Economics - Winter 1999

This is an introductory course in microeconomics. The course has two principal goals: to introduce you to the ways in which economists view the world and attempt to solve economic problems, and to teach you to utilize these ways of thinking when you approach economic questions. We will focus on some basic concepts which most economists find useful in analyzing economic issues and we will apply these concepts to a variety of problems. The central theme of the course is how and why markets work, why they may fail to work, and the implications for social policies of both their successes and failures. Among the markets to be examined are the market for labor that largely determines who is poor and who is affluent, the markets for goods, and the markets for clean air and water.

Course Materials

The textbook for the course is Principles of Microeconomics by N. Gregory Mankiw (Forth Worth, TX: The Dryden Press, 1997), first edition. The text is available at the Bay Tree Bookstore, and it is sold with an accompanying study guide. I encourage you to use the study guide.

Course Requirements

In addition to reading the textbook, I expect you to read a daily newspaper on a regular basis. Whenever possible, class material will incorporate the latest U.S. and international events. The class meets three times each week for lectures and once each week for a small discussion session lead by a teaching assistant (TA). Everyone must be signed up for one of the conference sessions. TA sessions are an important part of the course. While the large size of the lecture sessions makes it difficult to have discussions, TA sessions are small and offer the opportunity to explore lecture topics in a more informal and individual setting. You are also required to attend 1-2 additional discussion sections lead by me. I will set up a schedule for these additional meetings. There will be regular problem sets, and these will be returned and discussed in your TA sessions. Late problem sets will not be accepted without the permission of your TA. The graded midterm exams will be distributed and reviewed in the conference sessions. Your performance in the conference sessions will be evaluated by your TA on the basis of problem sets and class discussion.

Grades will be determined as follows:

Problem sets 20%

2 midterm exams 40%

Final exam 40%

Economics 1 On-line

Information about this class is available on-line. I have created a course home page, where you can find the course syllabus, problem sets, sample exams, and answer keys. You will also find on-line versions of some of the readings on reserve and links to data sources and other points of interest. The address is:

http://wwwcatsic.ucsc.edu/~econ1

Other important points

Learning and teaching in a large-lecture format requires your cooperation. I consider late arrivals, early departures, reading the newspaper, and talking to be rude and disruptive to the class. Please be considerate of your fellow students and of me. If you think you need to leave early or arrive late routinely, please consult your TA. You are expected to adhere to standards of academic integrity. You should familiarize yourselfwith these standards by reading The Navigator. Violations of academic integrity standards will be dealt with in accordance with University policy.

Problem sets are an important part of the course and I strongly encourage you to complete themand turn them in on time. You may find working in groups to be helpful and even enjoyable. If you do some of the preliminary work in groups, be sure that you know how to solve for or think through the answer; don't rely too heavily on getting the answer from someone else (after all, exams are closed-book, closed-note, individual efforts). You must write up the answers on your own.

Class Schedule

I encourage you to complete the assigned readings before the class for which they are assigned. I suggest you read the material again after lecture.

Introduction and Overview

Introduction to Supply and Demand

Demand: A Closer Look

Elasticity

Producer Decisions: Supply

Firm Behavior and Supply

Competitive Markets

First Midterm Exam

Other Market Structures: Monopoly

Product Differentiation and Strategic Behavior

Factors of Production: The Labor Market

Labor: Unions and Collective Bargaining

Factor Pricing: Profits, Rent, and Interest

The Distribution of Income

Second Midterm Exam

Policy Debate - Work versus Welfare

Regulating Market Power

Public Goods, Externalities and Government Intervention

International Trade

Economics 2, Principles of Macroeconomics, will introduce you to the major economic issues of growth, business cycles, unemployment, and inflation that form the core of macroeconomics. Building on the basic principles of economics, we will develop a theoretical framework for understanding the role of monetary and fiscal policies in affecting the economy. The focus is on contemporary economic policy debates.

