railway Markets: The Case of Baden-Wu¨rttemberg, U¨ niversity of Zu- rich, mimeo.

Levin, J. and S. Tadelis, 2005, “Contracting for Government Ser- vices: Theory and Evidences from the U.S. Cities,U¨ niversity of California at Berkeley, mimeo.



32. Non-Parametric and Semiparametric Econometrics

Course name: Non-Parametric and Semiparametric Econometrics Code: 14700058 Kind of knowledge:







FOUR (4)

Professor: OVERVIEW The statistical techniques used in economic analysis have extended both the nature of the data used and the range of subjects studied. Currently, volatility issues, duration of events, conditional probabilities decision, etc. are analyzed. The purpose of non-parametric and semi – parametric econometrics is easing restrictions made in the classical methods and using the data to make inferences and test hypotheses with the lowest possible assumptions. In other words: "ensure that data speak by itself." COURSE TRAINING PURPOSES After completing the course the student should be able to handle and apply concepts required in the study of basic techniques in non-parametric and semi-parametric methods commonly used today. These methods are essential for intermediate and advanced studies in the area, and therefore the basis of statistical theory related to these issues must be strengthen. Also, students should know how to identify and raise questions that xsome academic papers related to this topic try to answer, you should be able to replicate some results of these items and should implement these techniques in student research . COURSE OUTLINE • Estimating the density in data analysis

ü Definitions ü Use in the exploration and presentation of data ü recent literature OVERVIEW ü Histogram

• Conditional estimation ( non-parametric regression )



ü Kernel Method ü Nadaraya -Watson estimator ü Approach WARP ü Nearest neighbor ü spline- based method

• Bandwidth Selection

ü Cross-Validation ü Functions to penalize

• Local polynomial regression

ü Advantages ü Polynomial order that should be used ü Applications

• Simple semiparametric models

ü Binary Model ü Additions and interactions ü Parametric Component ü Inference ü Hypothesis testing

• Introduction to mixed models

ü Models with fixed effects ü Models with random effects

• Quantile regression models

ü Inference ü Applications

• Topics in the analysis of survival data

ü Estimation of the hazard and survival function ü Permutation tests for type I and II errors ü Comparison of survival functions

• Methods of a sample

ü Definitions



ü Tests for the median of a binomial distribution ü Confidence intervals for the bad quantile

• Methods of two samples

ü Permutation tests on two samples ü Wilcoxon Test ü Testing for equal scale parameters ü Boostrap methods

• Methods for k samples

ü Permutation tests ü Kruskal Wallis test ü Multiple comparisons ü Ordered alternatives

• Test for bivariate data association

ü Measures of association for bivariate data ü Measures of association for contingency tables ü Permutation tests for contingency tables and chi-square ü Fisher test ü Crosstabs with ordered categories

• Goodness of fit tests TEXTBOOKS Conover w, (1978), Practical Nonparametrics Statistics, Jhon Wiley and Sons. Devroyre L, (1987), A course in Density Estimation, Birkhauser. Fan J and Gijbels I. (1997), Local polynomial Modelling and Its Applications, Chapman Hall. Gibbons, J. (1963), Nonparametric Statistics Inference, Mc GRaw Hill Hardle W, (1990), Smoothing Techniques, Springer Verlag. Hastie Trevor, Tibshirani Robert, Friedman Jerome T, 2002, The Elements of Statistical Learning, Springer Verlag. Hollander, M and Wolfe D, 1999, Nonparametric Statisitcal Methods, John Wiley and Sons Lehman F, (1998), Nonparametrics Statistical Methods Based on Ranks, Prentice Hall. Ruppert D, Wand M, Carrol R, (1995), Semiparametric Regression, Cambridge Series in Statistical and Probabilistic Mathematics. Pagan A, (1999), Nonparametric Econometrics, Cambridge. Siegel, S (1988), No Parametrics for the Behavioural Science, Mc Graw Hill. Silverman, W, (1986), Density Estimation for Statistics and Data Analysis, Chapman Hall



