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CERGE-EICharles University Prague

Center for Economic Research and Graduate Educationand

the Economic Institute of the Academy of Sciences of the Czech Republic

Course Book for the Academic Year 2001-2002

The Fall Semester

Student Affairs Office

Prague, August 2001

Printed version of this course book is subject to possible updates available atHTTP://WWW.CERGE-EI.CZ/INTERNAL/STUDY/ACADEMIC/COURSEBOOK

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CONTENTSI. THE STRUCTURE OF PH.D. STUDIES IN ECONOMICS AT CERGE................................ 3A. Contents and Organization of Graduate Study at CERGE 3B. Core Study – The First Two Years 3C. Specialized Study – Third and Fourth Years 3D. Study Program 4

Preparatory semester ............................................................................................................................................................. 4First year ............................................................................................................................................................................... 4Second Year .......................................................................................................................................................................... 4

II. SYLLABI OF THE FALL SEMESTER COURSES .............................................................. 5A. First year students 5

MACROECONOMICS I ...................................................................................................................................................... 5MICROECONOMICS I........................................................................................................................................................ 6STATISTICS ........................................................................................................................................................................ 7PRE-ACADEMIC WRITING .............................................................................................................................................. 8ACADEMIC WRITING I..................................................................................................................................................... 8ACADEMIC WRITING II ................................................................................................................................................... 9

B. Second year students 10ADVANCED MACROECONOMICS ............................................................................................................................... 10ECONOMETRICS III......................................................................................................................................................... 12ECONOMICS OF TRANSITION I.................................................................................................................................... 14FINANCIAL MARKETS I................................................................................................................................................. 21INDUSTRIAL ORGANIZATION I ................................................................................................................................... 21LABOR ECONOMICS I .................................................................................................................................................... 23MONETARY ECONOMICS I ........................................................................................................................................... 24PUBLIC ECONOMICS...................................................................................................................................................... 30SEMINAR (REVIEW) COURSE....................................................................................................................................... 33ACADEMIC WRITING III ................................................................................................................................................ 34ADVANCED ENGLISH COMBINED SKILLS................................................................................................................ 34

C. Third year students 35ACADEMIC WRITING IV................................................................................................................................................ 35

III. CERGE FACULTY MEMBERS TEACHING IN THE FALL SEMESTER 2001 ................ 36Ronald W. Anderson........................................................................................................................................................... 36Austin Andrew.................................................................................................................................................................... 36Radim Boháček................................................................................................................................................................... 36Byeongju Jeong................................................................................................................................................................... 36Michal Kejak....................................................................................................................................................................... 36Ev�en Kočenda ................................................................................................................................................................... 37Lubomír Lízal ..................................................................................................................................................................... 37Chris Mason ........................................................................................................................................................................ 37Laura Mentz ........................................................................................................................................................................ 37Daniel Münich..................................................................................................................................................................... 37José Noguera....................................................................................................................................................................... 38Sarah Peck........................................................................................................................................................................... 38Gerald Roland ..................................................................................................................................................................... 38Will Seng ............................................................................................................................................................................ 38Avner Shaked...................................................................................................................................................................... 38Richard Stock...................................................................................................................................................................... 38Jan �vejnar .......................................................................................................................................................................... 38Viatcheslav Vinogradov...................................................................................................................................................... 39Kresimir Zigic ..................................................................................................................................................................... 39

IV. ACADEMIC CALENDAR FOR THE YEAR 2001 / 2002.................................................. 40V. SCHEDULES OF THE FALL SEMESTER 2001............................................................... 41A. First year students 41B. Second year students 42

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I. The Structure of Ph.D. Studies in Economics at CERGEThe Center for Economic Research and Graduate Education (CERGE) is a research and educational

institute of Charles University. In close cooperation with the Economics Institute (EI) of the Academy of Sciencesof the Czech Republic, CERGE offers a Ph.D. program in Economics, accredited by the Ministry of Education,Youth and Sport of the Czech Republic, to students from the Czech Republic and other Central and EasternEuropean (CEE) and former Soviet Union countries . Economic research is an integral part of CERGE activities.

A. Contents and Organization of Graduate Study at CERGEFurther details on the program can be found in the handbook for graduate students.

The basic mission of CERGE is to perform graduate studies in Economics and to train future universityfaculty and researchers and public administration representatives. The main idea of establishing the doctoralprogram curriculum is to transfer the modern Western system of Ph.D. study in Economics, as it is applied in theUnited States and some Western European countries, to the local environment and incorporate it into thestructure of Czech university education within Charles University. The program offers economic education at alevel comparable with world standards directly at Charles University, without the necessity of more expensivestudy abroad. Besides this fact, the best students may be offered the opportunity to visit (for up to one academicyear) an appropriate university in the United States or Western Europe. This experience may enlarge their scopeof knowledge significantly.

During the first two years of study courses are taught by the local and visiting faculty. Studies areconducted entirely in English. The duration of the doctoral study is four years. The first two years offer primarilysystematic knowledge of theory; for the latter two years the students work on their dissertation. The transfer fromstudy to independent research work is gradual and begins during the second year of study.

B. Core Study – The First Two YearsIn the first year of study the students follow a common curriculum designed to provide a strong

foundation in Microeconomic Theory, Macroeconomic Theory, Statistics and Econometrics, and English. Thiscurriculum is standard for the PhD study in Economics. The study is divided into three semesters: the fallsemester (FS), the spring semester (SS), and the summer semester (SuS). In view of the fact that many newlyrecruited students do not have an extensive background in modern Economics equivalent to "western"standards, and also that their knowledge of Mathematics and English are frequently at different levels, apreparatory semester is organized for potential students. It allows CERGE to provide the students with somebasic tools as an introduction to the program and to achieve a standard level of competence.

The second year of formal study at CERGE provides students with the opportunity to investigate morespecific fields of interest. Several courses (usually five) are offered each of the two semesters, and the secondyear students must enroll for a minimum of three. The students participate in a seminar series and are nowexpected to begin their own research.

Having completed both the first and second years, students must pass a General (comprehensive)examination. After the first year, the students must pass Microeconomic Theory, Macroeconomic Theory, andEconometrics; after the second year they must show proficiency in at least two specialized fields by passingGeneral (field) exams in their chosen areas of interest.

During the first two years of study the students do not have a special supervisor, rather, they rely on theadvice of the Deputy Director of Graduate Studies, who is also one of the CERGE faculty members. Theprogram and organization of graduate study is regulated by a CERGE's Graduate Council (GC).

C. Specialized Study – Third and Fourth YearsDuring the spring semester of the second year and the fall semester of the third year, the students have

to choose the topic of their dissertations. A tentative chair as a supervisor is then assigned. By the middle of thethird year (at the latest), they formulate a thesis proposal and public defense is required together with statedoctoral examination. For students who passed all General examinations with distinction, the main importancewill be placed on the defense of the thesis proposal. Those with less than distinctive examination results canalso expect additional detailed questions from respective fields. After having successfully defended the proposal,a three-member dissertation committee is appointed which guides and supervises the study and research work.

At least one member of the dissertation committee has to be an employee of CERGE or EI, and at leastone of the members has to be a professor from some other university. Under the guidance of this committee thestudent works on his or her dissertation. In the fourth year the students present their third year work at the

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Dissertation workshop and prepare for the defense of the dissertation. The study is concluded by the publicdefense of the doctoral dissertation.

D. Study ProgramHere we present the courses designed for the preparatory semester and the first and second year of

study. (One lecture/exercise unit is 45 minutes long.)

Preparatory semester (Lecture hours / exercise hours) Macroeconomics 0 4/2, Exam Microeconomics 0 4/2, Exam Mathematics 4/2, Exam English 0/4

Notes: Upon completion of the preparatory semester, the final selection of students is made to enter the doctoralprogram in the fall, based on final exam results.

First year Semester Fall Spring Summer Macroeconomics I, II, III 4/2, Exam 4/2, Exam 4/2, Exam Microeconomics I, II, III 4/2, Exam 4/2, Exam 4/2, Exam Statistics 4/2, Exam Econometrics I and II (Applied) 4/2, Exam 4/2, Exam Academic Writing I, II 0/4, Credit 0/4, Credit

Notes: After completing the first year, each student must pass the General examination in the fields ofMicroeconomics, Macroeconomics and Econometrics.

Second Year Semester Fall Spring Summer Advanced Macroeconomics I, II 4/2, Exam 4/2, Exam Econometrics III, IV 4/2, Exam 4/2, Exam Economics of Transition I, II 4/2, Exam 4/2, Exam Financial Markets I, II 4/2, Exam 4/2, Exam Health Economics (Topic) 4/2, Exam Industrial Organization I, II 4/2, Exam 4/2, Exam Labor Economics (Topic) 4/2, Exam Monetary Economics I, II 4/2, Exam 4/2, Exam Public Economics (Topic) 4/2, Exam Academic Writing III 0/2, Credit Advanced Combined English Skills 0/2, Credit Seminar Course 0/2, Credit 0/2, Credit Directed Research 0/2, Credit

Notes: Second-year students choose at least three (exam-ended) courses per semester. The credits for Englishcourses, the Seminar Course and Directed Research are mandatory. The courses cannot be from the samefield. Courses offered may differ slightly from year to year, depending on the faculty in residence. Aftercompleting the second year each student must pass General exam in two fields. Upon agreement of CERGE, astudent may complete part of his/her study at another university - this is valid not only for individual courses, butalso for a whole study year.Topic courses are one semester courses not forming two semester sequence and do not cover comprehensivelyall material needed for Field General Exam.

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II. Syllabi of the Fall Semester CoursesReading Lists for the Fall Semester are available on http://library.cerge-ei.cz/reading in the directory Fall01. Fulltexts of the articles from the reading lists are also available in PDF format and you can read them by usingAdobe Acrobat Reader.

A. First year students

MACROECONOMICS ILecturer Lecturer Teaching Assistant

Name Byeongju Jeong Michal Kejak TbdOffice 321 329Phone 240 05 258 240 05 186e-mail Byeongju.jeong@cerge-ei.cz Michal.kejak@cerge-ei.czOffice hours Drop-ins and by appointments Drop-ins and by appointments

Course informationPart 1 (B. Jeong):This is the first half of the first semester of the first-year macro sequence. The main objective will be theintroduction to the dynamic macro theory.Part 2 (M. Kejak):Monetary Macroeconomics• money in overlapping generations models � Ch. 4 (B&F), Ch. 8 (L&S)• Tobin effect � Ch. 2 (W)• money in utility function � Ch. 4 (B&F), Ch. 2 (W)• cash-in-advance models � Ch. 3 (W), Ch. 17 (L&S)• shopping-time models - Ch. 17 (L&S)• credit and currency models � Ch. 18 (L&S)• money and public finance � Ch. 4 (W)• ten monetary doctrines � Ch. 17 (L&S)• money in RBC models

Requirements and gradingThe grade (for this first half of the semester) will be based on the midterm exam (2/3) and occasional homeproblems (1/3).

ReadingsPart 1 (B. Jeong):Chapters 1 and 2, Stokey and Lucas (1989), "Recursive Methods in Economic Dynamics"As we go along, I will announce additional reading material that will be discussed in class.Part 2 (M. Kejak):We will use the books below together with journal articles which will be specified in a more detailed syllabus.

Blanchard, Olivier J. and Stanley Fischer: Lectures on Macroeconomics. MIT Press, 1989. (B&F)Ljungquist, Lars and Thomas J. Sargent: Recursive Macroeconomic Theory. MIT Press. 2000 (L&S)Carl E. Walsh: Monetary Theory and Policy. MIT Press. 2000 (W).

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MICROECONOMICS ILecturer Teaching Assistant

Name Kresimir Zigic Prutenau Anca,Podpiera Jiri

Office 306Phone 240 05 245e-mail Kresimir.zigic@cerge-ei.czOffice hours

Course outline1. Consumer Theory and the Theory of Mathematical Optimization in Economics, Consumer preferences. Utilityfunction. Budget constraints. Optimal decision (choice) of a consumer and it's Sensitivity Analysis. Lagrange andKhun-Tucker conditions. Value functions. Envelope Theorem.• Income and price change analysis. (Marshallian and Hicksian) Demand Functions. Expenditure and Indirect

utility functions. Roy's identity, Sheppard's lemma. Substitution and Income effects, Slutsky decomposition.• Revealed preferences. Consumer's Welfare, Equivalent and Compensating variations, Price indices.• Aggregate demand. Elasticities and their importance.2. The Theory of the Firm I• Inputs, Outputs, Production functions.• Decomposition of the decision of a firm.• Cost analysis, Conditional Factor Demands.3. The Theory of the Firm II and Basic Market structures• Basic market structures and their influence on an optimal decisions of firms. Aggregation of firms� supply into

industry supply under different market structures in the short run and in the long run.• Decisions of competitive firms. Competitive market.• Decisions of monopolistic firms. Monopolistic market.• Price Discrimination• Natural monopolies.• Contestable markets. Welfare consequences.4. Relevant concepts of Game Theory.• Strategies and decisions of players. Game trees, backward induction. Domination. Nash Equilibrium and it's

importance.5. Advanced Market Structures• Oligopoly and Monopolistic Competition.• Strategic interactions and the concept of reaction functions• Bertrand versus Cournot oligopoly• Stackelberg first mover advantage

Requirements and gradingMidterm: 30 %Homework: 20 %Final Test: 50 %

ReadingsMain References:Andreu Mas-Colell, Michael D.Whinston, and Jerry R.Green, Microeconomic Theory, Oxford UniversityPress, NY 1995H.R.Varian, Microeconomic Analysis: a Modern Approach, Norton, NY 1984Also recommended:D.Kreps, A Course in Microeconomic Theory, 1990H.Gravelle, R.Rees, Microeconomics, Longman, London 1990Mathematical background:A.C.Chiang: Fundamental Methods of Mathematical Economics, McGraw Hill, London 1988J.M.Henderson, R.E.Quandt, Microeconomic Theory: a Mathematical Approach, McGraw Hill, NY 1958H.Nikaido, Convex Structures and Economic Theory, Academic Press, NY 1968Basic and Intermediate texts:H.R.Varian, Intermediate Microeconomics: a Modern Approach, Norton, NY 1987

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D.N.Hyman, Modern Microeconomics: Analysis and Applications, IRWIN, 1993P.R.Samuelson, W.D.Nordhaus, Economics, McGraw Hill, 1989.

STATISTICSLecturer Teaching Assistant

Name Viatcheslav Vinogradov TbdOffice 312Phone 240 05 234e-mail Viatcheslav.vinogradov@cerge-ei.czOffice hours by appointment

Course informationThe goal of this course is to give students a deep understanding of the statistical theory and practice and to buildup a background for econometric analysis. The emphasis of this course is on the principles of probability theoryand statistical inference. Aside from theoretical studies, students will make regular use of computers to explore avariety of useful applications.

Course outline• axiomatic theory of probability:sample space, sigma-algebra, probability, probability space, conditional probability and independence, law oftotal probability, Bayes� theorem;• random variables:probability distributions, density functions, characteristics of random variables, moment generating functions,Chebyshev's inequality, Jensen�s inequality, some classical discrete and continuous distributions;• systems of random variables:joint distributions, independence, marginal and conditional distributions, expectations, covariance, correlation,Cauchy-Schwarz inequality, bivariate normal distribution;• functions of random variables, the distribution of transformations of random variables;• central limit theorems, modes of convergence of random variables;• elements of stochastic processes, Markov chains and stochastic calculus (if time allows);• statistical inference:sampling asymptotic theory, sampling, sampling distributions, sample moments, laws of large numbers, chi-square distribution, F-distribution, t-distribution, point and interval estimators, method of moments, likelihoodfunctions, properties of estimators, minimum variance unbiased estimation, Cramer-Rao theorem, hypothesistesting, confidence regions, types of error, nonparametric tests, Bayesian inference;• introduction to linear regression models.

Requirements and gradingProblem Sets and Written Assignments (20%), Midterm Exam (30%), Final Exam (50%).

ReadingsPrincipal textbook:Mood, A.M., F.A.Graybill and D.C.Boes (1974). Introduction to the Theory of Statistics, McGraw-Hill, Inc.Other Useful References:Bickel, P.J., and K.A.Doksum (1977). Mathematical Statistics: Basic Ideas and Selected Topics, Holden-Day,Inc., Oakland, CA.Casella, G., and R.L.Berger (1990). Statistical Inference, Duxbury Press, Belmont, CA.Cox, D.R., and D.V.Hinkley (1990). Theoretical Statistics, Chapman and Hall,Feller, W. (1970). An Introduction to Probability Theory and Its Applications, Vol. 1,2, John Wiley and Sons, NY.Greene, W.K. (2000). Econometric Analysis, Macmillan, Inc., NY.Karlin, S., and H.M.Taylor (1975). A First Course in Stochastic Processes, Academic Press, Inc., San Diego, CA.Kmenta, J. (1986). Elements of Econometrics, Macmillan, Inc., NY.Lehmann, E.L. (1991). Testing Statistical Hypotheses, Wadsworth and Brooks/Cole, Pacific Grove, CA.Lehmann, E.L. (1991). Theory of Point Estimation, Wadsworth and Brooks/Cole, Pacific Grove, CA.Sen, A.V.,M.Srivastava (1990). Regression Analysis: Theory, Methods and Applications, Springer-Verlag, NY.Øksendal, B. (1998). Stochastic Differential Equations, an Introduction with Applications, Springer-Verlag, Berlin.

