Master 2 Syllabi 2011 2012

Ecole dconomie de Toulouse TSE

Universit Toulouse 1 Capitole, Manufacture des Tabacs 31042 Toulouse cedex France Tl : +33 (0)5 61 63 36 90 - Fax : +33(0)5 61 63 35 86, www.ecole.tse-fr.eu Contact : ecoletse@ut-capitole.fr

Microeconomics I
2011-2012

This 36-hour class is an introduction to the fundamental concepts in Microeconomics: consumers, producers, general equilibrium, optimum, externalities and public goods. The underlying motivation is ambitious (to say the least): we want to understand what makes the world go round, and how it could be made a better place. That ambition may be shared by other social sciences. The specificity of Microeconomics is to rigorously derive general recommendations from a set of carefully chosen assumptions. Do not underestimate the power of these recommendations (quotation from Keynes, The General Theory, 1935): "The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. In the same line, Robert L. Heilbronner wrote (in The Worldly Philosophers, 1953): This is a book about a handful of men with a curious claim to fame. By all the rules of schoolboy history books, they were nonentities: they commanded no armies, sent no men to their deaths, ruled no empires, took little part in history-making decisions. [] Yet what they did was more decisive for history than many acts of statesmen who basked in brighter glory, often more profoundly disturbing than the shuttling of armies back and forth across frontiers, more powerful for good and bad than the edicts of kings and legislatures. It was this: they shaped and swayed men's minds. And because he who enlists a man's mind wields a power even greater than the sword or the scepter, these men shaped and swayed the world. [] they left in their train shattered empires and exploded continents; they buttressed and undermined political regimes; they set class against class and even nation against nation -- not because they plotted mischief, but because of the extraordinary power of their ideas. Who were these men? We know them as the Great Economists.

Now you are enthusiastic. You want to learn the microeconomic tools, so as to be able to understand and criticize economists ideas. Welcome.

Textbooks As often, the emphasis on rigor translates into the use of mathematics. This class reference book (hereafter MWG) Mas-Colell, A., M. Whinston and J. Green, Microeconomic Theory , Oxford University Press, 1995 is a bit frightening, but you really have to read the recommended parts very carefully. Additional useful (and less formal) references are Varian, H., Microeconomic Analysis Norton, 1992 Kreps, David M., A course in Microeconomics Theory, Prentice Hall, 1990.

Course Outline (with references in MWG): The class is divided into three parts, each part should represent roughly 8 sessions of 90 minutes. The first part of the class focuses on pure-exchange economies:

1) An analysis of decision-making (Chapter 1; Chapter 2, sections B and C; chapter 3, sections B and C). 2) Prices, revenue, and consumer demand (Chapter 2, sections D, E, F; chapter 3, section D) 3) The Welfare Theorems in an exchange economy 4) Welfare evaluation of economic changes (Chapter 3; read also chapter 4)

Then we introduce production, and general versions of the Welfare Theorems: 5) Production and the firm (Chapter 5) 6) Partial equilibrium (Chapter 10) 7) General equilibrium (Chapter 15, 16) and the Welfare Theorems

Finally we discuss extensions to the general equilibrium model, and limits to the Welfare Theorems: 8) Time and Uncertainty (Chapter 6 and parts of Chapters 17, 19, 20). 9) Market Failures: Externalities and Public Goods (Chapter 11)

Details: You are strongly advised to read the relevant material in the textbook before attending the lecture. The lectures are completed by a series of tutorials. Attendance is strongly recommended. The tutorials are effective only if you study the material and attempt to solve the exercises before attending the session. There will be a written exam during the week following the end of the class. The exams from previous years are available on CAELUS: ldap.univ-tlse1.fr/index_casier.html The material for this exam includes the lectures and the textbook sections mentioned above. Note that this textbook material (in particular the proofs) is included, even if it has not been presented in class. Franois Salani, TSE (INRA, LERNA, IDEI).salanie@toulouse.inra.fr. Building S, office MS117. Schedule: Monday 09:30-11:00, room MB II Tuesday 15.30-17:00, room MB II Tutorials by Luc Bridet l.bridet@gmail.com and Carlos Caon cicenator@gmail.com.

MICROECONOMICS IIA
Patrick REY OUTLINE AND READING LIST

Textbooks:
Bolton, P. and M. Dewatripont (2005), Contract Theory, MIT Press. Fudenberg, D., and J. Tirole (1991), Game Theory, MIT Press, Cambridge. Gibbons, R. (1992), A Primer in Game Theory, Harvester Wheatsheaf, N.Y. Laffont, J.J. (1988), Fundamentals of Public Economics, MIT Press, Cambridge. Laffont, J.J. (1986), Economie de lIncertain et de lInformation, Economica, Paris. (English version: The Economics of Unvertainty and Information, MIT Press, Cambrigde). Laffont, J.J. and D. Martimort (2002), The Theory of Incentives: The Principal Agent Model, Princeton University Press. Mas-Colell, A., M.D. Whinston and J. Green (1995), Microeconomic Theory, Oxford University Press, New York and Oxford. Salani, B. (1994), The Economics of Contracts: A Primer, MIT Press, 1997.

Chapter 1 Introduction: Information economics

Textbook: Mas-Colell, Whinston and Green, Chap. 13. Articles: Akerlof, G. (1970), The market for Lemons: Quality uncertainty and the market mechanism , Quarterly Journal of Economics, 89:488-500. Rothschild, M. and J. E. Stiglitz (1976), Equilibrium in Competitive Insurance Markets, Quarterly Journal of Economics, 90:629-649. Hirshleifer, J. (1971), The Private and Social Value of Information and the Reward to Inventive Activity, American Economic Review, 61:561-574. Spence, M. (1973), Job Market Signalling, Quarterly Journal of Economics, 87:355374. Wilson, C. (1977), A Model of Insurance Markets with Incomplete Information, Journal of Economic Theory, 16:167-207. Wilson, C. (1980), The Nature of Equilibrium in Markets with Adverse Selection, Bell Journal of Economics, 11:108-130.

I. Arrow-Debreu economics 1. Framework 2. Pareto efficiency 3. Competitive equilibrium 4. Main Theorems 5. Market failures

II. Asymmetric information and market failures 1. Lemons problems 2. Screening 3. Market disequilibrium III. Roadmap

Chapter 2 Implementation
Textbooks: Laffont and Martimort, Chap. 1. Laffont 1988, Chap. 5. Fudenberg and Tirole, Chap. 7. Mas-Colell, Whinston and Green, Chap. 23.

I. Introduction
Dasgupta, P., P. Hammond and E. Maskin (1979), The Implementation of Social Choice Rules: Some General Results on Incentive Compatibility, Review of Economic Studies, 46: 185-216. Green, J., and J.J. Laffont (1979), Incentives in Public Decision Making, North Holland, Amsterdam. Laffont, J.J., and E. Maskin (1982), The Theory of Incentives: An Overview, in W. Hildenbrand (ed.), Advances in Economic Theory, Cambridge University Press. Myerson, R.B. (1979), Incentive Compatibility and the Bargaining Problem, Econometrica, 47: 61-74.

1. Problem 2. Framework 3. Revelation principle

II. Implementation in dominant strategies

Gibbard, A. (1973), Manipulation of Voting Schemes: A General Result, Econometrica, 41: 587-601. Groves, T. (1973), Incentives in Teams, Econometrica, 41: 617-631. Laffont, J.J., and E. Maskin (1980), A Differential Approach to Dominant Strategy Mechanisms, Econometrica, 48: 1507-1520. Satterthwaite, M. (1975), Strategy-Proofness and Arrows Conditions: Existence and Correspondence Theorems for Voting Procedures and Social Welfare Functions, Journal of Economic Theory, 10: 187-217.

1. Simple example 2. Negative result 3. Solutions

III. Bayesian implementation

Textbook: Fudenberg and Tirole, Chap. 8.

Articles: DAspremont, C., and L.A. Grard-Varet (1979), Incentives and Incomplete Information, Journal of Public Economics, 11: 24-45. Laffont, J.J., and E. Maskin (1979), A Differentiable Approach to Expected Utility Maximizing Mechanisms, Chap. 16 in Laffont, J.J. ed., Aggregation and Revelation of Preferences, North-Holland, Amsterdam. 4

Myerson, R., and M. Satterthwaite (1983), Efficient Mechanisms for Bilateral Trading, Journal of Economic Theory, 28: 265-281. Palfrey, T. (1992), Implementation in Bayesian Equilibria: The Multiple Equilibrium Problem in Mechanism Design, in Advances in Economic Theory, Vol. I, Laffont ed., Cambridge University Press.

1. Framework 2. Quasi-linear utilities

IV. Nash implementation

Maskin, E. (1977), Nash Equilibrium and Welfare Optimality, mimeo, paratre dans Journal of Mathematical Economics. Maskin, E. (1985), The Theory of Implementation in Nash Equilibrium: A Survey, Social Goals and Social Organization, Essays in memory of Elisha Pazner, L. Hurwicz, D. Schmeidler and H. Sonnenschein eds., Cambridge University Press. Moore, J. (1992), Implementation, Contracts, and Renegotiation in Environments with Complete Information, in Advances in Economic Theory, Vol. I, Laffont ed., Cambridge University Press.

1. Framework 2. Strong Nash implementation 3. Equilibrium refinement

Chapter 3 Auctions
Textbook: Bolton and Dewatripont, Chap. 7. Articles: Laffont, J.J. (1997), Game Theory and Empirical Economics: The Case of Auction Data, European Economic Review, 41: 1-35. Klemperer, P. (2004), Auctions: Theory and Practice, Princeton University Press. McAfee, P., and J. McMillan (1987), Auctions and Bidding, Journal of Economic Literature, 25: 699-738. Milgrom, P. and R. Weber (1982), A Theory of Auctions and Competitive Bidding, Econometrica, 50: 1089-1122. Myerson, R. (1981), Optimal Auctions Design, Mathematics of Operations Research, 6: 58-73. Riley, J., and W. Samuelson (1991), Optimal Auctions, American Economic Review, 71: 381-392. Vickrey, W. (1961), Counterspeculation, Auctions, and Sealed Tenders, Journal of Finance, 16: 8-37.

I. Introduction 1. Different auctions 2. Revelation principle 3. Examples

II. Independent values 1. Framework 2. Revenue equivalence theorem 3. Bidding strategies 4. Optimal auction 5. Risk aversion 6. Asymmetry

III. Common value 1. The Winners curse 2. Correlation

Chapter 4 Adverse selection

Textbooks: Laffont 1991, Chapter 10. Laffont and Martimort Chapters 2-3. Bolton and Dewatripont, Chapter 2. Mas-Colell, Whinston and Green, Chapters 13-14.

General References:
Baron, D. (1989), Design of Regulatory Mechanisms and Institutions, Chapter 24, Handbook of Industrial Organization, R. Schmalensee and R. Willig eds, North Holland. Caillaud, B., R. Guesnerie, P. Rey, and J. Tirole (1988), Government Intervention in Production and Incentives Theory: A Review of Recent Contributions, Rand Journal of Economics, Spring 19: 1-26. Hart, O. and B. Holmstrom (1987), The Theory of Contracts, in Advances in Economic Theory, Fifth World Congress, T. Bewley ed., Cambridge University Press. Laffont, J.J., and J; Tirole (1993), A Theory of Incentives in Procurement and Incentives, MIT Press.

Basic Articles: Baron, D., and R. Myerson (1982), Regulating a Monopolist with Unknown Costs, Econometrica, 50: 911-930. Guesnerie, G., and J.J. Laffont (1984), A Complete Solution of Principal-Agent Problems with an Application to the Control of a Self-Managed Firm, Journal of Public Economics, 25: 329-369. Maskin, E., and J. Riley (1984), Monopoly with Incomplete Information, Rand Journal of Economics, 15: 171-196. Mussa, M., and S. Rosen (1978), Monopoly and Product Quality, Journal of Economic Theory, 18: 301-317.

I. Introduction

II. Simple example 1. Price discrimination 2. Complete information 3. Incomplete information

III. A more general analysis 1. Framework 2. Implementation 3. Optimization 4. Examples

IV. Variations 1. Multiple agents 2. Noisy observation 3. Interim renegotiation 4. Countervailing incentives 5. Stochastic contracts 6. Dynamics

Chapter 5 Moral hazard

Textbooks:
Laffont 1991, Chapter 11. Laffont and Martimort, Chapters 4-5. Bolton and Dewatripont, Chapter 4. Mas-Colell, Whinston and Green, Chapter 14.

General References:
Baron, D. (1989), Design of Regulatory Mechanisms and Institutions, Chapter 24, Handbook of Industrial Organization, R. Schmalensee and R. Willig eds., North Holland. Hart, O., and B. Holmstrom (1987), The Theory of Contracts, in Advances in Economic Theory, Fifth World Congress, T. Bewley ed., Cambridge University Press. Basic Articles: Grossman, S., and O. Hart (1983), An Analysis of the Principal-Agent Problem, Econometrica, 51: 7-45. Holmstrom, B. (1979), Moral Hazard and Observability, Bell Journal of Economics, 10: 74-91. Rogerson, W. (1985), The First-Order Approach to Principal-Agent Problems Econometrica, 53: 1357-1368. Shavell, S. (1979), Risk-Sharing and Incentives in the Principal and Agent Relationship, Bell Journal of Economics, 10: 55-73. Jewitt, I. (1988), Justifying the First-Order Approach to Principal-Agent Problems, Econometrica, 56(5): 1177-1190. Sappington, D. (1983), Limited Liability Contracts between Principal and Agent, Journal of Economic Theory, 29: 1-21. Holmstrom, B., and P. Milgrom (1987), Aggregation and Linearity in the Provision of Intertemporal Incentives, Econometrica, 55: 303-328. 10

Holmstrom, B., and P. Milgrom (1991), Multi-Task Principal-Agent Analyses: Incentives Contracts, Asset Ownership and Job Design, Journal of Law, Economics and Organization, 7: 26-52.

I. Introduction 1. Efficiency versus risk-sharing 2. Efficiency versus informational rent

II. The role of statistical inference 1. The inference problem 2. Full inference 3. Limited inference 4. Valuable signals

III. Effort levels 1. A simple example 2. Risk-sharing, incentives and participation constraint 3. Multi-tasks

11

IV. Applications 1. Partial insurance 2. Efficiency wage 3. Credit rationing 4. Group lending 5. Moral hazard in teams 6. Career concerns 7. Commitment

12

cole dconomie de Toulouse - TSE

MACROECONOMICS 1 G. Saint-Paul
The purpose of this course is two-fold : first, introduce to the students to a number of tools in dynamic optimization, equilibrium derivation, and welfare analysis. Second, present the main theories of macroeconomics in the long run, i.e. the theory of economic growth and unemployment.

Prerequisites : Kuhn-Tucker optimization theory ; standard calculus and linear algebra ; standard micro price theory.

Some textbooks :

Blanchard and Fischer, Lectures on macroeconomics, MIT Press Romer, Advanced Macroeconomics, McGraw Hill Pissarides, Equilibrium Unemployment Theory Aghion and Howitt, The Economics of Growth, MIT Press Acemoglu, Introduction to modern economic growth Layard-Nickell-Jackman, Unemployment, Oxford

1. The Ramsey growth model

Tool : optimal control

Readings :

Blanchard/Fischer, chapter 2 Acemoglu, chapter 7 Acemoglu, chapter 8 Ramsey (1928), A mathematical theory of saving , Economic Journal

2. Innovation and endogenous growth

Tool : the Dixit-Stiglitz aggregative model

Readings :

Acemoglu, chapters 12 and 13 Dixit-Stiglitz, Monopolistic Competition and Optimum Product Diversity The American Economic Review, Vol. 67, No. 3 (Jun., 1977), pp. 297-308 Romer, Paul, .Endogenous Technological Change , Journal of Political Economy, Vol. 98, No. 5 (Oct., 1990), pp. S71-S102 Grossman-Helpman, Quality Ladders in the Theory of Growth Review of Economic Studies, Vol. 58, No. 1 (Jan., 1991), pp. 43-61 Aghion-Howitt, A Model of Growth Through Creative Destruction Econometrica, Vol. 60, No. 2 (Mar., 1992), pp. 323-351

3. Empirical growth Tool : Log-linearization around steady state, computing a speed of convergence Readings : Acemoglu, chapter 3 Acemoglu, chapter 4

Mankiw, Romer, and Weil (1992), A contribution to the empirics of economic growth , Quarterly Journal of Economics Barro and Sala-i-Martin (1991), Convergence , Journal of Political Economy Jones (1995) Time Series Tests of Endogenous Growth Models Quarterly Journal of Economics, Vol. 110, No. 2 (May, 1995), pp. 495-525 Acemoglu, Johnson and Robinson (2001), The Colonial Origins of Comparative Development: An Empirical Investigation The American Economic Review, Vol. 91, No. 5 (Dec., 2001), pp. 1369-1401

4. Unemployment I : Insider-Outsiders and efficiency wages Tools: Dynamic programming, discrete and continuous time 2-state Markov models ; Poisson processes Asset-pricing interpretation of Bellman equations Readings : Lindbeck and Snower, Insiders versus Outsiders The Journal of Economic Perspectives, Vol. 15, No. 1 (Winter, 2001), pp. 165-188 Grout (1984), Investment and Wages in the Absence of Binding Contracts: A Nash Bargaining Approach Econometrica, Vol. 52, No. 2 (Mar., 1984), pp. 449-460 Shapiro and Stiglitz (1984) Equilibrium unemployment as a workers discipline device , American Economic Review Blanchard and Summers (1986), Hysteresis and the European Unemployment problem , NBER Macroeconomics Annual Layard and Nickell (1990), Unemployment, Oxford U. Press

5. Unemployment II : The Mortensen/Pissarides matching model

Tools : Comparing optimum and equilibrium in dynamic models with market failures Readings :

Pissarides, C. (1990) Equilibrium Unemployment Theory, 2nd edition, MIT Press, 1998

Mortensen, D. and C. Pissarides, (1994) "Job Creation and Job Destruction in the Theory of Unemployment", Review of Economic Studies; 61(3), pages 397-415. Hosios, Arthur (1990), On the Efficiency of Matching and Related Models of Search and Unemployment Review of Economic Studies, Vol. 57, No. 2 (Apr., 1990), pp. 279-298 Moen, Ragnar (1995), Competitive search equilibrium , Journal of Political Economy

6. Empirical Unemployment Readings : Nickell, Stephen. 'Labour Market Institutions and Unemployment in OECD Countries.' CESifo DICE Report 1, no. 2 (2003), pp. 13-26 Blanchard, Olivier, the medium run, Brookings Papers on Economic Activity, Vol. 1997, No. 2 (1997), pp. 89158 O. Blanchard and J. Wolfers. (2000), The Role of Shocks and Institutions in the Rise of European Unemployment: the Aggregate Evidence. Economic Journal, (462), 2000.

