Dr J Spinnewijn, LRB. R515, Dr K Jin, STC. S566, and Dr E Ilzetzki, STC. S587

This course is optional for BSc Econometrics and Mathematical Economics, BSc Economics, BSc Economics and Economic History, BSc Economics with Economic History, BSc Government and Economics, BSc Mathematics and Economics, BSc Philosophy and Economics and BSc Social Policy and Economics.

Students should have completed Microeconomic Principles I or II (or equivalent) and Macroeconomic Principles (or equivalent) and mathematics to at least the level of Mathematical Methods.

This course consists of three lecture topics introducing recent developments in economic theory. The first part focuses on information economics and contract theory, analyzing the optimal design of contracts and the role of incentives. This part emphasizes the methods used to analyze these models and discusses applications in the different fields of economics. The second part studies theoretical determinants of the current account and international portfolio diversification. This part analyzes the causes of large global imbalances across countries and examines optimal international portfolios. The third part discusses the theory and evidence surrounding financial crises of the type the world is currently experiencing. This part analyzes the causes, consequences and cures from a macroeconomic perspective.

Lectures EC301: 10 MT and 20 LT.

Classes EC301.A: 15 Sessional.

The course is mainly based on lecture notes and journal articles. Relevant textbooks will be announced at the beginning of each term.

A three-hour written examination in the ST. The paper is divided into three parts. Each part corresponds to the material taught by one of the three instructors. Students are required to answer one question (out of two) for each part.