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PRE-ACADEMIC WRITINGTeacher

Name English facultyOfficePhonee-mailOffice hours

NOTE: This course will be offered in the Fall Semester only if the need exists.

Course informationAs preparation for the volume and level of reading and writing demanded in Academic Writing I, this course willsupplement the work done in Prep Semester English. The pace will be considerably slower than in AWI, andthough the primary focus will be on producing written work in English, comprehension (both reading andlistening) as well as speaking will also receive attention. The instructor will NOT assume students have acomplete working command of basic English grammar and sentence structure. Instead he or she will survey theclass to ascertain the most pressing needs of the class as a whole, keeping in mind what will be expected inAcademic Writing I.

Course outlineTopics and practices may include (but are not limited to) the following:• the difference between note-making and note-taking• developing confidence in both spoken and written English• how and when to ask questions• thinking in English• dictation• grammar troublespots (in written contexts)• building blocks of sentence structure• paragraph development• academic vocabulary

Requirements and gradingGrades will be based on progress, preparation, participation and regular attendance. Assessment tools willinclude brief writing assignments, quizzes, sentence structure tests, a midterm and a final.

Readings• Collins Cobuild Dictionaries (brought to class by instructor as needed)• Exercises and writing assignments provided as handouts by the instructor• Understanding and Using English Grammar (Third Edition) � available in the library

ACADEMIC WRITING ITeacher

Name English facultyOfficePhonee-mailOffice hours

Course informationThrough extensive writing and discussion in English, students will learn how to develop and then organize theirthoughts by applying the various schema and rhetorical devices of the Anglo-American writing model. They willthen gradually begin to adapt these techniques to the specific demands of academic writing at the graduatelevel. However, in order to give students as broad a range of writing resources as possible, assignments mayvary widely in content focus, with the instructor sometimes asking students to connect the economic principles intheir courses to the economics of everyday life. Composition topics covered (based on students� needs) shouldinclude: essay structure and development; informative vs. argumentative strategies; developing intellectualcuriosity and critical thinking; the revision process; word choice and sentence structure patterns in academic

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prose. Expanding vocabulary, exploring the why behind grammatical principles, and mastery of native-likesentence structures will also be included in the instructor�s attempts to instill the importance of a clear, preciseand cohesive style. Students will receive feedback from each other as well as from the instructor.

Requirements and gradingGrades will be based on a student�s mastery of both content and the mechanics of English on short essayassignments, as well as on scores on possible quizzes/tests, a midterm and final. Class participation, writingpartner support, and attendance will also play roles in determining the course grade.

Readings• Giltrow, Janet. Academic Writing: Writing and Reading across the Disciplines, 2nd ed. (Chapters 1-4)• Various handbooks, grammars, and style guides in the CERGE-EI or English Dept. library• Model essays and articles photocopied by the instructor as handouts

ACADEMIC WRITING IITeacher

Name English facultyOfficePhonee-mailOffice hours

NOTE: This course will be offered in the Fall Semester only if enough students qualify for it.

Course informationBuilding upon the analytical reading and summarizing work and paragraph/sentence revision techniquespracticed extensively in Academic Writing I, students will focus on writing longer essays with a more criticalperspective. They will also explore research writing as a genre and begin to focus on economics discourse style.

Course outlineApproximately the second half (Chapters 5-8) of Janet Giltrow�s Academic Writing: Writing and Reading acrossthe Disciplines will provide a loose framework for reading and analytical writing assignments. In addition, classmembers will try to move beyond sentence structures, syntax, and word choices already heavily relied upontoward those more closely approximating native writers� and reflecting the complexity of scholarly conceptualthinking. Contextual revision practice using excerpts by economists writing in the field will increasingly be thebasis for critiques. Based on the collective needs of class participants, the instructor may choose to focus ontopics from among�but not limited to�the following: verb tense sequencing; punctuation to clarify andemphasize; developing ideas through revealing examples; paragraph divisions; transition techniques;differences between introductions and conclusions; agentless structures; reported speech; stylistic choices;refining and expanding vocabulary; documentation; the ongoing battle with articles.

Requirements and gradingGrades will be based on a student�s mastery of content and mechanics on various writing assignments, quizzes,and midterm and final exam in-class essays. Class participation and interaction as well as attendance will beconsidered in determining final course grades.

Readings• Academic Writing: Writing and Reading across the Disciplines by Janet Giltrow; Chapters 5-8• Selected articles and essays• Collins Cobuild English Dictionary, 2nd rev. ed.(as needed for in-class work)

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B. Second year students

ADVANCED MACROECONOMICSLecturer Teaching Assistant

Name Radim Boháček TbdOffice 328Phone 240 05 194e-mail Radim.bohacek@cerge-ei.czOffice hours Mon. and Thu. at 3:30-4:30 p.m.

Course informationThis course is the first part of the advanced macroeconomic theory sequence. In the first year you learnt how tounderstand the basic theory and how to read papers. The goal of this course is to learn how to write papers inmacroeconomic theory addressing important issues in real economies. We will study in great detail the essentialtheoretical topics and tools of modern macroeconomics and apply them to models and numerical simulation inMATLAB. There will be two lectures per week on Mondays and Thursdays at noon. Problem sets will bediscussed during TA sessions.

Course outlineContracts in general equilibrium with heterogeneous agents Atkeson and Lucas(1992), Atkeson and Lucas(1995) and Phelan and Townsend (1991). Stokey, Lucas, and Prescott (1989) and Cooley (1995) are the maintextbooks for this part of the course.Equilibrium search, unemployment and labor market policies Lucas and Prescott (1974) and its version inStokey, Lucas, and Prescott (1989), Jovanovic (1987), Alvarez and Veracierto (1999), Veracierto (2000), andPrescott and Rios-Rull (1992). Sargent (1987) and Sargent and Ljungquist (2000) provide a good survey ofsearch.Credible government policies Chapter 4 in Sargent (1999) and Chapter 16 in Ljungquist and Sargent (2000) aregreat expositions for Abreu, Pearce, and Stacchetti (1986), Abreu, Pearce, and Stacchetti (1990), Abreu (1988),Atkeson (1991), Stokey (1991), Phelan and Stacchetti (1999), and Kydland and Prescott (1977).Capacity constraints, lotteries, and politico-economic equilibrium Cooley, Hansen, and Prescott (1995), Hansenand Prescott (1998), and Krusell, Quadrini, and Rios-Rull (1997).

Requirements and gradingThe grade will be based on problem sets (20%), a short research paper (20%), and a final exam (60%). Thepolicies related to student conduct will be strictly enforced.

ReadingsTextbooksStokey, Nancy L., Robert E. Lucas, Jr., and Edward C. Prescott. Recursive Methods in Economic Dynamics.Cambridge: Harvard University Press, 1989.Ljungquist, Lars, and Thomas J. Sargent. Recursive Macroeconomic Theory. MIT Press, 2000.Sargent, Thomas J. Dynamic Macroeconomic Theory. Cambridge: Harvard University Press, 1987.Sargent, Thomas J. The Conquest of American In ation. Princeton University Press, 1999.Cooley, Thomas F., Editor. Frontiers of Business Cycle Research. Princeton University Press: 1995.Reading ListAbreu, D. (1988). On the theory of infinitely repeated games with discounting. Econometrica 56, 383-396.Abreu, D., D. Pearce, and E. Stacchetti (1986). Optimal cartel equilibria with imperfect monitoring. Journal ofEconomic Theory 39, 251-269.Abreu, D., D. Pearce, and E. Stacchetti (1990). Toward a theory of discounted repeated games with imperfectmonitoring. Econometrica 58 (5), 1041-1063.Aiyagari, R. S. (1994a). Macroeconomics with frictions. Federal Reserve Bank of Minneapolis Staff Report 18(3), 24-40.Aiyagari, R. S. (1994b). Uninsured idiosyncratic risk and aggregate savings. Quarterly Journal of Economics 109(3), 659-684.Aiyagari, R. S. (1995). Optimal capital income taxation with incomplete markets, borrowing constraints, andconstant discounting. Journal of Political Economy 103, 1158-1175.

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Aiyagari, R. S. and F. Alvarez (1995). Stationary efficient distributions with private information: A tale of kingsand slaves. Manuscript.Aiyagari, R. S. and M. Gertler (1991). Asset returns with transaction costs and uninsured individual risk. Journalof Monetary Economics 27, 311-331.Alvarez, F. and M. Veracierto (1999). Labor market policies in an equilibrium search model. NBERMacroeconomic Annual (14), 265-304.Atkeson, A. (1991). International lending with moral hazard and risk of repudiation. Econometrica 9, 1069-1089.Atkeson, A. and R. E. Lucas, Jr. (1992). On efficient distribution with private information. Review of EconomicStudies 59, 427-453.Atkeson, A. and R. E. Lucas, Jr. (1995). Efficiency and equality in a simple model of efficient unemploymentinsurance. Journal of Economic Theory 66, 64-98.Bohacek, R. (2000). Capital accumulation and moral hazard in an economy with heterogeneous agents.CERGE-EI Working Paper Series.Cooley, T. F., J. Greenwood, and M. Yorokoglu (1997). The replacement problem. Journal of MonetaryEconomics 40, 457-499.Cooley, T. F., G. D. Hansen, and E. C. Prescott (1995). Equilibrium business cycles with idle resources andvariable capacity utilization. Economic Theory 6, 35-49.Diamond, D. W. and P. H. Dybvig (1983). Bank runs, deposit insurance, and liquidity. Journal of PoliticalEconomy 91 (3), 401-419.Fuerst, T. S. (1992). Liquidity, loanable funds, and real activity. Journal of Monetary Economics 29, 3-24.Hansen, G. D. and A. Imrohoroglu (1992). The role of unemployment insurance in an economy with liquidityconstraint and moral hazard. Journal of Political Economy 100 (1), 118-142.Hansen, G. D. and E. C. Prescott (1998). Capacity constraints, asymmetries and the business cycle. Universityof Chicago Working Paper.Hopenhayn, H. A. (1992a). Entry, exit, and firm dynamics in long run equilibria. Econometrica 60 (5), 1127-1150.Hopenhayn, H. A. (1992b). Exit, selection, and the value of firms. Journal of Economic Dynamics and Control 16(3-4), 621-653.Hopenhayn, H. A. and J. P. Nicolini (1997). Optimal unemployment insurance. Journal of Political Economy 105(2), 412-438.Hopenhayn, H. A. and E. C. Prescott (1992). Stochastic monotonicity and stationary distributions for dynamiceconomies. Econometrica 60 (6), 1387-1406.Hopenhayn, H. A. and R. Rogerson (1993). Job turnover and policy evaluation: A general equilibrium analysis.Journal of Political Economy 101 (5), 915-938.Huggett, M. (1993). The risk-free rate in heterogeneous-agent incomplete-insurance economies. Journal ofEconomic Dynamics and Control 17, 953-969.Huggett, M. (1997). The one-sector growth model with idiosyncratic shocks: Steady states and dynamics.Journal of Monetary Economics 39, 385-403.Imrohoroglu, A. (1992). The welfare cost of in action under imperfect insurance. Journal of Economic Dynamicsand Control 16, 79-91.Jovanovic, B. (1987). Work, rest, and search: Unemployment, turnover and the cycle. Journal of LaborEconomics.Kehoe, T. J. and D. K. Levine (1990). Determinacy of equilibria in dynamic models with finitely many consumers.Journal of Economic Theory 50, 1-21.Kehoe, T. J. and D. K. Levine (1993). Debt-constraint asset market. Review of Economic Studies 60, 865-888.Kocherlakota, N. R. (1996, 595-609). Implications of efficient risk sharing without commitment. Review ofEconomic Studies 63.Krueger, D. (1999). Risk sharing in economies with incomplete markets. University of Minnesota Working paper.Krusell, P., V. Quadrini, and J.-V. Rios-Rull (1997). Politico-economic equilibrium and economic growth. Journalof Economic Dynamics and Control 21, 243-272.Kydland, F. and E. C. Prescott (1977). Rules rather than discretion: the inconsistency of optimal plans. Journal ofPolitical Economy 84, 473:491.Lucas, Jr., R. E. (1972). Expectations and the neutrality of money. Journal of Economic Theory 4, 103-124.Lucas, Jr., R. E. (1980). Equilibrium in a pure currency economy. Economic Inquiry 43, 203-220.Lucas, Jr., R. E. (1982). Interest rates and currency prices in a two-country world. Journal of MonetaryEconomics 10, 335-359.Lucas, Jr., R. E. (1990). Liquidity and interest rate. Journal of Economic Theory 50, 237-264.Lucas, Jr., R. E. (1992). On efficiency and distribution. The Economic Journal (102), 233-247.

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Lucas, Jr., R. E. and E. C. Prescott (1974). Equilibrium search and unemployment. Journal of Economic Theory7, 188-209.Marcet, A. and R. Marimon (1992). Communication, commitment, and growth. Journal of Economic Theory 58,219-249.Mortensen, D. T. and C. A. Pissarides (1994). Job creation and job destruction in the theory of unemployment.Review of Economic Studies 61, 397-415.Phelan, C. (1995). Repeated moral hazard and one-sided commitment. Journal of Economic Theory 66, 488-506.Phelan, C. (1998). On the long run implications of repeated moral hazard. Journal of Economic Theory 79, 174-191.Phelan, C. and E. Stacchetti (1999). Sequential equilibria in a ramsey tax model. Federal Reserve Bank ofMinneapolis Staff Report (258).Phelan, C. and R. M. Townsend (1991). Computing multi-period, information-constrained optima. Review ofEconomic Studies 58, 853-881.Prescott, E. C. (1986). Theory ahead of business cycle measurement. Carnegie-Rochester Conference Serieson Public Policy 25, 11-44.Prescott, E. C. and J.-V. Rios-Rull (1992). Classical competitive analysis of economies with islands. Journal ofEconomic Theory 57, 73-98.Prescott, E. C. and R. M. Townsend (1984a). General competitive analysis in an economy with privateinformation. International Economic Review 25, 1-20.Prescott, E. C. and R. M. Townsend (1984b). Pareto optima and competitive equilibria with adverse selectionand moral hazard. Econometrica 52 (1), 21-45.Stokey, N. L. (1991). Credible public policy. Journal of Economic Dynamics and Control 15,627-656.Stokey, N. L., R. E. Lucas, Jr., and E. C. Prescott (1989). Recursive Methods in Economic Dynamics.Cambridge: Harvard University Press.Ventura, G. (1999). Flat tax reform: A quantitative exploration. Journal of Economic Dynamics and Control 23,1425-1458.Veracierto, M. (2000). Employment ows, capital mobility, and policy analysis. Federal Reserve Bank ofMinneapolis Working Paper (2000-05).Wang, C. (1995). Dynamic insurance with private information and moral hazard. Review of Economic Studies62, 577-596.Wang, C. and S. D. Williamson (1996). Unemployment insurance with moral hazard in a dynamic economy.Carnegie-Rochester Conference on Public Policy 44, 1-41.

ECONOMETRICS IIILecturer Teaching Assistant

Name Ev�en Kočenda TbdOffice 333Phone 240 05 149e-mail Evzen.kocenda@cerge-ei.czOffice hours By appointment

Course informationThis course is a part of the sequence in econometrics. The course will focus mainly on the models that use timeseries and will review current state of theory and empirical work. The course is an applied econometrics coursein nature and therefore it will stress application of the topics into applied research. The course will cover topicslisted in the course outline below.

Course outlineUnivariate Time SeriesUnit Roots and Fractional IntegrationTrend Breaks and Structural ChangeMultiple Time SeriesCointegrationUnit Roots and Cointegration with Panel DataHeteroskedasticityNonlinear Structure

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Requirements and gradingThe grade for this applied course will be based on the exam and 5-6 assignments that will require to performeconometric and economic analysis. Evaluation will be proportional.

