ECMG 212 - Statistics for Economics and Business Administration

[Spring 2017 Syllabus]

There are three kinds of lies: lies, damned lies, and statistics. - Benjamin Disraeli, British P.M.

The sexy jobs in the next ten years will be statisticians. - Hal Varian, Chief Economist, Google

Statistics is the science of learning from data. Businesses, governments, academics, nonprofit organizations, consultants, and many other professions are using more data than ever. The rise of the internet and the ability for organizations to track many things about their users, known as “big data,” make statistical literacy and competency one of the most in-demand skills that most employers today are looking for.

This course is designed as an introduction to data and how it is collected, described, and used to make useful inferences about the world. I am an economist, not a business expert nor a mathematician. While we will be dealing with elementary statistical and probability theory, we will be keeping our eye towards applications in business and economics. If you want a more ``pure” class in statistics or mathematics, they are offered by the department of mathematics. The formal prerequisites for this course are MATH 120 or equivalent. I assume that you have no background in statistics or probability (we will start from square one), but that you are competent in basic algebra and graphing skills (we may do a brief review as necessary).

I have three goals for everyone taking this course: (1) to understand and evaluate statistical and empirical claims; (2) to understand research design and hypothesis testing; (3) to gain experience working with, interpreting, and communicating real data. I am less concerned with forcing you to memorize and recite proofs of statistical estimator properties, and more concerned with the development of your intuitions and the ability to think critically as a businessperson, a social scientist, and a democratic citizen—although this will require you to demonstrate proficiency with some statistical and mathematical tools.

To these ends, in addition to lectures about statistical methods, you will be working on problem sets that use theory, as well as using Microsoft Excel to complete problem sets using data, and write a brief empirical paper using data. By the end, you should feel comfortable working with data and understanding the empirical claims of others. The best training is for you to learn by doing.

Lesson Slides Excel Templates
1. Sampling and Data Slides
2. Descriptive Statistics Slides Descriptive Statistics; Boxplots
3. Probability Slides
4. Discrete Random Variables Slides
5. Continuous Random Variables Slides Modelling Distributions
6. The Normal Distribution Slides
7. The Central Limit Theorem Slides
8. Confidence Intervals Slides Regression Example
9. Hypothesis Testing Slides
10. Linear Regression Slides

ECON 205 - Principles of Macroeconomics

[Fall 2018 Syllabus]

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. - F.A. Hayek, 1974 Economics Nobel Laureate

The goal of this course is to introduce you to the economic way of thinking and to demonstrate its power in comprehending the world around us. This class assumes you have no knowledge of economics whatsoever, and I teach it like it is the first, and last, economics class you will ever take. I hope it will not be.

So what is economics? Most people, upon hearing the words “economics” or “economist” imagine some combination of money, business, and those folks on the news who report “the latest numbers” on the economy (which always seem to be different than previous forecasts). These examples certainly might use economics, but economics really is a much broader way of thinking, analyzing, and understanding the world around us. With economics, you will learn to appreciate the role of prices, incentives, and institutions in fostering cooperation and social order to achieve all of the things (material and nonmaterial) that we desire from the human experience.

This course will have been successful if you are able to apply the economic way of thinking to your own passions, future studies, and professional aspirations that involve social, political, and economic issues. Understanding basic economics will also make you a better citizen in our democratic and market-based society. I invite you to diligently grapple with the ideas raised in our readings and discussions, and to do all that you can to try to understand and explore the world around you. More specifically, I aim for you to be able to:

  • Effectively understand, articulate, and critique economic arguments verbally and in writing
  • Apply economic tools and theories to market conditions, including using appropriate graphical and mathematical tools.
  • Obtain basic understanding of economic statistics, as well as know where to collect them and how to effectively present them graphically and numerically.
  • Understand current policy debates and formulate informed opinions
Lesson Slides Handouts Practice Problems Homework
1. The Economic Way of Thinking HW #1
2. Cooperation and Exchange Comparative Advantage Practice (Answers) HW #2
3. Supply and Demand Supply and Demand Practice (Answers) HW #3
4. Markets and Economic Policy Homework #4
5. Measuring the Macroeconomy Homework #5
6. Economic Growth
7. Money and the Financial System Homework #6
8. Monetary and Fiscal Policy

