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NQF credits: 30

Fifth year status‚ first semester‚ two double lectures and one double tut per week

Course co–ordinator: A Professor I Woolard

Entrance requirements : ECO4007F‚ ECO4016F‚ ECO5046‚ and either ECO5020F or ECO6007F. Students who haven’t completed ECO4007F must take ECO5020F. Students who haven’t completed ECO4016F must either take ECO4016F prior to registering‚ or must also take ECO5070s concurrently with this course.

Course outline:

The main focus of the course is on recent theoretical and empirical contributions to the study of economic development‚ with a special emphasis on the development and testing of applied microeconomic theory using experimental and quasi–experimental empirical approaches. We believe this type of approach characterises much of the recent published work in the field and our goal in this course is to expose students to this new literature‚ and way of conceptualising development problems. We begin the course with a broad survey of the state–of–the–art methodological contributions as applied to development problems. This part of the course‚ lasting two sessions‚ is meant to introduce students to the idea of the experimental approach to development policy formulation‚ with a view to establishing the basic ideas behind some of the tools and techniques that will be used in many of the papers to be covered in lectures. Although we will mostly emphasise randomised–control trials (RCTs)‚ our brief methodological survey will also touch on quasi–experimental approaches and natural experiments. With this broad technical overview in place‚ students are then well equipped to look at sector–specific microeconomic studies of development interventions that employ experimental or quasi–experimental approaches. The right place to begin this interrogation is by studying the key unit of analysis that many traditional development interventions have been targeted at: the household. We begin by interrogating the assumption of dictatorial preferences and the efficiency implications deriving from this assumption. We then consider the related restriction of separability of the consumption domain from that of production‚ and then look at studies that have attempted to consider the implications of both sets of restrictions. Having established the often misleading implications for policy deriving from these assumptions about preferences‚ we then consider a variety of contexts where this assumption has been (explicitly or implicitly) relaxed. Our approach here is to look at key factor markets: labour markets (encompassing both education and health interventions)‚ land markets‚ and credit markets. We then consider the implication (embedded in most general equilibrium models) that full insurance takes place across households. Here we consider the evidence for‚ as well as against‚ Pareto–efficient allocations of risk across households before examining the types of perverse outcomes that can arise when‚ in the absence of full insurance‚ individuals adopt ex ante inefficient strategies to coping with risk. Finally we look at trade‚ and the role of institutions for economic development.

DP requirements: None.

Assessment: A substantive term paper counting 40% and 10% weekly tutorials and 50% final exam.    

Last updated : 18 Jun 2014

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