ReadingsThe text for the course isWalter Enders: Applied Econometric Time Series (Wiley, 1995) andTerence C. Mills: The Econometric Modelling of Financial Time Series (Cambridge University Press, 1994)

Most of the course content will be based on journal papers. A detailed list of required/recommened papers willbe distributed in the class.Campbell, J. and P. Perron, "Pitfalls and Opportunities: What Macroeconomists Should Know About Unit Roots," NBER Macroeconomics Annual, 1991, 141-163.Cochrane, J., "Comment on Campbell and Perron" NBER Macroeconomics Annual, 1991, 201-210.Dickey, D. and Fuller, W., �Distribution of the Estimators for Autoregressive Time Series With a Unit Root�,Journal of American Statistical Association, 1979, 366(74), 427-431Diebold, F. and M. Nerlove, "Unit Roots in Economic Time Series: A Selective Survey," in T. Fomby and G.Rhodes, eds., Advances in Econometrics, Volume 8, Co-Integration, Spurious Regressions, and Unit Roots,1990, 3-70.Kwiatkowski, D., Phillips, p., Schmidt, P. and Y. Shin, "Testing the Null Hypothesis of Stationarity Against theAlternative of a Unit Root: How Sure Are We That Economic Time Series Are Non Stationary?", Journal ofEconometrics, 1992,159-178.Nelson, C. and C. Plosser "Trends and Random Walks in Macroeconomic Time Series: Some Evidence andImplications, "Journal of Monetary Economics, 1982, 139-162.Diebold, F. S. Husted and M. Rush, "Real Exchange Rates Under the Gold Standard," Journal of PoliticalEconomy, 1991, 1252-1271.Perron, P., "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, 1989, 1361-1402.Zivot, E. and D. Andrews, "Further Evidence on The Great Crash, the Oil Price Shock, and the Unit RootHypothesis, "Journal of Business and Economic Statistics, 1992, 251-270.Perron, P. and T. Vogelsang, Nonstationarity and Level Shifts with and Application to Purchasing Power Parity,"Journal of Business and Economic Statistics, 1992, 301-320.Vogelsang, T. and P. Perron, "Additional Tests for a Unit Root Allowing for a Break in the Trend Function at anUnknown Time," mimeo, Cornell University, 1994.Vogelsang, T. J. 1997. �Wald-type tests for detecting Breaks in the Trend Function ofa Dynamic Time Series,� Econometric Theory 13, 818-849Andrews, D. and W. Ploberger, "Optimal Test When a Nuisance Parameter is Present Only Under theAlternative, "Econometrica, 1994, 1383-1414.Ben-David, D. and Papell D. 1997. �International Trade and Structural Change,� Journal of InternationalEconomics, 43, 513-523.Sims, C. "Money Income and Causality", in Rational Expectations and Econometric Practice (LS), R. Lucas andT. Sargent, Eds., 387-404.Sims, C. "Macroeconomics and Reality," Econometrica, Jan. 1980, 1-48.Taylor, J. "Output and Price Stability: An International Comparison", (Section 1), Journal of Economic Dynamicsand Control, 1980, 109-132.Engle, R. and C. Granger, "Co-Integration and Error Correction: Representation, Estimation and Testing,"Econometrica, 1987, 251-266, also in their Long-Run Economic..., 267-276.Stock, J., "Asymptotic Properties of Least-Squares Estimators of Cointegrating Vectors, "Econometrica, 55,1987, 1035-1056.Papell, D., �Searching for Stationarity: Purchasing Power Parity Under the Current Float�, Journal of InternationalEconomics, 43, 1997, 313-332Levin, A. and C. Lin, "Unit Root Tests in Panel Data: Asymptotic and Finite Sample Properties, "DiscussionPaper 92-23, University of California, San Diego, 1992.Levin, A. and C. Lin, "Unit Root Tests in Panel Data: New Results," Discussion Paper 93-56, University ofCalifornia, San Diego, 1993.Pedroni, P., "Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests withand Application to the PPP Hypothesis," mimeo, Indiana University, 1994.

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Kočenda, E. and Papell, D., "Inflation Convergence Within the European Union: A Panel Data Analysis,International Journal of Finance and Economics, 1997, 3, 189-198Engle, R., "Autoregressive Conditional Heteroscedaticity with Estimates of the Variance of United KingdomInflation," Econometrica, 1982, 987-1007.Bollerslev, T., "Generalised Autoregressive Conditional Heteroscedasticity," Journal of Econometrics, 1986, 307-327.Baille, R. and T. Bollerslev, "The Message in Daily Exchange Rates: A Conditional-Variance Tale," Journal ofBusiness and Economic Statistics, 1989, 297-305.Engle, R. and T. Bollerslev, Modelling the Persistence of Conditional Variances, "Econometric Reviews, 1986.Bollerslev, T., R. Chou and K. Kroner, "ARCH Modelling in Finance: A Review of the Theory and EmpiricalEvidence, �Journal of Econometrics, 1992Kočenda, E.: Altered Band and Exchange Volatility. 1998, The Economics of Transition, 6(1), 173-181Brock, W., Dechert, W., and Scheinkman, J., 1987, A Test for Independence Based on the CorrelationDimension, University of Wisconsin at Madison, Department of Economics Working Paper.Brock, W., Dechert, W., Scheinkman, J., and LeBaron, B., 1996, A Test for Independence Based on theCorrelation Dimension, Econometric Reviews, 15, 197-235Brock, W,. D. Hsieh, and B. LeBaron, Nonlinear Dynamics, Chaos, and Instability, (MIT Press, 1991). Chs. 2 and4 and Appendix F.

ECONOMICS OF TRANSITION IChief Lecturer Lecturer Lecturer

Name Lubomír Lízal Gerald Roland Jan �vejnarOffice 310 326Phone 240 05 114 240 05 193e-mail Lubomir.lizal@cerge-ei.cz Groland@ulb.ac.be Jan.Svejnar@cerge-ei.czOffice hours By appointment, usually

after class

Course informationThe course is a standard one semester course, two 90 minutes classes per week plus one student seminarpresentation. Review of theoretical and empirical studies focused on economics of transition. The course issequenced with Transition II course in Spring and this syllabus covers both semestersPreliminary requirements: Microeconomics, Basic Econometrics.Recommended complementary courses: Industrial Organization, Econometrics.

Course outline and ReadingsA. MICROECONOMIC ASPECTS OF TRANSITION AND BACKGROUND LITERATURE(i) Models of Planned Economies - Classical Literaturea) Literature of a standard view of elementary theory of planning, pre-requisite readings:Ward, Benjamin: The socialist economy. Berkeley, University of California Press, 1967Hayek, F.A. (ed): Collectivist Economic Planning. London, Routledge, 1935Lange, Oskar, and F.M. Taylor (eds): On the Economic Theory of Socialism. Minneapolis: University ofMinnesota Press (Reprinted, NY: McGraw-Hill, 1964)The New Palgrave: Problems of the planned economyKowalik, T.: Lange Lerner mechanismVohra, R.: Planningb) Producer in Planned EnvironmentAbel, Istvan and John P. Bonin (1990): Behavior of the Socialist firm under Indirect Control. In: Quandt andTriska: Optimal Decisions in Markets and Planned Economies. Westview Press, 1990Portes, Richard D.: The enterprise under central planning. The Review of Econ. Studies, 36, 1969, no. 2, pp.197 - 212Kornai, Janos (1986): The Soft Budget Constraint. Kyklos-MalinvaudHlavacek, Jiri (1990): Producer's Criteria in a Centrally Planned Economy. In: Quandt and Triska.(ii) Labor managed firmWard, Benjamin (1958): The Firm in Illyria: Market Syndicalism, American Economic Review, 566-89; orchapters 8 - 10 in Ward.Domar, Evsey (1966)" The Soviet Collective Farm as a Producer Cooperative. American Economic Review, 734-757

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Prasnikar, J., J. Svejnar, D. Mihaljek and V. Prasnikar (1994): Behavior of Participatory Firms in Yugoslavia:Lessons for Transforming economies. Review of Economics and Statistics, 728-740Spinnewyn, Frans and Jan Svejnar (1990): Optimal Membership, Employment, and Income Distribution inUnionized and Labor Managed Firms. Journal of Labor Economics, 317-340 Estrin, Saul and Jan Svejnar (1993): Wage Determination in Labor-Managed Firms under Market-OrientedReforms: Estimates of Static and Dynamic Models. Journal of Comparative Economics, 687-700*Svejnar, J.: Bargaining Power, Fear of Disagreement and Wage Settlements: Theory and Evidence from U.S.Industry, Econometrica, 54 (5):1055-78, 1986.Bonin, J., D. Jones, and L. Putterman: Theoretical and Empirical Studies of Producer Cooperative: Will Ever theTwin Meet? Journal of Economic Literature, 31 (3), 1993.(iii) Structure of the firmHart, Oliver and John Moore (1990): Property Rights and the Nature of the Firm, Journal of Political Economy,98(6), pp. 1119-1158.Grossman, Sanford and Oliver Hart (1986): The Costs and Benefits of Ownership: A Theory of Vertical andLateral Integration, Journal of Political Economy, 94(4), pp. 691-719 (supplementary reading to Hart and Moore1990)Alchian, Armen A. and Harold Demsetz (1972): Production, Information Costs and Economic Organization.American Economic Review, 62(5), pp. 777-795Furubotn, Eirik G. and Svetozar Pejovich (1972) Property Rights and Economic Theory: A Survey of RecentLiterature. Journal of Economic Literature, pp. 1137-1162.Weitzman, Martin L. (1974): Prices versus Quantities. Review of Economic Studies, vol. 4, 477 - 491Bonin, John (1976): On the design of Managerial Incentive Structures in a Decentralized Environment. AER,66(4), pp. 682-687.Kornai, Janos (1979): Resource Constrained versus Demand Constrained Systems. EconometricaWeitzman, Martin L. (1980): The Ratchet Principle and Performance Incentives, Bell Journal of Economics,11(1), pp 302Keren, Michael, Jeffrey Miller and James R. Thornton (1983): The Ratchet: A Dynamic Managerial IncentiveModel of the Soviet Enterprise. Journal of Comparative Economics, 7(4)Tirole, Jean (1988): The Theory of Industrial Organization. MIT Press(iv) Pre-privatization Behavior, Privatization and RestructuringLi, David D. and Francesca Cornelli (1995): Enterprise Behavior Before Restructuring, unpublished manuscriptCornelli, F. and D. Li: Optimal Privatization with Large Shareholders, working paper, University of Michigan,1993.Aghion, Philippe, Olivier Blanchard and John Burgess (1994): The Behaviour of State Firms in Eastern EuropePre-Privatization. European Economic Review, 1327-1349Lizal, Lubomir, Miroslav Singer and Jan Svejnar (1995): Manager Interests, Breakups and Performance of StateEnterprises in Transition. In: Svejnar, Jan (ed.): The Czech Republic and Economic Transition in EasternEurope. Academic Press*Lizal, Lubomir, Miroslav Singer and Jan Svejnar, Enterprise Break-ups and Performance in Transition, in theReview of Economics and Statistics, February 2001.Kotrba, Josef (1996): Privatization and Restructuring: Friends or Enemies, CERGE-EI WP #103.Pinto, Brian, Marek Belka and Stefan Krajewski (1993): Transforming State Enterprises in Poland: Evidence onAdjustment by Manufacturing Firms. Brooking Papers on Economic ActivityEstrin, Saul and Paul Hare (1992): Firms in Transition: Modelling Enterprise Adjustment. CEPR Working PaperNo. 89Carlin, Wendy, John van Reenen and Toby Wolfe (1994): Enterprise Restructuring in the Transition: anAnalytical Survey of the Case Study Evidence from Central and Eastern Europe. EBRD Working Paper No. 14*Barberis, N., M. Boycko, A. Shleifer, and N. Tsukanova: How Does Privatization Work? Evidence from theRussian Shops , Journal of Political Economy, 1996.*Frydman, R., C. Gray, M. Hessel, and A. Rapaczynski: When Does Privatization Work? The Impact of PrivateOwnership on Corporate Performance in the Transition Economies, Quarterly Journal of Economics, CXIV(4),1153-1192, 1999.*Gupta, N., J. Ham and J. Svejnar: Priorities and Sequencing in Privatization: Theory and Evidence from theCzech Republic, The William Davidson Institute Working Paper No. 323, 2000.*Djankov, Simeon and Peter Murrell, Enterprise Restructuring in Transition: A Quantitative Survey, Mimeo,November 2000.Laffont, J.J. and J. Tirole: Privatization and Incentives, Journal of Law, Economics, and Organization, 7, 84--105,1991.

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Shleifer, A. and R. Vishny: Politicians and Firms, Quarterly Journal of Economics, 439, 1994.Schmidt, K. and M. Schnitzer: Privatization and Management Incentives in Transition Period in Eastern Europe,Journal of Comparative Economics, 17, 1993.Blanchard, O. and P. Aghion: On Insider Privatization , mimeo, 1995.(v) Privatization: Practical IssuesBoycko, Maxim, Andrei Schleifer and Robert Vishny (1994): Voucher Privatization. Journal of FinancialEconomics, 35(2), pp. 249-266.Boycko, M., A. Shleifer and R. Vishny: Privatizing Russia , Brookings Papers on Economic Activity, winter, 1993.Winiecki, Jan (1994): Polish Mass Privatization Programme: The Unloved Child in a Suspected Family. AdamSmith Research Centre Working PaperKotrba, Josef and Jan Svejnar (1994): Rapid and Multifaceted Privatization: The Case of Czech and SlovakRepublics. Moct-Most 4: 147-185Svejnar, Jan and Miroslav Singer (1994): Using Vouchers to Privatize and Economy: The Czech and SlovakCase. Economics of Transition 2, 43-64Carlin, Wendy and Colin Mayer (1995): Structure of Ownership of East German Enterprises. CERGE DiscussionPaper No. 51Stiglitz, J.E.: Theoretical Aspects of the Privatization: Applications to Eastern Europe, Working Paper, Institutefor Policy Reform, Stanford University, 1991.(vi) Side Effects of Privatization; Privatization and Public SectorWitzum, Amos: Privatization, distribution and economic efficiency in transitionLaffont, Jean-Jacques and Jean Tirole (1991): Privatization and Incentives. Journal of Law, Economics andOrganization 7, 84-105(vii) Entrepreneurs and New Firms*Johnson, Simon, John McMillan and Christopher Woodruff, Entrepreneurs and the ordering of institutionalreform, Economics of Transition, 8 (1), 1-36, 2000.Bratkowski, Andrzej, Irena Grosfeld and Jacek Rostowski, Investment and finance in de novo private firms,Economics of Transition, 8 (1), 101-116, 2000.*Pissarides, Francesca, Miroslav Singer and Jan Svejnar, Objectives and Constraints of Entrepreneurs:Evidence from Small and Medium Size Enterprises in Russia and Bulgaria, The William Davidson WorkingPaper No. 346, October 2000.(viii) Firms and the Banking SectorDittus, Peter (1994):Bank Reform and Behavior in Central Europe. JCE 19,335-361van Wijnbergen, Sweder (1994): On the Role of Banks in Enterprise Restructuring: The Polish ExampleBonin, John (1995): Banking in the Transition: Privatizing banks in Hungary, Poland, and the Czech Republic.Varhegyi, Eva (1993): Key elements of the Reform of the Hungarian Banking System: Privatization and PortfolioCleaning Grosfeld, Irena (1994): Financial Systems in Transition: Is there a Case for a Bank Based System? CEPRWorking Paper No. 1062Tirole, Jean (1995): Western Prudential Regulation: Assessment and Reflections on its Application to Centraland Eastern Europe. Economics of Transition(ix) Principal Agent Problems in (Post) Transformation EconomiesLi, David D. and Francesca Cornelli (1994): Large Shareholders, Private Benefits and Optimal Schemes forPrivatization. CEPR Working Paper No. 891Admati, Anat R., Paul Pfleiderer and Josef Zechner (1994): Large Shareholder Activism, Risk Sharing andFinancial Market Equilibrium. JPE 102, 1097-1130Stark, David and Laszlo Bruszt (1995): Network Properties of Assets and Liabilities: Patterns of Inter-EnterpriseOwnership in the Post-socialist TransformationStark, David (1994): Recombinant Property in East European CapitalismAbel, Istvan and Konstantine Gatsios (1993): The Economics of Bankruptcy and the Transition to a marketeconomyLegros, Patrik and Janet Mitchell (1995): Bankruptcy as a Control Device in Economies in Transition, Journal ofComparative Economics, pp. 265-301.

B. MACROECONOMIC ASPECTS OF TRANSITION, TRADE AND LABOR ISSUES1. Background to Central Planning and Transition

*Gregory, Paul and Robert Stuart: Comparative Economic Systems. Fourth Edition, Houghton Mifflin Company,Boston, 1992. (Chapters 1, 2 and 15)

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*EBRD (European Bank for Reconstruction and development), Progress and patterns in transition, Transitionreport 2000, pp. 13-29, 49-51, and 53-54.Stiglitz, Joseph E., Whither Socialism? Cambridge, MA: MIT Press, 1994.Kornai, Janos: Socialist Systems. Princeton University Press, 1992.

2. Traditional Topics of Comparative EconomicsKoopmans, T.C. and J.M. Montias, On the Description and Comparison of Economic Systems, in A. Ecksteined., Comparison of Economic Systems, University of California Press, 1971, 27-78Gregory, Paul and Robert Stuart: Comparative Economic Systems. Fourth Edition, Houghton Mifflin Company,Boston, 1992. (Chapters 5, 6, 7, and 8)Bornstein, Morris: Comparative Economic Systems: Models and Cases. Seventh Edition, Irwin, Boston. 1994.(Chapters 1 and 2)

2.1 Plan versus Market: Theoretical DiscussionsHurwicz, L.: The Design of Mechanisms for Resource Allocation, American Economic Review, 1973.*Manove, M.: A Model of Soviet-Type Planning, American Economic Review, 1971.Weitzman, M.L.: Price vs. Quantities, Review of Economic Studies, 41, 1974, 477-491.Ludwig von Mises: Economic Calculation in Socialism , in Bornstein, Morris: Comparative Economic Systems:Models and Cases. Seventh Edition, Irwin, Boston. 1994.Heal, Geoffrey M., The Theory of Economic Planning, Noth Holland, Ch. 1-6.

2.2. Incentive Problems in Socialist SystemsDewatripont, Mathias and Eric Maskin. 1995. Credit and Efficiency in Centralized and Decentralized Economies.Review of Economic Studies, 62, 541-556. July 1995.Weitzman, M., The Ratchet Principle' and Performance Incentives, Bell Journal of Economics, 22(1):302, 1980.Bonin, J., On the Design of Managerial Incentive Structure in a Decentralized Planning Environment, AmericanEconomic Review, 66 (4), 1976.