COMPLEMENTARY TEXTBOOKS Searle, S. R. Linear Models, 1971, John Wiley and Sons Hall, A, 2005, Generalized Method of Moments. Oxford. Draper and Smith 1998, Applied Regression Analysis, N.Y. Wiley. Kutner, Nachtsheim, Neter, Applied Linear Regression, Mc-Graw Hill. Bates D, Watts D. Nonlinear analysis Regression and its applications, John Wiley and Sons



33. Topics in Monetary Policy

Course name: Topics in Monetary Policy

Code: 14700061

Kind of knowledge:


Course type: Obligatory Elective: X Credit type: Hours of work with direct

support from professor: 32




Two (2)

Professor: OVERVIEW In recent years, most developed and developing countries have experienced the benefits and costs of living in a globalized economy. Therefore, the economists are called to clearly understand these phenomena in order to provide economic and political authorities, in each of their respective economies, different policy alternatives that allow to ensure the welfare of its inhabitants. COURSE TRAINING PURPOSES In particular this course is to identify, understand and quantify the transmission mechanisms of monetary policy between countries in order to provide the monetary authorities decision rules optimal to enable them to carry out objectives such as maximizing the welfare of their respective economies. EXPECTED LEARNING OUTCOMES To develop this idea, macroeconomists, in Central Banks and academia, have developed, implemented and estimated various classes of stochastic dynamic general equilibrium models (DSGE). This model has the great advantage of allowing identify shocks that affect different economies, to understand quite clearly and precisely much different economic phenomena, given that they are derived from microeconomic foundations, that different countries face every day .



In this course, the main objective is to understand and derive largely numerically cases, different rules of optimal monetary policy according to the structure of each economy. This requires resolve and understand how the different families of models (DSGE) are estimated. In the first part of the course, students learn as analytically and numerically solve these models, using very simple examples. In the second part of the course students learn to use different computational tools to solve larger models. This is not a course in computational economics, so the classes are not going to concentrate on understanding how they work in detail the different solution algorithms. COURSE OUTLINE Topics . A Brief Review of Implementation Solution and Estimating Stochastic Dynamic General Equilibrium Model (DSGE) 1.1 Model of Real Business Cycle - RBC 1.1.1 Analytical Solution • Steady State • first-order approximation method of undetermined coefficients Suggested reading: Bejarano (2012), Kydland and Prescott (1982), Long and Plosser (1983) and King and Rebelo (1999) 1.1.2 Numerical Solution • Global Methods • Local Approach Methods Suggested reading: Judd (1992), Christiano and Fisher (2000), Blanchard and Kahn (1980), Klein (2000) and Uhlig (1995). 1.1.3 Calibration Suggested reading: Bejarano (2012) and Bonaldi et al. (2011) 1.1.4 Estimation



• Maximum Likelihood • Bayesian Suggested reading: Ireland (2004), Lubik and Schorfheide (2005), Koop (2003) and Gri_oli07 (2007) 1.2 Model for Closed New Keynesian Economics 1.2.1 Analytical Solution • Steady State • first-order approximation method of undetermined coefficients Suggested reading: Bejarano (2012), Chapters 2 and 6 in Walsh (2010) and Chapters 2 and 3 in Gali (2008) 1.2.2 Numerical Solution • Global Methods • Local Approach Methods Suggested reading: Judd (1992), Christiano and Fisher (2000), Blanchard and Kahn (1980), Klein (2000) and Uhlig (1995). 1.2.3 Calibration Suggested reading: Bejarano (2012) and Bonaldi et al. (2011). 1.2.4 Estimation • Maximum Likelihood • Bayesian Suggested reading: Ireland (2004), Lubik and Schorfheide (2005), Koop (2003) and Gri_oli07 (2007). Optima 1.2.5 Monetary Policy Suggested reading: Bejarano (2012), Cap__tulos 4 and 5 in Gali (2008), Lubik and Schorfheide (2004). 2. DSGE models in two countries 2.1 Models with a single well