7. Overlapping generations

Readings : Acemoglu, Chapter 9 Allais, Maurice (1947), Economie et Intrt Blanchard, Olivier (1985), Debts, Deficits, and Finite Horizons, Journal of Political Economy, 93:223-247 Diamond, Peter (1965), National debt in a neo-classical growth model, American Economic Review, 55: 11261150 Malinvaud, Edmond (1987), The overlapping generations model in 1947, Journal of Economic Literature Samuelson, Paul (1958), An exact consumption-loan model of interest with or without the social contrivance of money, Journal of Political Economy 66: 467-482

Econometrics I Nour Meddahi (Toulouse School of Economics) Outline: Part I: Linear Model 1. Examples 2. Finite Sample Properties 3. Asymptotic Theory 4. Bootstrap 5. Serially Correlated Errors Part II: Generalized Method of Moments 1. Examples 2. GMM: Single Equation 3. GMM: Multiple Equation 4. GMM for Serially Correlated Data 5. Minimum Distance Estimator 6. Bootstrap Part III: Univariate Time Series 1. Stationary Processes 2. Estimating and Testing Time Series Models 3. Non-Stationary Time Series and Unit-Root Econometrics 4. Forecasting Time Series Data 5. Bootstrap

Part IV: Panel Data 1. Examples 2. Estimators 3. Bootstrap References: Hayashi, F., Econometrics, Princeton University Press, 2000.

cole dconomie de Toulouse - TSE

Econometrics II
Jean-Pierre Florens

This course addresses two topics : stastistical methods for econometric estimation and structural econometrics.

The different chapters of the course will be the following : I Estimation by maximization and GMM Parametric models and maximum likelihood method Bayesian analysis of parametric models Non parametric methods

II Identification Simultaneity Non observable variables

References : Econometric modeling and inference by J.P. Florens, V. Marimoutou and A. Peguin-Feisolle. Cambridge University Press 2007.

Syllabus Advanced Econometrics 2 Time Series Spring 2012 Instructor: Irene Botosaru, O ce: MF 403, Email: irene.botosaru@tse-fr.eu The course examines the models and statistical techniques used in the study of time series in nance and economics. The objective is to lay out the econometric theory of nonlinear univariate and linear multivariate time series. The focus will be mostly theoretical. The topics covered will focus on: ARCH/GARCH models, VARMA, state space models and the Kalman lter, markov switching models, and cointegration. Time permitting: continuous time nancial modeling and panel data models. Grading: The grade will be based on homework assignments that will be distributed throughout the class. They will count for 50% of the grade. A nal exam will cover the other 50%. The nal exam could be either written or oral (i.e. a presentation of several papers assigned by me that deal with a topic of your choice but related to what we have covered in class). Textbooks and Articles: Required : Hamilton, J. (1994). Time Series Analysis. Princeton University Press. A list of useful textbooks and a preliminary list of articles are included below. A set of articles to accompany the lectures will be posted online (website to be announced). Optional textbooks: Arellano, M. and B. Honore (2001). Panel Data Models: Some Recent Developments, Handbook of Econometrics, Volume 5, Chapter 55. Online. Brockwell, P.J. and R.A. Davies (1991). Time Series: Theory and Methods. 2nd ed, Springer. Cont, R. and P. Tankov (2004). Financial Modelling with Jump Processes, Chapman & Hall/CRC. Dielbold, F.X. and G.D. Rudebusch (1999). Business Cycles: Durations, Dynamics, and Forecasting. Princeton University Press. Engle, R. and W.J. Granger (1991). Long-Run Economic Relationships: Readings in Cointegration. Oxford University Press. Lutkepohl, H. (2005). New Introduction to Multiple Time Series Analysis. 1st ed, Springer. Mills, T.C. (1990). Time Series Techniques for Economists, Cambridge University Press. Tsay, R.S. (2010). Analysis of Financial Time Series. 3rd ed, Wiley. Zivot, E. and J. Wang (2006). Modelling Financial Time Series with S-Plus. Online. ARCH/GARCH and VARs: Andersen, T.G. and T. Bollerslev (1998). Answering the Skeptics: Yes, Standard Volatility Models Do Provide Accurate Forecasts. International Economic Review, 39(4) 885-905. Engle, R.F. (2001). GARCH 101: The Use of ARCH/GARCH Models in Applied Econometrics. The Journal of Economic Perspectives 15(4) 157-168. Engle, R.F. and T. Bollerslev (1986). Modeling the Persistence of Conditional Variances. Econometric Reviews 1-50. Fernandez-Villaverde, J., J.F. Rubio-Remirez, T.J. Sargent, and M.W. Watson (2007). ABCs (and Ds) of Understanding VARs. Review of Economic Studies 1021-1026. Rubio-Remirez, J.F., D.F. Waggoner, and T. Zha (2010). Structural Vector Autoregressions: Theory of Identication and Algorithms for Inference. Review of Economic Studies 77 665-696. Sims, C.A. (1980). Macroeconomics and Reality. Econometrica 48(1) 1-48. Yang, L. (2005). A Semiparametric GARCH Model for Foreign Exchange Volatility. Journal of Econometrics 130 365-384. Cointegration and Unit Roots:

Engle, R.F. and C.W.J. Granger (1987). Co-Integration and Error Correction: Representation, Estimation, and Testing. Econometrica 55 73-107. Granger, C. (1986). Developments in the Study of Cointegrated Economic Variables. Oxford Bulletin of Economics and Statistics 48 213-228. Granger, C. and P. Newbold (1974). Spurious Regressions in Econometrics. Journal of Econometrics 26 1045-1066. Granger, C. (1981). Some Properties of Time Series Data and Their Use in Econometric Model Specication. Journal of Econometrics 28 121-130. Harvey, D.I., S.J. Leybourne, and A.M.R. Taylor (2009). Unit Root Testing in Practice: Dealing with Uncertainty over the Trend and Initial Conditions. Econometric Theory 25 587-636. Hendry, D. (1986). Econometric Modelling with Cointegrated Variables: An Overview. Oxford Bulletin of Economics and Statistics 48 201-212. Phillips, P.C.B. (1987). Time Series Regression with a Unit Root. Econometrica 55 277-301. Phillips, P.C.B. and Z. Xiao (1998). A Primer on Unit Root Testing. Journal of Economic Surveys 12(5) 423-469. Stock, J. and M. Watson (1988). Variable Trends in Economic Time Series. Journal of Economic Perspectives 2 147-174. Markov Regime Switching Models: Hamilton, J.D. (2005) Regime-Switching Models. The Palgrave Dictionary of Economics.

Helmuth Cremer M2, TSE

Fall 2011 2012

Public Economics I Scope and objectives

Public economics studies the role of the government in a market economy and the implications of its actions for the citizenry. The underlying structure is one of a decentralized economy wherein economic decisions are coordinated through prices (which in turn are determined by free, but sometimes regulated, markets). Additionally, the public sector itself typically plays a signicant role in these market economies. Public economics examines why the government may have to supplement the market mechanism. It evaluates the e ciency and equity justications for an intervention and their ramications for individualsincentives and welfare. It also studies what form the interventions should take and how policies ought to be designed. The course provides and introduction to public economics. It is designed for rst year graduate students (with a good background in microeconomic theory). We shall cover a good deal of classical material (you need to know the foundations) but also some more recent developments (to see some of the contemporary research in public economics). Similarly, we shall combine methodological with more applied issues.

Textbooks
The main references are Public Economics by Gareth Myles, Cambridge University Press, 1995 and my lecture notes (slides). Additional references are given below.

Course outline
1. Foundations (Myles, Ch. 1 Varian, Ch. 17 Mas-Collel et al.) 2; 18; (a) Some facts and data (b) The role of the government in a market economy i. General equilibrium and welfare economics: denitions and review of the welfare theorems ii. Market failures and rationale for government intervention iii. Redistribution: lump-sum transfers and taxes

2. Public goods (Myles, Ch. 9; Cremer and Laont (2003), Bergstrom et al. (1986)) (a) Introduction (b) Pareto-e ciency with public goods i. Pure public good ii. Public good with costly access (c) Equilibrium/decentralization i. Lindhal equilibrium ii. Voluntary contributions (d) Excludable public good 3. Taxation and e ciency (Auerbach and Hines, Section 2) (a) Deadweight loss of taxation: denition and measurement (b) Illustrations: i. Partial equilibrium, single competitive market ii. Single household, two goods iii. Labor supply, savings, etc. 4. Commodity taxation (Myles, Ch. 4; Atkinson and Stiglitz, Ch. 12; Auerbach and Hines, Sections 3 5) (a) Introduction (b) Identical individuals (c) Heterogenous households (d) Ramsey-Boiteux prices (e) Application: access pricing in the postal sector 5. Income taxation (Myles, Ch. 5; Stiglitz (1987), Atkinson and Stiglitz, Ch. 13, Diamond (1998)) (a) Introduction: income tax schedules (tax functions), marginal and average tax rates, progressivity (b) Linear income tax (c) Non-linear income tax (d) Applications and special cases 2

6. Income vs. commodity taxation (Stiglitz (1987); Atkinson and Stiglitz Ch. 14; Cremer, Pestieau and Rochet (2001)) (a) Introduction: the direct vs. indirect tax controversy (b) The Atkinson and Stiglitz (AS) result (non-linear and linear commodity taxes) (c) Attacks on AS (d) Multi-dimensional heterogeneity and the design of tax policy: an example (e) Other instruments: social insurance, in-kind transfers, etc. 7. Externalities: the basics (Myles, Ch. 10, Laont, Ch. 1) (a) Introduction (b) Denitions and examples (c) E cient allocation and market equilibrium (d) Remedies (e) Example: Pigouvian tax in a partial equilibrium setting 8. Externalities and optimal taxation (Salani, Ch. 10) (a) Introduction: environmental taxation in second-best (b) Linear taxation: Sandmo analysis s (c) General taxation: Cremer and Gahvari i. Taxation of nal goods ii. Taxation of inputs and emissions (d) Empirical illustration: taxation of energy 9. [Under construction] Dynamic aspects of taxation (Myles, Ch. 7; Sandmo (1985), Cremer, Pestieau and Rochet (2003), Cremer and Pestieau (2004)) (a) Tax treatment of savings and wealth (b) Intergenerational transfers

Additional references
Textbooks Atkinson, A. and J. Stiglitz, Lectures on Public Economics McGraw Hill : , New York, 1980. Cornes, R and T. Sandler, The Theory of Externalities, Public Goods and Club Goods Cambridge University Press, Cambridge UK, 1996 (second , edition). Jha, R. Modern Public Economics Routledge, London, 1998. , Kaplow, L., The Theory of Taxation and Public Economics, Princeton University Press, 2008. Laont, J-J., Fundamentals of Public Economics MIT Press, Cambridge , Massachusetts, 1988. Mas-Colell, A., M. Whinston and J. Green, Microeconomic Theory Ox, ford University Press, 1995. Salani B., The Economics of Taxation MIT Press, 2003. , Varian, H, Microeconomic Theory , Norton (third edition). Surveys Auerbach, A. The Theory of Excess Burden and Optimal Taxation in , Auerbach, A. and M. Feldstein, eds., Handbook of Public Economics, Vol.1, 1985, 61 86. Auerbach, A. and J. Hines Taxation and Economic E ciency in Auer, bach, A. and M. Feldstein, eds., Handbook of Public Economics, Vol.3, 2002, 1347 1422. Boadway, R. and M. Keen, Redistribution in Atkinson, A. and F. Bour, guignon, eds., Handbook of Income Distribution, Vol.1, 2000, 677 790. Cremer, H. and P. Pestieau, Wealth transfer taxation: a survey of the theoretical literature in: Handbook on the Economics of Giving, Reci, procity and Altruism, Editors: L.-A. Gerard-Varet, S.C. Kolm and J. Mercier-Ythier, North-Holland, 2004, 1108 1134. Sandmo, A. The Eects of Taxation on Saving and Risk-Taking in A. , Auerbach and M. Feldstein, Eds., Handbook of Public Economics, Vol.1, Amsterdam : North Holland, 1985, 265 293. Sandmo, A. The theory of tax evasion: A retrospective view mimeo, 2004. , 4

Stiglitz, J.Pareto E cient and Optimal Taxation and the New New Welfare Economics in Auerbach, A. and M. Feldstein, Eds., Handbook of Public , Economics, Volume 2, Amsterdam : North Holland, 1987, 991 1041. Papers Atkinson, A. and J. Stiglitz, The Design of Tax Structure : Direct Versus Indirect Taxation Journal of Public Economics, 1976, 6, 55 , 75. Atkinson, A. Optimal Taxation and the Direct Versus Indirect Tax Controversy Canadian Journal of Economics, 1977, 590 , 606. Atkinson, A. and A. Sandmo, Welfare Implications of the Taxation of Savings, Economic Journal, 90, 1980, 529 549. Bergstrom, T., L. Blume and H. Varian, On the private provision of public goods, Journal of Public Economics, 29, 25 49. Cremer, H. and F. Gahvari, Uncertainty, optimal taxation and the direct versus indirect tax controversy, Economic Journal, 105, 1995, 1165 79. Cremer, H., F. Gahvari and JM Lozachmeur, Tagging and income taxation: theory and an application American Economic Journal: Economic Pol, icy, 2, 2010, 31 50. Cremer, H. and F. Gahvari, Second-best taxation of emissions and polluting goods, Journal of Public Economics, 80, 2001, 169 197. Cremer, H. and J.J. Laont, Public goods with costly access, Journal of Public Economics, 87, 2003, 1985 2012. Cremer, H., N. Ladoux and F. Gahvari, Externalities and optimal taxation, Journal of Public Economics, 70, 1998, 343 364. Cremer, H., N. Ladoux and F. Gahvari, Tax reform versus tax design in the presence of consumption and production externalities (with Applications to France) Journal of Environmental Economics and Management, 59, , 2010, 82 93. Cremer, H. and P. Pestieau, Redistributive taxation and social insurance, International Tax and Public Finance, 3, 1996, 281 295. Cremer, H. and P. Pestieau, Piracy prevention and the pricing of information goods Information Economics and Policy, 21, 2009, 34 , 42. Cremer, H., P. Pestieau and J.C. Rochet, Direct versus indirect taxation: the design of the tax structure revisited International Economic Re, view, 42, 2001, 781 799. 5

Cremer, H., P. Pestieau and J.C. Rochet, Capital income taxation when inherited wealth is not observable, Journal of Public Economics, 87, 2003 2475 2490. Diamond, P., Optimal income taxation: an example with a U-shaped pattern of optimal marginal tax rates, American Economic Review, 1998, 83 95. Diamond, P. and J. Mirrlees, Optimal Taxation and Public Production : I, American Economic Review, 1971, 8 27. Diamond, P. and E. Saez, The Case for a Progressive Tax: From Basic Research to Policy Recommendations forthcoming, Journal of Economic , Perspectives, 2011. Gahvari, F. Review of Ruud A. de Mooij: Environmental Taxation and the Double Dividend, Journal of Economic Literature, 40, 2002, 221 223. Goulder, L. Environmental taxation and the double dividend : A reader s guide, International Tax and Public Finance, 2, 1995, 157 183. Mirrlees, J. An Exploration in the Theory of Optimum Income Taxation, Review of Economic Studies, April 1971. Naito, H., Re-examination of uniform commodity taxes under a non-linear income tax system and its implications for production e ciency Journal , of Public Economics, 71, 165 188.