2.3 Shortages and Rationing*Shleifer, A. and R. Vishny: Pervasive Shortages under Socialism, Rand Journal of Economics, 23 (2) 1992.Portes, R. and D. Winter: Disequilibrium Estimates for Consumption Goods Markets in Centrally PlannedEconomies, Review of Economic Studies. 1980.Qian, Y.: A Theory of Shortages in Socialist Economies Based on the `Soft Budget Constraint' , AmericanEconomic Review, 84 (1), 1994.

2.4 The Labor-Managed Firm and Worker ParticipationWeitzman, M.: The Simple Macroeconomics of Profit Sharing, American Economic Review, 75, 1985.

2.5 A Positive Political Economy Approach to Socialist SystemsKornai, J.: The Economics of Shortage. North-Holland, 1980. (Chapters9, 13, 14, and 22.)Kornai, J.: The Socialist System: A Political Economy Approach. Princeton University Press, 1992. (Chapter 6, 7,15, and 21.)

3. Major Issues of Transition3.1 Price Liberalization, Macroeconomic Stabilization and Output Fall

*Roland, Gerard: Understanding Transition, Transition and Economics, MIT Press, 2000, Chapter 1, pp. 1-22.*Roland, Gerard: Liberalization and Output Fall, Transition and Economics, MIT Press, 2000, Chapter 2, pp.153-170.*Berg, A., E. Borensztein, R. Sahay, and J. Zettelmeyer: The Evolution of Output in Transition Economies:Explaining the Differences, Nobel Symposium, September 1999.*Blanchard, Olivier and Michael Kremer, Disorganization, Quarterly Journal of Economics, 112(4), 1091-1126,Nov. 1997*Roland, Gerard and Thierry Verdier, Transition and the Output Fall, Economics of Transition, vol. 1, 1999, 1-28.Olivier Blanchard, The Economics of Post-Communist Transition, Oxford: Oxford University Press, 1997, Ch. 1-2, pp. 1-56.Kornai, J.: Transformational Recession: The Main Causes , Journal of Comparative Economics, 19 (1), 1994.Berkowitz, Daniel, David DeJong and Steven Husted, Transition in Russia: It's Happening, The William DavidsonInstitute Working Paper No. 33, February 1997.Cochrane, J. and B. Ickes: Inflation Stabilization in Reforming Socialist Economies: The Myth of the MonetaryOverhang, Comparative Economic Studies, 33 (2), 97-122, 1991.Bennett, J. and H.D. Dixon: Macroeconomic Equilibrium and Reform in a Transition Economy, EuropeanEconomic Review, 39 (8), 1465--85, 1991.Calvo, G.A. and C.A. Vegh: Stabilization Dynamics and Backward-looking Contracts, Journal of DevelopmentEconomics, 43 (1), 59--84, 1994.

3.2: Reforms and Behavior of State Owned Enterprises

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*Roland, Gerard: The Political Economy of Mass Privatization, Transition and Economics, MIT Press, 2000,Chapter 4, pp. 85-105.*Roland, Gerard: The Optimal Speed of Sectoral Reallocation, Transition and Economics, MIT Press, 2000,Chapter 5, pp. 109-129.Olivier Blanchard, The Economics of Post-Communist Transition, Ch. 3-4, pp. 61-127.

Employment and Productivity*Bai, C., D. Li, and Y. Wang: Enterprise Productivity and Efficiency: When Is Up Really Down? , JournalComparative Economics, 24 (2), 265-280, 1998.*Basu Swati, Saul Estrin and Jan Svejnar, Employment and Wage Behavior of Enterprises in TransitionalEconomies, The William Davidson Institute Working Paper No. 114, Oct. 1997 (revised, January 1999)Grosfeld, Irena and Francois Nivet, Firms' Heterogeneity in Transition: Evidence from a Polish Data Set, TheWilliam Davidson Working Paper No. 47, May 1997.*Lee, Young, Wages and Employment in China's SOEs, 1980-1994: Corporatization, Market Development andInsider Forces Journal of Comparative Economics, 27(4), 702-29, Dec.1999.Spinnewyn, Frans and Jan Svejnar, The Efficiency of Wage-Employment Bargains in a Consistent DynamicFramework, Mimeo, University of Michigan, December 1998.

Investment Behavior, Financial Sector Development and Soft Budget Constraints*Roland, Gerard: The Soft Budget Constraint and Financial Transition, Transition and Economics, MIT Press,2000, Chapter 12, pp. 287-325.*Mitchell, Janet, Theories of soft budget constraints and the analysis of banking crises, Economics of Transition,8 (1), 59-100, 2000.Weller, Christian and Bernard Morzuch, International financial contagion: Why are Eastern Europe's banks notfailing when everybody else's are? Economics of Transition, 8 (3), 639-663, 2000.Ericson, Richard E., Restructuring Investment in Transition: A Model of the Enterprise Decision, The WilliamDavidson Institute Working Paper No. 129, Jan. 1998.*Lizal, Lubomir and Jan Svejnar, Investment, Credit Rationing, and the Soft Budget Constraint: Evidence fromCzech Panel Data, The William Davidson Institute Working Paper No. 60a, Revised, April 2000.*Anderson, Ronald and Chantal Kegels, Finance and Investment in Transition: Czech Enterprises, 1993-94, TheWilliam Davidson Institute Working Paper No. 164, Sept. 1997.*Prasnikar, Janez and Jan Svejnar, Investment and Wages During the Transition: Evidence from Slovene Firms,The William Davidson Institute Working Paper No. 184, July 1998.Rockinger, Michael and Giovanni Urga, The Evolution of Stock Markets in Transition Economies, Journal ofComparative Economics, 28(3) 456-472, Sept. 2000.Hanousek, Jan and Randall Filer, The relationship between economic factors and equity markets in CentralEurope, Economics of Transition, 8 (3), 623-638, 2000.Brandt, Loren and Xiaodong Zhu, Redistribution in a Decentralized Economy: Growth and Inflation in Chinaunder Reform, Journal of Political Economy, 108 (2), 422-439, April, 2000.Frydman, Roman, Cheryl Gray, Marek Hessel, and Andrzej Rapaczynski, The limits of discipline: Ownership andhard budget constraints in the transition economies, Economics of Transition, 8 (3), 577-601, 2000.

3.3 Labor Market and Income DistributionHuman Capital

*Münich, Daniel, Jan Svejnar and Katherine Terrell, Returns to Human Capital under the Communist Wage Gridand during the Transition to a Market Economy: Retrospective Evidence from Czech Micro Data, Working PaperNo. 272, The William Davidson Institute, University of Michigan Business School, December 1999.Chase, Robert S., Markets for Communist Human Capital: Returns to Education and Experience in Post-Communist Czech Republic and Slovakia, Industrial and Labor Relations Review, 51(3), April 1998, 401-423.*Brainerd Elizabeth, Winners and Losers in Russia's Economic Transition, American Economic Review, 88(5)December 1998, 1094-1116.

Labor Mobility*Sorm, Vit and Katherine Terrell, Sectoral Restructuring and Labor Mobility: A Comparative Look at the CzechRepublic, Journal of Comparative Economics, 28(3) 431-455, Sept. 2000. *Sabirianova, Klara, The Great Human Capital Reallocation: An Empirical Analysis of Occupational Mobility inTransitional Russia, The William Davidson Institute Working Paper No. 309, 2000.*Münich, Daniel, Jan Svejnar and Katherine Terrell, Worker Mobility and Wage Gains during the Transition,Mimeo, The William Davidson Institute, December 2000.*Jurajda, Stepan and Katherine Terrell, Job Creation and Job Destruction during the Transition, Mimeo,Davidson Institute, 2000.

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*Bilsen, Valentijn and Jozef Konings, Job Creation, Job Destruction and Growth of Newly Established, Privatizedand State-Owned Enterprises in Transition Economies: Survey Evidence from Bulgaria, Hungary and Romania,Journal of Comparative Economics, 26(3), September 1998, 429-445.

Income Distribution and Welfare*Garner, Thesia and Katherine Terrell, Changes in Distribution and Welfare in Transition Economies: Market vs.Policy in the Czech Republic and Slovakia, Economics of Transition, 6(1), 1998.*Commander, Simon, Andrei Tolstopiatenko and Ruslan Yemtsov, Channels of Redistribution: Inequality andPoverty in the Russian Transition, Economics of Transition, 7(1), 1998.Lokshin, Michael and Martin Ravallion, Welfare impacts of the 1998 financial crisis in Russia and the response ofthe public safety net, Economics of Transition, 8(2), 269-295, 2000

Unemployment*Münich, Daniel, Jan Svejnar and Katherine Terrell, Worker-Firm Matching in the Transition: (Why) Were theCzechs More Successful than Others? The William Davidson Institute Working Paper No. 107, Revised,December 2000.*Ham, John C., Jan Svejnar and Katherine Terrell, Unemployment and the Social Safety Net During Transitionsto a Market Economy: Evidence from the Czech and Slovak Republics, American Economic Review, 88(5)December 1998, 1117-1142.*Ham, John C., Jan Svejnar and Katherine Terrell, Factors Affecting Women's Unemployment During theTransition in the Czech and Slovak Republics, Economics of Transition, 7(1) 1999, 47-78.Foley, Mark, Determinants of Unemployment Duration in Russia, The William Davidson Institute Working PaperNo. 81, Aug. 1997.*Boeri, Tito and Christopher Flinn, Returns to Mobility in the Transition to a Market Economy, The WilliamDavidson Institute Working Paper No. 108, Nov. 1997.*Lehmann, Hartmut, Jonathan Wadsworth and Alessandro Acquisti, Grime and Punishment: Job Insecurity andWage Arrears in the Russian Federation, Journal of Comparative Economics, 27(4) 595-617, Dec. 1999.

3.4. Reforming International Trade*Repkin, Alexandre and Patrick P. Walsh, Evidence of European Trade and Investment U-Shaping IndustrialOutput in Bulgaria, Hungary, Poland, and Romania, Journal of Comparative Economics, 27(4), 730-52, Dec.1999.*Yener Kandogan, University of Michigan, PhD. Thesis 2001*Hillman, A.: The Transition from the CMEA System of International Trade , in Keren, M. and G. Ofer eds.: Trialsof Transition, Westview Press, 1992.Murphy, Kevin M. and Shleifer, Andrei: Quality and Trade , Journal of Development Economics; 53(1), June1997, pages 1-15.*Leamer, Edward A.: :Access to Western markets, and eastern effort levels, Chapter 3 in �, pp. 503-526.Williamson, Jeffery: The Economic Opening of the Eastern Europe , pp.15 ---54, Institute for InternationalEconomics, Washington, DC, 1991.Li, David and Qi Chen: Why Aren't Foreign Direct Investments Always Welcome? mimeo, University of Michigan,2000.Feenstra, Robert: Foreign Direct Investment: Myths and Facts , mimeo University of California at Davis, WorkingPaper, 1998.Staiger, R.: A Theory of Gradual Trade Liberalization , mimeo, University of Wisconsin, 1993.

3.5. Reforming Public Finance and the Government*Qian, Y., G. Roland and C. Xu, Coordinating Changes in M-Form and U-Form Organizations, Mimeo, ECARE,Brussels, 1998.*Gordon, Roger and David Li: Taxes and Government Incentives: Eastern Europe versus China, CEPR WorkingPaper, 1997.*Gordon, Roger, Chong-en Bai, and David D. Li: Efficiency Losses from Tax Distortions vs. Government Control.European Economic Review, 43(4-6), 1999, pp. 1095-1103.McKinnon, R.: Taxation, Credit, and Money in a Liberalizing Socialist Economy , in Clague, C. and G. Rausser(eds): The Emergence of Market Economies in Eastern Europe, Blackwell, 1992.Che, Jiahua and Yingyi Qian: Insecure Property Rights and Government Ownership of Firms. Quarterly Journalof Economics. May 1998, 467-96.*Qian, Yingyi and Barry Weingast. Federalism as a Commitment to Reserving Market Incentives. Journal ofEconomic Perspectives. Fall 1997, pages 83-92.Qian, Yingyi and Gerard Roland, Federalism and the Soft Budget Constraint, American Economic Review, 88(5)December 1998, 1143- 1162.

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Frye, Timothy and Andrei Shleifer. The Invisible Hand and the Grabbing Hand. American Economic Review. May1997, pages 354-58.Li, David. Changing Incentives of the Chinese Bureaucracy. American Economic Review. May 1998.*Basu, Susanto and David D. Li, Corruption in Transition, The William Davidson Institute Working Paper No.161, May 1998.Li, David D., A Theory of Ambiguous Property Rights in Transition Economies: The Case of the Chinese Non-State Sector, Journal of Comparative Economics, 23(1), Aug. 1996, 1-19.Shleifer, A.: Government in Transition, mimeo, 1996.*Li, David D.: Costs and Benefits of Government Control during Transition: Evidence from China's StateEnterprises , mimeo, 1996.Berkowitz, Daniel and Wei Li, Tax Rights in Transition Economies: A Tragedy of the Commons, The WilliamDavidson Institute Working Paper No. 45a, Sept. 1997, forthcoming in Journal of Public Economics.*Shleifer, A. and R. Vishny: Corruption , Quarterly Journal of Economics, 1993.

3.6 Speed and Methods of Reform*Roland, Gerard: Speed and Methods of Price Liberalization, Transition and Economics, MIT Press, 2000,Chapter 6, pp. 131-152.*Katz, Barbara and Joel Owen, Choosing between Big-Bang and Gradualist Reform: An Option Price Approach,Journal of Comparative Economics, 28(1), 95-107, March 2000.*Dewatripont, M. and G. Roland: Economic Reform and Dynamic Political Constraints, Review of EconomicStudies, 59 (4), 703-730, 1992.Wei, Shang-jin. Gradualism versus Big Bang: Speed and Sustainability of Reforms. Canadian Journal ofEconomics; 30(4), November 1997, pages 1234-47.Murrell, P. and Y. Wang: When Privatization Should be Delayed: The Effect of Communist Legacies onOrganizational and Institutional Reforms, Journal of Comparative Economics, v. 17, 1993.*Murphy, K., Shleifer, A., and R. Vishny: Pitfalls of Piecemeal Reform, Quarterly Journal of Economics, 1993.*Lau, Lawrence, Yingyi Qian, and Gerard Roland. Reform without Losers: An Interpretation of China's EconomicReform. Journal of Political Economy, 108(1), pp. 120-163, 2000.Alesina, A. and A. Drazen: Why Are Stabilization Delayed? The American Economic Review, 81 (5), 1171--88,1991.*Dewatripont, M. and G. Roland: The Virtues of Gradualism and the Legitimacy in the Transition to a MarketEconomy, The Economic Journal, 102, pp.291-300, 1992.Useful Books for both sequences:Salvatore Zecchini, 1997, Lessons from the Economic Transition: Central and Eastern Europe in the1990s.OECD-Kluwer Academic Publishers.Gerard Roland, Transition and Economics, MIT Press, 2000.Gregory, Paul and Robert Stuart: Comparative Economic Systems. Fourth Edition, Houghton Mifflin Company,Boston, 1992.Kornai, Janos: The Socialist System: A Political Economy Approach. Princeton University Press, 1992.Kornai, J.: The Economics of Shortage. North-Holland, 1980.Bornstein, Morris: Comparative Economic Systems: Models and Cases. 7th Ed., Irwin, Boston. 1994.Heal, Geoffrey M., The Theory of Economic Planning, Noth Holland.Olivier Blanchard, The Economics of Post-Communist Transition.Marie Lavigne, The Economics of Transition, NY, London, 1995.Daniel Gros and Alfred Steinherr, Winds of Change, NY, London, 1995Note: The reading list can be updated during the semester in order to accommodate the needs of the courseand/or to reflect recent developments in the literature on transition.

Requirements and gradingThe course will typically consist of traditional lectures and seminar/visiting speaker per week. Lectures will coverup to date papers as well as classical treatments of related topics. There is one midterm and final exam. Thestudents will be asked to prepare presentation of some of the papers covered. Grading will be based on exams,in-class and seminar presentation.

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FINANCIAL MARKETS ILecturer Lecturer Teaching Assistant

Name Jose Noguera Roland Anderson TbdOffice 307Phone 240 05 128e-mail Jose.noguera@cerge-ei.cz R.W.Anderson@lse.ac.ukOffice hours

Course informationThis course is devoted to an introduction to financial economics at the doctoral level. It assumes at basicknowledge of microeconomics at the doctoral level. The course is organized into three parts. The first coversfundamental concepts and will be taught be Ron Anderson. The second covers capital markets and is taught byJosé Noguera. The third covers corporate finance and is taught by Ron Anderson. Parts II and III will runcontemporaneously

Course outlinePart I: Foundations1. Savings, investment, and interest rates under certainty2. Arbitrage3. Choice under uncertainty4. General equilibrium with complete and effectively complete markets.Part II: Capital Markets5. Mean Variance Analysis6. Capital Asset Pricing Model7. Extensions to the CAPM8. Separation9. Allocational Theory10. Multiperiod Models11. Option PricingPart III: Corporate Finance12. Capital budgeting under uncertainty, Modigliani & Miller (October)13. Corporate finance and moral hazard:14. Corporate finance and Adverse Selection

ReadingsJ. Ingersoll The Theory of Financial Decision Making.C. F. Huang and R. L. Litzenberger, Foundations for Economic Analysis.John Cochrane (2001), �Asset Pricing,� Princeton University Press.There will be also some additional readings.