Suggested reading: Backus et al. (1992), Baxter and Crucini (1993), Chapter 9 in Walsh (2010) and Wang and Wen (2007). 2.2 Models with two goods Suggested reading: Corsetti and Pesenti (2004), Corsetti and Pesenti (2005), Corsetti et al. (2008), Devereux and Engel (2003) and Bejarano (2010). 2.3 Models Indexing choice Exports Suggested readings: Obstfeld and Rogo_ (1995), Devereux and Engel (2003), Devereux et al. (2004), Corsetti and Pesenti (2004) and Bhattarai (2009). 2.4 International Monetary Policy: Cooperative Cooperative vs No Suggested reading: Benigno and Benigno (2008), Corsetti and Pesenti (2005), Gali (2010) and Bejarano (2010). 3. DSGE Models for Economies Peque ~ nas and Open 3.1 Models of complete markets Suggested reading: Gali and Monacelli (2005), Chapter 9 Walsh (2010), Chapter 7 in Gali (2008) and Chapter 2 in Uribe (2012). 3.2 Models of Incomplete Markets Suggested reading: Mendoza (1991), Chapter 4 in Uribe (2012) Gonzalez et al. (2011) and Mendoza and Asea (1994). 3.3 Models with Endogenous Financial Constraints Suggested reading: Durdu et al. (2009), Benigno et al. (2010) Korinek (2011) and Bianchi and Mendoza (2011). REFERENCES Backus, D., Kehoe, P., Kydland, F., 1992. International real business cycles. Journal of Political Economy 100 (4), 745{775. Baxter, M., Crucini, M., Jun 1993. Explaining saving-investment correlations. The American Economic Review 83 (3), 416{436. Bejarano, J., 2010. Optimal monetary policy under endogenous currency invoicing. Tech. rep., Mimeo - TAMU, available at http://econweb.tamu.edu/bejaranoj/Research_files/Job_ Market_Paper.pdf.



Bejarano, J., 2012. Topics in international monetary policy. Lecture Notes. Benigno, G., Benigno, P., April 2008. Implementing international monetary cooperation through ination targeting. Macroeconomic Dynamics 12, 45-59. Benigno, G., H, C., Otrok, C., Rebucci, A., Young, E., Jun. 2010. Revisiting overborrowing and its policy implications. CEPR Discussion Papers 7872, C.E.P.R. Discussion Papers. URL http://ideas.repec.org/p/cpr/ceprdp/7872.html Bhattarai, S., 2009. Optimal currency denomination of trade: Theory and quantitative exploration. Tech. rep., Princeton University, available at http://www.princeton.edu/~sbhattar/Research/JMP.pdf. Bianchi, J., Mendoza, E. G., Feb. 2011. Overborrowing, financial crises and macro-prudential policy? IMFWorking Papers 11/24, International Monetary Fund. Blanchard, O. J., Kahn, C., 1980. The solution of linear diference models under rational expectations. Econometrica 48 (5), 1305{1312. Bonaldi, P., Prada, J., Gonzalez, A., Rodriguez, D., 2011. Método numérico para la calibración de un modelo dsge. Revista Desarrollo y Sociedad 68,119-156. Christiano, L., Fisher, J., 2000. Algorithms for solving dynamic models with occasionally binding constraints. Journal of Economic Dynamics and Control 24 (8), 1179{1232. Corsetti, G., Dedola, L., Leduc, S., 2008. International risk sharing and the transmission of productivity shocks. Review of Economic Studies 75, 443-473. Corsetti, G., Pesenti, P., 2004. Endogenous pass-through and optimal monetary policy: A model of self-validating exchange rate regimes. Tech. rep. CEPR Working Paper No. 8737, available at http://www.econ.cam.ac. uk/faculty/corsetti/research_files/svoca.pdf. Corsetti, G., Pesenti, P., 2005. International dimensions of optimal monetary policy. Journal of Monetary Economics 52 (2), 281-305. Devereux, M., Engel, C., 2003. Monetary policy in the open economy revisited: Price setting and exchange rate exibility. Review of Economics Studies 70 (4), 765-783. Devereux, M., Engel, C., Storgaard, P., 2004. Endogenous exchange rate pass-through when nominal prices are set in advance. Journal of International Economics 63, 263-291. Durdu, C. B., Mendoza, E., Terrones, M., July 2009. Precautionary demand for foreign assets in sudden stop economies: An assessment of the new mercantilism. Journal of Development Economics 89 (2), 194-209.



