Economics

In this lecture we will introduce a number of economic concepts • We will also explain the role of institutions in economics • We will then examine how they interact within an economic history context

We will consider different models of long run-growth • We will compare theories and look at some of the evidence

In this topic we will cover: 1 Brief probability review. 2 Random variables. 3 Continuous probability distributions. The uniform distribution. The normal and standard normal distributions. The exponential distribution. 4 Z-scores

• Air pollution as a policy challenge. • Health costs of air pollution. • Non-health costs of air pollution. • Re-framing of traditional view of environment-economy trade off

• We explain what the industrial revolution was and when it happened • Why was Britain first and why was it a revolution? • The role of technological change is discussed and modelled 3 / 38

- How to compare variances, for example, to test whether two samples come from populations that have equal variances. - How to test the equality of 3 or more population means. To do this we use an ANOVA (ANalysis Of VAriance) test. - Both of these tests require use of an F test. This F statistic has an F distribution

- We will examine the “agricultural revolution” • What advances were made and why is there so much disagreement • Was there a proto-industrial revolution? • What was the transition to capitalism?

• We will define the “industrious revolution” • Was the industrial revolution demand driven? • We will look at a number of demand driven theories • The theories will be considered against the empirical evidence - perhaps it was not so industrious after all

• We will examine how the British Empire emerged • Describe the colonial debate and the navigation acts • Understand the impact of trade • Consider the costs and benefits of Britain holding the British West Indies and the 13 States

The Demand for global governance: - What are international institutions? - What do we mean by global governance? - What determines the demand for global governance?

Part 1: Corruption as a local issue: - Definition and types of corruption - Causes and consequences of corruption Part 2: Corruption as a global issue

2.1 Why do we want to study financial crises 2.2 What is correlated to financial/economic crises? – Deposit insurance, bank capital to asset ratio, non- performing loans to total gross loans ratio

• Who is a migrant? • Characteristics of the immigrants worldwide • Focusing on immigrants in Europe • The role of immigrants for productivity • Diversity of immigrants and innovation • High-skilled immigration, innovation and productivity • Skills mismatch • What next? Take away message

3.1 What is experimental economics? 3.2 Types of experiments in economics – Natural experiment – Field experiment – Lab experiment 3.3 An example 2

A: Global migration trends B: The drivers of migration - Type of migrants - Why do people migrate? Pull and push factors C: Migration and conflict

A: The science: Understanding climate change - Global warming - Greenhouse gases B: Global trends in GHG emissions C: Climate Change: Impacts and Policy The Global Economy

Seen some data on the recent rise in non-natural capital and the associated rate of natural capital decline, and seen different perspectives on the economic as well as environmental impact of that loss. Been exposed to the notions of ecosystems services, natural capital, and the characteristics of natural capital that lead to particular challenges for economic modelers. Understood the classic economic theory of species collapse, ecosystem stability and how that relates to the economy. Explored v

• This topic examines “when” the great divergence happened • We link this analysis to previous growth models mentioned in the introductory lectures

- Understood the concept of p-value as a measure of statistical significance, and what we might learn from looking at patterns of p-values in an empirical literature. - Discussed the problem and implications of p-hacking, why it arises, and what could be done about it. - Discussed the problem and implications of publication bias, why it arises, and what could be done about it.

• We will explain the success of the US • We will look at manufacturing productivity, education, access to capital and migration flows

A: Global inequality dynamics - Defining inequality - Measuring inequality - Global trends in inequality: labour and capital income inequality B: Capital in the XXI century

• In this lecture we examine “why” the great divergence happened • We consider the characteristics of the other great powers • The lecture will cover demographics, institutions, and the glorious revolution

• The basic approach to long-run macroeconomics • Long-run model of equilibrium : Specifying the supply-side • Production and the production function • Factor market equilibrium in long-run equilibrium

• The Circular Flow of Income for the open economy • Net Exports and the Savings/Investment balance • Net exports, current account and capital flows • Purchasing Power Parity as an explanation of the (Real) Exchange Rate

• Real interest rates for the small open economy and net capital outflows • The real exchange rate in the small open economy • The long-run model of the small open economy • The long-run model of a large open economy

• Share of income to labour and capital and inequality • National savings and real interest rates: Historical and modern perspectives • What do trade restrictions do in the long-run? • Understanding the US Trade Deficit • Policy for the long-run

• Functions of Money • Historical development of money • Measuring money • Banks and the money supply • Controlling the money supply • Money supply experiences (the Great Depression, The Great recession and the Pandemic)

• The Quantity Theory of Money • The demand for money and the quantity theory • Money and inflation • The Fisher equation • Uncovered interest parity condition

• Costs of expected inflation • Costs of unexpected inflation • Seigniorage and Hyperinflation • The rate of inflation and demand for money • Hyperinflationary experiences

• The components of a model of short run macroeconomics • Expectations and shocks in the short run • Aggregate Demand in the short run and the IS Curve for an open economy • Money Market equilibrium in the short run and the LM Curve

• The Mundell Fleming Model • The exchange rate regime • Capital Market Liberalisation and the Trilemma • From short to long run in the Mundell Fleming Model

 Introduction  What is Microeconomics?  1.1 Consumer choice building blocks: budget constraint, preferences, and utility function;  1.2 Consumer’s optimal choice;  1.3 Consumer demand  (includes Slutsky income-substitution decomposition).  1.4 Revealed preferences

- Uncertainty, expected wealth and expected utility; - Attitudes to risk; - Demand under uncertainty; - Insurance market: “fair” and “unfair” prices.

1.1 Consumer choice building blocks: budget constraint, preferences, and utility function (continued). Consumer choice: utility function. 1.2 Consumer's optimal choice 1.3 Consumer demand (part 1)

• Fiscal and monetary policy under fixed exchange rates • Fiscal and Monetary Policy under flexible exchange rates • Trade Policy under fixed exchange rates • Introducing the risk premium into the Mundell Fleming model • The short run impact of Brexit

Introduction  1.1 Consumer choice building blocks: budget constraint, preferences, and utility function;  1.2 Consumer’s optimal choice;  1.3 Consumer demand  Income effect;  Price effect;  Slutsky income and substitution effect.

• Building a short run model of the large open economy • Policy in the short run for the large open economy • The impact of uncertainty

• Production function in per worker terms • Household behaviour • Capital stock and dynamics • Defining the Balanced Growth Path/Steady State • Changing savings in the Solow Model