INDUSTRIAL ORGANIZATION ILecturer Co-lecturer Teaching Assistant

Name Avner Shaked Kresimir Zigic Michael KúninOffice 332a 306 42Phone 240 05 233 240 05 245 240 05 238e-mail shaked@glider.econ3.uni-bonn.de Kresimir.zigic@cerge-ei.cz Michael.kunin@cerge-ei.czOffice hours Please see

http://www.cerge.cuni.cz/consult/By appointment By appointment

Course informationIndustrial organization is about strategic interactions of firms within an industry. As such it inspired the study ofgame theory and in turn was helped by its development. Industrial organization was an unfailing source ofinteresting situations of interactions that game theory modeled and analyzed.The course will follow the books of J. Tirole, O. Shy and J. Sutton.

Course outlineThe main topics covered by the course will be:

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1.) Models of Bertrand and Cournot Competition2.) Vertical and horizontal product differentiation3.) Models of Advertising4.) Barriers to Entry and Exit5.) Market Structure: Theoretical and Empirical analysis6.) Economics of Information and Innovation

Requirements and gradingThe course will be accompanied by exercises sessions, midterm exam (35%), final exam (50%) and studentpresentations (15%).

Readingsa) Textbooks:1.) Tirole, Jean: "The Theory of Industrial Organization", MIT press, 19892.) Shy, Oz: "Industrial Organization, Theory and Applications", MIT Press, 19963.) Sutton, John: "Sunk Costs and Market Structure: Price Competition, Advertising, and the Evolution ofConcentration" Cambridge, Ma, MIT Press 1991.b) Articles:D'Aspremont C., J. J.Gabszewicz and J.-F. Thisse: "On Hotelling Stability in Competition", Econometrica, 1979.Butters, G.R.,: "Equilibrium Distribution of Sales and Advertising Prices", Review of Economic Studies, 1977.Dixit, A.: "A Model of Duopoly Suggesting a Theory of Entry Barriers", Bell Journal of Economics, 1979.Dixit, A. : "The role of Investment in Entry Deterrence", Economic Journal, 1980.Eaton, B.C. and R.G. Lipsey: "Exit Barriers and Entry Barriers, The Durability of Capital as Barrier to Entry", BellJournal of Economics, 1980.Spence, A.M."Entry, Capacity, Investment and Oligopolistic Pricing", Bell Journal of Economics, 1977.Fudneberg, D. and J. Tirole: "The Fat�Cat, The Puppy Dog Ploy, and Lean and Hungry Look", AmericanEconomic Association Papers and Proceedings, May 1984.Green, E. J and R.H.,Porter: "Non-Cooperative Collusion Under Imperfect Price Information", Econometrica,1984.Gilbert,R.J.:�Mobility Barriers and the Value of Incumbency,� In R. Schmalensee and R. Willig, eds. Handbook ofIndustrial Organization, pp. 476�531. Amsterdam: North-Holland. 1989.Grossman, M. G. and C., Shapiro: "Informative Advertising with Differentiated Products", Review of EconomicStudies, 1984.Kamien, I. M., E. Muller and Zang : "Research Joint Venture and R&D Cartels." American Economic Review 82,1992.Kreps., D. and J. Scheinkman: "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes",Bell Journal of Economics, 1983.Maggi, G.: "Strategic Trade Policies with Endogenous Mode of Competition", American Economic Review,March 1996.Salop, S.C.,: "Monopolistic Competition with Outside Goods", Bell Journal of Economics, 1979.Shaked, A. and J., Sutton: "Relaxing Price Competition through Product Differentiation," Review of EconomicStudies, 1982.Shapiro, C.: "Theories of oligopoly behaviour." In R. Schmalensee and R. Willig, eds. Handbook of IndustrialOrganization, pp. 329�410. Amsterdam: North-Holland. 1989Suzumura, K.: "Cooperative and Non-cooperative R&D in an Oligopoly with Spillovers." American EconomicReview 82: 1992Wolinsky, A : "Prices as Signals of Product Quality," Review of Economic Studies, 1983Wolinsky, A.: "True Monopolistic Competition as a Result of Imperfect Information",Quarterly Journal ofEconomics, 1986

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LABOR ECONOMICS (Topic course)Lecturer Teaching Assistant

Name Daniel Münich TbdOffice 303Phone 240 05 175e-mail Daniel.münich@cerge-ei.czOffice hours Tue and Fri 2-4pm

Course informationThis course is one-semester topic course in graduate labor economics. The course will focus on topics of staticand dynamic labor supply and human capital. The course has three major goals i) to review present theoreticaland empirical understanding of major labor market issues, ii) to provide a guidance for student's own empiricalresearch, iii) to make students familiar with the labor market research resources, standards and approaches.The course will put stress on the labor market theory, empirical evidence and will use standard and recent toolsof econometrics tools. The necessary prerequisite for the course is understanding of the principles ofmicroeconomic theory. Although the course can be taken without Econometrics I and II background, familiaritywith econometrics and statistics would be an advantage.

Course outlineLABOR SUPPLYLabor force participation, by gender, and age.The basic model of labor supply, non-linear price lines, overtime work, rationing, taxes and transfer schemes.Home production, interpersonal transfers and earnings within families, the allocation of (non)market time.Labor supply over the life-cycle: Theory and evidence.Aggregate models of labor supply - labor supply over the business cycle.Labor force participation, taxes and selection bias.Further evidence and estimation.HUMAN CAPITALBasic models, the investment in schooling, on the job training, alternative interpretations.Further evidence on the on-the-job training and tenure.Estimating returns to human capital.The fundamentals of gender wage differences, income distribution growth, specific human capital and laborturnover, migration, compensating wage differentials, the supply of effort.Schooling and education: demand, supply, and quality.LABOR DEMANDBasic theoretical and analytical frameworkLABOR MARKET EQUILIBRIUMSeminal theoretical papers

Requirements and gradingGrades will be based on student's performance in midterm exam (15%), final exam (35%), 3-5 empiricalassignments (30%), a short term-paper (10%) and one oral presentation (10%). The aim of the empiricalassignments is to get experienced with standards of empirical economic analysis and to learn basic datamanagement practices using standard statistical packages. The term paper should be a 3-5 pages longdescription of a labor related economic puzzle. The oral presentation will be devoted to a comprehensive reviewof a specific (listed) labor market issue. Issues of the paper and of the oral presentation can be interrelated.You will find all necessary information about the Labor course on the CERGE-EI web site http://home.cerge-ei.cz/münich/labor/cours.htm. Please check especially the Schedule being updated every Monday. You canretrieve information posted here in HTML format, using File/SaveAs and print it out. The Exercise session will bescheduled irregularly and will be announced no later than each Monday.

ReadingsBooks:O.Ashenfelter and R. Layard, eds. Handbook of Labor Economics Amsterdam: Elsevier Science Publishers,1986.O. Ashenfelter and K. Hallock, eds., Labor Economics, Brookfield, VT: Edward Elgar, 1995(4 vols.).Detailed reading list is available a http://home.cerge.cuni.cz/münich/labor/cours.htm. Papers are mostly availableon-line or in library as xerox copies.

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Useful references:Ehrenberg and R. Smith, Modern Labor Economics,Hamermesh and Rees, The Economics of Work and PayW. H. Greene, Econometrics Analysis.Ch. Hsiao, Analysis of Panel DataG.S.Maddala, Limited Dependent and Qualitative Variables in Econometrics

MONETARY ECONOMICS ILecturer Teaching Assistant

Name Jose Noguera TbdOffice 307Phone 240 05 107e-mail Jose.noguera@cerge-ei.czOffice hours By appointment

Course informationThis is a second year Ph.D. course in monetary economics and will cover three broad topics. First, the natureand modeling of money; second, money effects on inflation and economic activity, and third, monetary policy.

Course outlinePART I: THE NATURE AND MODELING OF MONEY1. Motivation and Some Monetary History2. Classical Approaches to the Demand for Money3. Modern Modeling of the Demand for Money4. Problems and Recent Development of the Money Demand Theory5. Money Demand and Portfolio and Financial Institutions in an Open EconomyPART II: MONEY, FLUCTUATIONS AND THE SOURCE OF RIGIDITIES1. New Keynesian Economics2. Models of Fluctuations3. Credit Market ImperfectionsPART III: MONETARY POLICY1. Time Inconsistency and Rules vs. Discretion2. The Optimum Quantity of Money3. Exchange Rate Regimes4. Monetary Integration5. Monetary Instability, Speculative Attacks and Balance of Payments Crises6. Central Bank Policy7. Contagion8. Stabilization Policy

Requirements and gradingStudents are expected to create individualized reading lists that go beyond the basic readings. Students are totake a midterm exam, make an oral presentation of a topic of their choice and write a term paper. Also, there willbe eventual homework assignments. The paper must feature either (i) an original model or an original extensionof a model of a monetary phenomenon or policy questions; or (ii) an analysis of the existing literature and dataon a monetary topic not covered in class. An A is the top possible grade for (i), and an A- is the top possiblegrade for (ii).

ReadingsDouble starred (**) are important references.

MAJOR TEXTBOOKS:(**) Walsh, Carl E. (1999). �Monetary Theory and Policy,� The MIT Press, Chapters 2 and 3(**) B. M. Friedman and F. H. Hahn (eds.) (1990). �Handbook of Monetary Economics,� Volumes 1 and 2.(**) Grossman G. and K. Rogoff (eds.), �Handbook of International Economics,� Volumes II and III., NorthHolland, 1995.(**) F. van der Ploeg, ed. �Handbook of International Macroeconomics,� Blackwell, 1994.OTHER BOOKS TO USE(**) Bordo, M. and Capie. "Monetary Regimes in Transition," Cambridge University Press, 1994.

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Bordo, M. and A.Schwartz (eds.). "A Retrospective on the Classical Gold Standard 1821-1931," University ofChicago Press and NBER, 1984.Chown John F. (1996) �A History of Money : From Ad 800� Routledge.(**) Dornbusch, R. (1980) �Open Economy Macroeconomics.�(**) Dornbusch, R. (1990). �Exchange Rates and Inflation,� MIT Press.Dornbusch, R., and S. Edwards, S (eds) �The Macroeconomics of Populism in Latin America,� University ofChicago Press, 1991Fischer, Stanley �Indexing, Inflation and Economic Policy.� Cambridge, Mass.: MIT Press.Friedman, M. (ed.) (1956), Studies in the Quantity Theory of Money. Chicago: University of Chicago PressGandolfo, G. (2001). �International Finance and Open Economy Macroeconomics,� Springer-Verlag, MayHall, R. E. (ed.) �Inflation: Causes and Effects� Chicago University Press. Chicago.(**) Kindleberger C. A. (1984) �Financial History of Western Europe,� Allen & Unwin(**) Kindleberger C. (1989). �Manias, Panics and Crashes: A History of Financial Crises� Basic BooksKrugman, P. and M. Miller. (eds.) (1992). �Exchange Rate Targets and Currency Bands� Cambridge UniversityPressKrugman, P. and M. Miller. (eds.) (1992) �Exchange Rate Targets and Currency Bands� Cambridge UniversityPressKrugman, P. (1988) �Exchange Rate Instability,� MIT PressKrugman, P. (ed.) (2000). �Currency Crises,� NBER Conference ReportLaidler (1993). The demand for money: theories, evidence, and problems. - 4th ed. New York, NY : HarperCollins College Publishers.Martin R. L. (1999) �Money and the Space Economy�, Hardcover - (February)(**) Mundell, R. �International Economics� 1960.Rivera-Batiz, F. L. and L. A. Rivera-Batiz (1994). �International Finance and Open Economy Macroeconomics,�MacMillan Pub Co., January(**) Romer, D. (2000). �Advanced Macroeconomics,� McGraw-Hill Ed.Sargent, Thomas J. (1987). �Macroeconomic Theory,� Second Edition, Academic Press Inc. San Diego,California.(**) J. Taylor and M. Woodford (eds) (2000). �Handbook of Macroeconomics,� North Holland.(**) White, L. H. (1999). �The Theory of Monetary Institutions� Blackwell Pub.Yeager, L. (1966). �International Monetary Relations,� Harper & Row.

In addition to the textbooks, there will be an important number of additional readings.Motivation and Some Monetary HistoryBlanchard O. (2000). �What Do we Know about Macroeconomics That Fisher and Wicksell Did Not?� QuarterlyJournal of Economics, vol. 115, 4, November* Dornbusch, R. �Expectations and Exchange Rate Dynamics�, Journal of Political Economy, Dec. 1976 (also inExchange Rate and Inflation, chapter 4)* Dornbusch, R. Open Economy Macroeconomics. Chapter 6.Kindleberger C. Manias, Panics and Crashes: A History of Financial Crises. Basic Books 1989.McCandless, G. T. and W. E. Weber (1995). �Some Monetary facts,� Federal Reserve Bank of MinneapolisQuarterly Review, 19, no. 3 (Summer): 2-11(**) Mundell, R. A. Monetary Theory, chapter 10.Noguera, J. (2001) �Fluctuations in Prices, Production and Employment. A Survey Article,� Cerge-EI, WorkingPaperRomer, D. (2000). �Keynesian Macroeconomics without the LM Curve,� Journal of Economic Perspective, 14 (2),Spring 2000, pp. 149-69.White, L. H. (1999). �The Theory of Monetary Institutions� Blackwell Pub.Classical Approaches to the Demand for MoneyFriedman, M. (1956). �The Quantity Theory of Money, A Restatement,� in M. Friedman (ed.), Studies in theQuantity Theory of Money. Chicago: University of Chicago PressFriedman, Milton (1968). �The Role of Monetary Policy,� American Economic Review, 58: 1-17Laidler, D. (1981). �Monetarism: an interpretation and an assessment,� Economic Journal, 91 March: 1-28Sargent, T. J. and N. Wallace (1982). �The Real Bill Doctrine vs. the Quantitative Theory: A Reconciliation,�Journal of Political Economy 90 (December): 1212-36Modern Modeling of the Demand for MoneyBaumol, William (1952). �The Transaction Demand for Cash: An Inventory Approach,� Quarterly Journal ofEconomics, 66, November, pp. 545-56

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Clower, Robert (1967). �A Reconsideration of the Microeconomic Foundations of Monetary Theory,� Journal ofPolitical Economy, 74, 353-367Feenstra, Robert (1986). �The Functional Equivalence Between Liquidity Cost and the Utility in Money,� Journalof Monetary Economics, 17, pg. 271-291Sargent, Thomas J. (1987). �Macroeconomic Theory,� Second Edition, Academic Press Inc. San Diego,California. Chapter 7Tobin, J. (1958). �Liquidity Preference as Behaviour Towards Risk,� Review of Economic Studies, 25, 65-86Uhlig, Harald (1995). �A Toolkit for Analyzing Nonlinear Dynamic Stochastic Models Easily,� Discussion Paper101, Federal Reserve Bank of Minneapolis, (June). An updated version exists athttp://cwis.kub.nl/~few5/center/STAFF/uhlig/toolkit.dir/toolkit.pdfWalsh, Carl E. (1999). �Monetary Theory and Policy,� The MIT Press, Chapters 2 and 3Problems and Recent Development of the Money Demand TheoryBarnett, W. A. (1997). �Which Road Leads To Stable Money Demand?� The Economic Journal, 107, July, 1171-1185Kiyotaki, N. and R. Wright (1989). �On Money as a Medium of Exchange,� Journal of Political Economy, vol. 9,no. 41Kiyotaki, N. and R. Wright (1993). �A Search-Theoretical Approach to Monetary Economics,� AmericanEconomic Review, 83, no. 1, (March): 63-77Laidler, D. (1997). �Notes on the Microfoundations of Monetary Economics� The Economic Journal, 107, July,1213-1223Mizen, P. (1997). �Microfoundations for a Stable Demand for Money Function� The Economic Journal, 107, July,1202-1212Noguera, J. (2001) �The Appearance of Carriers and the Origins of Money,� Cerge-EI, Working Paper No. 169Noguera, J. (2000) �Barter Economies and Centralized Merchants,� Cerge-EI, Working Paper No. 162Money Demand and Portfolio and Financial Institutions in an Open Economy(*) Dornbusch, R. �Exchange Rate Risk and the Macroeconomics of Exchange Rate Determination,� inExchange Rates and Inflation, Chapter 7.(**) Feldstein, M. and Horioka, C. �Domestic Savings and International Capital Flows�. Economic Journal, June1980, pages 314-329.Frenkel, J. and Mussa,M. �Asset Markets, Exchange Rates and the Balance of Payments� in R. Jones andP.Kenen (eds.) Handbook of International Economics, Vol.2, North-Holland 1985.Frankel, J. (1992) �Measuring International Capital Mobility: A Review.� American Economic Review. Papers andProceedings. May(**) Froot, K. and R. Thaler. �Anomalies: Foreign Exchange,� Journal of Economics Perspectives, vol 4, No. 3,Summer 1990, Pages l79-l92.Lewis, K. �Puzzles in International Finance Markets� in F. van der Ploeg, ed. Handbook of InternationalMacroeconomics, Blackwell, 1994.New Keynesian EconomicsCooper, Russell W. and Andrew John (1988). �Coordinating Coordination Failures in Keynesian Models,�Quarterly Journal of Economics 103, Aug., pp. 441-463Dotsey, M. R., R. King and A. Wolman (1999),�State Dependent Pricing and the General Equilibrium Dynamicsof Money and Prices,� Quarterly Journal of Economics, 114 (May), 655-690Erceg, C. J., D. W. Henderson, and A. T. Levin (2000). �Optimal Monetary Policy with Staggered Wage andPrice Contracts,� Journal of Monetary Economics, Volume 46, Issue 2, 01, OctoberGordon, Robert J. (1990). �What is New Keynesian Economics?� Journal of Economic Literature. Vol. XXVIII,September, pp. 1115-1171Gottfries, Nils (1992). �Insiders, Outsiders and Nominal Wage Contracts,� Journal of Political Economy, 100,April, pp. 252-270Katz, Lawrence F. (1986). �Efficiency Wage Theories: A Partial Evaluation,� NBER. Macroeconomics Annual. pp.235-275Romer, D. (2000). �Advanced Macroeconomics,� McGraw-Hill Ed., Chapter 5 and 6Models of FluctuationsChristiano, L. and M. Eichenbaum (1992). �Liquidity Effects and the Monetary Transmission Mechanism,�American Economic Review, May 82 (2), 346-353Fuerst, T. (1992). �Liquidity Funds and Real Activity,� Journal of Monetary Economics, 29 (1), February, 3-24McCallum, B. T. and E. Nelson (1999). �An Optimizing IS-LM Specification for Monetary Policy and BusinessCycle Analysis,� Journal of Money Credit and Banking, Volume 31, Number 3, Part 1, August 1999

