# Master Economics # Theoretical and empirical 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

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Macroeconomics II

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Econometrics I and II (6 ECTS)

### Econometrics I: linear model

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Econometrics II: non linear model

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

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

### Labor economics

## 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

## 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)

## 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

## 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

## 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

## VOLUME OF TEACHINGS

- Lectures:
**18**hours

### Health and environmental economics

## 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

## VOLUME OF TEACHINGS

- Lectures:
**18**hours

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

### Software for economists III

## 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

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Advanced econometrics

## 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

### 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

## 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

## 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

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

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

### Research methodology (4 ECTS)

### Research methodology I

## VOLUME OF TEACHINGS

- Tutorials:
**12**hours

### Research methodology II

## 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

## 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

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Theoretical econometrics

## 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

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Macroeconomics II

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Econometrics I and II (6 ECTS)

### Econometrics I: linear model

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Econometrics II: non linear model

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

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

### Labor economics

## 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

## 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

## 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

## 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

## VOLUME OF TEACHINGS

- Lectures:
**18**hours

### Health and environmental economics (3 ECTS)

### Health and environmental economics

## 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

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Advanced econometrics

## 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

### 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

## 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

## 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

## 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

## VOLUME OF TEACHINGS

- Tutorials:
**12**hours

### Research methodology II

## 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

## 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

## VOLUME OF TEACHINGS

- Lectures:
**24**hours

### Theoretical econometrics

## VOLUME OF TEACHINGS

- Lectures:
**24**hours