ECON 304 - International Political Economy

[Spring 2017 Syllabus]

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. - F.A. Hayek, 1974 Economics Nobel Laureate

This course examines the dual role of political institutions and economic forces that determine the relative prosperity, conflict, and/or flourishing of human beings in different social settings. As political economy–the enduring tradition that Adam Smith and others developed before technical “economics” emerged in the 20th century–it deals with some of the moral and institutional problems that societies must grapple with, and why some succeed or fail more relative to others. While we consider the theory of various political and economic institutions, we often apply them to an international context of trade, globalization, foreign aid, conflict, development in our increasingly global-oriented cultures. As a result, a major goal of this course is understanding the state of the world and current events today, as well as being able to reason through political economic problems.

This is an economics course, and as such we use the tools of microeconomics to understand not just economic, but also political, social, and cultural issues. Basic familiarity with microeconomics is essential to understanding how decisions made by agents in different institutional contexts lead to social coordination and the creation of value (or fail to do so). While I would prefer that you have some background, it is possible to take the course with little to no understanding of formal economic theory. The required prerequisite courses are ECON 205, PCSI 215, OR GLBS 200.

This course will have been successful if you are able to comprehend and apply the tools and insights of political economy towards explaining differences in real world political, economic, and cultural settings and are able to analyze current events. Primarily, this means applying models of rational choices for individual and firm behavior in different social contexts, and understanding the role of market institutions of property rights, prices, and profit and losses in bringing about social coordination.

Lecture Slides
1. Introduction to IPE
2. Review of Microeconomics
3. Property and the Rule of Law
4. Profit-Seeking and Rent-Seeking
5. Moral Dilemmas of Markets
6. Violence and Order
7. Feudalism and the Natural State
8. Mercantilism and the Natural State
9. Socialism and National Socialism
10. Liberal Democracy and Open-Access Orders

ECON 306 - Microeconomic Analysis

Syllabus

[Fall 2018] | [Spring 2018.S1] | [Spring 2018.S2] | [Fall 2017] | [Spring 2017] | [Fall 2016.S1] | [Fall 2016.S2]

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. - F.A. Hayek, 1974 Economics Nobel Laureate

Microeconomics is a collection of analytical tools for modeling and understanding how decisions made by agents (individuals and firms) in a context of market institutions lead to social coordination and the creation of value. This toolkit is the analytical foundation for exploring all fields and applications of economics as a social science, has many practical applications in business, finance, politics, and insights into any realm of human endeavors. Economics, after all, is the study of human action. At the intermediate level, these concepts are made more rigorous through the use of mathematical models, but we will first and foremost lay the theoretical foundations with economic intuition. As such, this class assumes you have met the required prerequisite courses by taking introductory economics and basic mathematics.

This class will add rigor to your thinking about the world by empowering you with the ability to model the choices and interactions of people and organizations in their economic capacities – as consumers, producers, firms, voters, etc.

This course will have been successful if you are able to comprehend and apply the tools and insights of microeconomics towards explaining real world phenomena. Primarily, this means applying models of rational choices for individual and firm behavior, identifying key features of various market structures (perfect price competition, monopoly, oligopoly, and monopolistic competition), and understanding the role of market institutions of property rights, prices, and profit and losses in bringing about social coordination.

Lesson Slides Date Handouts Practice Problems Homework
1. The Tools of Microeconomics Aug 27 Preliminary Math Quiz (Answers)
2. Choice and Cost Aug 29
3. The Division of Labor Sept 5
4. Supply and Demand Basics Sept 7 Math Review
5. Comparative Statics Sept 12
6. Price Elasticity Sept 17 Elasticity Practice (Answers) HW #1
7. Markets and Surpluses Sept 19
8. The Social Functions of Prices Sept 26
9. Policies that Raise Transaction Costs Oct 1
10. Taxation Oct 3 Tax Problem Answers HW #2
11. Constrained Optimization and the Budget Constraint Oct 22
12. Preferences and Utility Oct 24
13. Solving the Consumer’s Problem Oct 29 Consumer Choice Practice Problems (Answers) HW #3
14. Building a Demand Function Nov 7 HW #4
15. Theory of the Firm Nov 12
16. The Firm’s Problem in the Short Run and Long Run Nov 14
17. Solving the Firm’s Cost-Minimization Problem Nov 26 HW #5
18. Cost and Revenue Functions Nov 28
19. Short Run Profit Maximization Dec 3 Competitive Supply Practice Problems (Answers)
20. Industry Equilibrium in the Long Run Dec 5
21. Sources of Market Power Dec 10