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Chari, V., P. Kehoe, and E. McGratten (2000). �Sticky Price Models of the Business Cycle: can the contractmultiplier solve the persistence problem?�, Econometrica, (November)Nelson, Ed (1998). �Sluggish Inflation and Optimizing Models of the Business Cycle,� Journal of MonetaryEconomics, 42 (2), October, 303-322(**) Dornbusch, R. Open Economy Macroeconomics, chapter 9.Lizondo, S. and P. Montiel. �Contractionary Devaluation in Developing Countries. An Analytical Survey.�International Monetary Fund Staff Papers, March 1989.Obstfeld, M. and Rogoff, K. �New Directions for Stochastic Open Economy Models,� Journal of InternationalEconomics, February 2000.Credit Market ImperfectionsAcemoglu, D. (2001). �Credit Market Imperfections and Persistent Unemployment,� European Economic Review,Volume 45, Issue 4-6, 01 MayBernanke, B. and M. Gertler (1989). �Agency Cost, Net Worth, and Business Fluctuations,� American EconomicReview, 79, no. 1 (March): 14-31Bernanke, B., M. Gertler and S. Gilchrist (1996). �Financial Accelerator in a Quantitative Business Framework,�Review of Economics and Statistics, vol. 78, no. 1 (February):1-15Bernhardt, D. (2000). �Credit Rationing?� American Economic Review, Vol. 90, No. 1, March, pp. 235-239Blanchard, O. and N. Kiyotaki (1987). �Monopolistic Competition and the Effects of Aggregate Demand,�American Economic Review, 77: 647-666Jaffee, D. and J. Stiglitz (1990). �Credit Rationing,� in the Handbook of Monetary Economics, vol. 2, B. M.Friedman and F. H. Hahn (eds.), Chapter 16Kiyotaki, N. and J. Moore (1997). �Credit Cycles,� Journal of Political Economy, 105 (2), (April): 211-248Walsh (1999). Chapter 7Time Inconsistency and Rules vs. DiscretionFischer, S. (1990). �Rules versus Discretion in Monetary Policy,� in the Handbook of Monetary Economics, vol.2, B. M. Friedman and F. H. Hahn (eds.), Chapter 21Rogoff, K. (1985). �The Optimal Commitment to an Intermediate Monetary Target,� Quarterly Journal ofEconomics, 100, 1056-1070Romer, D. (2000). �Advanced Macroeconomics,� McGraw-Hill Ed., Chapter 10 and 11.Walsh, C. E. (1995). �Optimal Contracts for Central Bankers,� American Economic Review, 85 (1), March: 150-167Walsh, (1999). �Monetary Theory,� Chapter 8The Optimum Quantity of MoneyClarida, R., J. Galí, and M. Gertler (2001). �Optimal Monetary Policy in Open versus Closed Economies: AnIntegrated Approach,� American Economic Review, Vol. 91, No. 2, May, 248-252Driffil, J., G.E. Mizon and A. Ulph (1990). �Costs of Inflation,� in the Handbook of Monetary Economics, vol. 2, B.M. Friedman and F. H. Hahn (eds.), Chapter 19Gillman, M. (1995). �Comparing Partial and General Equilibrium Estimates of the Welfare Costs of Inflation,�Contemporary Economic Policy, 13, no. 4 (October): 60-71Lucas, R. and N. Stokey (1983). �Optimal Fiscal and Monetary Policy in an Economy without Capital,� Journal ofMonetary Economics, 12, no. 1 (July):55-93Lucas, R. E. Jr (2000), �Inflation and Welfare,� Econometrica, Volume 68: Issue 2McCallum, B. (2000). �Theoretical Analysis Regarding a Zero Lower Bound on Nominal Interest Rates,� Journalof Money Credit and Banking, Volume 32, Number 4, Part 2, NovemberMussa, M. (2000). �Reflections on Monetary Policy of Low Inflation,� Journal of Money Credit and Banking,Volume 32, Number 4, Part 2, November, 1100Ueda, K. (2000). �Japan�s Experience with Zero Interest Rates,� Journal of Money Credit and Banking, Volume32, Number 4, Part 2, NovemberWalsh, (1999). Chapter 4Woodford, M. (1990). �The Optimum Quantity of Money,� in the Handbook of Monetary Economics, vol. 2, B. M.Friedman and F. H. Hahn (eds.), Chapter 20Exchange Rate RegimesBertola, G. �Continuos-Time Models of Exchange Rates and Intervention � In F. van der Ploeg, ed. Handbook ofInternational Macroeconomics, Blackwell, 1994.Bertola, G. and Caballero, R. �Target Zones and Realignments, American Economic Review, 1992.Borda, C. (2001). �Coping with Terms of Trade Shocks: Pegs vs Floats� American Economic Review, May 2001.(**) Calvo, G. �Devaluation: Level versus Rates� Journal of International Economics, Vol ll, No. 2, Pages 165-172, May 1981.

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Calvo, G. �Capital Markets and the Exchange Rates�, April 2000 (www.bsos.umd.edu.econ.calvo.htm)Dornbusch, R. Open Economy Macroeconomics. Chapter 7.Dornbusch, R. �Exchange Rates and Prices� American Economic Review , March 1987. Also in Exchange Ratesand Inflation, Chapter 5.Krugman,P. �Exchange Rate Instability,� MIT Press, 1988.Grilli, V. and N. Roubini (1992) �Liquidity and Exchange Rates,� Journal of International Economics 32(3-4), MayKeynes, J. M. A Tract on Monetary Reform, MacMillan, 1923, chapt. 3.(**) Krugman, P. and M. Miller. (eds.) Exchange Rate Targets and Currency Bands. Cambridge University Press,1992.Lucas, R. E. �Interest Rates and Currency Prices in a Two-Country World,� Journal of Monetary Economics, 10,335-59, 1982.Mundell, R. International Economics, chapts. 14 -18.Taylor M. �The Economics of Exchange Rate�. Journal of Economic Literature, Vol.XXXIII, March 1995, pp.13-47.Taylor, J. (2001). �The Rules of the Exchange Rate in Monetary Policy Rules,� American Economic Review, Vol.91, No. 2, May, 263-267Monetary IntegrationAlesina, A. and R. Barro (2001). �Dollarization � American Economic Review, MayBencivenga V. R, Huybens E, Smith B.D (2001) �Dollarization and the integration of international capital markets- A contribution to the theory of optimal currency areas,� Journal of Money Credit and Banking 33: (2) 548-589,Part 2 MayCalvo, G. A. (2001). �Capital markets and the exchange rate with special reference to the dollarization debate inLatin America,� Journal of Money Credit and Banking 33: (2) 312-334, Part 2 MayDornbusch R. (1997). �Fiscal aspects of monetary integration,� American Economic Review, 87: (2) 221-223MayDornbusch R. �Fewer Monies, Better Monies�, December 2000.Minford P. (1995). �Other Peoples Money � Cash in Advance Microfoundations for Optimal Currency Areas,�Journal of International Money and Finance 14: (3) 427-440 JuneMundell, R. �A Theory of Optimum Currency Areas�, American Economic Review 51, September 1961.Mundell R. (2000). �Currency Areas, Volatility and Intervention,� Journal of Policy Modelling 22: (3) 281-299 MayMundell R. (1997). �Currency areas, common currencies, and EMU,� American Economic Review 87: (2) 214-216 MayObstfeld, M. and K. Rogoff, �The Mirage of Fixed Exchange Rates� Journal of Economic Perspectives 9, Fall1995Olesen F (2000) �European monetary integration: 1958-2002,� Economic Journal 110: (467) F773-F775, SpecialIssue. F NovemberTavlas, G. S. �The New Theory of Optimum Currency Areas,� World Economy 16: (6) 663-685 NovemberUngerer, H and Olesen F (2000) �A Concise History of European Monetary Integration: From EPU to EMU,�Economic Journal 110: (467) F773-F775, Special Issue. F NovemberMonetary Instability, Speculative Attacks and Balance of Payments CrisesAghion, P., P. Bacchetta and A. Banerjee (2000). �A Simple Model of Monetary Policy and Currency Crises,�European Economic Review, 44(4-6), May, pp 728-38Buch, C. M. and R. P. Heinrich (1999). �Twin Crises and the Intermediary Role of Banks,� International Journalof Finance and Economics; 4(4), OctoberCalvo, G. �Capital Flows and Capital Market Crises: The Simple Economics of Sudden Stops�, in Journal ofApplied Economics, Vol. 1, No. 1, November 1998, pp. 35-54, also available at (http://www.bsos.umd.edu/econ/ciecalvo.htm)Calvo, G. A. (1995). �Varieties of Capital Market Crises,� Mimeo, University of Maryland at College Park. Also, http://www.bsos.umd.edu/econ/ciecrp3.pdfChang, R. and A. Velasco. �Liquidity Crises in Emerging Markets: Theory and Policy,� NBER WP 7272, July1999Chang, R. and A. Velasco. �Financial Fragility and the Exchange Rate Regime,� Journal of Economic Theory,Forthcoming, or NBER WP 6469Chari, V. V. and Kehow, P. �Hot Money,� NBER WP 6007.Diaz Alejandro, C. �Good-bye Financial Repression, Hello Financial Crisis� Journal of Development Economics,19, 1985.Dornbusch, R. �Collapsing Exchange Rate Regime�, Journal of Development Economics, Vol 27, No 1-2, Pgs 7l-83, October 1987.

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Dornbusch, R. �A Primer on Emerging Markets Crises� January 2001, (http://web.mit.eud/rudi/www.)(**) Garber, P. and L. Svensson �The Operation and Collapse of Fixed Exchange Rate Regimes� chapter 36,section 3, in Grossman G. and K. Rogoff (eds.) Handbook of International Economics, Vol. III., North Holland,1995.Glick, R. and Hutchinson, M. �Banking and Currency Crises: How Common are Twins?� http://www.frbsf.org/economics/conferences/990923/papers/glick_hutchison.pdfGoldfajn, I. and Valdes, �Capital Flows and the Twin Crisis: The Role of Liquidity� IMF WP 97/87.Gourinchas, P., R. Valdes and O. Landerretche (2001) �Lending Booms: Latin America and the World,�forthcoming Economia. Also: http://www.princeton.edu/~pog/academic/economia/lendla_po0903c.pdfKaminski, G. L. and C. M. Reinhart (1999). �The Twin Crises: The Causes of Banking and Balance of PaymentProblems.� American Economic Review 89(3), June, pages 473-500.Kaufman, G. G. (2000). �Banking and Currency Crises and Systemic Risk: A Taxonomy and Review� FinancialMarkets, Institutions and Instruments, 9(2), pages 69-131.Krugman, P., (2000) �Are currency crises self-fulfilling?� in Krugman, P. �Currency Crises,� NBER ConferenceReport Series. Chicago and London: University of Chicago Press(**) Krugman, P. �A Model of Balance of Payments Crises.� Journal of Money, Credit and Banking, 3, 1979 ,311-325.Krugman P. �What happened to Asia?� January 1998 (http://web.mit.edu/krugman/www) Marion, Nancy P. (1999). �Some Parallels between Currency and Banking Crises,� International Tax and PublicFinance, 6(4), November, pages 473-90.Miller, Victoria (2000). �Central Bank Reactions to Banking Crises in Fixed Exchange Rate Regimes,� Journal ofDevelopment Economics, 63(2), December, pages 451-72.Miller, Victoria (1999). �The Timing and Size of Bank-Financed Speculative Attacks,� Journal of InternationalMoney and Finance, 18(3), June, pages 459-70.Mishkin, F. S. (1996). �Understanding Financial Crises: A Developing Country Perspective,� in Annual WorldBank Conference on Development Economics, Washington DC: World Bank, pp. 29-62. Also http://papers.nber.org/papers/W5600.pdfRogoff, K. �International Institutions for Reducing Global Financial Instability,� Journal of EconomicsPerspectives, 1999, or NBER WP 7265.Velasco, A. (1987) �Financial and Balance-of-Payments Crises,� Journal of Development Economics. 27, pp.263-83.Central Bank PolicyAlvarez, F., R. E. Lucas Jr., and W. E. Weber (2001) �Interest Rates and Inflation,� American Economic Review,Vol. 91, No. 2, May, 219-225Aubhil Khan, R. King and A. L. Wolman (2000) �Optimal Monetary Policy� Federal Reserve Bank of RichmondWorking Paper 00-10, October. http://www.rich.frb.org/pubs/wpapers/pdfs/wp00-10.pdfCarlstrom C. T. and T. S. Fuerst (1995). �Interest rate Rules vs. Money Growth Rules: A Welfare Comparison ina Cash in Advance Economy,� Journal of Monetary Economics, 36 (2), November: 247-267Clarida, R., J. Gali and M. Gertler. (1999). �The Science of Monetary Policy: A New Keynesian Perspective,�Journal of Economic Literature, DecemberClarida, R., J. Gali and M. Gertler. (1997) �Monetary Policy Rules in Practice: Some International Evidence,�NBER Working Paper 6254, NovemberMcCallum, B. T. (2001). �Should Monetary Policy Respond Strongly to Output Gasp?� American EconomicReview, Vol. 91, No. 2, May, 258-262Walsh, (1999). Chapter 9-10Woodford, M. (1999) �Optimal Policy Inertia,� NBER Working Paper no. 7261, Julyhttp://dsl.nber.org/papers/w7261.pdfWoodford, M. (2000) American Economic Review 2000, Vol. 90, No. 2, May 2000, �Pitfalls of Forward-LookingMonetary Policy,� 100-104ContagionPesenti, P. and C. Tille (2000). �The Economics of Currency Crises and Contagion: An Introduction,� FederalReserve Bank of New York Economic Policy Review, 6(3), September, pages 3-16.Eichengreen B., A. Rose, C. Wyplosz. �Contagious Currency Crises�. Scandinavian Journal of Economics,December 1996 (also in http://haas.berkeley.edu/~arose/RecRes.htm and in http://emlab.berkeley.edu/facdir/eichengreen.html)Stabilization PolicyAlesina, a. and A. Drazen. �Why are Stabilizations Delayed?� American Economic Review, December 1991.

