EC4201 (Provisional may change)
Economic Analysis
LECTURERS:
Dr Ozge Senay (Principal Module Teacher)
Dr Kemal Ozbek
LECTURES:
25 lectures, beginning in week 1.
3 lectures per week on Mondays, Tuesdays
and Wednesdays at 10 am in PLACE.
EXAMINATION:
One examination (3 hours) with two sections:
Section A (50%) Macro maths and formal
development + essay
Section B (50%) Micro maths and formal
development
FINAL GRADE:
Examination, 70% weight
2 Class tests, 15% weight on each
PREREQUISITE:
Available only to students in second year of
Honours programme
Martinmas (First) Semester 2015/16
CREDITS:
30
TUTORIALS:
8x1 hour tutorials in weeks 2, 3, 4, 5, 6,
7, 8 and 9. Tutorials will involve working
problems or exercises assigned the week
before.
CONTINUOUS ASSESSMENT:
Two class tests, 50 minutes each:
Class test 1 on TBA.
Class test 2 on TBA.
SUPPLEMENTARY INFORMATION:
The class tests have quantitative
elements
REQUIREMENTS:
Participation in at least 6 tutorials
Introduction
The module is designed to provide an advanced understanding of economic theory with
applications, covering both macroeconomics and microeconomics.
The Macroeconomics part of the module has three main components. The first group of
lectures focuses on analysing the main features of three general models of growth theory,
namely the Solow model, the Ramsey model and endogenous growth models, the main
focus of interest of the second group of lectures is advanced real business cycle theory and
its applications. The final group of lectures aims to introduce the main framework of modern
macroeconomic analysis, namely dynamic stochastic general equilibrium models, and to
relate its applications to recent economic crises.
The Microeconomics part of the module covers selected topics in game theory supplied with
insightful applications. Game theory is the study of rational behavior in decision making
situations with multiple players having conflicting interests, where the payoff of each player
depends not only on his own actions but also on the actions of others, and thereby on the
nature of strategic interactions between players. Game theory has important applications in
economics, and in the fields of political science, international relations, business
administration, law and biology.
Learning Outcomes
By the end of the macroeconomic component of this module, students should know and
understand the following:
 the main features of key growth models
 the main features of real business cycle theory and methodology
 the theoretical and empirical underpinnings of real business cycle models and their
extensions
 modern macroeconomic analysis using dynamic stochastic general equilibrium models
and their applications to recent economic crises
There is strong emphasis on analytical reasoning in the microeconomic component of this
module, although no advanced mathematical tool is used. A student who has taken this part
of the module should be able to:
 Analyze both simultaneous and sequential move games with different solution concepts
like dominant strategy equilibrium, Nash equilibrium, and subgame perfect equilibrium.
 Understand different methods to solve games, like dominance and elimination of
strategies, rationalizability, best responses, and backward induction.
 Construct game theoretic models to study problems with strategic interactions, and apply
solution methods to predict an outcome for the game.
Course Outline
Macro-Economics
Time permitting, the topics to be covered in this part of the course are:
1. Growth theory and analysis of key growth models (the Solow model, the Ramsey model
and endogenous growth models)
2. Empirical evidence on growth models
3. Real business cycle (RBC) theory and the empirical performance of RBC models
4. Extensions to the basic RBC model and recent developments in RBC modelling
5. Framework of modern macroeconomic analysis: Dynamic stochastic general equilibrium
models and their applications to recent economic crises
Micro-Economics
Time permitting, the topics to be covered in this part of the course are:
1. Representations and Basic Assumptions
2. Simultaneous-move Games: Behavior and Applications
3. Sequential-move Games: Behavior and Applications
4. Information and Behavior
Selected Readings
(Detailed reading lists will be given before each set of lectures start - electronic
library reading lists for the module will also be made available on MMS)
Macro-Economics
1. Romer, D. (2006) Advanced Macroeconomics
2. Jones, C.I., Vollrath, D. (2013) Introduction to Economic Growth
3. Sørensen, P.B., Whitta-Jacobsen, H.J. (2005) Introducing Advanced Macroeconomics:
Growth and Business Cycles
Micro-Economics
1. Watson, J., Strategy: An Introduction to Game Theory, 2013.
2. Tadelis, S., Game Theory: An Introduction, 2013.
3. Dixit, A., Skeath, S., Reiley, D., Games of Strategy, 2010.
4. Osborne, M.J., An Introduction to Game Theory, 2009.
5. Gibbons, R., A Primer in Game Theory, 1992.