Gali, J., 2008. Monetary Policy, Ination, and the Business Cycle: An Introduction to the New Keynesian Framework. Princeton University Press, Princeton,NY,USA. Gali, J., 2010. International Dimensions of Monetary Policy. University of Chicago Press, Chicago,IL,USA. Gali, J., Monacelli, T., 2005. Monetary policy and exchange rate volatility in a small open economy. Review of Economics Studies 72, 707-734. Gonzalez, A., Mahadeva, L., Prada, J., Rodrguez, D., 2011. Policy analysis tool applied to colombian needs: Patacon model description. Tech. rep., Borradores de Economia - Banco de la Republica, available at http:// www.banrep.gov.co/docum/ftp/borra656.pdf. Gri_oli07, T., 2007. Dynare user guide: An introduction to the solution and estimation of dsge models. Tech. rep., Dynare, available at http://www.dynare.org/documentation-and-support/user-guide. Ireland, P., March 2004. A method for taking models to the data. Journal of Economic Dynamics and Control 28 (6), 1205-1226. Judd, K., 1992. Projection methods for solving aggregate growth models. Journal of Economic Theory 58 (2), 410452. King, R., Rebelo, S., 1999. The Handbook of Macroeconomics. Elsevier, Amsterdam, NL, pp. 927-1007. Klein, P., 2000. Using the generalized schur form to solve a multivariate linear rational expectations model. Journal of Economic Dynamics and Control 24 (10), 1405-1423. Koop, G., 2003. Bayesian Econometrics. John Wiley, West Sussex, England. Korinek, A., August 2011. The new economics of prudential capital controls. IMF Economic Review 59 (3). Kydland, F., Prescott, E., 1982. Time to build and aggregate uctuations. Econometrica 50, 1345-1370. Long, G., Plosser, C., 1983. Real business cycle. Journal of Political Economy 91, 39{69. Lubik, T., Schorfheide, F., 2004. Ination targeting and optimal monetary policy. Review, Federal Reserve Bank of St. Louis, 15-42. Lubik, T., Schorfheide, F., 2005. A bayesian look at the new open economy macroeconomics. NBER Macroeconomics Annual 20, 313-382.



Mendoza, E., Sep 1991. Real business cycles in a small open economy. American Economic Review 81 (4), 797-818. Mendoza, E., Asea, P., 1994. The balassa-samuelson model: A generalequilibrium appraisal. Review of International Economics 2 (3), 244-267. Obstfeld, M., Rogo_, K., 1995. Exchange rate dynamics redux. Journal of Political Economy 103, 624-660. Uhlig, H., 1995. A toolkit for analyzing nonlinear dynamic stochastic models easily. Tech. rep., Federal Reserve Bank of Minneapolis, available at http://minneapolisfed.org/ research/DP/DP101.pdf. Uribe, M., 2012. Open economy macroeconomics. Available at http://www.columbia.edu /~mu2166/GIM/lecturefinotes.pdf. Walsh, C., 2010. Monetary Theory and Policy. The MIT Press, Cambridge, MA,USA. Wang, P., Wen, Y., 2007. Ination dynamics: A cross-country investigation. Journal of Monetary Economics 54, 2004-2031.





34. Policy Competition

Course name: Policy Competition Code: 14700040 Kind of knowledge: Basic Complementary: X Integral formation Course type: Obligatory Elective: X Credit type: Hours of work with





Two (2)

Professor: OVERVIEW Competition laws have spread throughout different countries, being a priority on institutional changes in order to maintain and promote competition in local markets. The development of these policies is dynamic and varied in different regions and countries. These circumstances give relevance to a generation of specialists in the area to work on practical and academic aspects in the field. This course aims to introduce the main analytical tools of industrial organization to competition policy, introducing quantitative tools used in the practice of competition policy and case studies addressing different reality in the different themes of the competition policy.