Course requirements
There will be a written examination at the end of the term. The material for the exam covers the lectures plus the required readings. The readings mentioned in the course outline and my slides are required for all students. Additional readings are optional (but strongly recommended). Course material (slides, problem sets and solutions, readings, etc.) is available on CAELUS under Universit Toulouse 1 Capitole /Helmuth Cremer.

Public Economics II Philippe De Donder (dedonder@cict.fr) and Karine Van der Straeten (karine.van-der-straeten@tse-fr.eu)

Master 2, second semester, 2011-1012

Outline: In a democracy, some institutions are in charge of aggregating the possibly diverging opinions and interests of citizens. This course presents the economic approach of collective decision, both from the normative point of view of social choice theory, and from the positive point of view of public decision models. Regarding this second approach, the main tool will be game theory, applied to political actors and institutions. The course is divided in two parts. The first part (taught by Karine Van der Straeten) studies collective decision making in an abstract framework, and compares the properties of various political regimes or electoral systems. The second part (taught by Philippe De Donder) studies the political economy of social insurance and redistribution, including income redistribution, retirement, health insurance and unemployment policies.

The following topics will be covered: First Part: Collective decision making in abstract frameworks Topic 1: Justification of the majority rule: information aggregation and the Condorcet Jury theorem Topic 2: Axiomatization of the majority rule and Arrows impossibility theorem Topic 3: Single-dimension politics, The median voter theorem. Topic 4: Multi-dimension politics, Models of political competition. Topic 5: Comparison of electoral institutions and voting rules Second Part: The political economy of social insurance and redistribution Topic 6: Income taxation Topic 7: (Early) retirement and public pensions Topic 8: Health insurance Topic 9: Unemployment policies

Teaching Method : Presentation and discussion of research papers, organized by broad topics. Each topic covers about four or five papers, and their general context. It is strongly recommended that students read at least one or two papers before each session.

Assessment Method : Students, alone or in pairs, choose a couple of research papers related to one topic (A list from which they might pick is provided by the instructors). They read the papers, make a presentation of the main questions, models, and results, and critically comment upon those articles. They are required to make a 30 minute long presentation of this work and to hand write a short (5-page) paper summarizing it.

Bibliography: Textbooks: Ordeshook, P., Game Theory and Political Theory, (Cambridge, 1986). Persson, T. and G. Tabellini, Political Economics (MIT, 2000). Articles by topic: Topic 1: Justification of the majority rule: information aggregation and the Condorcet Jury theorem David Austen-Smith and Jeffrey S. Banks (1996), "Information Aggregation, Rationality, and the Condorcet Jury Theorem", American Political Science Review. (*) Timothy J. Feddersen and Wolfgang Pesendorfer (1998), "Convicting the Innocent: The Inferiority of Unanimous Jury Verdicts under Strategic Voting", American Political Science Review. Laslier et Van der Straeten, Electoral competition, information and a strategic electorate , 2004, Economic Theory, 24, 419-446 Heidhues, Paul & Lagerlof, Johan, 2003. "Hiding information in electoral competition," Games and Economic Behavior, vol. 42(1), pages 48-74, January. Topic 2: Axiomatization of the majority rule and Arrows impossibility theorem Arrow, K. Social Choice and Individual Values, Wiley : New York 1952. (*) Geanakoplos, J., (2005), "Three Brief Proofs of Arrow's Impossibility Theorem", Economic Theory, 26(1): 211-215. May, 1952. A set of independent necessary and sufficient conditions for simple majority decisions. Econometrica 20 (1952), pp. 680684. Topic 3: Single-dimension politics, The median voter theorem (*) Black, Duncan. 1948. On the Rationale of Group Decision Making. Journal of Political Economy 22-34. Downs, A. An Economic Theory of Democracy, Harper : New York 1957.

Hotelling, H., 1929, Stability in Competition, Economic Journal. Laslier, Trannoy et Van der Straeten, Voting under ignorance of job skills of unemployed: the overtaxation bias , 2003, Journal of Public Economics, 87, 595-626 Roberts, K.W.S., 1977. Voting over income tax schedules. Journal of Public Economics 8, pp. 329340 Topic 4: Multi-dimension politics, Models of political competition (*) McKelvey, Richard. 1979. General Conditions of Global Intransitivities in Formal Voting Games. Econometrica, 47: 1085-1111. Plott, Charles R., and Michael E. Levine. 1978. A Model of Agenda Influence on Committee Decisions. American Economic Review 68:146-60. Lee, Roemer et Van der Straeten, Racism, Xenophobia and Distribution, A Study of Multiissue Politics in Advanced Democracies, 2007, Harvard University Press & Russell Sage Foundation Press Topic 5 : Comparison of electoral institutions and voting rules (*) Myerson, Roger. 1993. "Incentives to cultivate favored minorities under alternative electoral systems." American Political Science Review 87:856-869. Laslier, J.-F. et K Van der Straeten, 2008, Approval voting in the French 2002 presidential election: A live experiment , Experimental Economics, vol. 11, p. 97-105. Blais, Laslier, Sauger and Van der Straeten, Strategic, sincere and heuristic Voting under for voting rules: An experimental study, IDEI WP Topic 6: Income taxation Gans, J.S. and M. Smart, 1996, "Majority Voting with Single-Crossing Preferences", Journal of Public Economics, 59, 219-237. Romer, T., 1975, "Individual welfare, majority voting and the properties of a linear income tax", Journal of Public Economics, 7, 163-68. Roberts, K., 1977, "Voting over income tax schedules", Journal of Public Economics, 8, 32940. Meltzer, A. H. and S. F. Richard, 1981, "A Rational Theory of the Size of Government", Journal of Political Economy, 89, p. 914-27. Topic 7: (Early) retirement and public pensions Galasso, V. and P. Profeta, The Political Economy of Social Security: a Survey European Journal of Political Economy, 18(1), 2002, pp. 1-29. Browning, E. K., 1975, "Why the social insurance budget is too large in a democracy", Economic Inquiry, 13, p. 373-388. Boldrin, M. and A. Rustichini, 2000, "Political Equilibria with Social Security", Review of Economic Dynamics, vol. 3(1), pages 41-78. Galasso, V. and P. Profeta, 2002, "The political economy of social security: a survey", European Journal of Political Economy, vol. 18(1), pages 1-29. Topic 8: Health insurance Epple D. and R. Romano, 1996, "Public Provision of Private Goods", Journal of Political Economy, 104, 57-84. Gouveia, M., 1997, "Majority rule and the public provision of private good", Public Choice, 93, 221-244.

Moreno-Ternero, J. and J. Roemer, 2007, "The political economy of health care finance", available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1006807.

Topic 9: Unemployment policies Anesi, V. and Ph De Donder, A Positive Theory of Unemployment Insurance and Employment Protection. CEPR Discussion Paper 7333. Boeri, T., Conde-Ruiz, J.I., Galasso, V., 2003. The Political Economy of Flexicurity. FEDEA Working Paper 2006-15. Lee, W., Roemer, J.E., 2005. The Rise and Fall of Unionised Labour Markets: A Political Economy Approach. Economic Journal 115, 28-67. Saint-Paul, G., 1996. Exploring the Political Economy of Labor Market Institutions. Economic Policy 23, 265-315. Wright, R., 1996. The Redistributive Role of Unemployment Insurance and the Dynamics of Voting. Journal of Public Economics 31, pp. 377-399.

Advances in Behavioral Economics: Behavioral Finance Sbastien Pouget Professor of Finance, Institut dAdministration des Entreprises Member of the Toulouse School of Economics Universit Toulouse 1 Capitole Contact : Course description: Traditional finance typically considers that financial markets are efficient because populated by rational investors who maximize their expected utility from consumption. This course departs from this view by showing how inefficiencies can arise due to investors psychology and limits to arbitrage. Psychology shapes investors preferences: Anticipatory utility, othersregarding preferences and mood are important in understanding investors behavior. Psychology also affects investors perception: Overconfidence, confirmation bias and several heuristics may impair their judgment. Whether these psychological factors have an impact on financial markets ultimately depends on arbitrageurs ability to fight against mispricings. We will show that limits to arbitrage may arise due to trading costs, fundamental risk, noise trader risk... These topics will be covered through lectures and class games and will trigger discussions of issues such as predictability of the stock market and other markets, delayed arbitrage, bubbles and crashes. The evaluation for this part of the course on Advances in Behavioral Economics will be based on a presentation of an original research idea (experimental, theoretical or empirical) that will take place on Friday, March 9. Tentative outline: Introduction 1) Limits of arbitrage 2) Financial market simulation 3) Investor psychology: Beliefs 4) Investor psychology: Preferences 5) Speculative Bubbles E-mail : Web : spouget@univ-tlse1.fr http://spouget.free.fr

Bibliography:
Introduction:

Camerer C., 1997, Taxi Drivers and Beauty Contests, Engineering & Science, No. 1. Camerer C. and G. Lowenstein, 2003, Behavioral Economics: Past, Present, Future, Advances in Behavioral Economics, Camerer, Lowenstein, and Rabin Eds., Princeton University Press.

Lou D., 2010, Maximizing Short-Term Stock Prices through Advertising, http://personal.lse.ac.uk/loud. Saunders E., 1993, Stock Prices and Wall Street Weather, American Economic Review, 83, No. 5.
LimitsofArbitrageEvidence:

Froot K. and E. Dabora, 1999, How are stock prices a!ected by the location of trade?, Journal of Financial Economics, 53. Hwang B.-H., 2011, Country-specific sentiment and security prices, Forthcoming Journal of Financial Economics Lamont O. and R. Thaler, 2003, Can the Market Add and Subtract? Mispricing in Tech Stock Carve-outs, Journal of Political Economy, 111. Lamont O. and R. Thaler, 2003, Anomalies: The Law of One Price in Financial Markets, Journal of Economic Perspectives, 17. Mitchell M., T. Pulvino, and E. Stafford, 2002, Limited Arbitrage in Equity Markets, Journal of Finance, 56. Ross S., 1987, The Interrelations of Finance and Economics: Theoretical Perspectives, The American Economic Review, 77, Papers and Proceedings of the Ninety-Ninth Annual Meeting of the American Economic Association. Scruggs J., 2007, Noise trader risk: Evidence from the Siamese twins, Journal of Financial Markets, 10.
LimitsofArbitrageTheory:

Abreu D. and M. Brunnermeier, 2002, Synchronization Risk and Delayed Arbitrage, Journal of Financial Economics, 66. Abreu D. and M. Brunnermeier, 2003, Bubbles and Crashes, Econometrica, 71. Brunnermeier M. and S. Nagel, 2004, Hedge Funds and the Technology Bubble, Journal of Finance, 59. Boyer B., 2011, Style-related Comovement: Fundamentals or Labels?, Journal of Finance, 66. Chen H., G. Noronha, and V. Singal, 2004, The price response to S&P 500 index additions and deletions: evidence of asymmetry and a new explanation, Journal of Finance, 59 Cooper M., O. Dimitrov, and P.R. Rau, 2001, A Rose.com by Any Other Name, Journal of Finance, 56. Cooper M., A. Khorana, I. Osobov, A. Patel, and P.R. Rau, 2005, The Game Of The Name: Valuation Effects Of Name Changes In A Market Downturn, Journal of Corporate Finance, 11. DeLong B., A. Shleifer, L. Summers, R. Waldmann, 1990, Noise trader risk in financial markets, Journal of Political Economy, 98. Flynn S., 2005, Noise-trading, Costly Arbitrage, and Asset Prices: Evidence from US Closedend Funds, Vassar College Department of Economics Working Paper 69.

Gromb D. and D. Vayanos, 2010, Limits of Arbitrage, Annual Review of Financial Economics, 2. Lamont O. and R. Thaler, 2003, Can the Market Add and Subtract? Mispricing in Tech Stock Carve-outs, Journal of Political Economy, 111. Lee C., A. Shleifer, and R. Thaler, Investor Sentiment and the Closed-end Fund Puzzle, Journal of Finance, 46. Malkiel B., 2007, A Random Walk Down Wall Street, W.W. Norton & Company. Mitchell M., T. Pulvino, and E. Stafford, 2002, Limited Arbitrage in Equity Markets, Journal of Finance, 56. Scruggs J., 2007, Noise trader risk: Evidence from the Siamese twins, Journal of Financial Markets, 10. Shleifer A. and R. Vishny, 1997, The limits of arbitrage, Journal of Finance, 52. Weiss K., 1989, The post-offering price performances of closed-end funds, Financial Management , 18.
FinancialMarketGame:

Plott C., and S. Sunder, 1988, Rational Expectations and the Aggregation of Diverse Information in Laboratory Security Markets, Econometrica, 56.
InvestorPsychologyBeliefs:

Barber B. and T. Odean, 2000, Trading is hazardous to your wealth: The common stock investment performance of individual investors, Journal of Finance, 55. Barber B. and T. Odean, 2001, Boys will be boys: Gender, overconfidence, and common stock investment, Quarterly Journal of Economics, 116. Barber B. and T. Odean, 2008, All that Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors, Review of Financial Studies, 2008. Barberis N., A. Shleifer and R. Vishny, 1998, A Model of Investor Sentiment, Journal of Financial Economics, 49. Ben-David I., J. Graham, and C. Harvey, 2010, "Managerial Miscalibration", NBER Working Papers 16215, National Bureau of Economic Research, Inc. Biais B., D. Hilton, K. Mazurier, and S. Pouget, 2005, Judgemental overconfidence, selfmonitoring and trading performance in an experimental financial markets, Review of Economics Studies, 72. Bisiere C., S. Pouget, and S. Villeneuve, 2010, Price Confirmation with Confirmation Bias, Working Paper, http://spouget.free.fr/Confbias.pdf. Bodenhausen G., 1988, Stereotypic biases in social decision making and memory: Testing process models of stereotype use, Journal of Personality and Social Psychology, 55. Chen J., H. Hong, and J. Stein, 2002, "Breadth of ownership and stock returns, Journal of Financial Economics, 66. Choi D. and D. Lou, 2010, A Test of the Self-Serving Attribution Bias: Evidence from Mutual Funds, Working Paper, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1100786.

Daniel K., D. Hirshleifer, and A. Subrahmanyam, 1998, Investor Psychology and Security Market Under- and Overreactions, Journal of Finance, 53. Darley J. and P. Gross, 1983, A hypothesis confirming bias in labeling effects, Journal of Personality and Social Psychology, 44. Diether K., C. Malloy, and A. Scherbina, 2002, Differences of Opinion and the Cross Section of Stock Returns, Journal of Finance, 57. Ditto P., D. Pizarro, E. Epstein, J. Jacobson, T. MacDonald, 2006, Motivational myopia: Visceral influences on risk taking behavior, Journal of Behavioral Decision-Making, 19. Edwards W., 1968, Conservatism in human information processing, in B. Kleinmuntz (ed.), Formal Representation of Human Judgment, pp.17-52, New York: John Wiley. Fisher K. and M. Statman, 2002, Blowing Bubbles, Journal of Psychology and Financial Markets, 3. Gervais S. and T. Odean, 2001, Learning to be Overconfident, Review of Financial Studies, 14. Goel V., J. Shuren, L. Sheesley, and J. Grafman, 2004, Asymmetrical involvement of the frontal lobes in social reasoning, Brain, 127. Graham J. and C. Harvey, 2001, Expectations of equity risk premia, volatility and asymmetry from a corporate finance perspective, Working Paper, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=292623. Green C. and R. Jame, 2011, Company Name Fluency, Investor Recognition, and Firm Value, Working Paper, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1777256. Griffin D. and A. Tversky, 1992, The Weighing of Evidence and the Determinants of Confidence, Cognitive Psychology, 24. Griggs R. and J. Cox, 1982, The elusive thematic-materials effect in wason's selection task, British Journal of Psychology, 73. Grullon G., G. Kanatas, and J. Weston, 2004, Advertising, Breadth of Ownership, and Liquidity, Review of Financial Studies, 17. Hirshleifer D., and T. Shumway, 2003, Good Day Sunshine: Stock Returns and the Weather, Journal of Finance, 58. Ho T. and Michaely R. , 1988, Information quality and market efficiency, Journal of Financial and Quantitative Analysis, 23. Huberman G., 2001, Familiarity breeds investment, Review of Financial Studies, 14. Kahneman D., P. Slovic, and A. Tversky, 1982, Judgment Under Uncertainty: Heuristics and Biases, New York: Cambridge University Press. Kahneman D. and A. Tversky, 1973, On the psychology of prediction, Psychological Review, 80. Kaustia M. and S. Knupfer, 2008, Do Investors Overweight Personal Experience? Evidence from IPO Subscriptions, Journal of Finance, 63. Kaustia M. and S. Knupfer, 2011, Peer Performance and Stock Market Entry, Working Paper, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1359006. Klibanoff P., O. Lamont, and T. Wizman, 1998, Investor Reaction to Salient News in Closed-End Country Funds, Journal of Finance, 53.

