# Master Economics # Empirical and theoretical economics

## RESPONSABLES

## AIM

This track aims at providing students with a general training in theoretical and empirical economics, which may lead to research or the conduct of economic analyses.

## LINKS WITH RESEARCH

This Master’s degree is part of the *Ecole Universitaire de Recherche (EUR) AMSE*, which gathers together almost a hundred researchers from AMU, CNRS, EHESS and ECM.

The teachers are selected according to their expertise within those entities. The teaching staff is supplemented with practitioners.

## FUNDAMENTAL PREREQUISITES

A high-level training in theoretical and empirical economics is necessary to access the training.

## RECOMMENDED PREREQUISITES

This track is especially adapted to students who have validated the first year (M1) of the Master Economics in the AMSE department of the Faculty of Economics and Management at Aix-Marseille University. Access is possible in second year (M2).

## WEB SITE

## PLAQUETTE DE LA FORMATION

## PROFESSIONAL SKILLS

The teaching program of this master’s degree track aims at developing a deeper understanding and mastery of the latest developments in economic theory and its methods, as well as the theory and practice of econometrics. The program aims at initiating students into research and at developing their ability to define and conduct a research project in economics.

Professional skills targeted upon graduation :

- To contribute to a novel scientific production in economic sciences,
- To highlight the value of research results,
- To solve economic problems,
- To show expertise in an area of economic research.

## INTERNSHIPS AND SUPERVISED PROJECTS

The student’s curriculum concludes on the writing of a research dissertation or an internship of at least three months. The writing of the dissertation is carried out under the supervision of an AMSE researcher.

## PLAQUETTE DE LA FORMATION

## EVALUATION AND EXAMS

Each course is assessed by a written exam and/or the creation of a file presented during an oral defence. In order to limit the number of projects per student, the teachers propose transversal projects when it is possible.

### Track : Theoretical and empirical economics (120 ECTS)

### M1 Economics (AN) (60 ECTS)

### S1 M1 ECO (SE) (30 ECTS)

### Microeconomics I and II (6 ECTS)

### Microeconomics I

## CONTENT

The objective of this course is to provide students with the foundations of economic theory. The course covers the consumption and production theory and is textbook based. The difficulty and coverage compare to those of the main departments of economics worldwide.

__Course outline :__

The course is textbook based. Topic list : Technology, Profit Maximization, Profit Function, Cost minimization, Cost Function, Duality, Utility Maximization, Choice, Demand.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Microeconomics II

## CONTENT

The objective of this course is to provide students with the foundations of economic theory. The course covers the consumption and production theory and is textbook based. The difficulty and coverage compare to those of the main departments of economics worldwide.

**Course outline :**

The course is textbook based. Topics list : Exchange, Time, Equilibrium Analysis, Welfare.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Macroeconomics I and II (6 ECTS)

### Macroeconomics I

## CONTENT

Learn the basic models with microeconomic foundations used in modern macroeconomics. Be able to do dynamic analysis. Understand the concept of dynamic efficiency and the role of public expenditures.

**Course outline :**

1. Introduction with reminders on the Solow model

2. The Ramsey model

2.1. The framework

2.2. Existence and features of the steady state

2.3. Dynamic analysis

2.4. Extension : public spending

3. The overlapping generations model

3.1. The model with capital

3.2. Intertemporal equilibrium, steady states and dynamics

3.3. Optimality

3.4. Extensions : public spending ; rational bubbles

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Macroeconomics II

## CONTENT

The aim of the course is to present advanced macroeconomic topics related to the analysis of aggregate consumption, aggregate investment and modern business cycle analysis with the Real Business Cycle model.

**Course outline :**

Chap. I : Consumption theory

1. Consumption over the life cycle : the life-cycle/permanent income models

2. Introducing uncertainty – The random walk hypothesis

3. Market imperfections : the role of liquidity constraints

4. Extensions : risk aversion, precautionary savings

Chap. 2 : Investment theory

1. The neoclassical model of capital demand

2. Investment with and without capital adjustment costs : Q-theory models

3. Role of shocks : real shocks, news shocks, noise shocks

Chap. 3 : Real Business Cycles

1. Measuring business cycles : trend-cycle decompositions and stylized facts

2. The canonical RBC model

3. Evaluation of the model

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Econometrics I and II (6 ECTS)

### Econometrics I: linear model

## CONTENT

**Provide students with :**

- the basics of panel data econometrics (fixed effects models, error components model)
- the identification of endogeneity problems in econometric models and their treatment (instrumental variables, GMM, tests)

**Course outline :**

1. Introduction to panel data and panel data models

2. The fixed effects model

- Specification of the model
- Estimation of the model : the Within / LSDV estimator.
- Testing the absence of unobserved heterogeneity.

3. The error components model

- Specification of the model
- Estimation of the model : the GLS / FGLS estimators.
- Testing the absence of unobserved heterogeneity.
- Testing the absence of correlation of the effects : the Hausman test

4. Endogeneity issues

- Causes of endogeneity in econometric models : measurement errors, dynamic models, unobserved heterogeneity, etc.
- The instrumental variables estimator
- The GMM estimator
- Looking for instruments (the time-series case, the cross-section case, the panel data case).
- Testing the validity of instruments
- Testing the exogeneity of regressors

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Econometrics II: non linear model

## CONTENT

Provide students with the basics of the econometrics of non linear models for binary, multinomial, ordered and count dependent variables as well as models for censored and truncated variables.

**Course outline :**

1. Introduction to non-linear models in econometrics and a brief reminder about the maximum likelihood principle.

2. Models for binary dependent variables.

- The linear probability model.
- The Logit model.
- The Probit model.

3. Models for multinomial and ordered dependent variables.

4. Models for count data.

5. Models for truncated and censored variables.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Labor economics - Risk and incentives (6 ECTS)

### Labor economics

## CONTENT

The objective of this course is to provide students with the necessary analytical tools to be able to study the consequences of different institutions, human capital formation, discrimination and wage bargaining on the labor market.

**Course outline :**

Introductory Chapter :

- Presentation
- Objectives
- Evaluation
- Labor market Institutions and course outline

Chapter 1 : « Labor Supply and Labor Demand » :

- Key definitions
- Labor Supply
- Labor Demand
- Equilibrium

Chapter 2. « Minimun wage »

- Facts
- Classical analysis
- The monopsony case
- Dual labor markets

Chapter 3 : « Mandatory contributions and social benefits »

- Facts
- Classical analysis
- Accounting for wage rigidities

Chapter 4. « Labor Unions » :

- Facts : unions, collective bargaining, union density
- The objective of labor unions
- Models of collective bargaining
- Model of strikes
- Empirical evidence and policy issues

Chapter 5. « Discrimination » :

- Facts : gender and ethnic wage and employment gaps
- Economic theories on discrimination
- Measuring wage discrimination
- Empirical results in the literature and policy issues

Chapter 6. « Education and human capital formation » :

- Facts
- The theory of human capital
- Education as a signaling device
- Identifying the causal relation between education and income
- Returns to education : private vs social returns

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Risk and incentives

## CONTENT

The main objective of this course is to provide the students with a theoretical synthetic framework so that they can face the difficulties of the study of economic decisions under uncertainty. Two main general topics will be dealt with : (1) the theory of decision under uncertainty, and (2) the moral hazard issues between several economic agents.

**Course outline :**

Chapter 1 : Risk, uncertainty and strategies

- Introduction of the main concepts (risk, uncertainty, probability, moral hazard, adverse selection)
- Probabilistic framework (space of states, random variables)
- Numerical decision criteria (preferences, representation by a numerical criteria)
- Game theory, Principal-Agent model

Chapter 2 : Expected Utility

- The virtues of the expected utility (Saint-Petersburg paradox)
- The axiomatics of the expected utility (objective and subjective expected utility)
- The limits of the expected utility (Allais paradox, Ellsberg paradox)
- Generalisations of the expected utility (rank-dependent expected utility, Choquet expected utility)

Chapter 3 : Risk Aversion and Risk Measures

- Qualitative approach (certainty equivalent, risk premium, risk attitude)
- Quantitative approach (local measures of risk aversion)
- Stochastic dominance (first and second order)

Chapter 4 : Introduction to moral hazard issues

- Risk sharing and sharecropping contracts
- Credit with risk aversion of the borrower

Chapter 5 : Other applications

- Risky saving
- Application of the expected utility to static portfolio choice

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Methodology I (6 ECTS)

### Software for economists I

## CONTENT

Provide students with the basics of the statistical and econometric treatment of data using SAS, from the statistical description of the sample, the detection of outliers to the implementation of estimation techniques for linear and non-linear models.

**Course outline :**

1. Introduction to SAS : importing and managing data – proc import, proc contents, proc format, proc sort, proc surveyselect and introduction to SAS macro functions.

2. Describing the data : descriptive statistics with SAS – proc means, proc univariate, proc freq, proc tabulate, proc gplot.

3. Estimating and testing linear models : proc reg, proc glm, proc model, proc panel.

4. Estimating and testing non linear models : proc logistic, proc probit, proc model, proc genmod, proc nlmixed.

## VOLUME OF TEACHINGS

- Tutorials:
**24**hours

### Mathematics for economists

## CONTENT

The course intends to deepen the understanding of optimization theory with a geometric approach, and to introduce in a second part the study of dynamical systems.

__Course outline__

**I. Optimization with mixed constraints** a. Tangent cone and KKT conditions b. Mixed constraints problem c. Constraints qualification conditions d. Convex problems e. Saddle point and duality

II. **Dynamical systems** a. Introduction b. Systems of linear equations

- Constant coefficient : resolution, exponantial of matrices
- Dynamic of the solutions : steady state, stability, planar systems
- nonhomogeneous systems c. Systems of nonlinear differential equations
- Existence and uniqueness theorem
- Linearized system, Hartman-Grobman theorem

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Elective course, choose one among two

### Refresher course in economics (0 ECTS)

## CONTENT

For students coming from other fields than economics : quick reminder about the fundamentals of Economics : utility and profit maximization, optimization, markets, equilibrium

**Course outline :**

1. Principles and key concepts of Economics

2. Foundations of Microeconomics : consumer decision and utility maximization

3. Foundations of Microeconomics : producer profit maximization and market equilibrium under perfect competition

## VOLUME OF TEACHINGS

- Lectures:
**6**hours

### Refresher course in mathematics and statistics (0 ECTS)

## CONTENT

For students who want to improve their math level : reminder about prerequisites for the Mathematics classes and basic notions of probability and statistics.

__Course outline :__

1. Linear algebra

2. Analysis and optimization

3. Matrix diagonalization

4. Ordinary differential equations of order 1

5. Basic notions of probability and statistics

## VOLUME OF TEACHINGS

- Lectures:
**6**hours

### S2 M1 ECO (SE) (30 ECTS)

### Microeconomics III and IV (6 ECTS)

### Microeconomics III - Game theory

## CONTENT

Introducing the basic concepts of Game Theory.

**Course outline :**

1. Complete information games (normal form, examples, analysis)

2. Mixed extension (lotteries, expected gain, mixed-strategy equilibrium)

3. Games with continuous actions (externalities,imperfect competition)

4. Incomplete information games (extensive form, subgame perfection)

5. Additional examples.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Microeconomics IV - Public economics

## CONTENT

The objective of this course is to study the role of state in the economy. It is designed to provide students with a broad overview of issues investigated in public economics. We will review the rational foundations of public intervention and explore some of the tools used by government to act : taxes and transfers, the provision of public goods, or the design of welfare schemes. Most topics will be approached from both theoretical and empirical points of view.

