Courses

This course is devoted to competitive analysis and game theory as the main two pillars of mainstream microeconomics. The first part on competitive analysis focuses on general equilibrium analysis and provides a methodology which is used in many areas of modern economics (macroeconomics, finance, etc.). It presents the formal description of an economy and studies the welfare properties of equilibrium. The second part on strategic analysis presents game theoretic tools, which offer a formal description of strategic interactions and equilibrium concepts for strategic behaviour. These tools are then applied to the analysis of imperfect competition in a partial equilibrium framework.

Literature: Mas-Colell, Whinston, Green: Microeconomic Theory (1995)

Microeconomics II
Kübler, Strausz, Wolfstetter

This course is devoted to decision making under uncertainty and the economics of asymmetric information. The first topic introduces the Von-Neumann-Morgenstern decision model which is used in many areas of modern economics where risk plays a role (macroeconomics, finance, etc.). The course studies the foundations of this model and alternative approaches. The second part focuses on economic settings with asymmetric information. With the help of game theoretic tools, we study the working of markets with asymmetric information, bilateral trading problems with moral hazard and adverse selection, and the theory of mechanism design. The intention of the course is to familiarize students with the standard tools of modern economic theory and to train them in applying these tools to actual economic problems.

Literature: Mas-Colell, Whinston, Green: Microeconomic Theory (1995)

This course covers dynamic programming and Langrangian methods, stochastic difference equations, dynamic stochastic general equilibrium models; solution techniques; macroeconomic applications of welfare theorems, the Ramsey problem, consumption, investment, and labor markets.

Literature: Ljungqvist; Sargent: Recursive Macroeconomics (2004); selected articles

Macroeconomic Analysis II - Monetary Macroeconomics
Heinemann

The course analyzes how future expected money supply affects the current price level, why money can be written in the utility function and what is required to determine a unique equilibrium with rational expectations. Turning to the foundations of New Keynesian Macroeconomics, we analyze why monopolistic competition leads to an active role for monetary policy, derive the forward looking Phillips curve and study optimal monetary policy.

Literature: Walsh, Monetary Theory and Policy, MIT-Press, 2003. Woodford, Interest and Prices: Foundations of a Theory of Monetary Policy, Princeton University Press, 2003.

This course consists of two parts. The first part operations management covers the optimization of stochastic models in which time plays an essential role. The focus is on modeling and deriving structural properties for discrete time, stochastic problems from the field of Operations Research and Management Science. The approach is based on Markov decision processes and more generally (stochastic) Dynamic Programming which provides a set of general methods for making sequential decisions under uncertainty. Objectives include: (i) Learn to solve stochastic optimization problems; (ii) Develop modeling skills to tackle issues in Operations and Management Science; (iii) Gain knowledge on conducting research in the field.

Literature: Bertsekas: Dynamic Programming and Optimal Control, vol I (2005), vol II (2007); selected articles

The second part is on Marketing Science: Models and Experiments and is specifically designed for students with an economics background. Marketing Science deals with topics in consumer choice and industrial organization, using analytical, experimental, and econometric approaches. It focuses on marketing decisions of the firm (e.g., segmentation and targeting, price, distribution, promotion and advertising, product definition), and often incorporates notions of consumer perception and persuasion. In this particular course, we actively contrast the findings of `models' (perhaps more familiar to economists) and `experiments' (often related to social psychology), in areas of the literature of great practical relevance. Each session is organized around two contrasting presentations (each by two students) of important papers, followed by a debate and additional technical inputs and perspectives from the instructor.

Literature: several articles

Econometrics I
Hautsch

This course deals with advanced estimation techniques in modern econometrics. Main topics include generalized methods of moments (GMM) estimation for single-equation models and multiple-equation models, information theoretic approaches, pseudo-maximum likelihood methods as well as empirical likelihood techniques. Furthermore, an introduction to Bayesian econometric methods will be given. Here the focus is on fundamental principles of Bayesian inference, Markov chain Monte-Carlo (MCMC) methods as well as different applications of Bayesian inference.

Literature: Greenberg (2008): Introduction to Bayesian Econometrics, Cambridge University Press;
Hayashi (2000): Econometrics, Princeton University Press; Koop (2003): Bayesian Econometrics, Wiley;
Mittelhammer, Judge, Miller (2000): Econometric Foundations, Cambridge University Press.

Econometrics II - Microeconometrics
Steiner

The aim of the course is to teach students how to analyze individual behavior using micro data (cross-section and panel data) on individuals, households, or firms. The lectures introduce the most commonly used methods and models in empirical microeconomics, such as in public and labor economics, and industrial organization. In the tutorials, these models will be applied to a variety of empirical topics using various micro data sets.