Malmendier U., E. Moretti, and F. Peters, 2011, Winning by Losing: Evidence on Overbidding in Mergers, October 2010, Working Paper. Malmendier U. and S. Nagel, 2011, Depression Babies: Do Macroeconomic Experiences Affect Risk-Taking?, Quarterly Journal of Economics, 126. Malmendier U. and G. Tate, 2005, CEO Overconfidence and Corporate Investment, Journal of Finance, 60. Miller E., 1977, Risk, Uncertainty, and Divergence of Opinion, Journal of Finance. Moeller S., F. Schlingemann, and R. Stulz, 2005, Wealth destruction on a massive scale: A study of acquiring firm returns in the merger wave of the late 1990s, Journal of Finance, 60. Nickerson R., 1998, Confirmation Bias: A Ubiquitous Phenomenon in Many Guises, Review of General Psychology, 2. Roll R., 1986, The Hubris Hypothesis of Corporate Takeovers, Journal of Business, 59. Shiller R., 2005, Irrational Exuberance, Princeton University Press. Tversky A. and D. Kahneman, 1974, Judgment under uncertainty: Heuristics and biases, Science, 185. Vissing-Jorgensen A., 2003, Perspectives on Behavioral Finance: Does "Irrationality" Disappear with Wealth? Evidence from Expectations and Actions, NBER Macroeconomics Annual 2003. Wason P., 1966, Reasoning, in B. Foss, New Horizons in Psychology, Harmondsworth: Penguin.
InvestorPsychologyPreferences:

Allais M., 1953, Le comportement de lhomme rationnel devant le risque: critique des postulats et axiomes de lcole Amricaine, Econometrica, 21. Barberis N. and W. Xiong, 2009, What Drives the Disposition Effect? An Analysis of a Long-standing Preference-based Explanation, Journal of Finance, 64. Barnea A., H. Cronqvist, S. Siegel, 2010, Nature or nurture: What determines investor behavior?, Journal of Financial Economics, 98. Benabou R and J. Tirole, 2006, Incentives and Prosocial Behavior, American Economic Review, 96. Benartzi S. and R. Thaler, 1995, Myopic Loss Aversion and the Equity Premium Puzzle, Quarterly Journal of Economics, 110. Boyer B., T. Mitton, K. Vorkink, 2010, Expected Idiosyncratic Skewness, Review Financial Studies, 23. Boyer B. and K. Vorkink, 2010, Stock Options as Lotteries, Working paper, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1787365. Brunnermeier M., 2004, Learning to Re-optimize Consumption at New Income Levels: A Rationale for Prospect Theory, Journal of European Economic Association, 2. Brunnermeier M. and J. Parker, 2005, Optimal Expectations, American Economic Review, 95. Camerer C., 2005, Three cheers psychological, theoretical, empirical for loss aversion, Journal of Marketing Research, 42.

Cesarini D., C. Dawes, M. Johannesson, P. Lichtenstein, and B. Wallace, 2009, Genetic Variation in Preferences for Giving and Risk Taking, Quarterly Journal of Economics, 124. Chabris C., D. Laibson, and J. Schuldt, 2008, Intertemporal Choice, Palgrave Dictionary of Economics. Chen M., Lakshminaryanan V., and L. Santos, 2006, How basic are behavioral biases? Evidence from capuchin monkey trading behavior, Journal of Political Economy, 114. Chen M., Lakshminaryanan V., and L. Santos, 2011, The Evolution of Decision-Making Under Risk: Framing Effects in Monkey Risk Preferences, Journal of Experimental Social Psychology, 47. Choi J., D. Laibson, B. Madrian, and A. Metrick, 2004, For Better or For Worse: Default Effects and 401(k) Savings Behavior, David Wise Ed., Perspectives in the Economics of Aging, University of Chicago Press. Della Vigna S. and U. Malmendier, 2006, Paying Not To go To The Gym, American Economic Review, 96. Gneezy U., E. Haruvy, and H. Yafe, 2004, The Inefficiency of Splitting the Bill, Economic Journal, 114. Green C. and B.-H. Hwang, 2011, IPOs as Lotteries: Skewness Preference and First-Day Returns , Working paper, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1374993. Harbaugh W., 1998, What Do Donations Buy?, Journal of Public Economics, 67. Hong H. and M. Kacperczyk, 2009, The price of sin: The effects of social norms on markets, Journal of Financial Economics, 93. Kahneman D. and A. Tversky, 1979, Prospect theory: An analysis of decisions under risk, Econometrica, 47 Kirby K., and R. Herrnstein, 1995, Preference reversals due to myopic discounting of delayed reward, Psychological Science, 6. Laibson David, 1997, Golden Eggs and Hyperbolic Discounting, Quarterly Journal of Economics, 62. Loewenstein G., 1987, Anticipation and the valuation of delayed consumption, Economic Journal, 97. Madrian B. and D. Shea, 2001, "The power of suggestion: Inertia in 401(k) participation and savings behavior, Quarterly Journal of Economics, 116. Mitton T. and K. Vorkink, 2007, Equilibrium Underdiversification and the Preference for Skewness, Review Financial Studies, 20. Monat A., J. Averill, and R. Lazarus, 1972, Anticipatory stress and coping reactions under various conditions of uncertainty, Journal of Personality and Social Psychology, 24. Odean T., 1998, Are Investors Reluctant to Realize Their Losses?, Journal of Finance, 53. Samuelson W. and R. Zeckhauser, 1988, Status Quo Bias in Decision Making, Journal of Risk and Uncertainty, 1. Shapira Z. and I. Venezia, 2001, Patterns of behavior of professionally managed and independent investors, Journal of Banking and Finance, 25. Shui H. and L. Ausubel, 2005, Time inconsistency in the credit card market, Working paper, http://www.ausubel.com/creditcard-papers/time-inconsistency-credit-card-market.pdf.

Thaler R. and S. Benartzi, 2004, "Save More Tomorrow (TM): Using Behavioral Economics to Increase Employee Saving, Journal of Political Economy, 112. Tversky A. and D. Kahneman, 1981, The framing of decisions and the psychology of choice, Science, 211.
SpeculativeBubbles:

Allen F. and G. Gorton, 1993, Churning Bubbles, Review of Economic Studies, 66. Blanchard O., 1979, Speculative bubbles, crashes and rational expectations, Economics Letters, 3. Camerer C., T.-H. Ho, and J.-K. Chong, 2004, A cognitive hierarchy model of one shot games, Quarterly Journal of Economics, 119. Harrison M. and Kreps D., 1979, Martingales and arbitrage in multiperiod security markets, Journal of Economic Theory, 20. Lamont O., 2003, Go Down Fighting: Short Seller vs. Firms, Yale ICF Working Paper No. 04-20. Moinas S. and S. Pouget, 2010, Rational and Irrational Bubbles: An Experiment, Working paper, http://spouget.free.fr/Bubbles.pdf. McKelvey, R. D. and T. R. Palfrey, 1995, Quantal Response Equilibrium for Normal Form Games, Games and Economic Behavior, 10. Scheinkman J. and W. Xiong, 2003, Overconfidence and Speculative Bubbles", Journal of Political Economy, 111.

Master 2 TSE - Economics and Competition Law (ECL) Industrial Organization: Theoretical and Applied
Instructors:
Fabian Bergs, Charg de Recherche INRA 18 h, and Cline Bonnet, Charge de Recherche INRA 18 h.
This course aims to give students an introduction to the theoretical and empirical analysis of market power and competition policies by preparing them to understand economic mechanisms, econometric methods and to interpret results.

I IO and Competition Policy (18h)

1. Competition Policy and market definition: (2h) (a) (b) (c) (d) (e) Competition Policy vs. Regulation; The history of competition policy in the European Union and the United States; The objective of competition policy; The relevant market definition: SSNIP test, diversion ratio, etc. The substitutability on the supply side, essential facilities doctrine;

2. Monopoly, Monopsony and Bilateral Monopoly: (4h30) (a) (b) (c) (d) (e) (a) (f) Private Monopoly with an homogenous good, deadweight loss and technology inefficiency; Private Monopoly in presence of a negative externality, like pollution; The durable goods monopoly and its intertemporal inability to commit; The natural monopoly (public); The monopsonist (input market and buyer's power); The bilateral monopoly. Number of firms, market shares and market power;

3. Strategic behaviors by firms: (3h) (a) Price predation; (b) Strategic investment as a barrier-to-entry; (c) Vertical integration and foreclosure. 4. Vertical restraints: (2h30) (a) The double marginalization issue and two-part tariffs; (b) Resale Price maintenance; (c) Exclusive territories. 5. Networks and standards: (3h) (a) (b) (c) (d) Network effects and consumers choice; Strategies in the network standard choices; Network and public policies ; Network and supporting services.

6. Advertising: informative and persuasive (3 h).

II Competition Econometrics (18h)

1. 2. 3. Introduction (motivation, organization of the course and background needed): (1h30) Market definition (concentration: Lerner index, relevant market: SSNIP tests): (1h30) Measurement of market power with differentiated products: (9h) (a) Continuous demand, AIDS model

(b) Discrete choice models (c) Estimation methods (Instrumental variable Method, generalized method of Moments, Maximum Likelihood Method, Simulation Method) 4. Competition analysis: (3h) (a) Oligopolistic competition (b) Vertical integration (double marginalization, two-part tariffs) 5. Merger Effects: (3h) (c) Merger simulation (d) Welfare and surplus effects

References:
Paul Belleflamme and Martin Peitz, 2010, "Industrial Organization: Markets and Strategies", Ed. Cambridge University Press, 724 pages, (ISBN-10: 0-521-68159-6 / ISBN-13: 978-0-521-68159-9) Carlton Denis and Perloff Jeffrey, 2005, Modern Industrial Organization, Ed. Addison-Wesley, 800 pages, (ISBN-10: 0-321-18023-2 / ISBN-13: 978-0-321-18023-0) - also available in French ; Motta Massimo, 2004, Competition Policy, Ed. Cambridge University Press, 616 pages, (ISBN-10: 0-52101691-6 / ISBN-13: 978-0-521-01691-9) ; Oz Shy, 1996, "Industrial Organization: Theory and Applications", Ed. MIT Press, 488 pages, (ISBN-10: 0262-69179-5 / ISBN-13: 978-0-262-69179-6) Jean Tirole, 2002, The Theory of Industrial Organization, Ed. MIT Press, 479 pages, (ISBN-10: 0-26220071-6 / ISBN-13: 978-0-262-20071-4)

Werden G. J., and L. M. Froeb (2006), Unilateral Competitive Effects of Horizontal Mergers, Handbook of Antitrust Economics Reiss, P., and F. Wolak (2006), Structural Econometric Modelling: Rationales and Examples from Industrial Organization, Handbook of Econometrics, Volume 6 Bishop, S. And Walker, M. The Economics of EC Competition Law, Sweet and Maxwell

Master 2 TSE - Economics and Competition Law (ECL) Innovation and product differentiation
Instructors:
Zohra Bouamra-Mechemache, Charge de Recherche INRA 9 h, Isabelle Dubec, Matre de Confrences 18 h, And Sylvette Monier-Dilhan, Charge de Recherche INRA 9 h.

I : Intellectual property (I. Dubec), 18h 1. 2. 3. 4. 5. 6. The economic problems that motivates interest in IP protection Static and dynamic efficiency The principal IP regimes Optimal patent design for stand-alone and cumulative innovation Patent licensing and pooling for stand-alone and cumulative innovation The digital economy

II : Quality Strategies (18h) 7. Introduction to the economics of quality (3h) (a) Product differentiation (Vertical/Horizontal differentiation) (b) Market of Lemons Labeling (6h) (a) Private versus Public Labeling (b) Geographic Indications: US System versus European system, Private Incentives and Public Intervention Standards (9h) (a) International Trade Implications (b) Consumers Protection versus Technical barrier to trade.

8.

9.

References : The main references for this introductory course on IP are : P.Belleflamme and M.Peitz, Industrial Organization, Markets and Strategies,chapter 19. S.Scotchmer, Innovation and Incentives, Cambridge, MA : MIT press Chapter 16 in Luis Cabral Introduction to Industrial Organization, Chapter 9 in Oz Shy, Industrial Organization, Theory and Application, Chapters 22 and 23 in Pepall and alii, Industrial Organization, contemporary theory and empirical Applications. Further readings : Gilbert and Shapiro (1990), optimal patent length and breadth, Economics, 23,106-112 Rand Journal of

Nordhaus (1969), Invention,Growth and Welfare, Cambridge,MA :MIT press Katz and shapiro (1985), on the licencing of innovation, Rand Journal of Economics, 16, 504-520 Klemperer (1990), How broad should the scope of patent be ? , Rand Journal of Economics, 21, 213-230.

Denicolo (1996) Patent races and Optimal patent breadth and length, Journal of Industrial Economics,44, 249-265 Takalo (2001) On the optimal patent policy, Finnish Economic papers,14,33-40 Liebowitz and Margolis(2004) Seventeen famous Economists Weigh in on copyright: the role of theory, Empirics and Network effects.,bepress Legal, series , paper 397 Bessen (2004) Holdup and licensing of cumulative innovations with private information , Economics Letters 82 ,321326 ODonnell, OMalley J. Huis, Halt Intellectuel Property in the Food Technology Industry. Hobbs J. E. Safety and Quality: International Trade Implications, The Estey Centre Journal of International Law and Trade Policy, Volume 11 Number 1 2010/p. 136152. Josling T. Whats in a Name? The economics, law and politics of Geographical Indications for foods and beverages, Freeman-Spogli Institute for International Studies, Stanford University. Korinek J., Melatos M. and M-L. Rau A Review of Methods for Quantifying the Trade Effects of Standards in the Agri-Food Sector. OECD Trade Policy Working Paper No. 79 Marette S. and J. Beghin, Are Standards Always Protectionist?, Review of International Economics, 18(1), 179192, 2010 Zago A. M. and D. Pick. Labeling Policies in Food Markets: Private Incentives, Public Intervention, and Welfare Effects, Journal of Agricultural and Resource Economics 29(1): 150-165

M2-TSE-EMO

Competition and Market Strategies (2011-12) - Doh-Shin Jeon, Patrick Rey and Jean Tirole It is an introductory class of advanced industrial organization with particular emphasis on the interface between industrial organization theory and practice of competition policies. There will be a total of 36 hours of which 30 hours will be covered by Jeon. Each of Rey and Tirole will teach 3 hours: their teaching schedule can be different from the regular schedule. Schedule Monday 11:00-12:30 (MD103), Thursday 15:30-17:00 (MD103) Evaluation Final Exam: 100 % Main texts Motta, Massimo. Competition Policy: Theory and Practice. Cambridge University Press, 2004 Tirole, Jean. The Theory of Industrial Organization, MIT, 1988 Other references Fuderberg, Drew and Jean Tirole. Game Theory, MIT, 1992 Kwoka, J. E; White, L.J. The Antitrust Revolution, Harper Collins College Publishers, 1994 (2nd edition), 1999 (3rd edition), 2004 (4th edition)

Teaching Plan

1. Competition Policy: History and definition (Motta, Chap 1) - Brief History of Competition Policy - Objectives of Competition Policy 2. Monopoly: Durable good and intertemporal price discrimination (Tirole, Chap 1.5.2) 3. Market definition and Horizontal Mergers (Motta. Chap 3, 5) Incentives to merge: Cournot vs Bertrand Benefit-Cost analysis of horizontal merger Merger guideline and market definition Cases: Coca-Cola and Dr Pepper (Kwoka and White, 1994) Nestle and Perrier (Motta)

 Deneckere, R. J. and C. Davidson (1985). Incentive to Form Coalitions with Bertrand Competition. The RAND Journal of Economics, 16: 473-86. Salant, S., S. Switzer and R. Reynolds (1983). Losses from Horizontal Merger: the Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium. Quarterly Journal of Economics, 98:185-199.