__Course outline :__

**Lecture 1 – Introduction to public economics**

- Foundations of public intervention – Normative and positive public economics – Some numbers about public intervention – Empirical methods for public economics

**Lecture 2 – Social choice and social welfare**

- Axiomatic approach to social choice – Social welfare functions

**Lecture 3 – Public goods and externalities**

- Public goods – Externalities

**Lecture 4 – Taxation of commodities**

- Tax incidence – Optimal commodity taxation

**Lecture 5 – Taxation of labor**

- Optimal labor taxation – Some empirics around labor taxation

**Lecture 6 – Taxation of capital**

- Taxes in an intertemporal framework – Optimal capital income taxation – Taxation of inheritances

**Lecture 7 – Social insurance**

- Unemployment insurance and workers’ compensation – Disability insurance – Health insurance

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Macroeconomics III and IV (6 ECTS)

### Macroeconomics III

## CONTENT

This course follows Macroeconomics II and it goes deeper in the description of micro-founded models by introducing market frictions into the RBC model. The DSGE-New Keynesian model which includes nominal rigidity is a natural extension of the RBC model to analyze monetary policy / fiscal policy. Although this course is mainly theoretical, lectures will be motivated by stylized facts and the empirical performance of business cycle models will be discussed.

**Course outline :**

Chapter 1 : Nominal rigidities (1) Introducing money in RBC model (2) Monopolistic competition (3) Price rigidity (4) Exercises

Chapter 2 : Monetary and Fiscal policy (1) Monetary policy analysis (2) Fiscal policy analysis (3) New topics in macroeconomics (ZLB, forward guidance…)

(4) Exercises

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Macroeconomics IV

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Methodology II (10 ECTS)

### Time series

## CONTENT

This course develops the basic theoretical tools for the analysis and estimation of univariate time series models. In particular, it discusses the concepts of stationarity and non-tationarity, unit-root tests, and exposes the techniques for estimating, forecasting and testing ARMA models using practical examples. Finally, it presents some non-linear models for conditional mean and variance.

**Course outline :**

• Brief Review of Statistics and Probability Concepts (pre-requisites)

• Stochastic processes and stationarity

• Classical stationary processes : AR, MA, ARMA

• Estimations techniques for the classical processes

• Forecasting methods for ARMA(p,q) processes

• White noise tests and stability tests

• Optimal choice of orders and Adequacy of parameters

• Univariate Non-Stationary processes and cointegration

• Modelling Nonlinearity of the conditional expectation

• Volatility modelling for univariate processes

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Software for economists II

## CONTENT

The objective of this course is twofold. Firstly, to study how to use and manipulate databases with Stata and secondly, to perform empirical analysis in relation with the concepts learned in the time series and econometric methods of evaluation classes. After a short introduction to Stata, the course will be divided into tasks-oriented sessions (with mini-projects and exercises) during which the students will perform empirical analysis using databases such as the World Values Survey, the French Labor Force Survey, the National Supported Work data, etc.

**Course outline :**

Lecture 1 : Introduction to Stata and database manipulation

Why using Stata – What Stata looks like – Importing and reading data into Stata – Examining the data – Saving the dataset – Keeping track of things – Organizing datasets – Creating new variables – Panel data manipulation

Lecture 2 : Graphs and linear regressions

Histograms – Two-dimensional graphs – Linear regressions – Post-estimation – Extracting results – Hypothesis testing – Interaction terms – Non-linearity – Fixed effects

Lecture 3 : Endogeneity and public policies econometrics

Randomized control trials – Difference-in-differences – Validity checks

Lecture 4 : Time series

Stationary and non-stationary processes

## VOLUME OF TEACHINGS

- Tutorials:
**24**hours

### Mathematics for finance

## CONTENT

**Objectives :**

Introducing elementary tools to analyse discrete and continuous-time random processes.

**Roadmap :**

1. Markov chains

1.1. Introductory Example : random walks

1.2. Markov chains on a finite state space

1.3. Markov chains on countable state spaces

1.3.1. States classification

1.3.2. Asymptotic results

2. Markovian processes in continuous time

2.1. Poisson processes

2.2. Continuous-time Markov processes

2.3. Queueing theory

3. Discrete-time random processes

3.1. Conditional expectation

3.2. Martingales

3.3. Stopping time

3.4. Convergence theorems

3.5. Applications

4. Introduction to continuous-time stochastic processes : Brownian motion

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Evaluation by econometric methods

## CONTENT

The objective of the course is to offer M1 students with an overview of the main empirical methods used for the evaluation of public policies. We will study key articles taken from various applied economics literature (health, education or activive labor policies). Practical case studies on STATA will be offered all along. We will point out advantages and limits of each method as well as guide in the selection of the appropriate method.

**Course outline :**

Introduction

1. Why evaluate ? What do we evaluate ? What is the objective ?

2. Potential outcome framework

3. Treatment effects and counterfactuals

4. Selection bias

Chapter 1 : Randomized experiments

1. Random assignment

2. Underlying assumptions

3. Study of 2 empirical papers using the method

4. Randomized experiments in practice

Running example : exercise on National Supported Work (NSW) data

Chapter 2 : Natural experiment : Difference-in-difference method

1. Model and underlying assumptions

2. Study of 2 empirical papers using the method

3. Extensions

4. D-in-D in practice

Running example : exercise on National Supported Work (NSW) data

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Elective teaching unit, choose 2 among 3 (8 ECTS)

### Project management - Health and environmental economics (4 ECTS)

### Project management

## CONTENT

Designing and managing development aid projects according to international standards.

**Course outline :**

The students will learn and practice how to build a development program.

## VOLUME OF TEACHINGS

- Lectures:
**18**hours

### Health and environmental economics

## CONTENT

The goal of this course is to bring together health and environmental economics as two narrow fields within the discipline of economics. This shall be done by identifying the interactions and intersections between health and environmental issues, describing the main economic properties that health and environment do have in common (market failure, externalities, government involvements …). This shall be followed by delineating the unique features of health and environment that make of them two distinct topics of study. Following this line of reasoning, the course shall, then, present two self-contained parts devoted to health economics and environmental economics. Each part shall present the workhorse analytical concepts and methods used by economists to explore specific issues relating to the two subfields. The course shall emphasize the use of economic evidence to identify priority issues and the most effective policies for health and environment. Examples and experiences of the kinds of topics that are addressed shall be provided all through the course.

**Course outline :**

Part I (4 hours) Overview : The links between health, environment and the economy

• Economic properties of health and environment

- What distinguishes “health goods” from “environmental goods” ?
- Typology of goods : Pure vs. impure public goods, private vs. publicly-provided private good, global vs. local public goods.

• The economic valuation approach :

- The theory of externalities
- Welfarism vs. extra-welfarism analysis
- Cost-benefit analysis, cost-effectiveness analysis, cost-utility analysis.
- Revealed vs. stated-preferences methods

• Government intervention and regulations

- Why do governments provide goods that are not pure public goods ? The case of health care services.
- What are the special characteristics and challenges of the “global public goods” ? The case of global climate change
- Rationing devices for publicly-provided goods (User charges, uniform provision, queuing).
- Efficiency conditions for public and pure public goods : Collective demand curve and provision of public goods.

Part II (7 hours) : Economics of Health and Health Care

• Overview : Health economics as a field of inquiry

• Health care market structure, conduct and performance :

- Do the law of supply and demand apply to health and health care ?
- What makes health and health care different ?
- Demand for health and health care : Health behavior
- Supply of health care : Production, provision and costs of health care.
- Health insurance markets : Public vs. private health insurance schemes, asymmetric information and agency, moral hazard and adverse selection.

• Reforming health care : Goals of reform, cost containment, efficiency and equity, extending insurance coverage, costs of universal coverage.

Part III (7 hours) : Economics of the Environment

• Overview : Economics and Environment :

- A framework of analysis, environmental microeconomics and macroeconomics.
- The environment as a public good.
- The global commons

• Ecological Economics and the Economic analysis of Environmental Issues :

- Valuing the environment, accounting for environmental costs, internalizing environmental costs, optimal pollution, the Coase theorem.
- Environmentally-adjusted national income accounts, the Genuine progress indicator, the better life index, environmental assets accounts.

• Environmental Health Policy : Impacts and Policy Responses :

- Measuring the economic cost of environmental impacts on health.
- Economic analysis and assessments of the performance of alternative policies in areas such as climate change, outdoor air pollution, water and sanitation.

## VOLUME OF TEACHINGS

- Lectures:
**18**hours

### Introduction to corporate finance - Financial econometrics (4 ECTS)

### Introduction to corporate finance

## VOLUME OF TEACHINGS

- Lectures:
**18**hours

### Financial econometrics

## CONTENT

1. Analyzing the properties of financial time series : application to French stock markets

The data consists of the stocks of the French CAC40 on a daily basis since 1980. Data are provided in excel format and need to be download to GRETL. Different companies are used as examples.

- Computing returns and historical volatility and analyzing their graphs (mean, variance, skewness and kurtosis, quantiles, min and max, autocorrelation)
- Analyzing the distributions of returns : non-parametric approaches (histograms and CDF based on kernels ; normality tests : QQ plot, Shapiro-Wilkinson, Doornik-Hansen, Jarque-Bera, etc.)
- Informal presentation of stable distributions : index of stability, skewness parameter, scale parameter, location parameter
- Example of parametrization of a stable distribution : the regression analysis of power law distributions.

2. Regression analysis of financial data

2.1.Evaluating the performance of a money manager : CAPM model

The data consist of the S&P 500 and some of its components (General Electric, Ford, Microsoft, ORACLE) and the 3-month Treasury bill).

- Estimate of the Betas using OLS and GLS
- Test of the CAPM using a two-pass regression
- The Jensen measure to evaluate manager performance.

2.2. Modellling the term structure of interest rates

The data consist of the Government zero-coupon bond yield taken at a daily frequency from 1990 to 2017 with several maturities : 6 months, 1 year, 2 years, 4, years, 4 years, 5 years, 7 years and 10 years.

- Analyzing some basic stylized facts of government bond yields (graphs of term to maturity, statistical properties, normality tets, correlation matrix, etc…).
- Recall on asset pricing, Duffie-Kan affine models and the decomposition of the yield curve.
- Decomposition of the tield curve using the Diebold’s regression approach : Level, slope and curvature curves.
- Factor models : a basic presentation of Kalman filter methodology and applications to the yield curve.

3.Some benchmark models for forecasting and trading models

The data consists of US/euro, US/Japan, US/UK exchange rate (daily) from 1999 and 1977 to 2017.

3.1.Models of naïve and MACD (moving average) strategies

3.2.ARMA models (identification via ACF and PACF, estimation, residual tests and forecasts)

3.3.Dectecting long-range dependence structure : an introduction to ARFIMA models

3.4.Introduction to stochastic volatility models : Harvey models and ARCH-GARCH models (tests and estimation).

## VOLUME OF TEACHINGS

- Lectures:
**18**hours

### Software for economists III - International trade (4 ECTS)

### Software for economists III

## CONTENT

This teaching unit aims at providing the fundamental basis of the use of R software (or the RStudio IDE) and R programming. The courses will be illustrated with exercises using the statistical environment R (http://www.r-project.org/) which is free, open-source free and multiplatform, or via the RStudio IDE. The organization of the course will make progressive the acquisition of the knowledge and the mastery of the R statistical tool. It aims to make the student more autonomous when faced to classical problem of statistical modelling or data analysis, which can be found in the fields of economics.

**Course outline :**

- Introduction (history).
- Basic handling (data management in R).
- Creating R functions.
- Loops, tests, vectorization.
- R Graphics.
- Application to modelling (regression/classification).

## VOLUME OF TEACHINGS

- Tutorials:
**18**hours

### International trade

## CONTENT

The aim of this course is to provide students the analytical tools that are essential to understand the causes and consequences of international trade. We will focus on some key questions as why nations trade, what they trade and who gains (or not) from trade. We will then analyse the reasons for countries to limit or regulate the exchange of goods and study the effects of such policies on development and inequality. We will also tackle some aspects of the globalization process like international norms, labor standards, firms’ organization, etc. We will heavily rely on formal economic modelling to help us understand issues of international trade.

**Course outline :**

1. Introduction – Basic facts

2. The Ricardian model

3. The Specific Factors model

4. The Hecksher-Ohlin Model

5. Trade theory with firm-level heterogeneity

## VOLUME OF TEACHINGS

- Lectures:
**18**hours

### M2 PT ETE (AN) (60 ECTS)

### S3 M2 ETE (SE) (30 ECTS)

### Common core (9 ECTS)

### Advanced macroeconomics

## CONTENT

The course will analyse advanced macroeconomics models, with a special focus on growth and development. The empirical validity of these theories will be discussed.