Topics covered include: Static and dynamic linear panel data models. Discrete choice models: cross-section and panel binary logit and probit models, conditional and multinomial logit models. Models for ordered and count data. Multivariate and simultaneous probit models. Limited-dependent variable models: tobit and selection models, duration models, and estimation of treatment effects.

Literature: Green, Econometric Analysis, Pearson, 2008;
Wooldridge, Econometric Analysis of Cross Section and Panel Data, MIT Press, 2002.

This course on mathematics aims to refresh basic mathematical knowledge essential for economic analysis. The course solely deals with deterministic mathematics. For some theorems formally rigorous proofs are presented in order to make participants more comfortable with - and ideally to provide some intuition for - constructing and understanding of mathematical proofs. Throughout the course proper use of notation will be stressed. It covers: sets, relations, preferences; vector spaces and linear algebra; topology and convex optimization; differential calculus.

Empirical Industrial Organization
Duso, Prantl

This course aims to introduce the student to current methods in Empirical Industrial Organization. In the first part of the course we will deal with the structural approach developed in the so called “New Empirical Industrial Organization” (NEIO) framework. We start by looking at techniques for demand estimation in homogeneous and differentiated products markets. We then will move to the simultaneous analysis of demand and supply relationships and compare various methods for estimating firms’ market power and strategic interactions based on game-theoretic models of oligopolistic competition. The second part of the course will focus on empirical literature investigating firms’ behaviour in dynamic markets and evolving industries. The topics to be covered include: competition and growth; firm entry, exit and industry evolution; production functions and productivity; innovation and technological change; industrial policies.

Auctions and Market Design
Wolfstetter

This course covers: single unit auctions (private and common values) - role of risk aversion optimal auctions - affiliation - multi-unit auctions - sequential auctions -- applications. The course has three main objectives: (i) Teach the mathematical methods of solving auction games and designing markets; (ii) Review the main fields of the auctions literature and frontiers of current research; (iii) Discuss practical experience (spectrum auctions, energy markets, take-over bidding, etc.).

Literature: Vijai Krishna: Auction Theory. Academic Press 2002 and other

Bargaining Theory
Ivanova

Bargaining is central to the working of the economy. This course is designed to introduce the major insights gained by the bargaining theory to students who will later develop, interpret or apply bargaining models in different fields within economics.

Literature: Muthoo, A. (1999): Bargaining theory with applications. Cambridge Univ. Press; Osborne, M. J. & A. Rubinstein (1990): Bargaining and markets. Academic Press, San Diego. and other

Numerical Methods for Quantitative Macroeconomics
Ebell

This course covers a variety of numerical methods for solving dynamic stochastic general equilibrium models, policy and value function iteration, log-linearization, and Euler-Equation methods. In addition students will learn how to chose parameters for models by calibration.

Research in the field of Political Economy has been very active during the last decades. The course has two major aims:

• to give you a good understanding of some results and basic tools, such as Arrow's theorem and voting models, and
• to give an introduction to several new developments in the field, focussing on Institutions, Democracy, the Press, and Conflict.

Political Economy and Fiscal Federalism
Geys:

Government architectures are not static, but subject to often substantial change (e.g., Belgium, Germany, European Union, and so on), thereby inducing significant changes in the vertical distribution of power and tasks over various levels of governments and altering the incentives of policy-makers at various levels of government. This course addresses some of the various trade-offs that need to be considered in such processes of 'decentralization' or 'federalization'.

We first start with a standard analysis of what is known as Oates’ (1972) Decentralization Theorem, which highlights an important trade-off in these allocation decisions. This provides a useful frame of reference and is important for evening the ground for what Oates (2005) and Weingast (2006) call ‘Second Generation Fiscal Federalism’, which allows analysis of aspects such as commitment power, time consistency issues and problems of information, as well as differences in political decision-making on different levels of government. Then, at the heart of the course, we discuss problems related to suboptimal task assignment. We thereby focus on a) strategic intergovernmental interactions, b) governments’ incentives for experimentation and innovation, and c) strategic effects of country’s decentralization in the international sphere.

Lectures on Merger Analysis
Wey:

This course analyzes in four lectures firms' incentives to merge and the consequences of concentration through mergers. The lectures focus on the unilateral effects of horizontal mergers (and by that, leave out issues of collective dominance as well as vertical mergers). Lecture 1 reviews the analysis of mergers in standard (Cournot and Bertrand) oligopoly models. Lecture 2 deals with takeover games where free-rider problems as well as preemptive motives emerge. Lectures 3 and 4 introduce input markets and the associated analysis of input market bargaining (where we focus on axiomatic concepts; in particular: the Nash bargaining solution and the Shapley value). Lecture 3 deals with linear input market prices and lecture 4 focuses on "efficient" bargaining.