4. Collusion and Horizontal agreements (Motta. Chap 4, Tirole, Chap 6) - Relevant factors for collusion: Theory with application to Nestle and Perrier case (Motta) - Coordination and the role of communication: Sugar Institute (AER, 2001), ATP case (Motta) - Standard of proofs (What should be legal or illegal?) and Wood Pulp case (Motta) - Leniency program Bernheim, Douglas and Michael Whinston (1990). "Multimarket Contact and Collusive Behavior." The RAND Journal of Economics, 21(1), 1-26. Genesaove David and Wallace P. Mullin. Rules, Communication and Collusion: Narrative Evidence from the Sugar Institute Case, American Economic Review, Vol 91, 379-98, 2001 Green, E and R. Porter (1984), Non-Cooperative Collusion Under Imperfect Price Information, Econometrica 52:87-100 5. Vertical agreements (Motta. Chap 6, Tirole, Chap 4) Terms of vertical restraints and Basic vertical externalities Intrabrand and interbrand competition Contract as Barrier to entry First Microsoft case (Kwoka and White, 1999) Advanced topics a. Vertical Foreclosure b. Exclusive dealing

Aghion, P and G. Bolton (1987). Contracts as a Barrier to Entry, American Economic Review 77: 388-401 Bernheim, Douglas, and Michael Whinston. (1998). "Exclusive Dealing." Journal of Political Economy, 106(1): 64-103 Fumagalli, Chiara and Massimo Motta, (2006). Exclusive Dealing and Entry, when Buyers Compete, 96(3): 785-795. Ordover, J., S. Saloner and S. C. Salop (1990), Equilibrium Vertical Foreclosure, American Economic Review 80: 127-142

 Rey, Patrick and Jean Tirole (1986). The Logic of Vertical Restraints, American Economic Review 76; 921-939 Rey, Patrick and Jean Tirole (2005). A Primer on Forecloure, Handbook of Industrial Organization, vol. III, North Holland, 2005, p. 2145-2220. Segal, Ilya and Michael Whinston (1997), Nake Exclusion: Comment. American Ecoomic Review 90: 296-309 6. Tying and Bundling with application to Microsoft case (Motta, Chap 7.3.2) Bakos, Yannis, and Eric Brynjolfsson. (1999). "Bundling Information Goods: Pricing, Profits and Efficiency." Management Science, 45(12): 1613-1630. Choi, Jay P., and Chris Stefanadis. (2001). "Tying, Investment, and the Dynamic Leverage Theory." RAND Journal of Economics, 32(1): 52-71. Nalebuff, Barry. (2004). "Bundling as an Entry Barrier." Quarterly Journal of Economics, 119(1): 159-188. Whinston, Michael D. (1990). "Tying, Foreclosure and Exclusion." American Economic Review, 80(4): 837-859. 7. Predation (Motta Chap 7, Fudenberg and Tirole, Chapter 9) (covered by Patrick Rey during the week of November 7-11) Bolton, G. and D. Scharfstein. (1990). A Theory of Predation Based on Agency Problem in Financial Contracting, American Economic Review, 80: 93-106 Kreps, D. and R. Wilson. (1982). Reputation and Imperfect information, Journal of Economic Theory, 27: 253-279 Milgrom, Paul, and John Roberts. (1982). Predation, Reputation and Entry deterrence, Journal of Economic Theory, 27: 280-312 8. IT and compatibility Crmer, Jacques, Patrick Rey and Jean Tirole. (2000) "Connectivity in the Commercial Network" Journal of Industrial Economics, 48(4): 433-72 Katz, Michael L. and Carl Shapiro (1985). "Network Externalities, Competition, and Compatibility", American Economic Review, 75, 424-440. Laffont, Jean-Jacques, Patrick Rey and Jean Tirole (1998a). "Network Competition I: Overview and Nondiscriminatory Pricing." Rand Journal of Economics, 29: 1--37. Laffont, Jean-Jacques, Patrick Rey and Jean Tirole (1998b). "Network Competition II: Price Discrimination." Rand Journal of Economics, 29: 38--56. 9. Two-sided markets (covered by Jean Tirole during the week of November 21-25) Anderson, Simon and Stephen Coate (2005). "Market Provision of Broadcasting: A Welfare Analysis", Review of Economic Studies, 72: 947-972 Armstrong, Mark (2006). "Competition in Two-Sided Markets", RAND Journal of Economics, 37: 668-691. Caillaud, Bernard and Bruno Jullien (2003). "Chicken and Egg: Competition Among Intermediation Service Providers", RAND Journal of Economics, 34: 309329.

 Rochet, Jean-Charles and Jean Tirole (2002). "Cooperation among Competitors: Some Economics of Payment Card Associations", RAND Journal of Economics, 33: 549-570. Rochet, Jean-Charles and Jean Tirole (2003). "Platform Competition in Two-Sided Markets", Journal of the European Economic Association, 1: 990-1029. Rochet, Jean-Charles and Jean Tirole (2006). "Two-Sided Markets: A Progress Report", RAND Journal of Economics, 35: 645-666

Doh-Shin Jeon Office, MF410 dohshin.jeon@gmail.com

Toulouse

School of Economics

Advanced Environmental and Natural Resource Economics

Winter 2012

Stefan Ambec E-mail: stefan.ambec@tse-fr.eu Office: MS 113 Ingela Alger E-mail: ingela.alger@tse-fr.eu Office: MS 202 Objective The course contains advanced theory in environmental and natural resource economics. It focuses on some of the mechanisms whereby human beings allocate and share natural resources. The two main topics are: fair allocation of natural resources and evolution of cooperation in social dilemmas. The first topic examines how to allocate fairly scarce natural resources among users. It relies on an axiomatic approach: fairness is defined as general principles. From those principles, we derive a fair way to share natural resource. We then discuss its implementation by regulation, markets, and negotiation rules among users. The second topic casts sharing and management of natural resources as a social dilemma, and examines theoretical, experimental, and empirical literature on behavior in social dilemmas. It discusses the potential for evolutionary forces and institutional mechanisms to help achieve efficient outcomes. The main goals of the course are to enhance the ability of the student to understand the literature and to conduct research in the field.

Tentative Course Outline Part 1: Fairness in the management of natural resources (Stefan Ambec) 12/01: The fair division problem -Thomson (2008) section 3 and 4 19/01: Dividing a good with single-peak preferences -Thomson (2008), section 11 Date to be defined: -Asheim (2005) Intergenerational sharing of a natural resource

Part 2: The environment as a collective resource and social dilemmas (Ingela Alger) 26/01: Background: the environment and social dilemmas Common social dilemmas and game theory Experimental and empirical evidence - Readings from Ostrom (1990) and Ostrom, Gardner, and Walker (1994) - Weibull (1995) Chapter 1 2/02 : Common social dilemmas and evolutionary game theory - Weibull (1995) Chapters 2 and 3 8/02: Recent research on the evolution of preferences in social dilemmas 16/02: Winter break 23/02, 1/03: Paper presentations by students 8/03, 15/03, 22/03, 29/03: More presentations by students (if needed) and/or a deeper presentation of the literature and related topics.

Evaluation Each student will make a presentation in class. The presentation will introduce and discuss a paper in the literature. Paper suggestions will be provided by the instructors. Each student will then write a short paper related to the paper he or she presented in class. The short paper should include (i) a review of some papers on the same topic/model, (ii) some analytical work (an extension of the model, dropping one assumption, examining other axiomatic principles, adding more structure to the model, comparing formally models, etc.). The evaluation will be based on the presentation (1/3) and the short paper (2/3). References Asheim G. (2005) Intergenerational ethics under resource constraints Swiss Journal of Economics and Statistics, 141, 313-330 Moulin, H. (2005) Fair Division and Collective Welfare, MIT Press Ostrom, Elinor. 1990. Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge: Cambridge University Press. Ostrom, Elinor, Roy Gardner, and James Walker. 1994. Rules, Games, & Common-pool Resources. Michigan: University of Michigan Press. Thomson, W (2008) Fair allocation rules, in Handbook of Social Choice and Welfare (K. Arrow, A. Sen, and K. Suzumura, eds), North-Holland, Amsterdam, New York, working paper available at: http://rcer.econ.rochester.edu/RCERPAPERS/rcer_539.pdf Weibull, J.W. (1995) Evolutionary Game Theory. Cambridge: MIT Press.

Air Transport Economics- 2009

Nathalie Lenoir Estelle Malavolti Steve Lawford Nicolas Gruyer Gilles Saint-Paul

Introduction to Air Transport Market

1.1 Outlook on the airline industry and trac 1.2 The air transport system
2 Organization of the Air transport Market

2.1 Main Actors of the sector 2.2 Regulation/deregulation in the air transport market
3 Air Transport Market and Competition Policy

3.1 3.2 3.3 3.4

4

Vertical agreements Horizontal agreements Essential Facility Network externalities

Empirical Methods

4.1 The Econometrics of Discrete Choice 4.2 Models of Entry - An Applied Example
5 Impact of the Capacity constraint

5.1 Capacity allocation and grand father rule

6 Spatial Economics applied to air trransport sector

6.1 Airport location

7 References
 Barla P. and C. Constantatos "Strategic interactions and airline network morphology under demand uncertainty", European Economic Review, march 2003. 2

 Basso " Airport deregulation : Eects on pricing and capacity", International Journal of Industrial Organization, 2008.  Berry, S. T., " Estimation of a model of entry in the airline industry", Econometrica, 1992.  Berry, S. T. and Jia, P.," Tracing the woes : an empirical analysis of the airline industry", Yale/MIT working paper, 2008.  Brueckner J., "Airport Congestion When Carriers Have Market Power", The American Economic Review, 2002.  Brueckner J., "The economics of international codesharing : an analysis of airline alliances", International Journal of Industrial Organization, 2001.  Brueckner J., "Network Structure and Airline Scheduling",The Journal of Industrial Economics, 2004.  Brueckner J., "International Airfares in the age of Alliances : the eect of codesharing and Antitrust Immunity", Review of Economics and Statistics, 2001.  Chen Y. and P. Gayle , "Vertical contracting between airlines : An equilibrium analysis of codeshare alliances", International Journal of Industrial Organization, 2007.  Dana J. "Equilibrium price dispersion under demand uncertainty : the roles of costly capacity and market structure", Rand Journal of Economics, 1999.  Dana J. "Using yield management to shift demand when the peak time is unknown" Rand Journal of Economics, 1999.  Goolsbee, A. and Syverson, C. " How do incumbents respond to the threat of entry ? Evidence from the major airlines", Quarterly Journal of Economics, 2008.  Richard K. Green,  A note on airports and economic development , mimeo, U. Wisconsin-Madison, 2002  Paul Krugman Anthony J. Venables, 1995. "The Seamless World : A Spatial Model of International Specialization," NBER Working Papers 5220  Januszewski, S. I., " The eect of air trac delays on airline prices", UCSD working paper, 2004.  Stephen Redding , Daniel M. Sturm, Nikolaus Wolf,  History and Industry Location : Evidence from German Airports , 2007, Centre for Economic Performance DP 809

Applied Corporate Finance M2 Economics of Markets and Organizations Roberta Dess

Course outline

The course will cover the following topics: Firms financial structure and performance Innovation and Venture Capital Corporate Finance, Competition and Product Markets Students will have the opportunity to select and present a recent applied paper in Corporate Finance in class, covering topics from the course or other topics they are particularly interested in.

Academic Year 2011-2012 MASTER 2 PUBLIC POLICY and DEVELOPMENT Applied Trade and Tax Policy Analysis Charles Vellutini

This course focuses on a particularly important applied modeling technique in development economics: computable general equilibrium (CGE) modeling. CGE are used routinely by donors, governments and advisers to assess, ex ante, tax and trade policy changes. A review of concepts and underlying theory will be provided; practical implementation issues (including software and coding) will be covered based on actual case studies and data from assignments with the European Commission and the World Bank. Student evaluation will be based on a CGE project, for which CGE GAMS code will be provided, together with actual data sets. An outline of the course is provided below.

1) Introduction: what role for modern economic analysis in solving real-world development problems? The demand: the clients, the needs, the trends. The competition: professional economics and economic consulting. Bridging the gap between Academia and consulting.

2) Applying general equilibrium: CGE modeling for trade and tax policy analysis 3.1 CGE modeling: review of principles and experience Underlying theory Review of international practice Introduction of dynamics Software and programming issues: introduction to GAMS

2.2 Implementing CGE Getting the data Compiling and processing the data: the social accounting matrix, estimation of key elasticities, processing trade and fiscal data, setting dynamic exogenous data. Adjusting/building the model; calibration, sensitivity analysis, Running the model and reporting: shocked scenarios against base case.

2.3 Case study: evaluating the impact of the EUs Economic Partnership Agreement in Cameroon. 3 3) Student projects based on real data 3.1 More GAMS 3.2 Reviewing the standard CGE GAMS code 3.3 GAMS exercise: balancing the social accounting matrix 3.4 Model calibration 3.5 Policy change analysis: free-trade agreements and tax reforms 3.6 Reporting: get the message across, professionally

ACADEMIC YEAR 2010-2012 MASTER ERNEA APPLIED WATER MANAGEMENT ARNAUD REYNAUD, ALBAN THOMAS AND VERA ZAPOROZHETS

LEARNING OBJECTIVES
Upon completion of this course, students are expected to be able to:

demonstrate knowledge of the general structure of the water sector and to describe particular characteristics and interrelation between different players of this industry provide an overview of specific economic aspects that are characteristic to the water sector demonstrate a good understanding of water sharing issues including on international rivers and irrigation networks, in particular on the fairness properties of water sharing agreements.

SYLLABUS
An introduction to water economics. We present the main characteristics of water as an economic, a public and a common good. We present the key economic factors of the water industry (supply and demand patterns, market players, market structure). We discuss the main economic specificities of the water industry. Economics of water demand. We present the main economic characteristics of the residential, agricultural and industrial water demands. We discuss the rationale for water demand-side management, and the issue of managing water quality. Several applications of demand-side management policies are provided, to illustrate the importance of evaluation and implementation issues. Economic analysis of the water supply chain. We formally define the water industry as a network industry. We breakdown the supply chain of the water sector as far as reasonable from an economic point of view and analyse the economic rationalities at each stage of the chain. We discuss the issue of the existence of a natural monopoly for this industry. Competition and regulation in the water industry. We discuss the issue of introducing competition into the water industry by making the distinction between direct and indirect competition. Then we analyse how economic regulation of this industry can be conducted. We distinguish the regulation of price, of service quality and of investment. Designing the water industry. The first part of the lecture deals with the issue of private versus public ownership of water services. We then discuss the question of the horizontal structure of the water industry in particular with respect to the possibility to introduce direct competition (through common carriage, cross-border competition of fringe area competition) or competition by comparison. The third part deals with the

vertical structure of the water industry. We conclude by a case study on vertical integration of the water services in the Wisconsin. Cost allocation and water management. We apply the economic principles of optimal cost allocation among users, to the case of quantitative water management. This involves a formal representation of the technology with the definition of joint cost functions. Principles of equity are then discussed, by introduced the economic concept of the core, and methods to extend this concept. The Shapley value is then introduced to help defining optimal allocation rules, and we apply the theoretical analysis to a problem of municipal cost-sharing.

COURSE OUTLINE
Part I. Economics of Water Demand (Alban Thomas) 10.5 hours I.1 A Brief Introduction to Water Economics I.2. Economic Analysis of Water Demands I.3. Management of Water Quality: Pollution and Regulation

Part II. Cost Allocation. Application to Water Resources Development (Vera Zaporozhets) 10.5 hours II.1. Introduction II.2. Joint Cost functions II.3. Principles of Equity: The Core II.4. Methods Extending the Core II.5. The Shapley Value II.6. A Swedish Municipal Cost-Sharing problem

Part III. The Water Supply Chain, Competition and Regulation (Arnaud Reynaud) 10.5 hours III.1. Economic Analysis of the Water Supply Chain III.2. Competition and Regulation in the Water Industry III.3 Designing the Water Industry Evaluation

Each student will pick a paper on a list. Students are required (i) to write a two pages evaluation report on the paper, (ii) to present the paper in class during the last sessions. The final mark will be based on both the report and the presentation.

List of Papers Ansink E. and A. Ruijs (2008) Climate Change and the Stability of Water Allocation Agreements, Environmental and Resource Economics, 41, 133-187. Ansink E. and H.P. Weikard (2011) Sequential sharing rules for river sharing problems, Social Choice and Welfare, http://www.springerlink.com/content/d18p22k67136m734/fulltext.pdf Dayton-Johnson, J. (2000) Choosing rules to govern the commons: a model with evidence from Mexico. Journal of Economic Behavior and Organization 42, 19 41. Chong, E., F. Huet, S. Saussier and F. Steiner. 2006. Public-Private Partnerships and Prices: Evidence from Water Distribution in France. Review of Industrial Organization 29, 146-169. Olmstead, S.M., W.M. Hanemann and R.N. Stavins. 2007. Water Demand under Alternative Price Structures. Journal of Environmental Economics and Management 54, 181-198. Jacoby, H.G., R. Murgai and S.U. Rehman. 2004. Monopoly Power and Distribution in Fragmented Markets: The Case of Groundwater. Review of Economic Studies 71(3), 783-808. McConnell, V.D. and G.E. Schwarz. 1992. The Supply and Demand for Pollution Control: Evidence from Wastewater Treatment. Journal of Environmental Economics and Management 23, 54-71. Murgai, R., P. Winters, E. Sadoulet and A. de Janvry (2002) Localized and incomplete mutual insurance, Journal of Development Economics, 67, 245274. Peterson, J.M. and Y. Ding. 2005. Economic Adjustments to Groundwater Depletion in the High Plains: Do Water-Saving Irrigation Systems Save Water? American Journal of Agricultural Economics 87(1), 147-159. Ray, I and J. Williams (2002), Locational asymmetry and the potential for cooperation on a canal, Journal of Development Economics, 67, 129155. Renwick, M.E. and R.D. Green. 2000. Do Residential Water Demand Side Management Policies Measure Up? An Analysis of Eight California Water Agencies. Journal of Environmental Economics and Management 40, 37-55. Renzetti, Steven, 1992. "Evaluating the welfare effects of reforming municipal water prices," Journal of Environmental Economics and Management, vol. 22(2), pages 147-163, Roibas, D., Garca-Valias, M.A. and Wall, A. (2007), Measuring welfare losses from interruption and pricing as responses to water shortages: An application to the case of Seville, Environmental and Resource Economics, 38(2), 231-243. Wang, Yutong (2011). Trading water along a river, Mathematical Social Science, 61(2): 124-130. Koundouri, P., C. Nauges and V. Tzouvelekas, 2006. Technology adoption under production uncertainty: Theory and application to irrigation technology. American Journal of Agricultural Economics 88, 657-670.

