Electives: Public Policy

The course introduces students to the main microeconometric methods for public policy evaluation. By providing a practical introduction with the opportunity to explore the methods using statistical software, student will gather an understanding how economic theory and evidence can be used to analyse topical policy issues. The course covers basic econometric techniques, applied to topics in economics of education, labour supply and financial development. The central themes of the course are the basic concepts of causal inference as well as methods such as linear regression, difference-in-differences, instrumental variable method and Regression discontinuity designs. 

The course focuses on understanding and evaluating the impact of the Financial Sector on the development of the real economy. This course consists of a two parts. In the first part (approx 25%) we will discuss theories of Financial Development. In the second part (approx 75%) we will see how researchers implement different econometric techniques to examine various theories to examine the impact of Finance on the Real Economy. To this end, we will revisit econometric theory to understand the underlying assumptions and limitations of econometric estimators. We will then examine and replicate empirical research papers to see how different techniques (OLS, Panel estimation, Instrumental-variables and Differences-in-Differences) are utilized to identify a causal relationship. This fosters the understanding of limitations of empirical research.

The course serves as an introduction to the quantitative methodologies used by economists and social scientists to measure the impact and effectiveness of policy interventions. The aim is to provide a mostly applied overview of experimental and non-experimental designs, ranging from RCT's to propensity score matching, regression discontinuity, instrumental variables and difference in difference. For each methodology, recent applications from the empirical literature will be discussed and practical examples will be implemented using the statistical software STATA (available in the PC-Lab). 

There is ample empirical evidence that some countries are richer than others and that some countries tend to grow faster than others. This course assesses the question why this is so by studying macroeconomic growth models. The course covers growth models in the spirit of Solow with an exogenous savings rate and intertemporal growth models with an endogenous savings rate, both real and monetary versions. Models of endogenous growth such as the Romer Model (1990) will also be discussed. Theoretical results will be contrasted with empirical findings. Particular emphasis is placed on the building blocks of the growth models so that students can learn to understand both the policy implications resulting from the respective growth models as well as their limitations for public policy makers. From a methodological perspective the course will introduce the students to dynamic optimization via Pontryagin’s Maximum principle.

The aim of this course is to familiarize students with the most relevant topics in the field of development economics, and in particular with its microeconomic aspects. An integral part of the course is to combine economic theory with empirical methodology.

This course introduces students to the study of the role of firms and industries in the process of economic development, focusing on the specific institutional environment of developing countries. The focus of this course is primarily methodological, and we will use recent empirical literature to study selected aspects of the microeconomics of industrial sector development, including the role of financial markets, labor markets, and international trade in explaining individual firm behavior, productivity, market structure, and industry dynamics.

This advanced course analyzes differences in the economic systems, preferences, and outcomes between Europe and the US. Topics include the welfare state, taxation, labor markets, demographics, preferences for redistribution, migration, monetary and fiscal policy, and the educational system. We study the origins of potential differences, as well as their consequences for the lives of people. We explore macro- as well as microeconomic studies of both theoretical and empirical nature. The major goal of this course is to give students the opportunity to apply the knowledge and tools acquired in previous courses to a fascinating topic. Thus, the prerequisites are intermediate microeconomic and macroeconomic theory, statistics, and econometrics. When discussing the readings, we will focus not only on the content, but also on the methodology.

The course addresses mainly first year students and is covering the normative and positive sides of Public Policy. Part 1 covers the normative side, including: Social welfare functions, the impossibility of transitive social preferences, the optimal supply of public goods, Externalities and the tragedy of the commons, Cost-benefit analysis, Regulation of market power, Public procurement.

Part 2 covers the positive side, including Voting rules, the economics of federalism, rent seeking, bureaucracy and the Leviathan hypothesis.

This course presents topics on the new area of Household Finance, on the interface between Macroeconomics and Finance. This is not only an active area of frontier academic research, but also interesting and useful to people working in the financial sector, including central banks. The broad overall theme of the topics presented is household wealth management, namely analysis of household demand for assets and for loans.

The course should appeal to a wide range of students, from those interested in understanding household preferences for financial products useful for financial sector jobs, to those who are more academically oriented and who want to study intertemporal portfolio selection in the face of labor income risk for which one cannot buy insurance.

An explicit aim of the course is to stress the intuition behind the results and to provide students with basic understanding of key findings in recent, mostly empirical but also computational, research on household portfolios. The formal lectures will be supplemented by sections (two hours every two weeks), which will stress useful techniques and hands-on-practice in data analysis using the STATA econometric package, as well as ways to interpret empirical findings in portfolio research.

The course surveys various topics at the intersection of labor economics and macroeconomics, using both empirical and theoretical approaches. We cover human capital and earnings inequality, structural and frictional unemployment, search and matching models of the labor market, frictional wage dispersion, business-cycle theories of the labor market, as well as labor market policy such as unemployment insurance, job protection legislation and minimum wages. Prerequisites are microeconomic and macroeconomic theory and econometrics.

During the course, we will develop different labor market models, relate them to the data, and use these models to analyze policy questions such as the effects of minimum wages on employment or the optimal design of unemployment benefit schemes. Students will learn how to solve simple models analytically and more complex models numerically, and how to apply these models for policy analysis.

Topics covered: Labor supply; Labor demand; Education and human capital; Wage rigidity and unemployment; Labor market flows; Job search; The Search and matching model; Labor markets and the business cycle; Frictional wage dispersion

The course discusses empirical methods at the master level, especially as applied to research in Industrial Organization and competition policy. We will discuss a broad range of topics, such as competition models, demand estimation and supply modeling. For all topics we will first discuss the theoretical framework such that they can be discussed in applied contexts. Students are expected to solve problem sets and an exam. Problem sets involve analyzing data sets and replication of existing work. Students should have access to a statistical package such as STATA or R. 

We will study variants of the three ”workhorses” of dynamic macroeconomics in general equilibrium: (1) the neoclassical representative agent model, (2) the Aiyagari-Bewley-Huggett models with intra-generational heterogeneity, and (3) overlapping generations (OLG) models, featuring intra- as well as inter-generational heterogeneity.

While all these types of models will be analyzed, most room will be given to life-cycle economies (OLG applications). For this reason, we will start out by extensively studying partial equilibrium models of household behavior, e.g. the dynamics of consumption, savings, labor supply and portfolio allocation decisions over the life cycle. Once we roughly understand these models, we will turn to general equilibrium models. Our general equilibrium discussion will then cover models with idiosyncratic risk (e.g., individual unemployment shocks that, in each time period, affect only a fraction of agents in the economy) and, if time permits, also models with aggregate risk (e.g., productivity shocks that simultaneously affect all agents).

During the course, (i) we will seek to compare certain model features with the data, (ii) we will implement some of the models on the computer and (iii) we will analyze policy questions. Among these policy questions there are issues related to the distribution of income, wealth and consumption both within and across generations, traditional public finance questions and how demographic change will affect the economy in a global world. Towards the end of the course you will have learned how to solve simple models analytically and more complex models numerically and how to use these models for policy analysis.