The text for the course will be is Macroeconomics: Principles and Applications by Robert E. Hall and Marc Lieberman (South-Western, 1998). Additional readings will be made available through the class web page. Course assessment will be based on problem sets, two midterms, and a final exam.

Further information about the course is available at http:/econ.ucsc.edu/~walshc/Econ2.

Tentative Course Outline:

Week /Topics

1 Introduction, Micro Review

2 Overview of Macro

3 The Long-Run

4 Economic Growth

5 Business Cycles

6 Interest Rates and Monetary Policy

7 Economics of Trade

8 Open Economy Macro

9 Macroeconomic Policy Issues

10 Summing up

Professor: Lori Kletzer
Location: 204 Social Sciences I
Location: MWF 9:30-10:40am

This course is an introduction to the theory and practice of econometrics, the application of statistical methods to the analysis of economic phenomena. The course focuses on the strengths and weaknesses of the basic econometric techniques used in empirical research. Emphasis will be placed on intuitive understanding rather than on rigorous proofs and derivations. The most important part of this course is learning to apply statistical and econometric methods to real-world economic problems. Weekly problem sets will be an important component of the course. Through these problem sets, I will introduce you to the STATA statistics and econometrics software package. No prior knowledge of computer programming is required.

COURSE MATERIALS

The main textbook for the course is Economic Statistics and Econometrics, by Thad W. Mirer (Englewood Cliffs, NJ: Prentice-Hall, 1995), third edition.

[THE BOOK BELOW MIGHT CHANGE FOR WINTER 1999]

Statistics with STATA 5, by Lawrence C. Hamilton (Duxbury Press, 1998), will help you bridge the gap between textbook statistics and practical problem-solving. This book demonstrates how to use STATA for data management and statistical analysis.

Both books are available at the Bay Tree Bookstore and at Slug Books Co-op. Slug Books is a student/alumni-run co-op discount textbook store, and it is located at 224 Cardiff Place, by 7-11 and Bay Federal Credit Union, two blocks from the base of campus. For more information, contact Slug Books at 469-SLUG, info@slugbooks.com, or http://www.slugbooks.com.

COURSE REQUIREMENTS

This is a class in empirical (data-based) economics. Many of my lecture examples will be motivated by "real world" events, facts, and applications. In that spirit, I encourage you to read a daily newspaper on a regular basis. I will also make reference to a number of the concepts and theories you learned in Economics 100A and 100B. The class meets three times a week for lectures and once a week for a small conference section lead by a teaching assistant (TA). Everyone must be signed up for one of the conference sections. These sections are an important part of the course because they provide an opportunity to explore and understand topics in a more informal and individual setting. There will be two midterm exams during the quarter, a comprehensive final exam, and weekly problem sets. Your grade will be determined as follows:

Problem Sets 20%

Hour Tests 40%

Final Exam 40%

GUIDELINES FOR PROBLEM SETS

Econometrics can be learned only with a great deal of practice. You will have approximately one week to complete each problem set. Problem sets will be distributed in class and copies will also be available on-line. Completed problem sets will be turned in at the start of lecture. Graded problem sets will be returned during the TA sections. Answer keys for the problem sets will be placed on reserve in McHenry Library and online. Late problem sets will not be accepted without the prior consent of the TA. The weekly problem sets give you the practical experience necessary for learning econometrics. Most problem sets will require some computer work, which you should not leave until the last minute. Computer difficulties are not a sufficient excuse for a late submission; such difficulties should be expected and you should allocate adequate time to complete the exercises. To minimize frustration and wasted time, you are encouraged to work together or ask our TAs or me whenever you are repeatedly getting no output or nonsensical output from the computer. If you do some of the preliminary work in groups, be sure that each member of the group learns how to obtain the results, not just the group leader. You must write up the answers on your own, although you may discuss with others possible interpretations of the results.