UE 1: Asset Pricing Valuation of financial assets and arbitrage

ECTS: H CM :

Responsable du Cours : Ekaterina VOLTCHKOVA

Contenu pdagogique :

1.

Fundamental concepts of arbitrage pricing Cox-Ross-Rubinstein model Introduction to option pricing

2.

Continuous time models It formula Geometric Brownian motion Arbitrage pricing in continuous time Black-Scholes model Change of probability measure

3.

Advanced option pricing Foreign exchange Forward, futures Exotic options American options

Pr-requis :

Basic probability theory Evaluation : final written exam Bibliographie : Bjrk T., Arbitrage Theory in Continuous Time, Oxford University Press, 2004 Hull J., Options, futures and other derivatives, Prentice Hall, 1999 Lamberton D., Lapeyre B., Introduction au calcul stochastique appliqu la finance, Ellipses marketing, 1997 Back K., A course in derivative securities, Springer, 2005

Non Life Insurance

ECTS : 2,5 H CM : 20H

Responsable du Cours : Rachid AIT-MANSOUR

Contenu pdagogique : 1 Gnralits sur lassurance non-vie Ce premier chapitre est consacr une prsentation rapide de lassurance non vie et ses particularits 2 Tarification Ce second chapitre traite de la problmatique de fixation dun tarif pour un produit dassurance non-vie : sur quels critres se calcule un tarif ? comment tablir la tarification ? 3 Provisionnement Dans ce chapitre, la question de la constitution de rserves est aborde, tant pour rpondre une exigence comptable que pour respecter les engagements pris envers les assurs. 4 Rassurance Les divers dispositifs de rassurance sont abords dans ce chapitre : rassurance proportionnelle et rassurance non proportionnelle. 5 Elments de comptabilit des assurances Dans ce chapitre, nous abordons les principes dtablissement des comptes dassurance non-vie (bilan et compte de rsultat) 6 Solvabilit Les rgles prudentielles en vigueur (norme Solvency I) sont dcrites dans ce chapitre. Les grandes orientations des futures rgles (Solvency II) sont abordes en fin de chapitre. Les diffrents chapitres comportent des applications numriques permettant dillustrer les divers concepts abords dans le cours.

Pr-requis : Cours de Statistiques et de Probabilits de Licence.

Bibliographie : TOSETTI Alain et Al. Assurance, Comptabilit, Rglementation, Actuariat , Economica DENUIT Michel et CHARPENTIER Arthur Mathmatiques de lassurance non-vie , Economica PETAUTON Pierre Thorie de lassurance dommages , Dunod

Business Strategy Professor Margaret Kyle Economics of Markets and Organizations Master 2 Professional This course examines various drivers of rm performance, or elements of business strategy. We discuss the roles of market structure (barriers to entry, concentration, rivalry, etc.) and organizational structure (the scale and scope of rm activities, divisional structure, incentives, etc.), and conclude with a unit on innovation. The material is of use to managers and consultants across a broad range of industries, and cases are selected from a diverse set of industries and geographic settings. We focus on the practical application of economic tools to business strategy. Accordingly, you are expected to develop skills in case analysis, and the group project is an opportunity to use the skills that are required to complete an internship or typical consulting assignment. Preparing cases: You are expected to do more than merely read the case. Where possible, you should attempt to use the nancial information in the case appendices to estimate costs, market demand, etc. You should restrict yourself to the information provided in the case itself; i.e., do NOT search for articles or websites that tell you the outcome of the case or that do the analysis for you. This may seem somewhat articial, but many top consulting rms include case analysis (with these restrictions) as part of the interview process. Group project: Working in groups of 4-5, I would like you to analyze the market for antiretroviral drugs (HIV treatments) in developing countries. There are two deliverables: a written report that is 15-20 pages of text plus exhibits, and an oral presentation of 25 minutes. I will assign each group to one of the following tasks: A) Determine the optimal product portfolio of antiretroviral treatments for Cipla, a drug rm based in India. For example: how many different antiretrovirals; how much capacity in each; etc. B) Determine the optimal pricing or licensing strategy for Abbott Laboratories with its heat-stable ritonavir. C) Determine the best procurement strategy for UNITAID for pediatric antiretrovirals. I will provide additional information during the rst lecture. Materials Assigned readings and cases can be downloaded from margaretkyle.net/EMO2011. Requirements: Midterm: 25% Group project: 50% Exam: 25%

Calendar: Introduction Lecture 1: Firm performance and competitive advantage ! Readings: BDSS Chapter 1 ! Case Assignment: Global Wine Wars Organizational structure and rm performance Lecture 2: Boundaries of the rm ! Readings: ! Coase, "The Nature of the Firm," Economica 4 1937 386-405 ! Holmstrom, Bengt and Jean Tirole. 1989. "TheTheory of the Firm," in Handbook of ! Industrial Organization. ! Case Assignment: Arauco Lecture 3: Internal organization ! Readings: Gibbons, Incentives in Organizations, Journal of Economic ! Perspectives, 12 (1998): 115-32 ! Case Assignment: Philips vs. Matsushita Market structure and rm performance Lecture 4: Rivalry, barriers to entry, dimensions of competition ! Readings: ! Fudenberg and Tirole "The Fat-Cat Effect, the Puppy-Dog Ploy, and the Lean and ! Hungry Look" AER 74(2) 1984, 361-366. ! Schmalensee "Interindustry Studies of Structure and Performance" Handbook of ! IO 951-1010 ! Case Assignment: Airbus vs. Boeing Lecture 5: Applications of game theory ! Readings: Chapter from Ghemawat, Games Businesses Play ! Case: British Satellite Broadcasting vs. Sky Television Lecture 6: Collaborative strategies ! Readings: Nalebuff and Brandenburger Chapters 1-6 (pp. 1-192) ! Case Assignment: Wintel (A): Cooperation or Conict Lecture 7: Midterm exam Innovation and rm performance Lecture 8: Innovation strategies ! Readings: Acs, Z., and Audretsch, D. 1988. Innovation in Large and Small Firms: ! An Empirical Analysis. American Economic Review 78, 678-690 ! Case Assignment: Kodak and the Digital Revolution Lecture 9: Markets for technology

! Readings: Arora, Fosfuri and Gambardella (2001), Markets for Technology: The ! Economics of Innovation and Corporate Strategy, pp. 1-14, 91-142 ! Case Assignment: Merck and LAB Lecture 10: Strategic use of intellectual property! ! Shapiro, C. (2001), Navigating the Patent Thicket: Cross Licenses, Patent Pools, ! and Standard Setting, in Jaffe, A., J. Lerner and S. Stern (eds.), Innovation Policy ! and the Economy Vol. 1, pp. 119-150 ! Case Assignment: AT&T vs. Microsoft Lecture 11: Overview of business models in two-sided markets and open source ! Readings: ! Rochet and Tirole, "Two-Sided Markets: A Progress Report", RAND Journal of ! Economics, vol. 35, n. 3, 2006, p. 645-667. ! Raymond, The Magic Cauldron http://catb.org/~esr/writings/magic-cauldron/ ! Case Assignment: Nintendo Lecture 12: group project presentations.

cole dconomie de Toulouse - TSE

CORPORATE FINANCE
Augustin LANDIER

This course will cover the traditional core questions in corporate finance: investment and capital structure. In a second part, we will present this growing literature that explores the interrelations between corporate finance and other economic subfields: political economy, industrial organization, labor economics, organization theory etc. We will cover both theoretical and empirical research articles. On the theoretical side, we will try to make use of the most parsimonious models needed to highlight the intuitions underlying the papers we will be discussing. On the empirical side, we will put a major emphasis on the methodological aspect of the papers, by trying to screen clean empirical strategies from more dubious ones.

TEXTBOOK: Tirole, The theory of Corporate Finance 1st edition, PUP, 2005. COURSE GRADING: 30% 70% Referee Report Final Exam

Course Outline:
Here is a tentative outline for the course. It contains the core materials we will necessarily cover (investment and capital structure) as well as some more advanced topics. Depending on your interests and the pace of the course, we will select and then go through some of these more advanced topics. There will therefore necessarily be some drastic changes to this syllabus over time. I will thus update it as time goes by. For the theoretical parts of the lectures, we will mostly use Tiroles book, The Theory of Corporate Finance, (2006), Princeton University Press. The following reading list provides the required readings only. A supplemental reading list with papers that will be covered during the course is provided separately.

1. Frictionless Corporate Finance: Modigliani-Miller, The neoclassical model of investment and its empirical applications
Hayashi (1982), Tobin's Marginal q and Average q: A Neoclassical Interpretation, Econometrica, Vol. 50, No. 1.pp. 213-224. Kaplan & Zingales (1997), Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints? Quarterly Journal of Economics 112, pp. 159-216. Rauh (2006), Investment and Financing Constraints: Evidence from the Funding of Corporate Pension Plans, Journal of Finance 61, pp. 33-71.

2. Models of credit constraints

(*) Tirole, Chapters 3 and 6. Hart & Moore, (1994), "Theory of Debt Based on the Inalienability of Human Capital," The Quarterly Journal of Economics, vol. 109(4), pages 841-79. Malmendier & Tate, (2005). "CEO Overconfidence and Corporate Investment," Journal of Finance, vol. 60(6), pages 2661-2700.

3. Capital structure: theories and evidence

Aghion & Bolton (1989), The Financial Structure of the Firm and the Problem of Control, European Economic Review

Baker & Wurgler (2002), Market Timing and Capital Structure, Journal of Finance 57, pp. 1-32. Nini, Smith & Sufi, (2009), Creditor control rights and firm investment policy, Journal of finance 92(3): 400-420

4. IPOs and Payout Decisions

Jay Ritter (1991), The long-run performance of initial public offerings, Journal of Finance 42, pp.365-394. Jagannathan, Stephens & Weisbach, Financial Flexibility and The Choice Between Dividends and Stock Repurchases, Journal of Financial Economics, vol. 57(3), pages 355-384

5. Corporate Finance and Product Markets

Chevalier & Scharfstein, Capital Market Imperfections and Counter-Cyclical Mark-ups: Theory and Evidence, American Economic Review, 86, 1996 Tirole, chapter 7.1

6. Corporate Finance and Development

Rajan & Zingales, Financial Dependence and Growth, American Economic Review 88, 1998 Jayaratne & Strahan, "The Finance-Growth Nexus: Evidence from Bank Branch Deregulation," Quarterly Journal of Economics 111, 1996.

7. Corporate Finance institutions

Colonial or Legal Origin? La Porta, Lopez de Silanes, Schleifer & Vishny, Legal Determinants of External Finance , Journal of Finance 52, 1997. Acemoglu & Johnson, Unbundling Institutions, Journal of Political Economy, 113, 2005

Dynamics of Institutions: The Political Economy View Rajan & Zingales, The Great Reversals: The Politics of Financial Development in the 20th Century, Journal of Financial Economics, 69, 2003

8. Corporate Finance and the Labor Market

Corporate Ownership/ Capital Stucture and the Wage-Setting Process Matsa, Capital Structure as a Strategic Variable: Evidence from Collective Bargaining, Mimeo 2007. Bertrand & Mulhainattan, Is there discretion in wage setting? A test using takeover legislation, Rand Journal of Economics, 30, 1999.

CEO Compensation Bertrand & Mullainathan, "Are Ceos Rewarded For Luck? The Ones Without Principals Are," The Quarterly Journal of Economics, 116, 2001 Gabaix et Landier, Why has CEO Pay Increased so Much ? , Quarterly Journal of Economics, Forthcoming.

9. Public Policies: Improving Access to Finance

Paravisini, Local Bank Financial Constraints and Firm Access to External Finance, Journal of Finance, Forthcoming.

10. Forensic Finance / Crookonomics

Bergstresser & Philippon, CEO incentives and Earnings Management, Journal of Financial Economics, 2005.

Benefit-Cost Analysis
Course meets: Thursday, 17.00 20.00, MC202 Faculty:

James K Hammitt (james.hammitt@tse-fr.eu) Nicolas Treich (ntreich@toulouse.inra.fr)

Outline of topics 1- Introduction to benefit-cost analysis 1.1 Principles & theory 1.2 Policy use 2- Benefits (theory and empirical issues) 2.1 Willingness to pay 2.2 Value per statistical life 2.3 QALYs 2.4 Revealed preference 2.5 Stated preference 3- Costs (concepts and empirical methods) 3.1 Opportunity costs 3.2 Compliance costs 3.3 Distorted markets 3.4 General equilibrium 4- Difficult issues 4.1 Equity 4.2 Discounting 4.3 Uncertainty 4.4 Bounded rationality 4.5 Altruism & social preferences 5- Applications 5.1 Mobile telephones and traffic safety 5.2 Environmental pollution Requirements: Students should attend all sessions and participate in class discussion. At the end of the term, each student will make a presentation of a benefit-cost analysis or of a paper discussing some topic relevant to benefit-cost analysis. Topics must be approved in advance by one of the instructors. Presentations will be approximately 20 minutes with 10 minutes discussion. Grade will be based on presentation (10 points), discussion of other students presentations (5 points), and class discussion (5 points).

Useful references

Pearce, Atkinson and Mourato, 2006, CBA and the Environment, Recent Developments, OECD. [broad, precise, up to date, and accessible with technical annexes] Boardman et al., 2006, CBA: Concepts and practices, Pearson. [broad, good basic economics] Kopp, Krupnick and Toman, 1997, CBA and Regulatory Reform: An Assessment of the Science and the Art, RFF. [nontechnical economic paper summarizing state of knowledge on BCA] Viscusi, 1998, Rational Risk Policy, Oxford UP. [summary of the authors empirical work on risk policies] Adler and Posner, 2001, CBA, Legal, Economic and Philosophical Perspectives, Chicago UP. [collected papers by top social scientists, critical toward BCA] Layard and Glaister, 2003, CBA, Cambridge UP. [reprinted papers by top economists, technical] Sunstein, 2002, Risk and Reason: Safety Law and the Environment, Cambridge UP. [legal perspective on BCA] Bateman et al., 2002, Economic Valuation with Stated Preference Techniques, Edward Elgar. [for survey techniques] Fuguitt and Wilcox, 1999, CBA for Public Sector Decision Makers, Quorum Books. [economic, nontechnical] Treich, 2005, LACB de la Prvention des Risques, see authors webpage. [in French, for some references] Hammitt, 2007, Risk Assessment and Economic Evaluation, Chapter 112 (1696-1711) in W.N. Rom (ed.), Environmental and Occupational Medicine (fourth edition), LippincottRaven Publishers [introductory overview] US Environmental Protection Agency, National Center for Environmental Economics, Guidelines for Preparing Economic Analyses, http://yosemite.epa.gov/ee/epa/eed.nsf/pages/Guidelines.html [EPA guidance for conducting BCA] Graham, 2008, Saving Lives through Administrative Law and Economics, University of Pennsylvania Law Review 157: 395-540. [overview of US procedure and recommendations for improvement; Graham was head of OIRA 2001-2006] Blogs: http://www.law.upenn.edu/blogs/regblog/ http://regulation2point0.org/

DATA MINING
Jean-Michel LOUBES

Voici les mots clefs: analyse de donnes, apprentissage statistique, aide la dcision Le cours cherche tudier l'analyse de donnes et l'apprentissage tant d'un point de vue thorique que pratique. Nous tudierons dans un premier temps les algorithmes de classification (K-means, arbres de classification), les mthodes de reprsentation des donnes (ACP) ainsi que les techniques de rduction de dimension. Puis nous nous intresserons aux mthodes d'aide la dcision automatique au moyen des mthodes SVM, rseaux de neurones, CART et Random Forest. Nous montrerons que ces mthodes dpendent de la thorie de la slection de modles et d'tude de la complexit.