**Course outline :**

The aim of the course is to examine the “new growth” or “endogenous growth” theories developed in the last 25 years, as well as the closely related literature on development.

The course consists of two sections. The first part will examine the seminal work in growth and economic development. We will study the various mechanisms that will result in sustained long-run growth -learning-by-doing, investments in infrastructure, education, and firms’ R&D decisions– and analyse the role played by externalities and increasing returns to scale. We will see that a crucial implication of these growth models is that the equilibrium growth rate is not socially optimal, and that a laissez-faire economy can grow either too slowly or too fast. We will also examine the causes of economic development, and why poverty traps may emerge. The explanations proposed include the theory of “the big push”, whereby increasing returns to scale can result in poverty traps and hence explain why certain economies remain underdeveloped. We will then address the role of “threshold effects” in education, their implications for development, and the role of the distribution of wealth.

The second part of the course will examine and several topics related to growth : the empirical evidence, the relationship between growth and inequality, recent views on the causes of the industrial revolution, and the role of institutions in development.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Advanced microeconomics

## CONTENT

To master the fundamentals of the economics of taxation

**Course outline :**

Foreword

Modern Public Finance : Why advanced ?

- The dual approach of consumer choice
- Mechanism Design
- Welfare economics

Taxation : The conundrum Capital, consumption, income

- Consumption better than capital (Chamley-Judd)
- Income better than Consumption (Atkinson-Stiglitz)
- Capital better than Income (Allais)

Chap 1 Why Taxation

Public Expenditures and Redistribution

How to define inequality

Hardy-Littlewood-Polya Theorem

Progressivity and Inequality : Jackobson Theoerem

Helping the poor

Universal vs targeted benefits

EITC vs NIT

Chap 2 What Taxes

Firms vs Households

How to defend the corporate tax ?

Globalization and the Destination Based Cash Flow Tax (Devereux Auerbach)

Capital vs Labor (Human Capital)

Capital : Income vs Stock ; Inheritance or Wealth

Income vs Consumption

Chap 3 First best taxation

The second theorem of Welfare Economics

The curse of talented people

Examples of first best taxes : Pigouvian and Land taxes (The Henry Georges theorem)

The Diamond Mirrlees Production efficiency Lemma : The foundation of VAT

Chap 4 Second best taxation and the efficiency cost of taxation

Substitution vs Income effect

The measure of the deadweight loss with the surplus measures

Changes in behavior, labor, saving, risk-taking

Changes in equilibrium and pass through

Partial Equilibrium (competitive vs non-competitive environment)

General Equilibrium (Haberger)

Dupuit’s Approximation formula and the marginal cost of public fund

Chap 5 Social Objectives

Social Welfare functions and Social welfare weights/ Rawls Vs Utilitarianism

Non Welfarist view-points

The Saez Stancheva generalization

Justice in taxation : The equal sacrifice

Chap 6 Ramsey Taxation

The inverse elasticity rule

Generalizations

The Scope of the Atkinson-Stiglitz Theorem

Chap 7 Capital taxation

The Chamley-Judd result (Straub and Werning result)

The Overlapping generation framework and positive result

The Piketty-Saez approach

Chap 8 Optimal Non-Linear Taxation : Analytics

From Mirrlees to Saez

The formulation as a Mechanism design pb

The principle of taxation

The Spence-Mirrlees condition as as sorting condition

Derivation of the pb as the solution of a optimal control pb

Bunching

The small perturbation approach

The ETRI as the sufficient statistics

Chap 9 Applications of the Optimal Non-linear taxation

The ABC formula

The optimal top tax rate

EITC vs NIT

Chap 10 On the research frontier

Nudge, behavioral economics and optimal tax results

More than 1 heterogeneity parameter

Optimal tax in an open economy

Optimal tax and Job search

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Advanced econometrics

## CONTENT

The goal of this course is to present advanced methods in econometrics for distributional analysis, regression and classification models. The course will present theoretical foundations and underlying intuition of each method, as well as several empirical examples.

**Course outline :**

1. Resampling Methods

- Pseudo-random generator
- Monte Carlo experiments
- Bootstrap and permutation tests

2. Nonparametric Econometrics

- Density estimation
- Regression splines
- Finite mixture models

3. Econometrics and Machine Learning

- Philosophy and general principle
- Resampling-based methods and algorithms
- Misspecification detection

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Economics of networks - Development economics (6 ECTS)

### Economics of networks

## CONTENT

The objective of this course is to provide an introduction to a fast-growing new field of research, the economics of networks. At the end of the course, students should notably be familiar with elementary network notions, should understand the microeconomic and econometric foundations of linear models of peer effects in networks and should be able to compute Nash equilibria of a model of altruism in networks.

**Course outline :** The course is organized in four parts.

(1) An introduction to the field.

A new field of research. Reasons behind its emergence. Examples of networks. Overview of the field (2) Elementary network notions.

Adjacency matrix. Types of networks. Specific networks. Degree. Density. Walks. Paths. Cycles. Components. Shortest paths. Diameter. Clustering. Homophily.

(3) Peer effects in networks : theory and econometrics.

Sources of correlations between peers’ outcomes. Simultaneity and strategic interactions. Continuous outcomes and small interactions. Bonacich centrality. Large interactions and bounds. Binary outcomes. Econometric issues : identification, estimation.

(4) Altruism and informal transfer in networks.

Magnitude and motives behind informal transfers. The empirics of perfect insurance. Informal insurance in networks. Altruism in networks.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Development economics

## CONTENT

This course is meant to train students on recent topics in development economics bridging the gap between theoretical and empirical research and the implementation of public policy to eradicate poverty. In this sense, the course will allow the students to apply the analytical tools they acquired during the first year of the master to specific questions and to relate them to targeted policies and their effectiveness.

This course will focus on *microeconomic* issues, seeking to understand the factors and constraints influencing individual-level, household-level, or firm-level decision-making in developing countries.

We will cover a series of broad topics. The first will concern __human capital__. Health and education are desirable per se, but they are also important determinants of productivity and of fertility levels (and of each other). What prevents poor households from becoming healthier and to acquiring more education ? Why are girls often at a disadvantage within the household ? What policies can improve health and education levels in developing countries ?

The second broad topic will concern __financial capital__. Most people in developing countries are self-employed earning highly irregular income, either a daily profit in the informal sector when business is good or only realizing income once or twice a year in farming when the harvest is good. How do households deal with such irregular income ? Can they borrow and save, and if not why not ? How and how well do informal insurance networks work ? Is microfinance the solution to all problems ?

We will also consider the importance of __physical capital__. Since the majority of poor households live in rural areas, agricultural productivity is central determinant of income for most of the world’ poor. How do the land distribution, property rights and access to technology matter for agricultural productivity ?

To summarize, the course will cover complementary topics in the development literature linking relevant econometric techniques and theoretical models to the implementation of relevant public policies.

__Course outline :__

The detailed list of the topics covered (and the related **plan of the course**) is the following :

INTRODUCTION

- What is economic development ? Measuring poverty.

HUMAN CAPITAL

1. Determinants of health : the household behaviour

- Nutrition based poverty traps
- Adoption and use of health products

2. Education :

- The demand for education and child labour
- The returns to education

3. Fertility, gender gaps and

- The determinants of fertility choices and the missing women
- Intra-household decision making

FINANCIAL CAPITAL

1. Microfinance and micro-savings

- Access to credit in poor countries
- Why don’t the poors save more ?

2. Coping with risk

- Income risk and agricultural production
- Informal safety nets

PHYSICAL CAPITAL

- Property rights and technology adoption :
- Property right and farm productivity
- Technology adoption and information

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Introduction to research (3 ECTS)

### Research questions

## CONTENT

This course is organized as a series of lectures during which faculty members will introduce students to a series of modern research topics.

**Course outline :**

To be determined.

### Elective teaching units, choose 1 among 2 (6 ECTS)

### Political economy - Incentives theory (6 ECTS)

### Political economy

## CONTENT

This course provides a graduate-level introduction to political economy, with a focus on the functioning of institutions and their impact on development and politics. The first part of the course deals with the building of states, institutional change and conflicts. The second part covers topics in democratic politics such as voting and electoral competition and electoral control, collective action and the links between politics and the media. Both theories and empirical works will be covered. By the end of the course, students will have an understanding of how institutions, power and economic outcomes interact with each other, and will be familiar with frontier research in this area.

**Course outline**

Lecture 1 : State building and state capacity

Weak states – Institution building and inequality – historical origin of institutions

Lecture 2 : Institutional change

Regime transition – Radical political change – Revolutions – Corruption

Lecture 3 : Civil war

War inefficiency – Ethnic conflicts – Natural resources – Economic causes of conflict

Lecture 4 : Voting and electoral competition

Models of voting – Lobbying and special interest

Lecture 5 : Political agency and electoral control

Government quality – Clientelism – Bureaucracies

Lecture 6 : Politics and the media

Media capture – Media bias

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Incentives theory

## CONTENT

The aim of this course is to present the main issues coming from the need to provide incentives (through mechanism or contract) in the presence of information asymmetries. It will highlight the contributions of the theory of incentives to many economic issues (in IO, public economics, macroeconomics, finance and insurance…) and present the recent developments (extrinsic motivation, behavioral biases).

**Course outline :**

1. Introduction : the principal-agent model and mechanism design

2. The case of adverse selection

2.1. The basic model

2.2. Applications and extensions

2.3. Signaling models

2.4. Dynamic aspects : the issue of commitment

3. The issue of moral hazard

3.1. Reminder on the basic model

3.2. Applications and extensions

3.3. Moral hazard in teams

3.4. Dynamic aspects : career concerns

4. The contribution of the theory of incentive in the main economic fields

4.1. Contributions to IO : Procurement and Optimal regulation

4.2. Contributions to public economics : Optimal taxation and Public-Private Partnerships

4.3. Contribution to Macroeconomics : Efficiency wage

5. The limits of the theory of incentives

5.1. Countervailing incentives

5.2. Behavioral aspects : intrinsic motivation and altruism

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Macroeconomic cycles - Dynamic macroeconomics (6 ECTS)

### Macroeconomic cycles

## CONTENT

The purpose of the course is to acquire relevant knowledge to analyze, both theoretically and numerically, discrete-time dynamic rational expectation models in economics. Applications in the field of Real Business Cycle (RBC) theory and Dynamic Stochastic General Equilibrium (DSGE) models will be presented. Computer sessions will be undertaken using Matlab software.

**Course outline :**

Chap 1 : Advanced Real Business Cycle theory

1. The RBC model : main results and early criticisms

2. Labor market extensions

3. Variable factor utilization

4. Capital adjustment costs and investment dynamics

5. Combining sources of uncertainty

Chap 2. Solving and estimating standard DSGE models

1. Linear rational expectation models : solution(s), uniqueness/multiplicity, stability

2. Solving standard DSGE model by first-order perturbation methods (log-linear approximation around the steady-state)

3. Estimation methods : overview

Chap 3. Computer sessions

1. Computer session 1

2. Computer session 2

Chap 4. Global methods : value function iteration and applications (optional)

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Dynamic macroeconomics

## CONTENT

The 2008 crisis and its consequences have shown the important role played by the interplay between the financial and real spheres at the macroeconomic level. The aim of this course is to study some of these aspects. We will focus on two issues that have experienced recent empirical and theoretical developments, the relationship between growth, macroeconomic volatility and public debt, and the one between economic activity and speculative bubbles.