OFFICE HOURS AND COMPUTER LAB TIMES

My office hours will be on Mondays 1-2pm, and Thursdays 10:00-11:30am, or by appointment. My office telephone number is 459-3596. You can also contact me via e-mail at lkletzer@cats. STATA is installed in the Social Sciences I Computing lab for your work. You may use the lab anytime during open hours; our reserved times grant us priority use of the computers. Our reserved times are: Wednesdays and Thursdays, 4-5pm, and Fridays 2-3:30pm.

OTHER IMPORTANT POINTS

Attending lecture is important. I doubt whether you can really learn this material on your own. One of the many benefits of attendance is that I will try to involve you directly in the class as much as possible, within the constraints of a moderately-sized lecture class. Learning and teaching in this format requires your cooperation. Please be considerate of your fellow students and of me. Do not arrive late, leave early, read the newspaper, or engage in behavior that others may consider rude or disruptive. You are expected to adhere to standards of academic integrity. You should familiarize yourself with these standards by consulting The Navigator. Violations of academic integrity standards will be dealt with in accordance with University policy.

ECONOMICS 113 ON-LINE

Information about this class is available on-line. I have created a course web site, where you can find the course syllabus, problem sets, answer keys, sample exams, and links to data sources. The address is: http://wwwcatsic.ucsc.edu/~econ113

If you are feeling shaky about your basic computer skills, there is a self-paced online computer literacy course that you can try at any of the CATS Instructional Computing Labs. You will find the course at: http://nettrail.ucsc.edu/nettrail/master

COURSE OUTLINE - dates are from Fall 1998 I encourage you to complete the assigned readings before the class for which they are assigned. The readings in Hamilton are computer interactive statistical exercises and they should be done at the Social Sciences I Computer Lab. I do not require you to turn in output from these exercises.

Oct. 2 Introduction

Mirer, chapters 1 and 2

Oct. 5, 7 Descriptive Statistics

Mirer, chapters 3 and 4

Hamilton, chapter 2, pp. 11-32; ch. 3, pp. 60-75 & pp. 78-85

Oct. 9, 12 Simple Regression: Theory

Mirer, chapter 5

Hamilton, chapter 4, pp. 94-98 & 103-113

Oct. 14, 16 Simple Regression: Application

Mirer, chapter 6

Hamilton, chapter 6, pp. 129-140

Oct. 19, 21 Multiple Regression

Mirer, chapter 7

Hamilton, chapter 6, pp. 147-154

Oct. 23, 26 Probability Theory

Mirer, chapter 8

Oct. 28 FIRST MIDTERM EXAM

Oct. 30, Nov. 2 Random Variables and Probability Distributions

Mirer, chapter 9

Nov. 4, 6 The Normal and t Distributions

Mirer, chapter 10

Nov. 9, 11 Inference for the Mean and Variance

Mirer, chapter 18

Hamilton, chapter 5, pp. 114-119

Nov. 13 Sampling Theory in Regression: The Linear Model

Mirer, chapter 11

Nov. 16, 18 Hypothesis Testing

Mirer, chapter 12

Hamilton, chapter 6, pp. 145-147

Nov. 20 Estimation and Confidence Intervals

Mirer, chapter 13, to pp. 288

Nov. 23 SECOND MIDTERM EXAM

Nov. 25, 30 Specification Error

Mirer, pp. 157-161, 290-294

Dec. 2, 4 Autocorrelation

Mirer, pp. 332-343

Hamilton, chapter 7, pp. 163-166

Dec. 7 Heteroscedasticity Multicollinearity

Mirer, pp. 161-163, 288-290, 325-332

Hamilton, chapter 7, pp. 181-184

Dec. 9, 11 More Testing and Specification Limited Dependent Variables

Mirer, pp. 303-323

Examines the analytics of issues in technology and innovation, including cooperation in research and development (R&D), standardization and compatibility, patents and intellectual property rights, and strategic management, using economic models and firm case studies.

Revised 7/23/04.