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Calvo, G. A. (1992). �Are High Interest Rates Effective for Stopping High Inflation? Some Skeptical Notes.� TheWorld Bank Economic Review. 6: 55-69Calvo, G. A. and Végh C. A. (1999). �Inflation Stabilization and BOP Crises in Developing Countries.� InHandbook of Macroeconomics J. Taylor and M. Woodford (eds). North Holland.Dornbusch, R. and Fischer, S. �Stopping Moderate Inflations.� World Bank Review, 1992Fischer, S. (1986a). �Exchange Rate versus Money Targets in Disinflation,� in Indexing, Inflation and EconomicPolicy. Cambridge, Mass.: MIT Press, 247-262.Gordon, R. J. (1982). �Why Stopping Inflation May Be Costly: Evidence from Fourteen Historical Episodes,� inInflation: Causes and Effects. R. E. Hall (ed.). Chicago University Press. Chicago.(*) Kaminsky G. and C.Reinhart, �On Crises, Contagion and Confusion.� Journal of International Economics, V.51, N. 1, June 2000 pp. 145-68Mishkin, Frederic (2000). �Inflation Targeting for Emerging Market Countries� American Economic Review, Vol.90, No. 2, MayObsteld, M. �Open Economy Macroeconomics; Developments in Theory and Policy,� NBER WP 6319, orScandinavian Journal of Economcis, December 1997(**) Vegh, C. �Stopping High Inflation: An Analytical Overview� International Monetary Fund, Staff Papers,September 1992

PUBLIC ECONOMICS (Topic course)Lecturer Teaching Assistant

Name Andrew Austin TbdOffice 327Phone 240 05 121e-mail Andrew.austin@cerge-ei.czOffice hours tba

Course outlinePublic economics seeks to understand how governments, or other collections of agents, behave and suggesthow an optimal government would behave. In an Arrow-Debreu world governments are not necessary, andcannot enhance economic efficiency. However, n the real world markets may fail to deliver economic efficiency(market failure) or provide grossly unequal rewards for citizens, opening the possibility that governments canimprove efficiency or provide a �fairer� distribution of resources. The first part of the course analyzes violations ofthe conditions of the First Welfare theorem such as externalities, public goods, non-convexities and imperfectinformation, and provides a normative basis for government action. The second part of the course concentrateson positive models of government behavior, otherwise known as political economy or public choice. Collectiveaction requires collective choice, and the course will cover basis results of group decision-making such asArrow�s Impossibility Theorem, the Gibard-Satterthwaite theorem and voting theory. Finally, the course offers abrief introduction to the theory of taxation.Starred (*) readings are required. Some of the articles will be available on the Internet via JSTOR in AdobeAcrobat format. JSTOR is a collection of scholarly journals available in electronic form. The library has oneterminal with JSTOR access. Printing with JSTOR can be slow, so be sure to plan ahead. Follow the link todownload a free copy of the Adobe Acrobat Reader.I. Introduction: Review of Fundamental Welfare Theorems*Introduction (FPE).*Basu, Kaushik (1991): "Markets, Power and Social Norms" in Economic Graffitti: Essays for Everyone. Bombay:Oxford.Kreps, ACIMT. Chapters 5.1, 5.2, 5.4, 6.3II. Theory of Market FailureA Externalities*Ch. 1, FPE.*Arrow, K. (1970): "The Organization of Economic Activity: Issues Pertinent to_ the Choice of Market VersusNon-Market Allocation" in Public Expenditure and Policy Analysis.R.H. Haveman and J. Margolis (eds.) Chicago: University of Chicago Press.Buchanan, J. and W.C. Stubblebine (1962): "Externality", Economica, 371-384.*Starrett, D. (1972): "Fundamental Non-convexities in the Theory of Externalities", Journal of Economic Theory4, 180-199.B. Public Goods

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1. Basic Theory*FPE Ch. 2, LOPE Ch. 16.*Samuelson, Paul A. (1955), "A Diagrammatic Exposition of the Theory of Public Expenditures, "Review ofEconomics and Statistics(Nov.).*Samuelson, Paul A. (1954): "The Pure Theory of Public Expenditure", Review of Economics and Statistics,_387-389.2. Lindahl Pricing*Lindahl, E. (1919): "Positive Lösung, Die Gerechtigkeit der Besteuerung", translated as "Just Taxation - APositive Solution" in Classics in the theory of_ Public Finance.R.A. Musgrave and A. T. Peacock (eds.), London: Macmillian.3. Applications and Implications of the Prisoners' Dilemma and Public Goods Theory.*AP, Chapters 9, 10.*Russell Hardin (1982):Collective Action, Baltimore: Johns Hopkins. Chapters 1 and 2.Mancur Olson, The Logic of Collective Action. Chapers 1 and 2.*GTPT, Chapter 5.4. Application of Public Goods Theory*Berry, Steven T. and Joel Waldfogel (1999): "Public Radio in the U.S.: Does it Correct Market Failure ofCannibalize Commercial Stations?," Journal of Public Economics 71, 189-211.C. Choice via Feet and Hands: Voting and Local Public Goods(i) Classics*Harold Bowen (1943): "The Interpretation of Voting in the Allocation of Economics Resources," QuarterlyJournal of Economics 58, 27-49.*Charles Tiebout (1956): "A Pure Theory of Local Expenditures," Journal of Political Economy 64, 416-424.*Bewley, Truman (1981): "A Critique of Tiebout's Theory of Local Public Expenditure," Econometrica 49, 713-740.(ii) Recent Directions*Conley, John and Hideo Konishi (2000): " Migration-Proof Tiebout Equilibrium: Existence and AsymptoticEfficiency ," working paper.*Epple, Dennis and Thomas Romer (1991): "Mobility and Redistribution,"Journal of Political Economy 99:(4),828-858.*Thomas Nechyba (2000): �Mobility, Targeting, and Private-School Vouchers, �American Economic Review90(1), 130-46.D. Nonconvexities1. Theory*FPE chapter 3.2. Rent-seeking and regulated monopolies*"The phone flushaway," The New Republic, Oct 9, 1989 v201 n15 p13+.PF Chapter 9 , pp.188-191.III. Social choice and Collective Decision MakingA. Arrow's Impossibility Theorem*FPE, Chapter 4*Inman, Robert (1985): "The 'New' Political Economy" in HOPESpear,_ Stephen Notes on Arrow's Impossibility Theorem Another proof strategy is explained here.GTPT, Chapter 2 section 1.Arrow, Kenneth (1963): Social Choice and Individual Values(second edition). New Haven: Yale University Press.AP, Chapter 4 - good non-technical discussion of assumptions used in Arrow's Theorem.B. Normative Models and Equity*Sen, Amartya (1985): "Social Choice and Justice: A Review Article" in Journal of Economic Literature 23, 1764-1776.Rawls, John (1971): A Theory of Justice. Cambridge: Harvard University Press.Baumol, William (1986): Superfairness: Application and Theory. Cambridge: MIT Press.Sudgen, Robert (1986): The economics of rights, co-operation, and welfare. Oxford: Oxford University Press.C. Spatial voting models*William Riker, Art of Political Manipulation. New Haven: Yale University Press. chapter on the Flying Club*GTPT, Chapter 6. AP, Chapter 5.Robert Inman and Dan Ingberman, "The Political Economy of Fiscal Policy".D. Mechanism Design, Agenda Setting and Information*FPE, chapter 5.

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*AP, Chapter 6.*Riker, William Art of Political Manipulation. Chapters on Pliny the Younger, How to Win a Roll Call by NotVoting, Exploiting the Powell Amendment.*Thomas Romer and Robert Rosenthal (1979), "Bureaucrats vs. Voters, "Quarterly Journal of Economics 93,563-87.GTPT, pp.266-284.E. Thinking about Markets and Politics*Wittman, Donald (1989): "Why Democracies Produce Efficient Results," Journal of Political Economy 97(6).*Sen, Amartya (1999): "On the Possibility of Social Choice,"American Economic Review 89(3), 349-78.F. Federalism*Oates, Wallace (1972): Fiscal Federalism. College Park, Maryland: University of Maryland Press.*Wildasin, David (1991): "Common Labor Market and Asylum Policy," American Economic Review 81: (4) 757-774.*Inman, Robert(1997) "Rethinking Federalism" Journal of Economic Perspectives 11(4), 43-64.Wildasin, David (1997): Fiscal Aspects of Evolving Federations: Issues for Policy and Research, in D.E.Wildasin (ed.), Fiscal Aspects of Evolving Federations. Cambridge: Cambridge University Press.VI. Rudiments of Tax TheoryA) Excess Burden*Auerbach, Alan (1985): "The Theory of Excess Burden and Optimal Taxation" in HOPE.*Hausman, Jerry (1981): "Exact Consumer's Surplus and Deadweight Loss," American Economic Review 71,662-676.*Haveman, Robert, M. Gabay and Jim Andreoni (1987): "Exact Consumer's Surplus and Deadweight Loss,"American Economic Review 77, 494-495.*Willig, Robert ((1976): Consumer's Surplus Without Apology," American Economic Review 66, 589-597.*FPE,chapter 6.B) Introduction to Optimal Taxation*LOPE, lecture 11.*Auerbach, Alan and James R. Hines Jr. (2000):" Taxation and Economic Efficiency," forthcoming in HOPEvol.3.*Stern, Nicholas (1987): "The Theory of Optimal Commodity and Income Taxation: An Introduction," in DavidNewbery and Nicholas Stern (eds.), The Theory of Taxation in Developing Countries. Oxford: Oxford UniversityPress.C) Commodity Taxes (Indirect Taxation)*LOPE, lectures 11 and 12.*Diamond, Peter A. and James Mirlees (1971):"Optimal Taxation and Public Production, I: Production Efficiencyand II: Tax Rules," American Economic Review 61, 8-27 and 261-276.*Atkinson, Anthony and Nicholas Stern (1974):"Pigou, Taxation, and Public Goods," Review of EconomicStudies 41, 119-127.D) Income Taxes (Direct Taxation)*LOPE, lectures 2 and 13.*Stiglitz, Joseph E. (1987): "Pareto Efficient and Optimal Taxation and the 'New' New Welfare Economics," inHOPE vol. 2.

Requirements and gradingCommunicating your ideas to colleagues in well-written English is a crucial skill. To persuade others that yourideas are interesting requires clarity in thought and words. Also, providing references to the work and ideas ofothers is essential. I have gathered a set of writing resources here. I will assign several homework assignmentsand there will be a midterm and final. Grades will be calculated using the following weights:Homework 15%Class Participation and Presentation 10%Midterm 35%Final 40%I expect students to attend all classes, do the readings before class and to check email regularly. I will assumethat students with several absences wish to be dropped from the course. Students are encouraged to form studygroups for homework and review. Past experience and educational research indicate that students who joinstudy groups significantly outperform students who do not. Study groups may not exceed three members.Membership of study groups must be acknowledged on homework assignments. No mobile phones, pagers orother electronic devices allowed in the classroom except for pre-approved emergency situations.

33

I expect academic integrity from all students on all assignments and examinations. Academic honesty isfundamental to scholarship. Violations of academic honesty will be treated harshly. No first warnings will begiven. If you have questions about what is acceptable, ask first.

ReadingsBooks:There will be several books used in this course, which are or will be available in the CERGE-EI Library.Abbreviations for commonly referenced books follow in parentheses.

Chief References:Jha, Raghbendra (1998), Modern Public Economics, London: Routledge.Laffont, Jean-Jacques (1989).Fundamentals of Public Economics, Boston: MIT.Myles, Gareth (1999).Public Economics, Cambridge:_ Cambridge University Press.Recommended References:Auerbach, Alan (1999): Public Finance. New York: Worth.Atkinson, Anthony and Joseph Stiglitz (1980): Lectures on Public Economics. London: McGraw-Hill. (LOPE)Handbook of Public Economics (volumes 1 and 2) (1985).A. Auerbach and M. Feldstein, (eds.). Amsterdam:_ North Holland. (HOPE)Banks, Jeff and David Austen-Smith (1998): Positive Political Theory I: Collective Preference. Ann Arbor,Michigan: Univ. of Michigan Press.Kreps, David (1990): A Course in Microeconomic Theory, Princeton: Princeton University Press. (ACIMT).Merrill, Samuel and Bernard Grofman (1999): A Unified Theory of Voting, Cambridge: Cambridge Univ.PressMueller, Dennis (1989): Public Choice II, Cambridge: Cambridge University Press. (PCII).Ordeshook, Peter (1986), Game Theory and Political Theory. Cambridge: Cambridge University Press. (GTPT).Starrett, David (1988):_ Foundations of Public Economics.Cambridge: Cambridge University Press.Classics and Other Useful Books:_Buchanan, James and Gordon Tullock (1965): The Calculus of Consent. AnnArbor, Michigan: Ann Arbor Paperbacks.Downs, Anthony (1957): An Economic Theory of Democracy. New York: Harper Row.Jerry Kelly (198?): Social Choice Theory. (rigorous mathematical coverage of social choice).Olson, Mancur (1965): The Logic of Collective Action.Cambridge, MA: Harvard.Sen, Amartya K.(1970): Collective Choice and Social Welfare.San Francisco: Holden-Day.Tufte, Edward R (1978): Political Control of the Economy.Princeton, NJ: Princeton.Wittman, Donald (1995): The Myth of Democratic Failure.Chicago: Univ. of Chicago Press. (MDF)

Undergraduate level:These books will be useful to understand basic concepts and institutions. Understanding institutional structuresand how they affect economic and political behavior is a central part of public economics.Cullis, John and Philip Jones (1992), Public Finance and Public Choice, McGraw-Hill. Slightly more theoreticalthan Holcombe, but no advanced math is used.Feldman, Allan (1980), Welfare Economics and Social Choice Theory, Boston: Kluwer Nijhoff. Careful proofsand diagrams, no calculus.Holcombe, Randall (1996) Public Finance , St. Paul: West. (PF). Standard undergraduate public finance text withgood introduction to public choice available in PDF and Word formats.McLean, Iain (1987), Public Choice: An Introduction, Oxford: Basil Blackwell. Good intro to the subject with UKexamples.Riker, William (1986), The Art of Political Manipulation, New Haven, CT: Yale University Press. (TAPM)Riker, William (1982): Liberalism against Populism, Freeman, 1982, Riker was a central figure in thedevelopment of the public choice field, known for his ability to use rational models to understand politics andhistory. These books use historical examples to illustrate public choice ideas and provide a great introduction tothe field. Very interesting reading.Rosen, Harvey (1999) Public Finance. Homewood, IL: Irwin (any edition) Another standard public finance text.Better on taxation than Holcombe, worse on public choice.Shepsle, Kenneth and Mark Boncheck (1997), Analyzing Politics: Rationality, Behavior and Institutions, NewYork: Norton. (AP) Text based on leading public choice researcher's Harvard undergraduate public choicecourse. Good discussion of key issues. Not much math at all.

34

ACADEMIC WRITING IIITeacher

Name English facultyOfficePhonee-mailOffice hours

Course informationThis will be a workshop/seminar style class tailored to the specific needs of the class members. The primary�texts� will be journal articles assigned as required reading in students� economics field courses. Summaries andcritiques of these can constitute writing assignments for the course. In the second half of the course, drafts offield course papers will be critiqued by classmates and the instructor. The instructor will coordinate deadlineswith the economics professors so that significant feedback can be provided before final drafts are due. Goodwriting models of journal articles similar in focus to those being written by class participants will serve assecondary �texts.� Students will analyze these and try to practice the successful strategies of �expert� writers(identified by the instructor in consultation with course lecturers). Additionally, the instructor will expect studentsto justify their chosen style in terms of the content of their papers. Specific contextual exercises will be selectedor designed to examine and help eliminate remaining problems with grammar, sentence structure, word choice,and textual cohesion and coherence. Toward the end of the semester a significant part of class time will bedevoted to preparing students to take the Writing Proficiency Exam.

Requirements and gradingGrades will be based on a student�s mastery of structure/organization and the mechanics of English on essaysserving as joint assignments for English/Economics classes, supplemented by writing assignments designed bythe instructor. For a midterm and final, students will write in-class essays on economics-related topics.

ReadingsSelected economics journal articles and other economics-related essays chosen as models of clear and conciseEnglish style.

ADVANCED ENGLISH COMBINED SKILLSTeacher

Name English facultyOfficePhonee-mailOffice hours

Course informationThe purpose of this class is to prepare students for the written and oral presentations they will be expected toproduce as Ph.D. candidates and as economists. The course will focus on developing and refining oral fluencyand presentation skills (including pronunciation), improving professional writing skills, expanding scholarlyeconomics vocabulary, and increasing overall proficiency in English. Students may consult with the instructor onany written work assigned in concurrent economics courses. Any in-class oral presentations required byeconomics instructors may be rehearsed in this class before the final presentation for the economics class.

Course outlineSpecific aspects of professional preparation to be addressed include the following:• Videotaped oral presentations (short informative talks, seminar and conference papers, class lectures)• Professional documents (formal letters and email, resume/c.v., creating a professional website)• Research-grant proposal writing

Requirements and grading• Oral presentations of various lengths (3-4 per student)

35

• Professional writing/design tasks• One research-grant proposal

Readings/ExercisesHandouts and other class materials will be provided by the instructor or downloaded from the Internet bystudents.

C. Third year students

ACADEMIC WRITING IVTeacher

Name English facultyOfficePhonee-mailOffice hours

Course informationIts size and the needs of the students enrolled in it will largely determine the content and the format of thiscourse. Since those enrolled in it will have already completed their required economics courses, there will be nodual-paper assignments as in Academic Writing III. However, since students will be preparing a DissertationProposal, this may serve as one of the �texts� generated and refined in the class. As such, students may receivefeedback from each other as well as from the instructor in a seminar-style format, resulting in a series of draftrevisions. Students must solicit feedback on the content of their Diss. Proposals from their proposed dissertationadvisor or other economics faculty knowledgeable about their topic. Then share this information with theinstructor and/or classmates in class and in writing conferences.Additionally, students will practice writing in-class essays on economics-related articles in order to improve thequality of such in-class critiques under time pressure. Revisions may be required to determine how muchimprovement might be achieved outside class.Residual problems with macro writing issues (organization, execution, development and how to stay on thetopic) as well as micro aspects of writing (precise word choice, academic vocabulary, and control of sentencedynamics) will be explored in class and individually in conferences.

Requirements and gradingDetermination of grades will be flexible, with progress in achieving a native-like command of written scholarlyEnglish an important determinant. As mentioned earlier, the composition of the class and a needs assessmentby the instructor will influence content, style, and assessment in the course. Students will be expected to takethe Writing Proficiency Exam at the end of the course.

Readings• Professional models of economic discourse chosen by both the instructor and former and present CERGE

students and faculty (including those which address economics writing)• Essays from a wider discourse range chosen by the instructor as models of clarity, conciseness and overall

excellence.