M2 & DEEQA 2011-12: Political Economy and Development, Jean-Paul Azam. Why do rich countries give so much money to poor ones as foreign aid? This course describes a research program spanning more than a decade that tried to answer this question. It suggests that philanthropy might not be the main motive. Reading List :
Foreign Aid vs. Poverty (1) Jean-Paul Azam and Jean-Jacques Laffont (2003): Contracting for Aid, Journal of Development Economics 70 (1), 25-58, February 2003. Foreign Aid vs. Oppression and Violence (2) Jean-Paul Azam and Tahsin Saadi-Sedik (2004): Aid v. Sanctions for Taming Oppressors: Theory and Case Study of the Iraqi Kurds, Defence and Peace Economics, 15 (4), 343-364, August 2004. (3) Jean-Paul Azam (2006): The Paradox of Power Reconsidered: A Theory of Political Regimes in Africa, Journal of African Economies, 15 (1), 26-58, March 2006. Peace and Redistribution without Aid (4) Jean-Paul Azam (2010): A State is Born: Transport Infrastructure and Democracy in Somaliland, TSE-Working Paper No.10-229, September 2010: Toulouse School of Economics. (5) Jean-Paul Azam and Sandrine Rospab (2007): Trade Unions vs. Statistical Discrimination: Theory and Application to Post-Apartheid South Africa, Journal of Development Economics, 84 (1), 417-444. Foreign Aid vs. Immigration from the South (6) Jean-Paul Azam and Flore Gubert (2006): Migrants Remittances and the Household in Africa: A Review of Evidence, Journal of African Economies, 15 (Supplement 2), 426-462, December 2006. (7) Jean-Paul Azam and Ruxanda Berlinschi (2010): The Aid-Migration Trade-Off, in Justin Yifu Lin and Boris Pleskovic (Eds.): Annual World Bank Conference on Development Economics 2009, Global: People, Politics, and Globalization, 147-171, World Bank: Washington, D.C. Foreign Aid vs. Transnational Terrorism (8) Jean-Paul Azam (2005): Suicide-Bombing as Inter-Generational Investment, Public Choice, 122 (1-2), 177-198, January 2005. (9) Jean-Paul Azam (forthcoming): Why Suicide-Terrorists Get Educated, and What to Do About it, Public Choice. (10) Jean-Paul Azam and Vronique Thelen (2010): Foreign Aid vs. Military Intervention in the War on Terror, Journal of Conflict Resolution, 54 (2), 237-261, April 2010. (11) Jean-Paul Azam and Vronique Thelen (work in progress): Where to Spend Foreign Aid to Counter Terrorism.

Cours optionnel Dures de vie, M2 Statistique et Economtrie e e

Enseignant : Eve Leconte Cours : 7h30 TD sur ordinateur (SAS et R) : 10h30 Contexte Le terme dures de vie, issu originellement du milieu mdical, dsigne tout type de e e e donnes o` lon sintresse a modliser une dure, cest-`-dire le dlai entre une date e u e ` e e a e dorigine et la date dapparition dun vnement dintrt. De multiples domaines sont e e ee concerns selon lvnement considr : domaine mdical (dcs, apparition dune male e e ee e e e adie,...), abilit (panne dun composant), conomie (n dun pisode de chmage), assue e e o rance (arrive dun sinistre), psychologie (apprentissage dune tche), sociologie (mariage, e a naissance, divorce,...),... La spcicit des dures de vie est la prsence de donnes cene e e e e sures, cest-`-dire dindividus pour lesquels lvnement dintrt ne sest pas encore proe a e e ee duit a la date de lanalyse. La prise en compte de telles donnes ncessite une mthodologie ` e e e spcique. e Objectif du cours : savoir reconna une situation o` apparaissent des donnes centre u e sures, pouvoir analyser de tels jeux de donnes en mettant en uvre une modlisation e e e approprie. e Plan du cours : Les distributions de survie : fonctions spciques et lois usuelles, e La notion de censure, Estimation non paramtrique de la fonction de survie et la fonction de risque : e estimateurs de Kaplan-Meier et de Nelson-Aalen, Comparaison de la survie de plusieurs groupes : tests du logrank pondrs, ee Les mod`les de rgression paramtriques : modles a risques proportionnels et e e e e ` mod`les a dure de vie acclre, e ` e ee e Le mod`le semi-paramtrique de Cox : modlisation, vraisemblance partielle, estie e e mation et tests des param`tres, interprtation des param`tres, estimation du risque e e e cumul de base, validation du mod`le. e e

Empirical Analysis of Infrastructure Industries Farid GASMI Toulouse School of Economics (Arqade & Idei) farid.gasmi@tse-fr.eu

Description The objective of this course is to emphasize the applied side of a set of topics in industrial organization and regulatory economics that are particularly relevant when thinking about the reforms that infrastructure industries have experienced during the last two to three decades in both developed and developing countries. These topics include the issues of natural monopoly, price regulation, access pricing, universal service, competition policy, and some political economy aspects of infrastructure industries reforms. The main ingredients of some theoretical frameworks within which important facets of these issues can be highlighted and some empirical analyses that further explore them are discussed. Students are expected to actively participate in class by presenting empirical papers concerning with some of these issues as they are raised in various infrastructure industries (telecoms, energy, transport, etc.).

January 2012

cole dconomie de Toulouse - TSE

ENERGY AND CLIMATE CHANGE

N.LADOUX

Introduction to public policy of the environment Main reference: Sandmo A. (2000), The Public Economics of the Environment, Oxford University Press) Optimal taxation in a second best world: theoretical and empirical analysis Main references: Sandmo A. (1975), Optimal Taxation in the Presence of Externalities, Swedish journal of Economics, 77 Cremer H., Gahvari F. and Ladoux N. (2003), Environmental Taxes with Heterogeneous Consumers: An Application to Energy Consumption in France", Journal of Public Economics, vol. 87 Environmental Tax Design with Endogenous Earning Abilities (with Applications to France), Journal of Environmental Economics and Management Vol. 59, n1, 2010, 82-93 (en collaboration avec Helmuth CREMER et Firouz GAHVARI) Global warming: the necessity to introduce the time dimension in the analysis Main references: Nordhaus, W., Managing the Global Commons: The Economics of Climate Change, MIT Press, Cambridge, MA., 1994. Edenhofer O., Grubb M., Khler J. and Popp D., Comparison of Climate Policies in the Entice-BR Models, Energy Journal, 2006, 17-55 Policy instruments to mitigate climate change in practice: The EU CO2 market and the Green certificates (Presentation by Ph. Girard)

Environmental Evaluation

36h (31.5h teaching, 4.5h seminar) Henrik Andersson Oce: MS210

Toulouse School of Economics Phone: 05.61.12.85.28 E-mail: henrik.andersson@tse-fr.eu

Course description The objectives of the course are to introduce the theoretical foundations of environmental evaluation, present and describe the empirical methods used, and to discuss the implementation of estimated values in policy making. The main focus of the course will be the application of dierent evaluation methods, such as hedonic pricing, contingent valuation, choice experiments, recreation values, etc. The aim is to provide the students who intend to pursue environmental- or health-related research or policy decision making with an understanding and knowledge on preference elicitation for non-marketed goods. The outline of the course is as follows, where section 2 is the central part of it: 1. Introduction to environmental evaluation 2. Non-market evaluation (a) Revealed preference methods (b) Stated preference methods 3. Health evaluation 4. Experiments 5. Developing countries 6. Further topics Main text Hanley, N. and E. B. Barbier: 2009, Pricing Nature: Cost-Benet Analysis and Environmental Policy. Cheltenham, UK: Edward Elgar. Other readings The required reading is mainly based on per-reviewed and published articles. Readings are in general available online through the University of Toulouse library, but those that are not will be made available in class. Grades Students are required to complete two tasks during the class. Each task is worth 50% of the grade. To pass the class, students are required to pass both tasks. Paper One paper of about ve to eight pages critically discussing one or more articles from the reading list or other articles approved by the instructor. The paper is to be presented and discussed by another student at a seminar. The grade will be based on: 1. Quality and originality of the paper. 2. The role of discussant in the seminar. 3. Active participation in the seminar. Exam A take-home exam in which students will analyze data sets and answer specic questions.
Master 2, in the module Economie de lenvironnement des ressources naturelles et de lagriculture, Bloc Evaluation. This version of the syllabus provides a general and preliminary description of the course and its requirements. The more detailed syllabus with the reading list will be provided in class.

Financial Markets and Financial Intermediaries Syllabus 2011 2012 The course will cover the following topics: A. Financial Markets 1. Arbitrage Theory 1.1 Static Arbitrage 1.2 Dynamic Arbitrage 2. Portfolio Choice 2.1 Mean Variance Analysis 2.2 Utility Gradient Approach 3. Equilibrium 3.1 The CAPM 3.2 The C-CAPM B. Financial Intermediaries 1. Why Do Financial Intermediaries Exist? 2. The Lender-Borrower Relationship

Models of Financial Markets

Alexander Guembel M2 Actuariat MIF 2011 12

In perfect markets equilibrium prices reflect the information and preferences of all potential investors and the corresponding allocation of the asset is efficient. We focus on the alternative case, where information asymmetries and strategic behaviour or cognition impair market efficiency. In this context the institutional arrangements governing the trading process can affect market outcomes. Against this backdrop, we will study the formation of prices, the trades conducted by market participants and the welfare properties of the resulting allocations. This will provide you with an introduction to a field of research in finance called market microstructure. If you want to read a survey on this topic you can use Biais, Glosten and Spatt, 2005, Market microstructure: A survey of microfoundations, empirical results and policy implications, Journal of Financial Markets, 217-264. The course will be organized as follows. First, we will briefly review the actual organization of financial markets in practice, so as to understand the rules of the game (class 1). Second we will study some of the major models of price formation under information asymmetry (classes 2 and 3). Third, we will extend these models to study two applications (manipulation and herding) (class 4)). The final exam (100% of overall grade) will be based on questions about the material covered in the lectures. These can be based on multiple choice questions, short answer questions or simple models.

Course Outline I) Introduction (Class 1) Introduction: Overview and institutional details An illustration of a simple model of market microstructure: bid-ask spreads in the Glosten Milgrom model Reference article: Glosten, L. and P. Milgrom, 1985, Bid, Ask and Transactions Prices in a Specialist Market with Heterogenously Informed Agents, Journal of Financial Economics, 17, 71-100. II) Fundamental principles of financial markets with privately informed traders II.1) Competitive equilibrium in a financial market with private information The benchmark model (Class 2) 1

Reference articles: Grossman, S. and J. Stiglitz, 1980, On the Impossibility of Informationally Efficient Markets, American Economic Review, 70, 393-408. II.2) Strategic traders Informed traders with market power (Class 2) Reference articles: Kyle, A., 1985, Continuous auctions and insider trading, Econometrica, 13151335. Hedging as a trading motive for uninformed traders (Class 3) Reference article: Spiegel, M, and A. Subrahmanyam, 1992, Informed speculation and hedging in a non-competitive securities market, Review of Financial Studies, 5, 307 329. Limit orders and liquidity supply by risk averse agents (Class 3) Kyle, A., 1989, "Informed Speculation with Imperfect Competition," Review of Economic Studies, 56, 317-355. III) Applications Manipulation (Class 4) Reference articles: Goldstein, I. and A. Guembel, 2008, Manipulation and the Allocational Role of Prices, Review of Economic Studies, 75, 133-164. Herding (Class 4) Reference articles: Avery, C. and P. Zemsky, 1998, Multidimensional Uncertainty and Herd Behavior in Financial Markets, American Economic Review, 88, 724-748.

cole dconomie de Toulouse - TSE

Foreign Aid: Organization and Effectiveness

Instructor: Pepita Miquel-Florensa Email: pepita.miquel@tse-fr.eu Office: MF123bis This course aims to study the organization and effectiveness of foreign development aid. We will study the different players on the aid game: on the one side, the aid recipients, and on the other side the aid donors. On the aid donors, we will study the behaviour of multilateral agencies (like the World Bank or the Inter-American Development Bank), of bilateral agencies (like the AFD, GTZ, USAid, ...) and of Non-Governmental organizations. We will study the comparative advantage of each of these institutions, how they allocate funds, how they interact, and how their behaviour affects the aid recipients' behaviour. We will also look in detail into the effectiveness of aid flows, and the factors that affect this effectiveness. This is a suggested list of papers and books, that will be updated during the course. 1. Introduction Easterly, William (2009), Can the West Save Africa?, Journal of Economic Literature Radelet, Steven (2006), A primer on foreign aid, Center for Global Development 2. The market for aid: participants Klein and Harford (2005), The market for aid, International Finance Corporation Easterly, William and Tobias Pfutze, Where Does the Money Go? Best and Worst Practices in Foreign Aid, Journal of Economic Perspectives, Spring 2008. Powell and Bobba (2006), Multilateral intermediation of foreign aid: What is the trade-off for donor countries?, IADB Working paper. Dreher, Molders, Nunnenkamp (2007), Are NGOs better donors? A case study of aid allocation for Sweeden, Kiel Working paper Koch, Dreher, Nunnenkamp, Thiele (2008), Keeping a low profile: What determines the allocation of aid by NGOs? Kiel Working paper Werker and Ahmed (2007) What do non-governmental institutions do? Journal of Economic Prospectives. Humphrey, C. and Michaelowa, K. (2010) "The bussiness of Development: Trends in Lending by Multilateral Development Banks to Latin America, 1980-2009", CIS Working Paper 3. Aid allocation Alesina and Dollar (2000), Who gives aid to whom and why?Journal of Economic Growth

Werker, Eric, Faisal Z. Ahmed, and Charles Cohen (2009) "How Is Foreign Aid Spent? Evidence from a Natural Experiment." American Economic Journal: Macroeconomics Nunnenkamp and Ohler (2011), "Aid Allocation through various official and private channels: Need, Merit and Self-interest as motives of German donors" World Development Neumayer (2006) "What factors determine the allocation of aid by Arab countries and Multilateral agencies?" Journal of Development studies. 4. Aid Effectiveness Rajan, Raghuram G. and Arvind Subramanian (2007), Aid and Growth: What Does the CrossCountry Evidence Really Show?, Review of Economics and Statistics Djankov, Simeon, Jose Montalvo and Marta Reynal-Querol (2009), The Curse of Aid, Journal of Economic Growth. Burnside, Craig and David Dollar (2000), Aid, Policies, and Growth, American Economic Review Easterly, William, Ross Levine, and David Roodman (2004) "New Data, New Doubts: A Comment on Burnside and Dollar's "Aid, Policies, and Growth", American Economic Review, Kilby and Dreher (2010), The impact of Aid on growth revised: Do donors motives matter? Economic Letters Denizer, Kaufmann and Kraay (2011). "Good countries or good projects? Macro and Micro correlates of World Bank Project Performance. WB Policy Research Working Paper Kilby, C. (2000) "Supervision and performance: the case of world bank projects", Journal of Development Economics Dollar and Svensson (1998) "What explains the success or failure of structural adjustment programs?" World Bank working paper. 5. Donor fragmentation Knack, S. and Rahman, A. (2007) 'Donor fragmentation and bureaucratic quality in aid recipients' Journal of Development Economics Roodman, D.(2006) 'Aid Project Proliferation and Absortive Capacity' Working paper, Center for Global Development. Roodman, D. (2006) 'Competitive Proliferation of Aid projects: A Model', Center for Global Development. Torsvik, G. 'Foreign Economic Aid; Should donors cooperate?' Journal of Development Economics 6. Aid contracts: Conditionality and Tied aid Temple (2010) Aid and Conditionality, Handbook of Development Economics. Azam and Laffont (2003) "Contracting for aid." Journal of development economics Svenson, Jakob (2000) "When is foreign aid policy credible? Aid dependence and conditionality." Journal of development economics Svenson, Jakob (2003) "Why conditional aid does not work and what can be done about it?." Journal of development economics 7. Suggested books Dambisa Moyo (2009) "Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa" William Easterly (2007) "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good"

Toulouse School of Economics

Green Business Strategies and Socially Responsible Investments

Fall 2011

Instructors
StefanAmbec,INRAResearchfellow,email:sambec@toulouse.inra.fr PhilippeBontems,INRAResearchfellow,email:bontems@toulouse.inra.fr SbastienPouget,ProfessorofFinance,email:spouget@univ-tlse1.fr

Objective
Thecoursedescribescorporatestrategiesregardingtheprotectionoftheenvironment.Weanalyze differentwaysforfirmstoenjoyacompetitiveadvantagebyimprovingenvironmentalperformance. These are: improving the environmental quality of a product; adopting greener technologies; complying with and preempting environmental regulations, adopting through the adoption of greenertechnologies;changingmanagementandbusinesspractices,forexamplebyasadoptingan environmental management system; gaining access to needed financial capital like socially responsible investment funds. We also investigate the firms localization strategies depending on countries environmental regulations. The course discusses how socially responsible investing (SRI) integrates environmental aspects into finance. It then studies how SRI affects corporate financing andthefunctioningoffinancialmarkets.Thiscoursehasbeendevelopedaspartoftheactivitiesofa research center on SRI: Chaire Finance Durable et Investissement Responsable (see the website of thecenterathttp://www.idei.fr/fdirformoreinformation).

TentativeCourseOutline
Part1:SociallyResponsibleInvestment(SRI)SbastienPouget(14/09,21/09,28/09) Whatissociallyresponsibleinvesting?Socialratingagencies,socialresponsibilityandcorporate financing, financialperformanceandsociallyresponsiblebehavior. 1

 Part2:Technology,organizationandenvironmentalregulationStefanAmbec(5/10,12/10, 19/10) Greentechnologies,EnvironmentalManagementSystems(EMS),environmentalregulation preemption? Part3:EnvironmentalqualityofproductsandlocalizationofproductionPhilippeBontems(2/11, 9/11,16/11) Greenlabeling,pollutionhavenhypothesis,environmentandtrade Moreinformation(detailedoutline,references,papers,slides)willbeprovidedduringthecourseby eachteacher.