ECON 316 - Game Theory

[Spring 2019 Syllabus]

Game theory is the formal study of strategic interactions between rational agents. Game theory is one of the most useful and powerful theoretical innovations in 20^th^ century social science, and has been applied extensively to economics, political science, psychology, sociology, logic, computer science, animal behavior, and evolutionary biology. Twelve economists have won the Nobel Prize for research directly related to game theory (and arguably several more for concepts indirectly related). This is an economics course, so the majority of our context and applications will be in economic settings, though we will examine a much wider scope of strategic interactions than the “narrow” economic domain of firms and consumers.

Please don’t get the wrong idea – this course is not the theory of “games” in the colloquial sense (e.g. chess, poker, football, Fortnite, etc)! This course is not intended to make a you a better [insert sport, board game, video game] player (but it might be a second-order effect!). A “game” in game theory is defined according to certain technical criteria. Furthermore, formal game theory can be very mathematical. I will try to balance formal theory with interesting real world applications, sometimes including colloquial “games.”

Game theory is a direct extension of basic microeconomics, so this class assumes you have met the required prerequisite course(s) – ECON 206. My approach to game theory requires some math, but I will try to make it not exclusively about the math.

This course will be a hybrid of formal lecture, hands-on activities, and student presentations of scholarly articles, with exams and a writing writing assignment serving as the prime means of evaluation.

Upon completing this course, you will be able to:

  • Recognize different types of strategic interactions across different domains of life (e.g. economics, political science, biology, etc.)
  • Understand the common types of games: prisoners’ dilemma, stag hunt, battle of the sexes, chicken
  • Solve for equilibria of games in normal form and extended form
  • Understand and apply famous game theoretic concepts of Nash equilibrium (pure and mixed strategies), the role of information, sequencing, credible commitments, repetition, etc.
  • Become familiar with some of the economics (and other) literatures that use game theoretic tools
Lesson Slides Homework
1. Introduction to Game Theory
2. Sequential Games HW #1
3. Simultaneous Games I: Discrete Strategies HW #2
4. Simultaneous Games II: Continuous Strategies [HW #3]()

ECON 324 - International Trade

[Fall 2018 Syllabus] | [Fall 2016 Syllabus]

International trade, simply defined, is the movement of goods across political borders. However, this simple concept is both remarkably complex economically, and is a vital ingredient for human civilization to flourish. The biggest difference between the last 250 (or so) years and the entire remainder of human history is the dramatic scale by which we have extended the division of labor. The overwhelming majority of our ancestors mired in what we would today consider abject poverty (for them it was the norm), rarely ever travelled more than a few miles from their birthplace, and to obtain just the basic goods needed for human subsistence - food, clothing, shelter, medicine - they had to make these themselves. Today, each of us consumes a wealth of goods which requires millions of tasks to be performed by people across the globe that we will never meet, and each of us will contribute only a sliver of tasks required to produce wealth to be enjoyed by people across the world we will never meet.

In this course, we will look at trade from this broad framework of extending the division of labor for human betterment. At the same time, we will get into the weeds and survey theories (and evidence) for understanding international trade flows and foreign trade policy: the purposes for its existence, the gains (and costs) created, and the division of those gains among different groups. As these subjects often intersect with current geopolitical events, especially during election cycles, we will attempt to explain these events using economic theory. Nearly all international trade theories are extensions of basic microeconomics, so this class assumes you have met the required prerequisite courses - ECON 205, 206, and 306.

Lesson Slides Practice Problems Homework
1. The Smithean View of Trade: Division of Labor
2. The Ricardian View of Trade: Comparative Advantage Comparative Advantage Practice (Answers) HW #1
3. The Standard (Neoclassical) Trade Model
4. The Hecksher-Ohlin (Factors) Trade Model
5. New Trade Theory HW #2
6. A Brief Economic History of Trade
7. Trade Policy: Tariffs and Other Trade Barriers
8. Industrial Policy
9. The Political Economy of Trade Policy

ECON 326 - Industrial Organization

[Spring 2017 Syllabus]

Industrial organization is one of the most common fields of applied microeconomics. It traditionally studies business firms and their relationship to the market - how they make economic decisions, how they are affected by government regulation, how they strategically interact with one another - and how these change in markets that are more or less competitive–monopoly, oligopoly, monopolistic competition, or perfect competition, often with a close connection to antitrust law.