COURSE TRAINING PURPOSES To introduce students to the main theories of Competition Policy, to its fundamental objectives, its evolution, the frontier research, its empirical tools and the most prominent national and international case studies, emphasizing cases that generate controversy. Two theoretical emphasis will be addressed, theoretical and empirical real case studies.

EXPECTED LEARNING OUTCOMES The student who has completed this course will be able to apply different analytical tools to cases related to competition policy and use the corresponding quantitative tools. Students will develop a critical mind and will have highly advantageous conditions for the practical and academic exercise in the areas of competition.

COURSE OUTLINE First part: Competition policy in history



1.1 Introduction 1.2 Important laws in history 1.3 Objectives of competition policy and public policy: what objective between economic efficiency and consumer protection? 1.4 The main principles of competition policy in the EU and the US.

Second part: Market power and welfare

2.1 Allocative efficiency. 2.2 Production efficiency. 2.3 Dynamic efficiency. 2.4 Public policy and incentives to innovation. 2.5 Monopoly and market structure dynamics. 2.6 OVERVIEW and conclusions.

Third part: Market definition and assessment of market power

3.1 Introduction 3.2 Market Definition:

• The test SSNIP • Degree of substitutability • Test price correlation, direct and cross-price elasticities.

3.3 Estimation of market power: theoretical and empirical aspects. Fourth Part: Horizontal Mergers

4.1 Introduction. 4.2 Unilateral effects. 4.3 Pro-collusive effects. 4.4 A general model. 4.5 Alternative Means of mergers.

Fifth part: Evidence and controversy in horizontal mergers

5.1 Policy mergers in the EU vs USA. 5.2 Case Study 1: approval. 5.3 Case Study 2: remedies. 5.4 Case Study 3: prohibition. 5.5 Case Study 4: Differential for market analysis.



Sixth part: Collusion and horizontal agreements

6.1 Introduction: What is collusion? 6.2 Structural factors that facilitate collusion. 6.3 Legal systems and punishments. 6.4 What should be legal and what illegal? 6.5 Joint-Ventures and horizontal agreements. 6.6 Informers and betrayed.

Seventh part: Evidence and controversy in collusion and horizontal agreements

7.1 Policy investigations of collusive agreements in the EU vs USA. 7.2 Case Study of parallel behavior. 7.3 Case study of international prices agreement. 7.4 Case study: the success of the informers program.

Octave part: Restrictions and vertical mergers

8.1 What is a vertical restraint? 8.2 Intra-branch competition. 8.3 Inter-branch competition. 8.4 Anti-competitive effects of vertical restraints. 8.5 Conclusions and competition policy.

Ninth part: Evidence and controversy restrictions and vertical mergers

9.1 Policies of Vertical Restraints in EU vs USA. 9.2 Case Study: Exclusivity contracts. 9.3 Case Study: "Rebates" and "loyalty discounts". 9.4 Case Study: "Tying". 9.5 Case Study: "Vertical foreclosure". 9.6 Case Study: Resale Price Maintenance. 9.7 Case Study: Refusal to sell. 9.8 Case Study: Distributions market.

Tenth part: Competition policy and markets of both sides



10.1 Introduction. 10.2 Characteristics of two-sided markets: network externalities. 10.3 Implications on competition policy: the eight errors in reasoning (Wright, 2004). 10.4 The economic sectors involved.

BASIC TEXTBOOKS The bibliography will be given ahead for each chapter. However, the topics will be cover following the above list of key books:

- Motta Massimo, Competition Policy, Cambridge, 2004. - Vives Xavier, Competition Policy in the EU: Fifty Years on from the Treaty of

Rome. Oxford University Press, 2009. - Handbook of Antitrust Economics, edited by Buccirossi Paolo, MIT Press, 2008

COMPLEMENTARY TEXTBOOKS Other reference books are:

- Belleflamme Paul y Peitz Martin. Industrial Organization: Markets and Strategy. Cambridge University Press, 2010.

- Jeffrey R. Church and Roger Ware. Industrial Organization: A Strategic Approach. New York: McGraw-Hill, 2000.