36

III. CERGE Faculty Members Teaching in the Fall Semester 2001

Ronald W. AndersonReceived his B.A. in Economics from Colgate University in 1969, his M.A. from University of Michigan in 1970and Ph.D. in Economics from University of Michigan in 1976. From 1976 to 1980 Assistant Professor, from 1980to 1984 Associate Professor at Columbia University (Graduate School of Business). From 1984 to 1994Professor of Economics at City University of New York (Graduate Center) and from 1994 to 1995 WassermanProfessor of Finance at the same university, Baruch College. He spent one year at Hong Kong University ofScience and Technology as a Visiting Professor of Finance (1997-1998). From 1990 to 2000 he worked as aProfesseur Ordinaire at Université Catholique de Louvain, Belgium.. Since 2000 has been ProfesseurExtraordinaire at Université Catholique de Louvain, Belgium, and Professor of Finance at London School ofEconomics and Political Science. He joined CERGE-EI as a Visiting Professor in 2001.

Austin AndrewPh.D. in Economics from University of Pennsylvania (1991), Diploma in Economics (1986) from University ofCambridge. Executive secretary for Program for Assessing and Revitalizing the Social Sciences (1989-1990),Research Associate in Institute for the Study of Political Economy (1997-2000), Assistant Professor inDepartment of Economics, University of Houston (1990-1998) and Visiting Assistant Professor in BowdoinCollege (1998-present). Member of American Economics Association, Econometrics Society and SouthernEconomic Association. Research interest: theoretical and empirical analysis of municipal government, analyticmodels of political economy and game theoretic models of local public finance. Teaching interests: publiceconomics, industrial organization, microeconomics and urban economics.

Radim BoháčekPh.D. in Economics from University of Chicago (1999), MA in Economics (1996) and MA in Social Sciences andHistory (1999) from University of Chicago. Research in general equilibrium macroeconomics, dynamicmacroeconomic theory, capital theory and models with heterogeneous agents. Lecturer on macroeconomics atUniversity of Chicago (1997-1999). Recipient of the University of Chicago Century Fellowship (1995-1999) andthe Irving B. Harris Fellowship (1992-1994).Ph.D. and M.A. from the University of Southern California, and M.Sc.and B.Sc. from the Federal University of Rio de Janeiro. Research activities: researcher at the IndustrialEconomics Institute (in Rio de Janeiro), Fulbright Scholar at The Johns Hopkins University (Baltimore), researchassistant to Richard Easterlin in the Economics Department (USC), consultant to the Government of Brazil, andvarious short-term assignments with the Office of the Director-General of The World Bank (in Washington, DC).Lecturer at the Department of Economics, California State University, Fullerton. Fellow of the InternationalSchool of Economic Research (Siena) and of the American Institute for Economic Research (Massachusetts);member of the American, European, Western, Brazilian and Latin American Economic Associations.

Byeongju JeongGraduated from the University of Texas in 1991 with a BA degree in Economics. Received an MA degree inEconomics from the University of Minnesota in 1994. Received a Ph.D. degree in Economics from the Universityof Minnesota in 1996. From 1996 to 1997 Lecturer at Penn State University. Since 1997 Researcher at EI andAssistant Professor at CERGE,Charles University, Prague.

Michal KejakMaster of Science in Technical Cybernetics, Czech Technical University, Prague, Faculty of ElectricalEngineering, Department of Control, June 1982. M.A. in Economics, Central European University, Prague,awarded by the University of the State of New York in August 1993. Ph.D. in Technical Cybernetics, CzechTechnical University in Prague, Faculty of Machine Engineering, Department of Automatic Control, October1993. Diploma, Program in Applied Economics 1993-1994, Institute for Advanced Studies, Vienna, June 1994.Researcher, Institute for Application of Computing Technique in Control, Prague, September 1982-July 1990.Researcher, Institute for Forecasting of the Academy of Sciences of the Czech Republic, Prague, August 1990-March 1993. Visiting Research Fellow, Economics Department, Institute for Advanced Studies, Vienna, May1993-July 1994. Visiting Scholar, Hoover Institute, Stanford University, September 1995-June 1996. Temporary

37

Consultant, World Bank, 1999. Since 1993 a Researcher at the Economics Institute of the Academy of Sciencesof the Czech Republic. Since 1997 an Assistant Professor at CERGE, Charles University, Prague.

Ev�en Kočenda

Graduated in 1985 from the Prague School of Economics with Ing. degree in International Trade Management.MA in Economics from the University of Toledo, Ohio in 1992. Graduate studies in Economics at the Universityof Houston, Texas with Ph.D. degree in 1996. 1996 - 1998 Deputy Director for Research at CERGE and EI.1996-1999 Assistant Professor. Since 1999 Associate Professor at CERGE, Charles University. ResearchFellow of the William Davidson Institute at the University of Michigan Business School and Research Affiliate ofCEPR, London. Economic Advisor to the Minister of Foreign Affairs of the Czech Republic, 1997. Since 1998member of the editorial board of the journal Finance a úvěr. 1998 � 1999 member of the Scientific Council of theMinistry of Transport and Communications. Since 1999 member of the Scientific Council of the EconomicsInstitute.

Lubomír Lízal

Graduated from Czech Technical University in Prague, The Faculty of Electrical Engineering in 1992. Receivedhis Master�s diploma in Systems Programming and Electronic Computers. Is currently Researcher at theEconomics Institute of the Academy of Sciences of the Czech Republic. Defended his Ph.D. thesis at CERGE,Charles University, Prague in 1998. Short-term consultant for the World Bank in 1994. Has held fellowships atthe Tinbergen Institute, Amsterdam, in 1992, at the University of Pittsburgh, 1994-1995, and at the WilliamDavidson Institute at the University of Michigan, 1996-1997. Member of the European Economic Association,CEPR, Česká ekonometrická společnost (Czech Econometrics Society) and a William Davidson InstituteResearch Fellow.

Chris MasonReceived a Higher Technical Education Certificate in Engineering Science from Mid-Gloucester TechnicalCollege, England, in 1982; B.A. (with Second Class Honours) in Philosophy/Social Administration fromLancaster University in 1990; RSA Cambridge Certificate in T.E.F.L.A. from Hilderstone College, Kent in 1991;and M.A. (TESOL) from the Institute of Education, University of London in 1994. He has taught EFL/ESP inOman, Saudi Arabia, Kenya, Hong Kong, Jakarta and Tokyo.

Laura MentzGraduated from the Catholic University of America, Washington, D.C., in 1989 with a B.A. in Philosophy (withhighest honors) and received an M.A. in Rhetoric and Linguistics from the same university in 1994. She hastaught English Composition and ESL courses since 1992 at various colleges in the D.C. area and at GeorgeMason Univ., Fairfax, Virginia, and has been an Instructor in English and ESL at Montgomery College, Rockville,Maryland, June 1997-July 2001. International Student Advisor at Montgomery College, May, 1999-July 2001;Contributing author and editor, Thinking and Writing (1998); Teacher/Consultant, Northern Virginia WritingProject.

Daniel MünichReceived a Ing. degree in 1990 in Electrical Engineering, Electric Propulsion and Control from Czech TechnicalUniversity (Ceske vysoke uceni technicke) in Prague, Faculty of Electrical Engineering. Received a Ph.D. degreein economics in 1998 from the Center for Economic Research and Graduate Education, Charles University(CERGE) in Prague. Currently an assistant professor at CERGE and since summer 1999 Director of GraduateStudies. Researcher at Economic Institute (EI). Research Fellow of the William Davidson Institute at theUniversity of Michigan Business School and Research Affiliate of CEPR, London. 1997-98 visiting scholar at theWilliam Davidson Institute at the University of Michigan. 1993-96 a researcher at EI. 1997-98 advisor to theMinister of Education, Youth and Sport and the Minister of Finance of the Czech Republic. Chief editor ofSvobodne rozhledy journal. Member of the Czech and European Economic Associations and of EuropeanAssociation of Labour Economists. Research interests in the area of empirical labor market and education.Consultant to the Worldbank, European Commission and Institute for Information inEducation (UIV).

38

José NogueraPh.D. in Economics from State university of Buffalo, M.A. in Economics from State university of Buffalo. VisitingAssistant Professor in Mathematics Department, State university of Buffalo (1998-1999), Visiting Professor inEconomics Department, Universidad Catolica Andres Bello, Venezuela (2000). Director of the Economic Studiesin Seguros Nuevo Mundo, Caracas, Venezuela (1989-1995). Research interests: macroeconomics, monetaryeconomics, applied econometrics, urban economics and economic growth.

Sarah PeckSarah Peck received a MA in Anthropology from Temple University, Philadelphia and a BA in Economics fromLafayette College, Easton, Pennsylvania. Previous teaching experience includes Fakulta Ekonomicka,Zapadoceska Univerzita in Cheb; Anglo-American College in Prague; Akiba Hebrew Academy and theNationalities Service Center in Philadelphia, Pennsylvania.

Gerald RolandGraduated with summa cum laude from the Université Libre de Bruxelles (U.L.B.), B.A. 1983, Master inEconometrics, 1984, Ph.D. in Economics, 1988; 1988-91: various courses in Economics at U.L.B; 1991-1996:associate professor at U.L.B.; since 1996, full professor at ULB. Visiting positions: In 1988-89: UniversitéCatholique de Louvain; invited professor at the University of California, Davis, March-July 1991; visiting fellow atCollegium Budapest December 1993; ENTER visiting chair at University College London (October 1996),William Davidson Institute visiting chair at University of Michigan Business School (April 1997), Oslo University(August 1997); visiting professor at SITE (January 1997), at Studienzentrum Gerzensee (August 1997); in 1998-99, fellow at the Center for Advanced Study in the Behavioral Sciences in Stanford. C.E.P.R. research fellow,since 1991, C.E.P.R. Programme Director on "Transition Economics", since 1995, William Davidson InstituteResearch Fellow since 1997. Has consulted for the World Bank, European Commission and EBRD. Member ofthe Executive and Supervisory Committee (ESC) of CERGE.

Will SengReceived a B.A. in Humanities, with a major in English and a minor in French, from Indiana University of Pa. in1970; M.A. in English Language and Literature from Ohio University, 1974. Instructor of English,1988-92 andAsst. Professor of English, 1992-95, College of San Mateo, San Mateo, Calif.; EFL Instructor/Specialist, AeonIntercultural Corp., Kyoto, Japan, 1995-96; freelance academic tutor/editor, 1996-97; Lecturer inEnglish/Academic Writing, CERGE, 1998-present.

Avner ShakedGraduated with special distinction from Hebrew University, Jerusalem, B.Sc. 1964, M.Sc. 1965, Ph.D. inEconomics, 1972. 1968 Assistant Lecturer, Maths Dept. H.U., Jerusalem. 1969-1972 Assistant Lecturer,Economics Dept. H.U., Jerusalem. 1972-1974 Research fellow, Nuffield college, Oxford. 1974-1976 Lecturer,Economics Dept. H.U., Jerusalem. 1976-1977 Lecturer, Economics Dept, Birmingham University, U.K. 1977-1983 Lecturer, Economics Dept. London School of Economics, U.K. 1983-1989 Reader In Economics, L.S.E.,U.K. 1989-present Professor of Economic Theory, Bonn University, Germany and CERGE-EI in Prague.

Richard StockReceived a M. A. in Literature and Theory, concentrating in Later American Literature and Writing Studies, fromthe University of Illinois at Urbana-Champaign in 1998, and a B. A. in the Teaching of English, with a minor inSocial Science, from the University of Illinois at Urbana-Champaign in 1996. He is a certified secondary schoolteacher in Illinois, USA, and has taught at Rolling Meadows High School in Illinois and the University of Illinois atUrbana-Champaign. In Prague he has taught at the Anglo-American College, the Czech Technical University inPrague and the U.S. Air Force Defense Language Institute.

Jan �vejnarGraduated from Cornell University with a B.S. degree in Industrial and Labor Relations in 1974. Graduatestudies at Princeton University with an M.A. degree in Economics in 1976 and a Ph.D. in Economics in 1979.Since 1996 the Executive Director of the William Davidson Institute at the University of Michigan BusinessSchool and the Everett E. Berg Professor and a Professor of Business Administration and Economics at theUniversity of Michigan. Since 1994 an economic advisor to Czech president Vaclav Havel. From August 1992 to

39

June 1999 the Director of the Economics Institute of the Academy of Sciences of the Czech Republic. Since1991 Chairman of the Executive and Supervisory Committee, CERGE-EI, Charles University, Prague.

Viatcheslav VinogradovGraduated with honors from St. Petersburg State University, Faculty of Mathematics and Mechanics, with anM.S. in Mathematics, June 1987. 1987-1991 St.Petersburg State University, Faculty of Mathematics andMechanics, Ph.D. in Mathematics, May 1991; 1994-1995 Central European University, Prague, M.A. inEconomics, June 1995, joint CEU/New York State University, M.A. in Economics; 1995-1996 Central EuropeanUniversity, Budapest, Advanced Diploma in Transition Economics, July 1996.

Kresimir ZigicGraduated from the Faculty of Economics, University of Zagreb, B.A. 1982, M.A., 1988. Financial Officer, RadeKoncar Corporation, Zagreb, 1982-1990. Visiting professor, Universite Paris Dauphine, 2000, Lecturer, WorldBank and Joint Vienna Institute Comprehensive Course, 1993-present. Lecturer, Central European University,1994. Researcher at EI, 1994 - present. Assistant Professor, CERGE, 1995 - present. Ph.D. in Economics,CERGE, 1996.

40

IV. Academic Calendar for the Year 2001 / 2002

September 2001

October2001

November2001

December2001

January2002

February2002

March2002 April 2002 May

2002June2002 July 2002 August

2002

3-7

10-1

417

-21

24-2

81-

58-

1215

-19

22-2

629

-25-

912

-16

19-2

326

-30

3-7

10-1

417

-21

24-2

831

-47-

1114

-18

21-2

528

-14-

811

-15

18-2

225

-14-

811

-15

18-2

225

-29

1-5

8-12

15-1

922

-26

29-3

6-10

13-1

720

-24

27-3

13-

710

-14

17-2

124

-28

1-5

8-12

15-1

922

-26

29-2

5-9

12-1

619

-23

26-3

0

Fall semester 2001 Christmasholidays Spring semester 2002 Summer semester 2002 Summer

holidaysFirst yearstudents

A/D � M � � F A/D M � � F � � M � F G

Fall semester 2001 Christmasholidays Spring semester 2002 Directed research Summer

holidaysSecond yearstudents

A/D � M � � F A/D M � � F � � G �

Research seminar series Christmasholidays Research seminar series Summer

holidaysThird andFourth yearstudents � � � � � � � �

Preparatory semester2002Preparatory

semesterM F

A/D Add/drop periodG General-exams weeksF Final-exams weekM Midterm-exams week (flexible)� National holidays: April 1st, May 1st, May 8th, July 5th and 6th, September 28th, October 28th, November 17th

41

V. Schedules of the Fall Semester 2001

The schedules are subject to change. Most recent versions are at http://www.cerge-ei.cz/internal/study/

A. First year students

MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY

08:30 � 10:00

Academic Writing I

Stock

#314

Microeconomics IExercises

#320

Academic Writing I

Stock

#314

Macroeconomics IExercises

#320

10:00 � 10:30 Coffee Break

10:30 � 12:00Microeconomics I.

Zigic#320

StatisticsVinogradov

#320

StatisticsVinogradov

#320

Macroeconomics IJeong/Kejak

#320

StatisticsExercises

#320

12:00 � 13:30 Lunch Break

13:30 � 15:00

Ac. Writing I or II

Seng

#11

Macroeconomics I.Jeong-Kejak

#320

Ac. Writing I or II

Seng

#314

Microeconomics IZigic#320

15:00 � 16:30

Academic Writing I

Mason

#314

Academic Writing I

Stock

#314

Academic Writing I

Mason

#314

Academic Writing I

Stock

#314

16:30 � 18:00Research Seminar

#6

Research Seminar

#6

tba � to be announced later* The Seminar course is optional for the first year students.

42

B. Second year students

MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY

08:30 � 10:00

Financial Markets I

Exercises#313

Monetary Economics

Exercises#313

Adv. Macroeconomics

Exercises#313

Econometrics III

Exercises#313

Ind. Organization

Exercises#313

10:00 � 10:30 Coffee Break

10:30 � 12:00

Mon. Economics/AW 3Noguera/Mason

#313/ #314

Econometrics IIIKočenda

#313

Industrial Organization IShaked-Zigic

#313

Mon. Economics/AW3Noguera/Mason

#313/ #314

Public EconomicsAustin#313

12:00 � 13:30 Lunch Break

13:30 � 15:00

Adv. MacroeconomicsBoháček

#313

Labor Econ. (Topic) /AW3Münich/Mentz

#313/ #314

Econometrics IIIKočenda

#313

Labor Econ. (Topic) /AW3Münich/Mentz

#313/ #314

Financial Markets IAnderson-Noguera

#313

15:00 � 16:30

Pub. Economics (Topic)/ AECS

Austin/ Peck#313/ #11

Industrial Organization IShaked-Zigic

#313

Financial Markets I/ AECSAnderson-Noguera/ Peck

#313

Adv. MacroeconomicsBoháček

#313

Transition

Exercises#313

16:30 � 18:00Research Seminar

#6

TransitionRoland- Lizal

#313

TransitionRoland- Lizal

#313

Research Seminar

#6

Public Economics(Topic)

Exercises#313

tba � to be announced later

C. Third year students

Academic Writing 4 � M 13:30-15:00, W 10:30-12:00, Mentz, #314

43

Notes:

44

Notes: