The objective of this course is an introduction to the economic and social environment where we live and to the models, theories and tools that are the core of the economic theory. We will start by looking at the historical transition dynamics, such as the shift from stagnation to permanent growth through the Industrial Revolution and technological progress as a driver for growth in capitalist economies. We will look at absolute and comparative advantages and some topics of interest today, such as inequality, long-run growth, environmental impact, and, in general, the characteristics of dynamic capitalism. We will explore how technological progress can be a main driving force for economic progress, in the long run, the role of institutions and government policies in determining the ‘winners’ and ‘losers’ from technological progress and minimizing the adverse effects on unemployment, and the implications of technological change. We will pay attention to Schumpeter's idea of creative destruction and explore the concepts of costs and profits, innovation rents, and the diminishing average product of labour, as well as Malthus’ Model. We will dive into the firm's structure and the organization by exploring the labour division and social interactions. We will thus investigate the labour market and the basic microeconomic model used for determining wages and focus on the economic relationship and complex and asymmetric interactions between economic actors, the concept of incomplete contracts and involuntary unemployment. We will also explore the adjustment process between equilibria (how the economy adjusts to a new long-run equilibrium). Last, we will explore the definition of the innovation system, specifically the invention-diffusion process, the impact of Intellectual Property Rights (IPRs), and the role of innovation rent when looking at the decision to innovate in more detail.
Course's manager(s)
Isabel Cavalli
In class
20h of lectures
PREREQUISITES
Before the start of the course, I must ...
Have a good level in English reading, writing and oral comprehension. The lectures will be delivered entirely in English.
Be curious (and willing to study). This course introduces you to the basic principles and methods of economics. It assumes no previous exposure to the field. We will learn everything together.
OBJECTIVES
By the end of this course, I should be able to...
Apply the economic principles that attempt to elucidate the complex choices that households, businesses, and societies make and the reality in which we live
Understand the impact of technological progress, innovation, and innovation system
Identify the determinants of supply and demand and demonstrate the impact of shifts in both market supply and demand curves on equilibrium price, output, and labour
Examine and interpret a nation’s economic performance indicators, such as economic growth, unemployment, and inequality
Understand strategic interactions between markets, individuals, firms, and the government and be able to use economic models to study them
Describe the functioning and organization of firms (their structure, how they make decisions based on costs and revenues, the relevance of technology and wage)
Interpret graphs, economic and historical events (at the micro- and macro-level)
Describe the advantages of market exchange and the benefits and gains of specialization
CONTENT
Unit 1 – The capitalist revolution
In unit 1, we will get an overview of the main themes and scope we will be facing during the semester. In this unit, we will get a big-picture view of stagnation and growth using the concept of the Hockey Stick. We will focus on the historical transition dynamics, such as the Industrial Revolution, as the first step of technological progress, thus encouraging a significant shift from stagnation to permanent growth starting from the 17th Century. Specifically, we will:
Observe how various economies grew over a very long time and what correlates to this growth: the rise in income inequality, the progress in production technologies and the damage to the environment
Explore the definition of dynamic capitalism as a system where private incentives, private property, cost-minimizing firms, and laissez-faire interacts
Investigate the benefits deriving from trade exchange and specialization as well as the concepts of absolute and relative advantage
Dive into crucial indicators to measure a state's economic performance and inequality
Unit 2 – Technology, population, and growth
Unit 2 introduces economic models to explain the empirical regularities (the hockey stick in living standards) shown in Unit 1. It is based on the claim that the change in living standards (the kink and the rising part of the hockey stick) is due to technological innovations. We will:
Use models to understand economic phenomena
Interprets models of technological change and how an increase in living standards has been possible due to permanent technological change
Analyze the Malthusian model
Focus on the Industrial Revolution and the big picture (why did it happen? Why did it occur first in Britain?
Explain how incentives for innovation arise through the possibility of innovation rents and how innovation can lead to growth and increasing living standards.
Unit 6 – The firm: owners, managers, and employees
n this unit, we will focus on economic relationships and interactions in the labour market and on the structure of firms. Specifically, we will understand the interaction between the typical firm and its employee as being highly strategic, based on information asymmetry and incomplete contracts. Hence, we will:
Establish what is meant by the firm (how firms operate in producing output, the interactions between managers, owners, and employees,)
Explore the functioning of real-world labour markets
Dive into cost optimization problems and employment rents
Unit 16 – Technological progress, employment, and living standards in the long run
We will focus on understanding the impact of labour-saving technological progress on real wages and employment, capital intensity, and labour productivity. In particular, we will explore:
The adjustment process between equilibria (How does long-run equilibrium change? How does an economy move from one equilibrium to the other?)
The role of institutions and other policies in determining the ‘winners’ and ‘losers’ from technological progress, the adjustment path of the economy between long-run equilibria, and the different implications for individuals’ living standards
The implications of technological change on inequality
Unit 21 – Innovation, information, and the networked economy
In this unit, we will discuss and explore the definition of the innovation system and innovation as a hallmark of progress and technological change and the major elements on which they stand: knowledge, individual creativity, public policy, economic institutions and social norms, and interactions between economic and innovative actors. Specifically, we will:
Explore how the production and use of new knowledge and innovation occur and how is protected through the Intellectual Property Rights (IPRs)
Dive into the innovation process by exploring the invention and diffusion path
Investigate how policies and institutions can help the process of innovation and adjust its effects
Approach primary elements of Game Theory to understand how two potential innovating firms interact strategically
Examine the role of universities in innovativeness and efficiency
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Français
English