**Course outline :**

1. Public debt, growth and macroeconomic volatility (Alain Venditti)

1.1. Balanced budget, fiscal policy and aggregate fluctuations

1.2. Public debt, inequalities and macroeconomic fluctuations

1.3. Multiple equilibria and collateral constraints in open economy

1.4. Public debt and growth : the short term and long term effects

2. Rational bubbles and macroeconomic activity (Thomas Seegmuller)

2.1. Existence of bubbles, crash and crowding-out effect in a simple overlapping generations model

2.2. Bubbles and infinitely lived agents

2.3. Bubbles enhancing production : heterogeneous investments and liquidity constraints

2.4. The role of public policies

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Elective teaching units, choose 1 among 2 (6 ECTS)

### Public choice - International trade (6 ECTS)

### International trade

## CONTENT

The objectives of this module is to familiarize students with the basic theories of international trade and to expose them to the latest theoretical and empirical advances in the field. By doing so, students should develop a clearer sense of what constitutes a good research topic (especially in the field of international trade). The course should equip them with skills and knowledge useful to better understand the current debates surrounding trade policy.

**Course outline :** This course covers the most important theories of international trade and their applications. Each week, the rigorous presentation of theoretical contributions is accompanied by a comprehensive overview of the corresponding empirical validations. The first part of the module quickly reviews the neoclassical theories of trade in the simplest frameworks, and then extends their predictions to more recent and realistic settings. The second part covers models of monopolistic competition with homogeneous and heterogenous firms. It also defines a unifying theoretical framework that can encompass different market structures and is often used for quantitative analysis. The third and last of part of the module applies the theoretical and empirical tools used in the first two parts to the study of three research topics that have recently received strong attention in the field.

- Part I : Neoclassical trade models

Ricardian models

Factor proportions theories

- Part II : Monopolistic competition and firms

Monopolistic competition with homogeneous firms

Monopolistic competition with heterogeneous firms

Gravity models and gains from trade

- Part III : Selected topics in international trade

Trade and labour markets

Trade policy

Global supply chains and multinationals

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Public choice

## CONTENT

Goals : Understanding the basic models of public choice, incentives, and decision making.

**Course outline :**

1. Economic institutions

2. Social choice and information

3. Efficiency

4. Aggregation, Arrow’s theorem

5. Non-manipulability, Gibbard and Saterthwaite theorem

6. Median voter theorem

7. Market institutions

8. Vickrey-Clarke-Groves schemes

9. Economic institutions and reform

10. Additional examples

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Health economics - Environmental economics (6 ECTS)

### Health economics

## CONTENT

This course proposes a balanced approach of health economics based on both theoretical and empirical considerations. It deals with the study of the main stakeholders’ economic behaviours of the health sector : patients, health professionals (physicians and hospitals), health insurance, companies producing health goods or pharmaceuticals and health authorities. It invites to reconsider some of the basic concepts in economics (supply and demand, public intervention, uncertainty, information asymmetries, incentives, etc.) and models (growth models and human capital, labour supply, etc.), for a deep understanding of the phenomena at work in the sector. Thus, the course is likely to meet the expectations from students willing to specialise in the analysis of the health sector as well as students interested in illustrations of concepts and mechanisms derived from the economic theory.

**Course outline :**

General introduction (2h-BV)

Part 1. Micro foundations (8h)

Chap 1 The demand for health and healthcare (4h-BV)

• Introducing health in the utility function and deriving healthcare demand : presentation of several options

• The demand for healthcare using the concept of health-capital (Grossman, 1972)

• Empirical illustration

Chap 2 Health supply (4h-AP)

• Self-employed physicians

• Modelling Quality

• Payment schemes

• Empirical illustration

Part 2. Health macroeconomics (8h)

Chap 3 Health as an economic sector (5h-AP)

• Health sector contribution to GDP and growth in France and other OECD countries

• The irresistible growth of the health sector in the economy (health as a luxury or a necessity good ?)

• Innovation in the health sector

• Empirical illustration

Chap 4 Health, development and growth (3h-BV)

• A health-augmented Solow-model

• Health and the development process, the Sachs report & the econometrics of the health/growth relationship

• The burden of diseases in Africa and the notion of “Universal Health Coverage”

• Modelling health in an macroeconomic design : epidemic traps

• Empirical illustration

Part 3. Topics (6h)

Chap 5 Public regulations in the healthcare market

• Measuring and reducing social inequalities in health (3h-BV)

Empirical illustrations

• Information asymmetries in health insurance (3h-AP)

Adverse selection in insurance companies’ plans

Moral hazard and healthcare consumption

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Environmental economics

## CONTENT

Part I of this lecture is dedicated to the design of an environmental policy. These regulation tools are first introduced in the context od a competitive polluting industry. We concentrate our attention on property rights, usual command and control, Pigouvian taxes, and emission rights permits. In a second step, we discuss the effect of imperfect competition, of imperfect information and of policy spill-overs.

In part two of this course you will learn about the categories of economic value assigned to environment and work through the utility theory on which environment valuation methods are based. We will survey the non-market valuation method employed by economists to measure public goods. This includes Revealed Preference methods and Stated Preference methods based on surveys and hypothetical markets. We will explore theoretical and empirical issues.

**Course outline :**

**Part I : The design of an environmental policies**

1. The regulation of a competitive polluting industry a. A competitive partial equilibrium model b. Property rights and the Coase theorem c. The different instruments

2. Some extensions a. Market Power b. Imperfect information c. Policy spill-overs

**Part II : Valuing the Environment**

1. The theory of environmental valuation a. Categories of Values b. From economic values of non-market goods to valuation methods c. Willingness To Pay (WTP) or Willingness To Accept (WTA)

2. Stated Preference Methods a. Hypothetical Market b. Contingent Valuation Methods c. Choice Modelling

3. Revealed preference Methods a. Valuing consumer's benefits b. Related topics

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### S4 M2 ETE (SE) (30 ECTS)

### Research methodology (4 ECTS)

### Research methodology I

## CONTENT

This course is organized as a series of lectures and activities. The first part of the course is made of lectures devoted to the epistemology of economics and to the description of todays’ organization of academic economics.

In the first set of lectures, what methodology and epistemology means in and for economics will be discussed. Students will be given a very broad overview over some historical developments and debates concerning key questions about “how to do science” and more specifically what this means in economics. What it means to produce a model and to reason in abstract terms, such as economics often does, will also be considered. Finally, some current debates of methodology in the context of experimental and behavioural economics will be introduced.

The second set of lectures will be devoted to the presentation of academic research in economics. Students will be introduced to the organization of research and to the form of academic research.

Subsequent activities will allow the students to practice research skills thanks to different activities supervised by different faculty members.

Collective supervision. Coordinator : Marc Sangnier

**Course outline :**

1 – Espistemology of economics (lectures)

What means methodology and epistemology in economics ? – Some important historical debates – As-if reasoning – What is a model ? – What is an experiment and how did it influence economics ?

2 – Academic research in economics (lectures)

Academic research organization – Research ethics – Academic writing – Oral presentation guidelines

3 – Critical assessment of research papers (activity)

4 – Literature review and collective research proposal (activity)

5 – Individual research proposal (activity)

## VOLUME OF TEACHINGS

- Tutorials:
**12**hours

### Research methodology II

## CONTENT

This course is organized as a series of lectures and activities. The first part of the course is made of lectures devoted to the epistemology of economics and to the description of todays’ organization of academic economics.

In the first set of lectures, what methodology and epistemology means in and for economics will be discussed. Students will be given a very broad overview over some historical developments and debates concerning key questions about “how to do science” and more specifically what this means in economics. What it means to produce a model and to reason in abstract terms, such as economics often does, will also be considered. Finally, some current debates of methodology in the context of experimental and behavioural economics will be introduced.

The second set of lectures will be devoted to the presentation of academic research in economics. Students will be introduced to the organization of research and to the form of academic research.

Subsequent activities will allow the students to practice research skills thanks to different activities supervised by different faculty members.

Collective supervision. Coordinator : Marc Sangnier

**Course outline :**

1 – Espistemology of economics (lectures)

What means methodology and epistemology in economics ? – Some important historical debates – As-if reasoning – What is a model ? – What is an experiment and how did it influence economics ?

2 – Academic research in economics (lectures)

Academic research organization – Research ethics – Academic writing – Oral presentation guidelines

3 – Critical assessment of research papers (activity)

4 – Literature review and collective research proposal (activity)

5 – Individual research proposal (activity)

## VOLUME OF TEACHINGS

- Tutorials:
**12**hours

### Research dissertation or end-of-study internship with report and defence (20 ECTS)

*Unavailable contents.*

### Elective teaching units, choose 1 among 2 (6 ECTS)

### Labor economics - Labor econometrics (6 ECTS)

### Labor economics

## CONTENT

The goal of this course is to provide the modern theoretical tools to model aggregate labor markets. We emphasize the role played by matching frictions, which summarize the mix of information imperfection and mobility costs for job-seekers and potential employers. The course covers individual behavior in frictional environments, measurement of unemployment inflows and outflows, the matching function, equilibrium search unemployment, unemployment compensation and job protection. Theoretical mechanisms are illustrated by case studies, calibrations and use of macro data.

Course outline :

Chapter 1 : Job search and unemployment compensation

- 1.1 Stationary job search
- 1.2 Accounting for non-stationarity
- 1.3 Unemployment compensation
- 1.4 Extensions

Chapter 2 : Unemployment inflows, outflows, and the matching function

- 2.1 Unemployment inflows and outflows
- 2.2 Beveridge curve
- 2.3 Matching functions
- 2.4 Microfoundations

Chapter 3 : Equilibrium search unemployment

- 3.1 Model assumptions
- 3.2 Equilibrium with exogenous wage
- 3.3 Equilibrium with wage bargaining
- 3.4 Efficient unemployment

Chapter 4 : The economics of job protection

- 4.1 What is Employment Protection Legislation ?
- 4.2 Transfers vs deadweight costs
- 4.3 Labor market impacts of EPL
- 4.4 EPL and the legal origins of the judicial system

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Labor econometrics

## CONTENT

We will focus on the practical challenges that empirical work has to face. These challenges require a purposeful choice of an estimation strategy (a research design), and we will study the strengths and weaknesses of leading approaches. This will enable us to identify good research practice (which is at the heart of what some leading empirical labour econometrician have labelled the Credibility Revolution in Empirical Economics).

__Course outline :__

Empirical methods for labour economics

All methods will be illustrated with real-world data using R, and several papers in applied labour economics will be discussed.

**(I) Selection biases : Problem and Remedies.**

Standard econometric tools require that our datasets be random samples, thus being representative of the population or universe of interest. However, this requirement is rarely satisfied in practice. Individuals optimally self-select into economic states, rendering the observed states non-random. For instance, individuals decide whether to accept jobs, and the study of the wage distribution can only use this self-selected group thus yielding distorted results (selection biases). We study Heckman’s idea of attempting to remove this sample selection bias by modelling it explicitly (a Roy model).

Applications : Heckman and Honore (1990, ECTA). “The Empirical Content of the Roy Model.” Roy models of migration : Borjas (1999, Handbook of LabEcon), “The Economic Analysis of Immigration”, Chiquiar and Hanson (2005, JPE), “International Migration, Self‐Selection, and the Distribution of Wages : Evidence from Mexico and the United States” ; Gurgand, M. and D.N. Margolis (2008, JPubE), “Does work pay in France ? Monetary incentives, hours constraints, and the guaranteed minimum income”.

**(II) Unobserved Heterogeneity : Fixed Effects, Panel Data Estimators, and Difference-in-Difference**

Usually, we cannot measure or observe everything that is relevant for the determination of outcomes. Such unobservable heterogeneity then poses serious problems for the researcher if it is correlated with control variables (the omitted variables problem). Overcoming this problem using an instrumental variables strategy is often not feasible in practice since credible instruments are very difficult to find. However, if we observe the same individual over several periods, such panel data can offer a solution. We will develop and put into practice empirical methods for estimation and inference that exploit such a panel structure. After reviewing the classic approaches, we then proceed to discuss some important papers from the theoretical and applied econometrics literatures. An important setting in which panel data methods have become very popular is the estimation of causal policy effects of natural experiments. We will discuss the challenges and limitations of such difference-in-difference (DiD) strategies.

Applications : Ruhm, C.J. (1996, JoHE), “Alcohol policies and highway vehicle fatalities” ; Card, D., J. Heining, and P. Kline. (2013, QJE) “Workplace Heterogeneity and the Rise of West German Wage Inequality” ; Duflo, E. (2001, AER),” Schooling and Labor Market Consequences of School Construction in Indonesia : Evidence from an Unusual Policy Experiment”

While DiD is a popular estimation method in situations in which the researcher disposes over a panel, drawing inference and testing is challenging is challenging. We consider several such situations which arise when errors are correlated within a group or across time.

Further readings : Moulton (1990, RESTAT), « An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Units » ; Donald and Lang (2007, RESTAT) « Inference with Difference-in-Differences and Other Panel Data » ; Bertrand, Duflo, Mullainathan (2004, QJE), « How Much Should We Trust Differences-in-Differences Estimates ? »

**(III) Identification**

What are the variations in the data that we seek to exploit in order to estimate the objects of our interest (typically the coefficients) ? Are these variations random, or a manifestation of choices ? An econometric model is identified if we can unique solve for these model coefficients. To achieve this, we usually have to impose some structure, such as the assumption that the error term in the linear regression be uncorrelated with the regressors (identification hypothesis). The validity of the chosen empirical strategy therefore depends on the empirical validity of the identification hypothesis. We will examine what constitutes good Research Design.

Application and replication : D. Card (1993), “Using geographic variation in college proximity to estimate the return to schooling.” Angrist and Krueger (2001, JEconPersp) “Instrumental Variables and the Search for Identification : From Supply and Demand to Natural Experiments”, Angrist and Pischke (2010, JEconPersp) “The Credibility Revolution in Empirical Economics : How Better Research Design is Taking the Con out of Econometrics.”

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Advanced econometrics (6 ECTS)

### Automatic model selection methods

## CONTENT

The objective of this course is to introduce quantitative methods allowing to reduce information. These methods cover different fields of statistics and are based on classical econometric methods (OLS, MLE) or classificatory or principal component methods. The ultimate goal is to study methods to do automatic variable selection in large-scale problems and to apply them to real data.

**Course outline :**

- Classification methods
- Economic factor models
- Statistical factor models
- Lasso methods
- The so-called « General to Specific » method (Hendry, Gets or Autometrics Methodology)

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Theoretical econometrics

## CONTENT

Provide students with a working knowledge of modern econometric practice, with the accompanying theoretical background. Students should also acquire skill with a suitable econometrics software package.

**Course outline :**

The course starts with a brief review of the linear regression model, with emphasis on a geometric approach. This is followed by the study of instrumental variables estimation, the method of moments, and generalised least squares. Next comes the method of maximum likelihood, and the classical hypothesis tests that can be based on maximum likelihood estimation. Discrete choice models, such as probit and logit, are discussed and it is shown how to estimate them by maximum likelihood. Throughout the course, the use of the bootstrap for the implementation of statistical inference in the context of econometrics will be emphasised.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Track ETE : with Magistere option (OPPT) (144 ECTS)

### M1 Economics (magistère option) (AN) (72 ECTS)

### S1 M1 Economics magistère option (SE) (36 ECTS)

### Microeconomics I and II (6 ECTS)

### Microeconomics I

## CONTENT

The objective of this course is to provide students with the foundations of economic theory. The course covers the consumption and production theory and is textbook based. The difficulty and coverage compare to those of the main departments of economics worldwide.

__Course outline :__

The course is textbook based. Topic list : Technology, Profit Maximization, Profit Function, Cost minimization, Cost Function, Duality, Utility Maximization, Choice, Demand.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Microeconomics II

## CONTENT

**Course outline :**

The course is textbook based. Topics list : Exchange, Time, Equilibrium Analysis, Welfare.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Macroeconomics I and II (6 ECTS)

### Macroeconomics I

## CONTENT

Learn the basic models with microeconomic foundations used in modern macroeconomics. Be able to do dynamic analysis. Understand the concept of dynamic efficiency and the role of public expenditures.

**Course outline :**

1. Introduction with reminders on the Solow model

2. The Ramsey model

2.1. The framework

2.2. Existence and features of the steady state

2.3. Dynamic analysis

2.4. Extension : public spending

3. The overlapping generations model

3.1. The model with capital

3.2. Intertemporal equilibrium, steady states and dynamics

3.3. Optimality

3.4. Extensions : public spending ; rational bubbles

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Macroeconomics II

## CONTENT

The aim of the course is to present advanced macroeconomic topics related to the analysis of aggregate consumption, aggregate investment and modern business cycle analysis with the Real Business Cycle model.

**Course outline :**

Chap. I : Consumption theory

1. Consumption over the life cycle : the life-cycle/permanent income models

2. Introducing uncertainty – The random walk hypothesis

3. Market imperfections : the role of liquidity constraints

4. Extensions : risk aversion, precautionary savings

Chap. 2 : Investment theory

1. The neoclassical model of capital demand

2. Investment with and without capital adjustment costs : Q-theory models

3. Role of shocks : real shocks, news shocks, noise shocks

Chap. 3 : Real Business Cycles

1. Measuring business cycles : trend-cycle decompositions and stylized facts

2. The canonical RBC model

3. Evaluation of the model

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Econometrics I and II (6 ECTS)

### Econometrics I: linear model

## CONTENT

**Provide students with :**

- the basics of panel data econometrics (fixed effects models, error components model)
- the identification of endogeneity problems in econometric models and their treatment (instrumental variables, GMM, tests)

**Course outline :**

1. Introduction to panel data and panel data models

2. The fixed effects model

- Specification of the model
- Estimation of the model : the Within / LSDV estimator.
- Testing the absence of unobserved heterogeneity.

3. The error components model

- Specification of the model
- Estimation of the model : the GLS / FGLS estimators.
- Testing the absence of unobserved heterogeneity.
- Testing the absence of correlation of the effects : the Hausman test

4. Endogeneity issues

- Causes of endogeneity in econometric models : measurement errors, dynamic models, unobserved heterogeneity, etc.
- The instrumental variables estimator
- The GMM estimator
- Looking for instruments (the time-series case, the cross-section case, the panel data case).
- Testing the validity of instruments
- Testing the exogeneity of regressors

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Econometrics II: non linear model

## CONTENT

Provide students with the basics of the econometrics of non linear models for binary, multinomial, ordered and count dependent variables as well as models for censored and truncated variables.

**Course outline :**

1. Introduction to non-linear models in econometrics and a brief reminder about the maximum likelihood principle.

2. Models for binary dependent variables.

- The linear probability model.
- The Logit model.
- The Probit model.

3. Models for multinomial and ordered dependent variables.

4. Models for count data.

5. Models for truncated and censored variables.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Labor economics - Risk and incentives (6 ECTS)

### Labor economics

## CONTENT

The objective of this course is to provide students with the necessary analytical tools to be able to study the consequences of different institutions, human capital formation, discrimination and wage bargaining on the labor market.

**Course outline :**

Introductory Chapter :

- Presentation
- Objectives
- Evaluation
- Labor market Institutions and course outline

Chapter 1 : « Labor Supply and Labor Demand » :

- Key definitions
- Labor Supply
- Labor Demand
- Equilibrium

Chapter 2. « Minimun wage »

- Facts
- Classical analysis
- The monopsony case
- Dual labor markets

Chapter 3 : « Mandatory contributions and social benefits »

- Facts
- Classical analysis
- Accounting for wage rigidities

Chapter 4. « Labor Unions » :

- Facts : unions, collective bargaining, union density
- The objective of labor unions
- Models of collective bargaining
- Model of strikes
- Empirical evidence and policy issues

Chapter 5. « Discrimination » :

- Facts : gender and ethnic wage and employment gaps
- Economic theories on discrimination
- Measuring wage discrimination
- Empirical results in the literature and policy issues

Chapter 6. « Education and human capital formation » :

- Facts
- The theory of human capital
- Education as a signaling device
- Identifying the causal relation between education and income
- Returns to education : private vs social returns

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Risk and incentives

## CONTENT

The main objective of this course is to provide the students with a theoretical synthetic framework so that they can face the difficulties of the study of economic decisions under uncertainty. Two main general topics will be dealt with : (1) the theory of decision under uncertainty, and (2) the moral hazard issues between several economic agents.

**Course outline :**

Chapter 1 : Risk, uncertainty and strategies

- Introduction of the main concepts (risk, uncertainty, probability, moral hazard, adverse selection)
- Probabilistic framework (space of states, random variables)
- Numerical decision criteria (preferences, representation by a numerical criteria)
- Game theory, Principal-Agent model

Chapter 2 : Expected Utility

- The virtues of the expected utility (Saint-Petersburg paradox)
- The axiomatics of the expected utility (objective and subjective expected utility)
- The limits of the expected utility (Allais paradox, Ellsberg paradox)
- Generalisations of the expected utility (rank-dependent expected utility, Choquet expected utility)

Chapter 3 : Risk Aversion and Risk Measures

- Qualitative approach (certainty equivalent, risk premium, risk attitude)
- Quantitative approach (local measures of risk aversion)
- Stochastic dominance (first and second order)

Chapter 4 : Introduction to moral hazard issues

- Risk sharing and sharecropping contracts
- Credit with risk aversion of the borrower

Chapter 5 : Other applications

- Risky saving
- Application of the expected utility to static portfolio choice

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Methodology I (6 ECTS)

### Software for economists I

## CONTENT

Provide students with the basics of the statistical and econometric treatment of data using SAS, from the statistical description of the sample, the detection of outliers to the implementation of estimation techniques for linear and non-linear models.

**Course outline :**

1. Introduction to SAS : importing and managing data – proc import, proc contents, proc format, proc sort, proc surveyselect and introduction to SAS macro functions.

2. Describing the data : descriptive statistics with SAS – proc means, proc univariate, proc freq, proc tabulate, proc gplot.

3. Estimating and testing linear models : proc reg, proc glm, proc model, proc panel.

4. Estimating and testing non linear models : proc logistic, proc probit, proc model, proc genmod, proc nlmixed.

## VOLUME OF TEACHINGS

- Tutorials:
**24**hours

### Mathematics for economists

## CONTENT

The course intends to deepen the understanding of optimization theory with a geometric approach, and to introduce in a second part the study of dynamical systems.

__Course outline__

**I. Optimization with mixed constraints** a. Tangent cone and KKT conditions b. Mixed constraints problem c. Constraints qualification conditions d. Convex problems e. Saddle point and duality

II. **Dynamical systems** a. Introduction b. Systems of linear equations

- Constant coefficient : resolution, exponantial of matrices
- Dynamic of the solutions : steady state, stability, planar systems
- nonhomogeneous systems c. Systems of nonlinear differential equations
- Existence and uniqueness theorem
- Linearized system, Hartman-Grobman theorem

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Big Data (6 ECTS)

### Big data, challenges and opportunities

## VOLUME OF TEACHINGS

- Lectures:
**6**hours

### Programming for Big Data, an introduction to Python and SQL

## CONTENT

This course is aimed at teaching the basics of computer programming, with emphasis on its use in Big Data. Students will first become familiar with database management (relational or not). They will then learn the basics of programming with the computer language Python.

**Course outline :**

Chapter 1 : Relational databases

1. Introduction

2. The relational model

3. Relational algebra

4. SQL Language

5. Entity-Association Schemes

Chapter 2 : Non-relational databases

1. Introduction

2. Parallel Computing

3. Schemas, and non-relational databases

4. MongoDB

Chapter 3 : Introduction to Python

1. Variables et calculs

2. Strings, lists, tuples, dictionnaries

3. If… else conditions

4. Loops

5. Functions

6. Introduction to Numpy

7. Data handling with Pandas

8. Visualization

9. Parallel programming

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Big data softwares

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### S2 M1 Economics magistère option (SE) (36 ECTS)

### Microeconomics III and IV (6 ECTS)

### Microeconomics III - Game theory

## CONTENT

Introducing the basic concepts of Game Theory.