- Tirole Jean, The Theory of Industrial Organization, MIT Press, 1993. - Shy Oz, The economics of Networks Industry, Cambridge University Press, 2001. - Cabral, Luis, Economía Industrial. McGraw Hill, 2000.





35. Labor Economics (2 credits)

Course name: Labor Economics Code: 14700043 Kind of knowledge: Basic Complementary: X Integral formation Course type: Obligatory Elective: X Credit type: Hours of work with





Two (2)

Professor: OVERVIEW Labor economics is one of the most multidimensional areas in economic analysis. It comprehends theoretical concepts related with macroeconomics, microeconomics, political economy and institutional economy. Additionally, due to the narrow connection between labor aspects and daily life, labor economics also involves topics in empirical methods. In this way, there are different categories (like wage, employment, unemployment or discrimination) that connect the economic environment with the social, political and cultural aspects. Emphasis will be placed on New Keynesian perspective on labor market, stressing in theoretical foundations and empirical analysis of the existence of involuntary unemployment. COURSE TRAINING PURPOSES This course is intended in the training of the students in the fundamentals, management and analysis of analytics tools in labor economics. It provides knowledge in quantitative analysis (approach of stock and flow), disequilibrium in labor market analysis (labor participation, unemployment, sub employment, informality and wage push inflation) and also, this course introduces the students the analysis of the micro fundamentals causes of disequilibrium, by means of New Keynesian rigidities. EXPECTED LEARNING OUTCOMES Upon the successful completion of this course, students should be able to undertake analysis of current laboral market situation, either static or dynamic, diagnose the particular circumstances of laboral market and offer politics intended to address the problems. In advanced theoretical terms, the student will be able to characterize the basic elements of the labor market disequilibrium and, in the case that surge involuntary unemployment, the student will be able to support this situation throughout theoretical models. COURSE OUTLINE:



1. Introduction: Basic elements laboral market analysis. Basic statistics and typology of unemployment. Stock and flow approach.

1.1. First Quiz (10%) 1.2. Laboral market theoretical approach (Solimano) 1.3. Laboral relationships

1.3.1. Models of the Labor Contract. 1.3.2. Internal Labor Markets and Transaction Costs. 1.3.3. Implicit Contract Theory. 1.3.4. Work Incentive Contracts. 1.3.5. Efficiency wages

1.4. Second Quiz (10%) 1.5. Specific Models

1.5.1. Efficiency wages. 1.5.2. Implicit contracts. 1.5.3. Principal-Agent model.

1.6. First exam (25%) 1.7. Contemporary Labor Disputes.

1.7.1. Minimum Wage. 1.7.2. Informality. 1.7.3. Hysteresis. 1.7.4. Migration. 1.7.5. Flexibility vs. Social protection.

REFERENCES

• Agell, J., Keen, M. y Weichenrieder, A. (2004), Labor Market Institutions and Public Regulation.

• Akerlof, G. (1982), “Labor Contracts as Partial Gift Exchange”, The Quarterly Journal of Economics, 97(4).

• Akerlof, G. (1984), “Gift Exchange and Efficiency-Wage Theory: Four Views”, The American Economic Review, 74(2).

• Azariadis, C., Stiglitz, J. (1983), “Implicit Contracts and Fixed Price Equilibria”, The Quarterly Journal of Economics, 98.

• Boeri, T., van Ours, J. (2008), The Economics of Imperfect Labor Markets. • Bosworth, D., Dawkins, P., Stromback, T., (1996), The Economics of the Labour Market. • Boyer, G., Smith, R. (2001), “The Development of the Neoclassical Tradition in Labor

Economics”, Industrial and Labor Relations Review, 54(2), pp. 199-223. • Card, D., Krueger, A. (1995), Myth and Measurement: The New Economics of the

Minimum Wage. • Cunningham, W. (2007), Minimum Wages and Social Policy. • Dobbie, M., (2004), “Hysteresis and Insider-Outsider Theory: A Literature Review”. • Ehremberg, R., Smith, R., (2006), Modern Labor Economics.



• Flanagan, R. (1984), “Implicit Contracts, Explicit Contracts and Wages”, The American Economic Review, 74(2).