In my view, industrial organization is less useful as a narrow theory of the classical capitalist business firm than a broader theory of economic organization in its many forms. We will examine other ways of organizing economic enterprises that deserve our attention and interest–for example, public enterprises, non-profit organizations, informal community enterprises, and criminal enterprises–as well as the institutions that govern and affect the choices involved in organizing an economic enterprise.

Industrial organization is a direct extension of basic microeconomics, so this class assumes you have met the required prerequisite courses - ECON 206 (ECON 306 recommended). My approach to I.O. does not require much math, the course will be more conceptual and discussion based around real-world examples, but there will be times where more formal analytical tools will be helpful.

Lesson Slides
1. Introduction to Industrial Organization Slides
2. Perfect Competition Slides
3. Monopoly Slides
4. Oligopoly Slides
5. Monopolistic Competition Slides
6. Entrepreneurship & Market Process Slides
7. Theory of the Firm Slides
8. Public Enterprises Slides
9. Informal Institutions & Community Enterprises Slides
10. Cooperation Without or Despite the State Slides
11. Vertical Integration Slides
12. Innovation, R&D, and IP Slides

ECON 410 - Public Economics

[Spring 2018 Syllabus]

What’s so great about democracy other than it’s democratic? - Gordon Tullock

Modern democratic governments directly control more than $\frac{1}{3}$ of gross national product and strongly influence the remaining $\frac{2}{3}$ through various fiscal and regulatory policies. How does “the government” make decisions, enforce laws, and provide the goods and services it is expected to? How does it interact with, and affect, the rest of the economy? A major part of this course is exploding the black box that we call “goverment” to examine and model the different political actors: voters, politicians, bureaucrats, & interest groups, and how they interact with one another to produce public policy and achieve their separate goals.

The major analytic framework used in this course is commonly known as “public choice:” the application of economic modeling (optimization and equilibrium) to study non-market decision-making. Markets use prices and voluntary exchanges to allocate scarce goods among competing uses based on individual preferences. Many other aspects of modern life do not rely on prices or voluntary exchanges; the primary arena we explore is politics - the realm of collective decision-making where a single choice is made for everyone. A simple summary of what we will be doing in this course is expanding and exploring answers to the question: how do we choose in groups?

Our primary focus will be the government of a modern liberal democracy, particularly the United States since 1789. In many ways, this is a more rigorous complement to your classic high school or college Civics course, but you will soon discover, it will at times emphasize key civic virtues of American governance, and at other times gore sacred cows and contradict popular myths. Time permitting, the end of the course will examine and compare other political systems such as autocracy, as well as other forms of non-market decision-making like law and religion.

Topic Slides Readings
1 Introduction Slides How to Read an Article
2 Externalities and Bargaining Coase (1960)
3 Property Rights Demsetz (1967)
4 Public Goods and Collective Action I Slides Olson (1982: Ch. 2)
5 Public Goods and Collective Action II Slides Ostrom and Ostrom (1999)
6 Efficiency and Justice Slides Justice Harvard Videos 5, 14
7 Constitutional Political Economy I Slides Madison (1778); Plunkitt (Chs. 1-3); Machiavelli (Chs. XV-IX)
8 Constitutional Political Economy II Slides Buchanan and Tullock (1962: Chs. 3, 5, 6)
9 Voting I: Social Choice Theory Slides Holcombe (2016: Chs. 2, 3, 5)
10 Voting II: Ignorance and Irrationality Slides Somin (2004); Caplan (2007)
11 Interest Groups I Slides Tullock (1967); Mitchell (2012)
12 Interest Groups II Slides Stigler (1971); Yandle (1983)
13 Bureaucracy Slides Niskanen (2001); Mises (1949, Ch. XV.10)
14 Politicians and Legislators I Slides Acemoglu (2003, sections 1, 6); Holcombe (2016, Chs. 8, 10, 11)
15 Politicians and Legislators II Martin and Thomas (2013); Safner (2013)
16 Politicians III: Reform Rauch (2015)
17 Federalism I Slides Weingast (1995)
18 Federalism II: Exit, Voice, and Loyalty Slides Hirschman (1971, Chs. 1, 2, 3)
19 The Sharing Economy Munger, Tomorrow 3.0 Video
20 Basic Income Guarantee (BIG) Econtalk: Munger on BIG
21 Will Blockchain Disrupt Governance? Slides Medium: How does the Blockchain Work?
22 Network Neutrality Slides Faulhaber (2013)
23 Autocracy I Slides Olson (1994); Econtalk: Bueno de Mesquita on the Political Economy of Power
24 Autocracy II: Coups and Revolutions Slides Tullock (1971); Kuran (1989)
25 Law I: Law Without the State Slides Benson (1989); Priest (1977)
26 Law II: Superstition Slides Leeson (2011; 2012)
27 Law III: Crime Slides Friedman (1995)
28 Religion Slides Iannaccone (1992); Leeson and Russ (forthcoming)