**Course outline :**

1. Complete information games (normal form, examples, analysis)

2. Mixed extension (lotteries, expected gain, mixed-strategy equilibrium)

3. Games with continuous actions (externalities,imperfect competition)

4. Incomplete information games (extensive form, subgame perfection)

5. Additional examples.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Microeconomics IV - Public economics

## CONTENT

The objective of this course is to study the role of state in the economy. It is designed to provide students with a broad overview of issues investigated in public economics. We will review the rational foundations of public intervention and explore some of the tools used by government to act : taxes and transfers, the provision of public goods, or the design of welfare schemes. Most topics will be approached from both theoretical and empirical points of view.

__Course outline :__

**Lecture 1 – Introduction to public economics**

- Foundations of public intervention – Normative and positive public economics – Some numbers about public intervention – Empirical methods for public economics

**Lecture 2 – Social choice and social welfare**

- Axiomatic approach to social choice – Social welfare functions

**Lecture 3 – Public goods and externalities**

- Public goods – Externalities

**Lecture 4 – Taxation of commodities**

- Tax incidence – Optimal commodity taxation

**Lecture 5 – Taxation of labor**

- Optimal labor taxation – Some empirics around labor taxation

**Lecture 6 – Taxation of capital**

- Taxes in an intertemporal framework – Optimal capital income taxation – Taxation of inheritances

**Lecture 7 – Social insurance**

- Unemployment insurance and workers’ compensation – Disability insurance – Health insurance

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Big Data (6 ECTS)

### Advanced SAS

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Introduction to machine learning

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Macroeconomics III and IV (6 ECTS)

### Macroeconomics III

## CONTENT

This course follows Macroeconomics II and it goes deeper in the description of micro-founded models by introducing market frictions into the RBC model. The DSGE-New Keynesian model which includes nominal rigidity is a natural extension of the RBC model to analyze monetary policy / fiscal policy. Although this course is mainly theoretical, lectures will be motivated by stylized facts and the empirical performance of business cycle models will be discussed.

**Course outline :**

Chapter 1 : Nominal rigidities (1) Introducing money in RBC model (2) Monopolistic competition (3) Price rigidity (4) Exercises

Chapter 2 : Monetary and Fiscal policy (1) Monetary policy analysis (2) Fiscal policy analysis (3) New topics in macroeconomics (ZLB, forward guidance…)

(4) Exercises

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Macroeconomics IV

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Méthodologie (6 ECTS)

### Software for economists II

## CONTENT

The objective of this course is twofold. Firstly, to study how to use and manipulate databases with Stata and secondly, to perform empirical analysis in relation with the concepts learned in the time series and econometric methods of evaluation classes. After a short introduction to Stata, the course will be divided into tasks-oriented sessions (with mini-projects and exercises) during which the students will perform empirical analysis using databases such as the World Values Survey, the French Labor Force Survey, the National Supported Work data, etc.

**Course outline :**

Lecture 1 : Introduction to Stata and database manipulation

Why using Stata – What Stata looks like – Importing and reading data into Stata – Examining the data – Saving the dataset – Keeping track of things – Organizing datasets – Creating new variables – Panel data manipulation

Lecture 2 : Graphs and linear regressions

Histograms – Two-dimensional graphs – Linear regressions – Post-estimation – Extracting results – Hypothesis testing – Interaction terms – Non-linearity – Fixed effects

Lecture 3 : Endogeneity and public policies econometrics

Randomized control trials – Difference-in-differences – Validity checks

Lecture 4 : Time series

Stationary and non-stationary processes

## VOLUME OF TEACHINGS

- Tutorials:
**24**hours

### Mathematics for finance

## CONTENT

**Objectives :**

Introducing elementary tools to analyse discrete and continuous-time random processes.

**Roadmap :**

1. Markov chains

1.1. Introductory Example : random walks

1.2. Markov chains on a finite state space

1.3. Markov chains on countable state spaces

1.3.1. States classification

1.3.2. Asymptotic results

2. Markovian processes in continuous time

2.1. Poisson processes

2.2. Continuous-time Markov processes

2.3. Queueing theory

3. Discrete-time random processes

3.1. Conditional expectation

3.2. Martingales

3.3. Stopping time

3.4. Convergence theorems

3.5. Applications

4. Introduction to continuous-time stochastic processes : Brownian motion

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Vocational courses (6 ECTS)

### Quantitative marketing

## VOLUME OF TEACHINGS

- Lectures:
**12**hours

### Software: R

## VOLUME OF TEACHINGS

- Lectures:
**12**hours

### Economic policy II

## VOLUME OF TEACHINGS

- Lectures:
**12**hours

### Insurance mechanisms

## VOLUME OF TEACHINGS

- Lectures:
**12**hours

### Oral training on Economics topics

## VOLUME OF TEACHINGS

- Tutorials:
**6**hours

### Oral training in English

## VOLUME OF TEACHINGS

- Tutorials:
**6**hours

### Elective courses, choose 2 among 6 (6 ECTS)

### Introduction to corporate finance (3 ECTS)

### Introduction to corporate finance

## VOLUME OF TEACHINGS

- Lectures:
**18**hours

### Project management (3 ECTS)

### Project management

## CONTENT

Designing and managing development aid projects according to international standards.

**Course outline :**

The students will learn and practice how to build a development program.

## VOLUME OF TEACHINGS

- Lectures:
**18**hours

### Health and environmental economics (3 ECTS)

### Health and environmental economics

## CONTENT

The goal of this course is to bring together health and environmental economics as two narrow fields within the discipline of economics. This shall be done by identifying the interactions and intersections between health and environmental issues, describing the main economic properties that health and environment do have in common (market failure, externalities, government involvements …). This shall be followed by delineating the unique features of health and environment that make of them two distinct topics of study. Following this line of reasoning, the course shall, then, present two self-contained parts devoted to health economics and environmental economics. Each part shall present the workhorse analytical concepts and methods used by economists to explore specific issues relating to the two subfields. The course shall emphasize the use of economic evidence to identify priority issues and the most effective policies for health and environment. Examples and experiences of the kinds of topics that are addressed shall be provided all through the course.

**Course outline :**

Part I (4 hours) Overview : The links between health, environment and the economy

• Economic properties of health and environment

- What distinguishes “health goods” from “environmental goods” ?
- Typology of goods : Pure vs. impure public goods, private vs. publicly-provided private good, global vs. local public goods.

• The economic valuation approach :

- The theory of externalities
- Welfarism vs. extra-welfarism analysis
- Cost-benefit analysis, cost-effectiveness analysis, cost-utility analysis.
- Revealed vs. stated-preferences methods

• Government intervention and regulations

- Why do governments provide goods that are not pure public goods ? The case of health care services.
- What are the special characteristics and challenges of the “global public goods” ? The case of global climate change
- Rationing devices for publicly-provided goods (User charges, uniform provision, queuing).
- Efficiency conditions for public and pure public goods : Collective demand curve and provision of public goods.

Part II (7 hours) : Economics of Health and Health Care

• Overview : Health economics as a field of inquiry

• Health care market structure, conduct and performance :

- Do the law of supply and demand apply to health and health care ?
- What makes health and health care different ?
- Demand for health and health care : Health behavior
- Supply of health care : Production, provision and costs of health care.
- Health insurance markets : Public vs. private health insurance schemes, asymmetric information and agency, moral hazard and adverse selection.

• Reforming health care : Goals of reform, cost containment, efficiency and equity, extending insurance coverage, costs of universal coverage.

Part III (7 hours) : Economics of the Environment

• Overview : Economics and Environment :

- A framework of analysis, environmental microeconomics and macroeconomics.
- The environment as a public good.
- The global commons

• Ecological Economics and the Economic analysis of Environmental Issues :

- Valuing the environment, accounting for environmental costs, internalizing environmental costs, optimal pollution, the Coase theorem.
- Environmentally-adjusted national income accounts, the Genuine progress indicator, the better life index, environmental assets accounts.

• Environmental Health Policy : Impacts and Policy Responses :

- Measuring the economic cost of environmental impacts on health.
- Economic analysis and assessments of the performance of alternative policies in areas such as climate change, outdoor air pollution, water and sanitation.

## VOLUME OF TEACHINGS

- Lectures:
**18**hours

### Evaluation by econometric methods (3 ECTS)

### Evaluation by econometric methods

## CONTENT

The objective of the course is to offer M1 students with an overview of the main empirical methods used for the evaluation of public policies. We will study key articles taken from various applied economics literature (health, education or activive labor policies). Practical case studies on STATA will be offered all along. We will point out advantages and limits of each method as well as guide in the selection of the appropriate method.

**Course outline :**

Introduction

1. Why evaluate ? What do we evaluate ? What is the objective ?

2. Potential outcome framework

3. Treatment effects and counterfactuals

4. Selection bias

Chapter 1 : Randomized experiments

1. Random assignment

2. Underlying assumptions

3. Study of 2 empirical papers using the method

4. Randomized experiments in practice

Running example : exercise on National Supported Work (NSW) data

Chapter 2 : Natural experiment : Difference-in-difference method

1. Model and underlying assumptions

2. Study of 2 empirical papers using the method

3. Extensions

4. D-in-D in practice

Running example : exercise on National Supported Work (NSW) data

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### International trade (3 ECTS)

### International trade

## CONTENT

The aim of this course is to provide students the analytical tools that are essential to understand the causes and consequences of international trade. We will focus on some key questions as why nations trade, what they trade and who gains (or not) from trade. We will then analyse the reasons for countries to limit or regulate the exchange of goods and study the effects of such policies on development and inequality. We will also tackle some aspects of the globalization process like international norms, labor standards, firms’ organization, etc. We will heavily rely on formal economic modelling to help us understand issues of international trade.

**Course outline :**

1. Introduction – Basic facts

2. The Ricardian model

3. The Specific Factors model

4. The Hecksher-Ohlin Model

5. Trade theory with firm-level heterogeneity

## VOLUME OF TEACHINGS

- Lectures:
**18**hours

### M2 track ETE magistère option (AN) (72 ECTS)

### S3 M2 ETE Magistère (SE) (36 ECTS)

### Common core (9 ECTS)

### Advanced macroeconomics

## CONTENT

The course will analyse advanced macroeconomics models, with a special focus on growth and development. The empirical validity of these theories will be discussed.

**Course outline :**

The aim of the course is to examine the “new growth” or “endogenous growth” theories developed in the last 25 years, as well as the closely related literature on development.

The course consists of two sections. The first part will examine the seminal work in growth and economic development. We will study the various mechanisms that will result in sustained long-run growth -learning-by-doing, investments in infrastructure, education, and firms’ R&D decisions– and analyse the role played by externalities and increasing returns to scale. We will see that a crucial implication of these growth models is that the equilibrium growth rate is not socially optimal, and that a laissez-faire economy can grow either too slowly or too fast. We will also examine the causes of economic development, and why poverty traps may emerge. The explanations proposed include the theory of “the big push”, whereby increasing returns to scale can result in poverty traps and hence explain why certain economies remain underdeveloped. We will then address the role of “threshold effects” in education, their implications for development, and the role of the distribution of wealth.

The second part of the course will examine and several topics related to growth : the empirical evidence, the relationship between growth and inequality, recent views on the causes of the industrial revolution, and the role of institutions in development.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Advanced microeconomics

## CONTENT

To master the fundamentals of the economics of taxation

**Course outline :**

Foreword

Modern Public Finance : Why advanced ?

- The dual approach of consumer choice
- Mechanism Design
- Welfare economics

Taxation : The conundrum Capital, consumption, income

- Consumption better than capital (Chamley-Judd)
- Income better than Consumption (Atkinson-Stiglitz)
- Capital better than Income (Allais)

Chap 1 Why Taxation

Public Expenditures and Redistribution

How to define inequality

Hardy-Littlewood-Polya Theorem

Progressivity and Inequality : Jackobson Theoerem

Helping the poor

Universal vs targeted benefits

EITC vs NIT

Chap 2 What Taxes

Firms vs Households

How to defend the corporate tax ?