• Foster, J., Wan, H. (Jr.), (1984), “Involuntary Unemployment as a Principal-Agent Equilibrium”, The American Economic Review, 74(3).

• Gibbons, R., Katz, L. (1991), “Layoffs and Lemons”, Journal of Labor Economics, 9(4). • Heart, O. (1983), “Optimal Labour Contracts under Asymetric Information: An

Introduction”, The Review of Economic Studies, 50(1). • Iregui, A., Melo, B., Ramirez, A. (2009), “Rigideces de los salarios a la baja en Colombia:

Evidencia empírica a partir de una muestra de salarios a nivel de firma”. Borradores de Investigación, No. 571.

• Lazear, E. (1984), “Incentives and Wage Rigidity”, The American Economic Review, 74(2). • Lindbeck, A., Snower, D., (1987), “Efficiency Wages versus Insiders and Outsiders”, The

European Economic Review, 31. • Lindbeck, A., Snower, D., (2002), “The Insider-Outsider Theory: A Survey”, IZA Discussion

Paper Series No. 534. • Riley, J. (2001), “Silver Signals: Twenty-Five Years of Screening and Signaling”, Journal of

Economic Literature, 39(2).



36. Behavioral Economics

Course name: Behavioral Economics Code: 14700064 Kind of knowledge: Basic Complementary: x Integral formation Course type: Obligatory Elective: x Credit type: Hours of work with





Two (2)

Professor: OVERVIEW This course introduces you to a relatively new - although fast-growing - field: psychology and economics (also known as behavioral economics). The goal is to learn how to think about economic decision-making in a psychologically richer way while maintaining the rigor of economic analysis. You will learn (i) what are the basic psychological phenomena that are most important for economics; (ii) how to identify these phenomena from simple decisions and capture them in economic terms; and (iii) how they should change our understanding of basic economic questions. This class will question the assumption of the standard model of economics, but not the fundamental emphasis of economics on mathematical tools and formal models. The goal is to present models of individual choice- similar to the standard models of microeconomics- that increase the psychological realism and improve the predictive power. In a nutshell, rather than analyzing standard “economic robots”, we are going to study a more realistic version of these same robots- where some behavioral considerations are programmed into them.

COURSE OUTLINE: • Introduction

What is Behavioral Economics, and how is it different form other fields? Themes in Behavioral Economics, illustrated through a few examples.

Reference-Dependent Preferences

Kahneman and Tversky’s prospect theory: evidence and features. Economic applications of prospect theory.

What is a reference point?

• Intertemporal Choice

Samuelson’s exponential-discounting model. Hyperbolic discounting and self-control.



Anxiety, optimism, and other anticipatory emotions. Misperception of future utility.

Projection bias.

Beliefs, Information and Updating

Anticipatory and ego utility.

Utility from Beliefs and communication. Law of small numbers.

Base rate neglect.

Heuristics and biases in probability judgements.

• Social Preferences

Distributional models. Intention models.

Malleability and Inaccessibility of preferences

Construction of preferences. Context effects.

Piecemeal Preferences.

REFERENCES Matthew Rabin, Psychology and Economics, Journal of Economic Literature, Vol. 36, No. 1 (Mar., 1998), pp. 11-46. Nava Ashraf, Colin F. Camerer, George Loewenstein, Adam Smith, Behavioral Economist, Jour- nal of Economic Perspectives, vol. 19(3), 2005. Reference-Dependent Preferences Daniel Kahneman and Amos Tversky, Prospect Theory: An Analysis of Decision under Risk, Econo- metrica, 47(2), 1979. Daniel Kahneman, Jack L. Knetsch, and Richard H. Thaler Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias, Journal of Economic Perspectives, 1991, Vol 5(1). Matthew Rabin, Risk Aversion and Expected-Utility Theory: A Calibration Theorem, Econo- metrica, Econometric Society, vol. 68(5), September 2000. Botond K˝ozsegi and Matthew Rabin, A Model of Reference-Dependent Preferences, Quarterly Journal of Economics, 2006, 121 (4). Choice Over Time Samuelson, Paul, A Note on Measurement of Utility, Review of Economic Studies, 1937, 4 (2). Laibson, David, Golden Eggs and Hyperbolic Discounting, The Quarterly Journal of Economics Vol. 112, No. 2, 1997. O’Donoghue, Ted and Matthew Rabin, Doing It Now or Later, American Economic Review, 1999, 89 (1). Loewenstein, George, Ted O’Donoghue, and Matthew Rabin, Projection Bias in Predicting Future Utility, Quarterly Journal of Economics, 2003, 118 (4). Beliefs Information and Updating Loewenstein, George, Anticipation and the Valuation of Delayed Consumption, The Economic Jour- nal, 1987, 97.