ECON 480 - Econometrics

Syllabus

[Fall 2018] | [Fall 2017] | [Fall 2016]

Course Content on Github, see this post for more.

There are three kinds of lies: lies, damned lies, and statistics. - Benjamin Disraeli

Econometrics is the application of statistical tools to quantify and measure economic relationships in the real world. It uses real data to test economic hypotheses, quantitatively estimate causal relationships between economic variables, and to make forecasts of future events. The primary tool that economists use for empirical analysis is ordinary least squares (OLS) linear regression, so the majority of this course will focus on understanding, applying, and extending OLS regressions.

I have three goals for everyone taking this course:
(1) to understand and evaluate statistical and empirical claims
(2) to understand research design and hypothesis testing
(3) to gain experience working with, interpreting, and communicating real data. I am less concerned with forcing you to memorize and recite proofs of statistical estimator properties, and more concerned with the development of your intuitions and the ability to think critically as an empirical social scientist - although this will require you to demonstrate proficiency with some intermediate statistical and mathematical tools.

To these ends, in addition to lectures about the estimation methods, you will read several journal articles with an eye to understanding and appraising their empirical claims, use R—a leading professional software package—to complete problem sets using data, and write a brief empirical paper using data. By the end, you should feel comfortable working with economic data and understanding the empirical claims of others. R is an extremely powerful open source statistical software package that is used by economists, statisticians, and data scientists. It is very valuable and much of this course is geared towards training you how to use and apply it. The best training, of course, is for you to simply learn by doing.

Lecture Date Handouts R Practice HW
1. Introduction to Econometrics Aug 27 Stats Preliminary Quiz (Answers)
2. The Quest for Causality Aug 29
3. Data and Descriptive Statistics Sept 5
4. Random Variables Sept 10
5. Meet R Sept 12 R Practice #1 (Answers) HW #1
6. Correlation and Linear Regression Basics Sept 17
7. Goodness of Fit and Bias Sept 24 Unbiasedness of OLS
8. Precision of OLS and Hypothesis Testing Sept 27 Inferential Statistics
9. Regression Diagnostics and Plotting with ggplot2 Oct 1 R Practice #2 (Answers) HW #2
10. Omitted Variable Bias Oct 23
11. Multivariate OLS Estimators Oct 29
12. Model Specification Strategies Oct 31 Writing an Empirical Paper HW #3
13. Dummy Variables Nov 7 Testing Differences in Group Means
14. Categories and Interactions Nov 12 HW #4
15. Better Data Wrangling with dplyr Nov 19 dplyr Practice (Answers)
16. Nonlinear and Polynomial Models Nov 26
17. Logarithmic Models and Testing Joint Hypotheses Nov 28 Interpretting Coefficients HW #5
18. Panel Data and Fixed Effects Dec 3
19. Difference-in-Difference Models Dec 5
20. Instrumental Variables Models Dec 10 HW #6

Resources

I have put together some short guides about using R, R Markdown, and R Projects for data analysis, writing papers and presentations, and organizing workflow in a reproducible and efficient way. Some of these are hosted on this website, and others are code on GitHub. All lecture files above, along with other resources for this course, are available on GitHub for anyone to inspect the source code (in R Markdown .Rmd files), as described in my post.