Globalization and the Destination Based Cash Flow Tax (Devereux Auerbach)

Capital vs Labor (Human Capital)

Capital : Income vs Stock ; Inheritance or Wealth

Income vs Consumption

Chap 3 First best taxation

The second theorem of Welfare Economics

The curse of talented people

Examples of first best taxes : Pigouvian and Land taxes (The Henry Georges theorem)

The Diamond Mirrlees Production efficiency Lemma : The foundation of VAT

Chap 4 Second best taxation and the efficiency cost of taxation

Substitution vs Income effect

The measure of the deadweight loss with the surplus measures

Changes in behavior, labor, saving, risk-taking

Changes in equilibrium and pass through

Partial Equilibrium (competitive vs non-competitive environment)

General Equilibrium (Haberger)

Dupuit’s Approximation formula and the marginal cost of public fund

Chap 5 Social Objectives

Social Welfare functions and Social welfare weights/ Rawls Vs Utilitarianism

Non Welfarist view-points

The Saez Stancheva generalization

Justice in taxation : The equal sacrifice

Chap 6 Ramsey Taxation

The inverse elasticity rule

Generalizations

The Scope of the Atkinson-Stiglitz Theorem

Chap 7 Capital taxation

The Chamley-Judd result (Straub and Werning result)

The Overlapping generation framework and positive result

The Piketty-Saez approach

Chap 8 Optimal Non-Linear Taxation : Analytics

From Mirrlees to Saez

The formulation as a Mechanism design pb

The principle of taxation

The Spence-Mirrlees condition as as sorting condition

Derivation of the pb as the solution of a optimal control pb

Bunching

The small perturbation approach

The ETRI as the sufficient statistics

Chap 9 Applications of the Optimal Non-linear taxation

The ABC formula

The optimal top tax rate

EITC vs NIT

Chap 10 On the research frontier

Nudge, behavioral economics and optimal tax results

More than 1 heterogeneity parameter

Optimal tax in an open economy

Optimal tax and Job search

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Advanced econometrics

## CONTENT

The goal of this course is to present advanced methods in econometrics for distributional analysis, regression and classification models. The course will present theoretical foundations and underlying intuition of each method, as well as several empirical examples.

**Course outline :**

1. Resampling Methods

- Pseudo-random generator
- Monte Carlo experiments
- Bootstrap and permutation tests

2. Nonparametric Econometrics

- Density estimation
- Regression splines
- Finite mixture models

3. Econometrics and Machine Learning

- Philosophy and general principle
- Resampling-based methods and algorithms
- Misspecification detection

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Economics of networks - Development economics (6 ECTS)

### Economics of networks

## CONTENT

The objective of this course is to provide an introduction to a fast-growing new field of research, the economics of networks. At the end of the course, students should notably be familiar with elementary network notions, should understand the microeconomic and econometric foundations of linear models of peer effects in networks and should be able to compute Nash equilibria of a model of altruism in networks.

**Course outline :** The course is organized in four parts.

(1) An introduction to the field.

A new field of research. Reasons behind its emergence. Examples of networks. Overview of the field (2) Elementary network notions.

Adjacency matrix. Types of networks. Specific networks. Degree. Density. Walks. Paths. Cycles. Components. Shortest paths. Diameter. Clustering. Homophily.

(3) Peer effects in networks : theory and econometrics.

Sources of correlations between peers’ outcomes. Simultaneity and strategic interactions. Continuous outcomes and small interactions. Bonacich centrality. Large interactions and bounds. Binary outcomes. Econometric issues : identification, estimation.

(4) Altruism and informal transfer in networks.

Magnitude and motives behind informal transfers. The empirics of perfect insurance. Informal insurance in networks. Altruism in networks.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Development economics

## CONTENT

This course is meant to train students on recent topics in development economics bridging the gap between theoretical and empirical research and the implementation of public policy to eradicate poverty. In this sense, the course will allow the students to apply the analytical tools they acquired during the first year of the master to specific questions and to relate them to targeted policies and their effectiveness.

This course will focus on *microeconomic* issues, seeking to understand the factors and constraints influencing individual-level, household-level, or firm-level decision-making in developing countries.

We will cover a series of broad topics. The first will concern __human capital__. Health and education are desirable per se, but they are also important determinants of productivity and of fertility levels (and of each other). What prevents poor households from becoming healthier and to acquiring more education ? Why are girls often at a disadvantage within the household ? What policies can improve health and education levels in developing countries ?

The second broad topic will concern __financial capital__. Most people in developing countries are self-employed earning highly irregular income, either a daily profit in the informal sector when business is good or only realizing income once or twice a year in farming when the harvest is good. How do households deal with such irregular income ? Can they borrow and save, and if not why not ? How and how well do informal insurance networks work ? Is microfinance the solution to all problems ?

We will also consider the importance of __physical capital__. Since the majority of poor households live in rural areas, agricultural productivity is central determinant of income for most of the world’ poor. How do the land distribution, property rights and access to technology matter for agricultural productivity ?

To summarize, the course will cover complementary topics in the development literature linking relevant econometric techniques and theoretical models to the implementation of relevant public policies.

__Course outline :__

The detailed list of the topics covered (and the related **plan of the course**) is the following :

INTRODUCTION

- What is economic development ? Measuring poverty.

HUMAN CAPITAL

1. Determinants of health : the household behaviour

- Nutrition based poverty traps
- Adoption and use of health products

2. Education :

- The demand for education and child labour
- The returns to education

3. Fertility, gender gaps and

- The determinants of fertility choices and the missing women
- Intra-household decision making

FINANCIAL CAPITAL

1. Microfinance and micro-savings

- Access to credit in poor countries
- Why don’t the poors save more ?

2. Coping with risk

- Income risk and agricultural production
- Informal safety nets

PHYSICAL CAPITAL

- Property rights and technology adoption :
- Property right and farm productivity
- Technology adoption and information

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### End-of-study project (6 ECTS)

### Big Data (6 ECTS)

### IT tools for Big Data, a deeper view

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Advanced machine learning

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Introduction to research (3 ECTS)

### Research questions

## CONTENT

This course is organized as a series of lectures during which faculty members will introduce students to a series of modern research topics.

**Course outline :**

To be determined.

### Enseignements optionnels (1 UE à choisir parmi 4) (6 ECTS)

### Political economy - Incentives theory (6 ECTS)

### Political economy

## CONTENT

This course provides a graduate-level introduction to political economy, with a focus on the functioning of institutions and their impact on development and politics. The first part of the course deals with the building of states, institutional change and conflicts. The second part covers topics in democratic politics such as voting and electoral competition and electoral control, collective action and the links between politics and the media. Both theories and empirical works will be covered. By the end of the course, students will have an understanding of how institutions, power and economic outcomes interact with each other, and will be familiar with frontier research in this area.

**Course outline**

Lecture 1 : State building and state capacity

Weak states – Institution building and inequality – historical origin of institutions

Lecture 2 : Institutional change

Regime transition – Radical political change – Revolutions – Corruption

Lecture 3 : Civil war

War inefficiency – Ethnic conflicts – Natural resources – Economic causes of conflict

Lecture 4 : Voting and electoral competition

Models of voting – Lobbying and special interest

Lecture 5 : Political agency and electoral control

Government quality – Clientelism – Bureaucracies

Lecture 6 : Politics and the media

Media capture – Media bias

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Incentives theory

## CONTENT

The aim of this course is to present the main issues coming from the need to provide incentives (through mechanism or contract) in the presence of information asymmetries. It will highlight the contributions of the theory of incentives to many economic issues (in IO, public economics, macroeconomics, finance and insurance…) and present the recent developments (extrinsic motivation, behavioral biases).

**Course outline :**

1. Introduction : the principal-agent model and mechanism design

2. The case of adverse selection

2.1. The basic model

2.2. Applications and extensions

2.3. Signaling models

2.4. Dynamic aspects : the issue of commitment

3. The issue of moral hazard

3.1. Reminder on the basic model

3.2. Applications and extensions

3.3. Moral hazard in teams

3.4. Dynamic aspects : career concerns

4. The contribution of the theory of incentive in the main economic fields

4.1. Contributions to IO : Procurement and Optimal regulation

4.2. Contributions to public economics : Optimal taxation and Public-Private Partnerships

4.3. Contribution to Macroeconomics : Efficiency wage

5. The limits of the theory of incentives

5.1. Countervailing incentives

5.2. Behavioral aspects : intrinsic motivation and altruism

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Macroeconomic cycles - Dynamic macroeconomics (6 ECTS)

### Macroeconomic cycles

## CONTENT

The purpose of the course is to acquire relevant knowledge to analyze, both theoretically and numerically, discrete-time dynamic rational expectation models in economics. Applications in the field of Real Business Cycle (RBC) theory and Dynamic Stochastic General Equilibrium (DSGE) models will be presented. Computer sessions will be undertaken using Matlab software.

**Course outline :**

Chap 1 : Advanced Real Business Cycle theory

1. The RBC model : main results and early criticisms

2. Labor market extensions

3. Variable factor utilization

4. Capital adjustment costs and investment dynamics

5. Combining sources of uncertainty

Chap 2. Solving and estimating standard DSGE models

1. Linear rational expectation models : solution(s), uniqueness/multiplicity, stability

2. Solving standard DSGE model by first-order perturbation methods (log-linear approximation around the steady-state)

3. Estimation methods : overview

Chap 3. Computer sessions

1. Computer session 1

2. Computer session 2

Chap 4. Global methods : value function iteration and applications (optional)

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Dynamic macroeconomics

## CONTENT

The 2008 crisis and its consequences have shown the important role played by the interplay between the financial and real spheres at the macroeconomic level. The aim of this course is to study some of these aspects. We will focus on two issues that have experienced recent empirical and theoretical developments, the relationship between growth, macroeconomic volatility and public debt, and the one between economic activity and speculative bubbles.

**Course outline :**

1. Public debt, growth and macroeconomic volatility (Alain Venditti)

1.1. Balanced budget, fiscal policy and aggregate fluctuations

1.2. Public debt, inequalities and macroeconomic fluctuations

1.3. Multiple equilibria and collateral constraints in open economy

1.4. Public debt and growth : the short term and long term effects

2. Rational bubbles and macroeconomic activity (Thomas Seegmuller)

2.1. Existence of bubbles, crash and crowding-out effect in a simple overlapping generations model

2.2. Bubbles and infinitely lived agents

2.3. Bubbles enhancing production : heterogeneous investments and liquidity constraints

2.4. The role of public policies

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Public choice - International trade (6 ECTS)

### International trade

## CONTENT

The objectives of this module is to familiarize students with the basic theories of international trade and to expose them to the latest theoretical and empirical advances in the field. By doing so, students should develop a clearer sense of what constitutes a good research topic (especially in the field of international trade). The course should equip them with skills and knowledge useful to better understand the current debates surrounding trade policy.

**Course outline :** This course covers the most important theories of international trade and their applications. Each week, the rigorous presentation of theoretical contributions is accompanied by a comprehensive overview of the corresponding empirical validations. The first part of the module quickly reviews the neoclassical theories of trade in the simplest frameworks, and then extends their predictions to more recent and realistic settings. The second part covers models of monopolistic competition with homogeneous and heterogenous firms. It also defines a unifying theoretical framework that can encompass different market structures and is often used for quantitative analysis. The third and last of part of the module applies the theoretical and empirical tools used in the first two parts to the study of three research topics that have recently received strong attention in the field.

- Part I : Neoclassical trade models

Ricardian models

Factor proportions theories

- Part II : Monopolistic competition and firms

Monopolistic competition with homogeneous firms

Monopolistic competition with heterogeneous firms

Gravity models and gains from trade

- Part III : Selected topics in international trade

Trade and labour markets

Trade policy

Global supply chains and multinationals

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Public choice

## CONTENT

Goals : Understanding the basic models of public choice, incentives, and decision making.