Botond K˝oszegi, Utility from anticipation and personal equilibrium, Economic Theory, Springer, vol. 44(3), September 2010. Caplin, Andrew and John Leahy, The Supply of Information by a Concerned Expert, Economic Journal, 2004, 114 (497). Matthew Rabin, Inference by Believers in the Law of Small Numbers, Quarterly Journal of Economics, 2002, 117 (3). Social Preferences Gary Charness and Matthew Rabin, Understanding Social Preferences with Simple Tests, Quarterly Journal of Economics, 2002, 117 (3). Matthew Rabin, Incorporating Fairness into Game Theory and Economics, American Economic Review, 1993, 83 (5).



37. Industrial Organization

Course name: Industrial Organization Code: 14700006 Kind of knowledge: Basic Complementary:: X Integral formation Course type: Obligatory Elective:: X Credit type: Hours of work with


Hours of independent work from student:128


Número de Créditos: Four (4) Professor:

OVERVIEW

Presentation of the recent theories of Industrial Organization and competition policy applications


Introduce students to the main theories of Industrial Organization.

Expected learning outcomes (ELOs):

• In this course the students will achieve maturity in their knowledge of the main themes of Industrial Organization.


COURSE OUTLINE

Introduction:

History of Industrial Organization. What is industrial organization? What is a company? What objectives does the company have? What kind of problems we are going to study?

PART : MONOPOLY

Monopoly In a static model : Uni- product monopoly . Multi-product monopoly .



Monopoly and quality. Monopoly and advertising.

In a dynamic model : Effect goodwill . Quality and duration. Durable goods.

Monopoly and price discrimination: Linear prices vs nonlinear First degree price discrimination Second degree price discrimination Third degree price discrimination

Monopoly and vertical control: Linear prices and vertical controls Vertical controls and externalities Competition on downstream markets

PART: STRATEGIC INTERACTIONS

Short-term competition and oligopoly Quantity competition: Cournot Stackelberg Price competition: Bertrand Model Capacity restriction Concentration index, profits and welfare

Competition and collusion: Repeated games and collusion Factors that benefit collusion Lag monitoring Stochastic demand and collusion Reputation problems Multi-market contact

Product differentiation: Spatial competition: Linear city: Hotelling model (1929) Circular city: Salop model (1929) Competition and publicity Competition and vertical differentiation



Market entry and exit: Fixed Cost: natural monopoly and contestability: Baumol et al (1982) model. Sunk costs and barriers to entry: the model of Stackelberg-Spence-Dixit. Business strategies. Exercise: a game input. Information and business strategies: Reputation, price limit and predation: Static competition under asymmetric information. Acomodaciónón and tacit collusion. Price strategy limits: the model of Milgrom-Roberts. Exercise: a game of price limits. two sided Markets or "2-sided markets": A definition by Rochet and Tirole (2005). A simple picture: the model of Armstrong (2005). Two applications: Competition among health networks: Model Bardey and Rochet (2009). Competition among hospitals: Model Bardey, Cremer and LOZACHMEUR (2010) R & D and innovation: Incentives to innovate according to market structure. The patents. Welfare analysis. An application: the regulation of drug prices and innovation in the pharmaceutical sector: Bommier model, Jullien and Bardey (2010).

Documents

2018 Graduate School of Economics Courses · important since they are either basic analytical tools that are used in many fields of economics or basic economic theories that will