**Course outline :**

1. Economic institutions

2. Social choice and information

3. Efficiency

4. Aggregation, Arrow’s theorem

5. Non-manipulability, Gibbard and Saterthwaite theorem

6. Median voter theorem

7. Market institutions

8. Vickrey-Clarke-Groves schemes

9. Economic institutions and reform

10. Additional examples

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Health economics - Environmental economics (6 ECTS)

### Health economics

## CONTENT

This course proposes a balanced approach of health economics based on both theoretical and empirical considerations. It deals with the study of the main stakeholders’ economic behaviours of the health sector : patients, health professionals (physicians and hospitals), health insurance, companies producing health goods or pharmaceuticals and health authorities. It invites to reconsider some of the basic concepts in economics (supply and demand, public intervention, uncertainty, information asymmetries, incentives, etc.) and models (growth models and human capital, labour supply, etc.), for a deep understanding of the phenomena at work in the sector. Thus, the course is likely to meet the expectations from students willing to specialise in the analysis of the health sector as well as students interested in illustrations of concepts and mechanisms derived from the economic theory.

**Course outline :**

General introduction (2h-BV)

Part 1. Micro foundations (8h)

Chap 1 The demand for health and healthcare (4h-BV)

• Introducing health in the utility function and deriving healthcare demand : presentation of several options

• The demand for healthcare using the concept of health-capital (Grossman, 1972)

• Empirical illustration

Chap 2 Health supply (4h-AP)

• Self-employed physicians

• Modelling Quality

• Payment schemes

• Empirical illustration

Part 2. Health macroeconomics (8h)

Chap 3 Health as an economic sector (5h-AP)

• Health sector contribution to GDP and growth in France and other OECD countries

• The irresistible growth of the health sector in the economy (health as a luxury or a necessity good ?)

• Innovation in the health sector

• Empirical illustration

Chap 4 Health, development and growth (3h-BV)

• A health-augmented Solow-model

• Health and the development process, the Sachs report & the econometrics of the health/growth relationship

• The burden of diseases in Africa and the notion of “Universal Health Coverage”

• Modelling health in an macroeconomic design : epidemic traps

• Empirical illustration

Part 3. Topics (6h)

Chap 5 Public regulations in the healthcare market

• Measuring and reducing social inequalities in health (3h-BV)

Empirical illustrations

• Information asymmetries in health insurance (3h-AP)

Adverse selection in insurance companies’ plans

Moral hazard and healthcare consumption

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Environmental economics

## CONTENT

Part I of this lecture is dedicated to the design of an environmental policy. These regulation tools are first introduced in the context od a competitive polluting industry. We concentrate our attention on property rights, usual command and control, Pigouvian taxes, and emission rights permits. In a second step, we discuss the effect of imperfect competition, of imperfect information and of policy spill-overs.

In part two of this course you will learn about the categories of economic value assigned to environment and work through the utility theory on which environment valuation methods are based. We will survey the non-market valuation method employed by economists to measure public goods. This includes Revealed Preference methods and Stated Preference methods based on surveys and hypothetical markets. We will explore theoretical and empirical issues.

**Course outline :**

**Part I : The design of an environmental policies**

1. The regulation of a competitive polluting industry a. A competitive partial equilibrium model b. Property rights and the Coase theorem c. The different instruments

2. Some extensions a. Market Power b. Imperfect information c. Policy spill-overs

**Part II : Valuing the Environment**

1. The theory of environmental valuation a. Categories of Values b. From economic values of non-market goods to valuation methods c. Willingness To Pay (WTP) or Willingness To Accept (WTA)

2. Stated Preference Methods a. Hypothetical Market b. Contingent Valuation Methods c. Choice Modelling

3. Revealed preference Methods a. Valuing consumer's benefits b. Related topics

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### S4 M2 ETE Magistère (SE) (36 ECTS)

### Big data IV (6 ECTS)

### Managing Big Data with SAS

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Hands-on project

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Research methodology (4 ECTS)

### Research methodology I

## CONTENT

This course is organized as a series of lectures and activities. The first part of the course is made of lectures devoted to the epistemology of economics and to the description of todays’ organization of academic economics.

In the first set of lectures, what methodology and epistemology means in and for economics will be discussed. Students will be given a very broad overview over some historical developments and debates concerning key questions about “how to do science” and more specifically what this means in economics. What it means to produce a model and to reason in abstract terms, such as economics often does, will also be considered. Finally, some current debates of methodology in the context of experimental and behavioural economics will be introduced.

The second set of lectures will be devoted to the presentation of academic research in economics. Students will be introduced to the organization of research and to the form of academic research.

Subsequent activities will allow the students to practice research skills thanks to different activities supervised by different faculty members.

Collective supervision. Coordinator : Marc Sangnier

**Course outline :**

1 – Espistemology of economics (lectures)

What means methodology and epistemology in economics ? – Some important historical debates – As-if reasoning – What is a model ? – What is an experiment and how did it influence economics ?

2 – Academic research in economics (lectures)

Academic research organization – Research ethics – Academic writing – Oral presentation guidelines

3 – Critical assessment of research papers (activity)

4 – Literature review and collective research proposal (activity)

5 – Individual research proposal (activity)

## VOLUME OF TEACHINGS

- Tutorials:
**12**hours

### Research methodology II

## CONTENT

Collective supervision. Coordinator : Marc Sangnier

**Course outline :**

1 – Espistemology of economics (lectures)

2 – Academic research in economics (lectures)

Academic research organization – Research ethics – Academic writing – Oral presentation guidelines

3 – Critical assessment of research papers (activity)

4 – Literature review and collective research proposal (activity)

5 – Individual research proposal (activity)

## VOLUME OF TEACHINGS

- Tutorials:
**12**hours

### Research dissertation or end-of-study internship with report and defence (20 ECTS)

*Unavailable contents.*

### Elective teaching units, choose 1 among 2 (6 ECTS)

### Labor economics - Labor econometrics (6 ECTS)

### Labor economics

## CONTENT

The goal of this course is to provide the modern theoretical tools to model aggregate labor markets. We emphasize the role played by matching frictions, which summarize the mix of information imperfection and mobility costs for job-seekers and potential employers. The course covers individual behavior in frictional environments, measurement of unemployment inflows and outflows, the matching function, equilibrium search unemployment, unemployment compensation and job protection. Theoretical mechanisms are illustrated by case studies, calibrations and use of macro data.

Course outline :

Chapter 1 : Job search and unemployment compensation

- 1.1 Stationary job search
- 1.2 Accounting for non-stationarity
- 1.3 Unemployment compensation
- 1.4 Extensions

Chapter 2 : Unemployment inflows, outflows, and the matching function

- 2.1 Unemployment inflows and outflows
- 2.2 Beveridge curve
- 2.3 Matching functions
- 2.4 Microfoundations

Chapter 3 : Equilibrium search unemployment

- 3.1 Model assumptions
- 3.2 Equilibrium with exogenous wage
- 3.3 Equilibrium with wage bargaining
- 3.4 Efficient unemployment

Chapter 4 : The economics of job protection

- 4.1 What is Employment Protection Legislation ?
- 4.2 Transfers vs deadweight costs
- 4.3 Labor market impacts of EPL
- 4.4 EPL and the legal origins of the judicial system

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Labor econometrics

## CONTENT

We will focus on the practical challenges that empirical work has to face. These challenges require a purposeful choice of an estimation strategy (a research design), and we will study the strengths and weaknesses of leading approaches. This will enable us to identify good research practice (which is at the heart of what some leading empirical labour econometrician have labelled the Credibility Revolution in Empirical Economics).

__Course outline :__

Empirical methods for labour economics

All methods will be illustrated with real-world data using R, and several papers in applied labour economics will be discussed.

**(I) Selection biases : Problem and Remedies.**

Standard econometric tools require that our datasets be random samples, thus being representative of the population or universe of interest. However, this requirement is rarely satisfied in practice. Individuals optimally self-select into economic states, rendering the observed states non-random. For instance, individuals decide whether to accept jobs, and the study of the wage distribution can only use this self-selected group thus yielding distorted results (selection biases). We study Heckman’s idea of attempting to remove this sample selection bias by modelling it explicitly (a Roy model).

Applications : Heckman and Honore (1990, ECTA). “The Empirical Content of the Roy Model.” Roy models of migration : Borjas (1999, Handbook of LabEcon), “The Economic Analysis of Immigration”, Chiquiar and Hanson (2005, JPE), “International Migration, Self‐Selection, and the Distribution of Wages : Evidence from Mexico and the United States” ; Gurgand, M. and D.N. Margolis (2008, JPubE), “Does work pay in France ? Monetary incentives, hours constraints, and the guaranteed minimum income”.

**(II) Unobserved Heterogeneity : Fixed Effects, Panel Data Estimators, and Difference-in-Difference**

Usually, we cannot measure or observe everything that is relevant for the determination of outcomes. Such unobservable heterogeneity then poses serious problems for the researcher if it is correlated with control variables (the omitted variables problem). Overcoming this problem using an instrumental variables strategy is often not feasible in practice since credible instruments are very difficult to find. However, if we observe the same individual over several periods, such panel data can offer a solution. We will develop and put into practice empirical methods for estimation and inference that exploit such a panel structure. After reviewing the classic approaches, we then proceed to discuss some important papers from the theoretical and applied econometrics literatures. An important setting in which panel data methods have become very popular is the estimation of causal policy effects of natural experiments. We will discuss the challenges and limitations of such difference-in-difference (DiD) strategies.

Applications : Ruhm, C.J. (1996, JoHE), “Alcohol policies and highway vehicle fatalities” ; Card, D., J. Heining, and P. Kline. (2013, QJE) “Workplace Heterogeneity and the Rise of West German Wage Inequality” ; Duflo, E. (2001, AER),” Schooling and Labor Market Consequences of School Construction in Indonesia : Evidence from an Unusual Policy Experiment”

While DiD is a popular estimation method in situations in which the researcher disposes over a panel, drawing inference and testing is challenging is challenging. We consider several such situations which arise when errors are correlated within a group or across time.

Further readings : Moulton (1990, RESTAT), « An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Units » ; Donald and Lang (2007, RESTAT) « Inference with Difference-in-Differences and Other Panel Data » ; Bertrand, Duflo, Mullainathan (2004, QJE), « How Much Should We Trust Differences-in-Differences Estimates ? »

**(III) Identification**

What are the variations in the data that we seek to exploit in order to estimate the objects of our interest (typically the coefficients) ? Are these variations random, or a manifestation of choices ? An econometric model is identified if we can unique solve for these model coefficients. To achieve this, we usually have to impose some structure, such as the assumption that the error term in the linear regression be uncorrelated with the regressors (identification hypothesis). The validity of the chosen empirical strategy therefore depends on the empirical validity of the identification hypothesis. We will examine what constitutes good Research Design.

Application and replication : D. Card (1993), “Using geographic variation in college proximity to estimate the return to schooling.” Angrist and Krueger (2001, JEconPersp) “Instrumental Variables and the Search for Identification : From Supply and Demand to Natural Experiments”, Angrist and Pischke (2010, JEconPersp) “The Credibility Revolution in Empirical Economics : How Better Research Design is Taking the Con out of Econometrics.”

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Advanced econometrics (6 ECTS)

### Automatic model selection methods

## CONTENT

The objective of this course is to introduce quantitative methods allowing to reduce information. These methods cover different fields of statistics and are based on classical econometric methods (OLS, MLE) or classificatory or principal component methods. The ultimate goal is to study methods to do automatic variable selection in large-scale problems and to apply them to real data.

**Course outline :**

- Classification methods
- Economic factor models
- Statistical factor models
- Lasso methods
- The so-called « General to Specific » method (Hendry, Gets or Autometrics Methodology)

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Theoretical econometrics

## CONTENT

Provide students with a working knowledge of modern econometric practice, with the accompanying theoretical background. Students should also acquire skill with a suitable econometrics software package.

**Course outline :**

The course starts with a brief review of the linear regression model, with emphasis on a geometric approach. This is followed by the study of instrumental variables estimation, the method of moments, and generalised least squares. Next comes the method of maximum likelihood, and the classical hypothesis tests that can be based on maximum likelihood estimation. Discrete choice models, such as probit and logit, are discussed and it is shown how to estimate them by maximum likelihood. Throughout the course, the use of the bootstrap for the implementation of statistical inference in the context of econometrics will be emphasised.

## VOLUME OF TEACHINGS

- Lectures:
**24**hours