Evaluation
Thecourseevaluationwillbebasedon statistical analyses (to be assigned in class, 1/3)acase study (1/3) and its presentation in class (1/3). The case study should describe a companys or an investors green business strategies. It should relate the facts with the issues and mechanisms explainedinclass.Thelastthreesessions(21/11,30/11,7/12)willbedevotedtothepresentationof case studies by students. The deadline for providing the written document for the case study is December12. Bibliography Ambec, S. M. A. Cohen, S. Elgie and P. Lanoie (2011) The Porter Hypothesis at 20: can environmental regulation enhance innovation and competitiveness?, Resources for the Future (RFF) discussion paper, http://www.rff.org/rff/documents/rff-dp-11-01.pdf Ambec S. and P. Lanoie (2008), Does it pay to be green? A Systematic Overview, Academy of Management Perspectives, 23: 45-62. Lanoie, P, J. Laurent-Lucchetti, S. Ambec and N. Johnstone (2011) Environment policy, innovation and performance: New insights on the Porter hypothesis Journal of Economics and Management Strategy, 20(3): 803841 Roland Benabou and Jean Tirole, Individual and Corporate Social Responsibility, Economica, pp. 1-19. Geoffrey Heal, Corporate Social Responsibility: An Economic and Financial Framework, The Geneva Papers on Risk and Insurance Issues and Practice, 2005, pp. 387409. Augustin Landier and Vinay Nair, Investing for Change, Oxford University Press, 2009. Jean Tirole, Corporate Governance, Econometrica, 2001, pp. 1-35.

Individuals and Households in Developing Countries Toulouse School of Economics Fall 2011 Priscila Souza priscila.souza@tse-fr.eu O ce: MF 121 Stphane Straub stephane.straub@univ-tlse1.fr O ce: MF 125 1st half: Priscila Souza, Tuesdays and Thursdays, 14-15:30pm. 2nd half: Stphane Straub, Mondays, 11-12:30pm and 3:30-5pm. This course covers the application of microeconomic tools to economic development issues in poor countries and the poorest sections of middle-income countries, with a focus on the study of individual and household behavior. The main topics are household economics, saving, risk and incomplete markets, philanthropy and non-prot organizations, health and education, micronance, infrastructure and property rights. We emphasize a critical reading of relevant papers on the selected topics. Readings (marked with *) will be covered in detail during lectures and we expect you to read them beforehand in order to participate in class discussion. Non-starred readings will not be discussed but are listed here as a guide for further study. Reference books in development economics and a short description of each of them are provided below. You are not required to buy these books for the course, but we recommend you to search and consider acquiring some of them, specially if you intend to pursue your studies in the area. 1) BARDHAN, Pranab and UDRY, Christopher, Development Microeconomics This is an excellent graduate level book that synthesizes important topics in development microeconomics. The focus is largely theoretical though some 1

empirical work is also discussed. It provides lots of intuition for the models and economic problems and it is not technically di cult. 2) RAY, Debraj, Development Economics This undergraduate textbook provides a great insight into the literature of development economics. The book is well-written, with clear and rigorous arguments that require minimum math skills. 3) BASU, Kaushik, Analytical Development Economics: The Less Developed Economy Revisited This is a graduate-level book on theoretical development economics with a good coverage of topics in macro (e.g., growth, in ation, trade, debt), the dual economy (e.g., migration, rural-urban wage gap) and the rural economy (e.g., tenancy, rural credit markets). 4) ERMISCH, John, An Economic Analysis of the Family This book focus on intra-household allocation and decision making, showing how standard microeconomics methods can be applied to understand family behavior. It highlights the importance of this analysis to understand the distribution of welfare within the family and the implications of public policy, 5) DEATON, Angus, The Analysis of Household Surveys: A Microeconometric Approach to Development Policy Focusing on microeconometric empirical techniques, this book study issues that arise in the construction and analysis of household survey data from poor countries. It emphasizes policy questions from several dierent developing economies. 6) BANERJEE, Abhijit and DUFLO Esther, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty This book focus on research that investigates the behavior of poor people and how antipoverty programs and nancial aid impact their lives. It emphasizes the contribution of randomized control trials to the eld of development economics.

For Econometrics reference: 1) WOOLDRIDGE, Jerey, Econometric Analysis of Cross Section and Panel Data A graduate-level book on microeconometric methods with a well-organized and clear text. This is one of the most used book by researchers doing applied work with cross section and panel data. 2) CAMERON A. Colin and TRIVEDI Pravin, Microeconometrics: Methods and Applications This graduate-level book is oriented to researchers doing empirical work, as it covers a broad range of topics frequently encountered during microeconometrics applications. 3) GREENE, William H, Econometric Analysis This is a widely used graduate-level book in econometrics that covers a vast number of topics. Course Requirements Students are expected to actively participate in class discussions. A set of home assignment (groups of up to 3 students) will constitute 40% of the grade. Also, there will be a nal exam (60%).

PART 1 - Priscila Souza (Sep. 13th to Oct. 20th)

1) Household economics (unitary household model, collective model and beyond) - 3 Lectures *Becker, Gary S., "A Theory of Social Interactions", Journal of Political Economy, Vol. 82, No. 6, Nov.-Dec. 1974, 1063-1093. *Bergstrom, Theodore C., "A Fresh Look at the Rotten Kid Theorem and Other Household Mysteries", Journal of Political Economy, Vol. 97, No. 5, Oct. 1989, 1138-1159. *Browning, Martin and Chiappori, Pierre-Andre, "E cient IntraHousehold Allocations: A General Characterization and Empirical Tests", Econometrica, Vol. 66, No. 6, Nov., 1998, 1241-1278. 3

*Duflo, Esther, "Grandmothers and Granddaughters: Old Age Pension and Intra-household Allocation in South Africa", World Bank Economic Review, 17(1), 2003, 1-25. *Udry, Christopher. 1996. "Gender, Agricultural Productivity and the Theory of the Household", Journal of Political Economy Becker, Gary S., "A Treatise on the Family", Cambridge, MA: Harvard University Press, 1981. Bergstrom, Theodore C., "A Survey of Theories of the Family", In Handbook of Population and Family Economics,. Ed. Mark Rosenzweig and Oded Stark, Elsevier, 1997, 21-79. Bruce, Neil and Waldman, Michael, "The Rotten-Kid Theorem Meets the Samaritan Dilemma", Quarterly Journal of Economics, Vol. 105, No. s 1, (Feb., 1990), pp. 155-165 Browning, Martin, Bourguignon, Francois, Chiappori, Pierre-Andre and Lechene, Valerie, "Income and Outcomes: A Structural Model of Intrahousehold Allocation", Journal of Political Economy, Vol. 102(6), Dec. 1994, 1067.96. Chiappori, Pierre-Andre, "Rational Household Labor Supply", Econometrica, Vol. 56(1), Jan. 1988, 63.90. Chiappori, Pierre-Andre, "Collective Labor Supply and Welfare", Journal of Political Economy, Vol. 100(3), Jun. 1992, 437.67. Schultz, T. Paul., "Testing the neoclassical model of family labor supply and fertility", Journal of Human Resources 25, 1990, 599.634. Souza, Priscila Z., "Moral Hazard in the Family", Job Market Paper, https://sites.google.com/site/priscilazsouza/. 2) Saving, Risk and Incomplete Markets - 4 Lectures *Paxson, Christina H. 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand", American Economic Review,.Vol. 82, No. 1 (Mar., 1992), pp. 15-33. 4

*Townsend, Robert M., "Risk and Insurance in Village India", Econometrica, Vol. 62, No. 3, (May, 1994), pp. 539-591 *Udry, Christopher, "Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria", Review of Economic Studies, Vol. 61, No. 3 (Jul., 1994), pp. 495-526 *Ligon, Ethan, Thomas, Jonathan P. and Worrall, Tim, "Informal Insurance Arrangements with Limited Commitment: Theory and Evidence from Village Economies", Review of Economic Studies, Vol. 69, No. 1, Jan. 2002, 209-244. *Foster, Andrew D. and Rosenzweig, Mark R., "Imperfect Commitment, Altruism, and the Family: Evidence from Transfer Behavior in LowIncome Rural Areas", Review of Economics and Statistics, Vol. 83, No. 3, Aug. 2001, 389-407. Attanasio, Orazio. and Rios-Rull, Jose-Victor, Consumption smoothing in island economies: Can public insurance reduce welfare?, European Economic Review, 2000, 44 (7), 1225 1258. Besley, Timothy, "Nonmarket Institutions for Credit and Risk Sharing in Low-Income Countries", Journal of Economic Perspectives, Vol. 9, No. 3 (Summer, 1995), pp. 115-127. Dubois, Pierre, Jullien, Bruno and Magnac, Thierry.(2008), "Formal and Informal Risk Sharing in LDCs: Theory and Empirical Evidence", Econometrica, 76: 679 725. Ligon, Ethan, Thomas, Jonathan P. and Worrall, Tim, Mutual insurance, individual savings, and limited commitment,Review of Economic Dynamics, 2000, 3 (2), 216 246 Morduch, Jonathan , "Income Smoothing and Consumption Smoothing", Journal of Economic Perspectives, Vol. 9, No. 3, Summer 1995, pp. 103-114. Udry, Christopher, "Risk and Saving in Northern Nigeria", American Economic Review, Vol. 85, No. 5 (Dec., 1995), pp. 1287-1300 5

3) Philanthropy and Non-prot organizations: Altruism and Other Motivations - 2 Lectures *Benabou, Roland and Tirole, Jean, "Incentives and Prosocial Behavior", American Economic Review, (December, 2006) *Besley, Timothy and Ghatak, Maitreesh, "Competition and Incentives with Motivated Agents", American Economic Review, Vol. 95, No. 3 (Jun., 2005), pp. 616-636 Benabou, Roland and Tirole, Jean, "Intrinsic and Extrinsic Motivation", Review of Economic Studies, 2003, 70: 489 520. Frey, Bruno, "Not Just for the Money: An Economic Theory of Personal Motivation", Cheltenham, UK: Edgar Elgar Publishing, 1997. Frey, Bruno S. and Meier, Stephan . 2004. "Social Comparisons and Pro-social Behavior:Testing Conditional Cooperation in a Field Experiment.", American Economic Review, 94(5): 1717-1722. Seabright, Paul, "Continuous Preferences and Discontinuous Choices : How Altruists Respond to Incentives", The B. E. Journal of Theoretical Economics (Contributions), vol. 9, n. 1, April 2009. Schechter, Laura 2007. "Theft, Gift-Giving, and Trustworthiness: Honesty Is Its Own Reward in Rural Paraguay", American Economic Review, 97(5): 1560 1582. 4) Human Capital: Health and Education - 3 Lectures *Miguel, Ted and Kremer, Michael, Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities Econo, metrica, vol. 72(1), 2004, pp. 159-217, 01. *Strauss, John, Does Better Nutrition Raise Farm Productivity? , Journal of Political Economy, 1986, pp. 297-320. *Behrman, Jere, Sengupta, Pilali and Todd, Petra (2001), "Progressing Through Progresa: An Impact Assessment of a School Subsidy Experiment", PIER Working Paper, 01-033, Penn Institute for Economic Research, University of Pennsylvania. 6

*Skoufias, Emmanuel and Parker, Susan W (2001), "Conditional Cash Transfers and their Impact on Child Work and School Enrollment: Evidence from the PROGRESA program in Mexico", Economia Vol.2, No. 1, p. 45-96 *Angelucci, Manuela, De Giorgi, Giacomo, Rangel, Marcos A. and Rasul, Imran, "Family Networks and School Enrolment: Evidence From a Randomized Social Experiment", Journal of Public Economics, forthcoming. *Edmonds, Eric V., "Child Labor and Schooling Responses to Anticipated Income in South Africa", Journal of Development Economics, vol. 81(2), Dec. 2006, 386.414. Foster, Andrew D. and Rosenzweig, Mark, "Technical Change and Human-Capital Returns and Investments: Evidence from the Green Revolution", American Economic Review, Vol. 86, No. 4 (Sep., 1996), pp. 931-953 Strauss, John and Thomas, Duncan, "Health, Nutrition, and Economic Development", Journal of Economic Literature, Vol. 36, No. 2, Jun., 1998, pp. 766-817 Schultz, T. Paul, School Subsidies for the Poor: Evaluating the Mexican Progresa Poverty Program,Journal of Development Economics 74(1), 2004, 199-250

PART 2 - Stphane Straub (Oct. 25th to Dec. 5th)

1) Micronance - 4 Lectures *Dean Karlan and Jonathan Zinman, "Microcredit in Theory and Practice: Using Randomized Credit Scoring for Impact Evaluation" (June 2011) Science, 332(6035), pp. 1278-1284. *Dean Karlan and Jonathan Zinman, "Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field Experiment" (November 2009) Econometrica, 77(6), pp. 1993-2008.

*D. McKenzie, M. Fafchamps, S. Quinn and C. Woodru, "When is capital enough to get female enterprises growing ? evidence from a randomized experiment in Ghana", mimeo, June 2011. De Mel, Suresh, David McKenzie, and Christopher Woodru. 2008. Returns to Capital in Microenterprises: Evidence from a Field Experiment . The Quarterly Journal of Economics, 123(4): 1329-1372. Book: B. Armendariz de Aghion and J. Morduch, 2005, The Economics of Micronance, MIT Press. 2) Infrastructure - 5 Lectures *T. Dinkelman, "The eects of rural electrication on employment: New evidence from South Africa", forthcoming, American Economic Review. *Dimitrios Batzilis, Taryn Dinkelman, Emily Oster, Rebecca Thornton, Deric Zanera, 2010, "New cellular networks in Malawi: Correlates of service rollout and eects on employment", NBER Working Paper No. 16616. *Du E. and R. Pande (2007), Dams Quarterly Journal of Economics, o , 122(2), 601-646. *Galiani, S., P. Gertler and E. Schargrodsky (2005), Water for Life: The Impact of Privatization of Water Services on Child Mortality Journal , of Political Economy, 113: 83-120. Jensen R. (2007), The Digital Provide: Information (Technology), Market performance, and Welfare in the South Indian Fisheries Sector Quar, terly Journal of Economics, 122(3), 879-924. *Olken B., Monitoring Corruption: Evidence from a Field Experiment in Indonesia mimeo. Journal of Political Economy 115 (2), pp. 200-249, , April 2007. *D. Donaldson, "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure", mimeo, MIT.

Straub, S. (2010), Infrastructure and Development: A Critical Appraisal of the Macro-Level Literature forthcoming The Journal of Development , Studies, 2011. Straub, S. (2008), Infrastructure and Growth in Developing Countries : Recent Advances and Research Challenges World Bank Policy Research , Working Paper No.4460. Bonnet, C., P. Dubois, D. Martimort, and S. Straub, 2011, Empirical Evidence on Satisfaction with Privatization in Latin America forthcoming, , World Bank Economic Review.

3) Property Rights - 3 Lectures *Field, E; Torrero M (2004) Do Property Titles Increase Credit Access Among the Urban Poor? Evidence from a Nationwide Titling Program , mimeo. http://post.economics.harvard.edu/faculty/eld/papers.html *Besley, T (1995) Property Rights and Investment Incentives: Theory and Evidence from Ghana The Journal of Political Economy Vol. 103, pp.903-937 *Field, Erica (2007) Entitled to Work: Urban Property Rights and Labor Supply in Peru The Quarterly Journal of Economics, 122 (4): 1561-1602. ,

UE : Assurance N I.D.

Master 2me anne Actuariat Intitul du cours : ECTS: H CM: 24 H TD:

The economics of risk and insurance

Responsable du cours : Guillaume Plantin Contenu pdagogique :

Sessions 1 2 How do individuals make decisions under uncertainty? The economists view Expected utility theory, risk aversion, orders on risks Session 3 Design and pricing of insurance contracts: economic criteria Demand for insurance, insurance supply Session 4 Endogenous risk: moral hazard, conflicts between risk sharing and risk mitigation A general formulation of moral hazard, moral hazard in insurance markets, moral hazard elsewhere in finance Session 5 Is risk sharing still feasible when some people know more than others? The lemons problem, insurance in the presence of adverse selection, adverse selection elsewhere in finance Session 6 (if time permits) Why and how should large corporations manage risks? Introduction to corporate hedging theories, prudential management of insurance companies Session 7 Review session Review key concepts, practice with exercises, answer all students questions before the exam Session 8 Final exam.

Closed book. No cheat sheet.

Pr-requis : none Evaluation : Final written exam Bibliographie :

Eeckhoudt, L., C. Gollier et H. Schlesinger, (2005), Economic and Financial Decisions under Uncertainty, Princeton University Press

MATHEMATICAL AND STATISTICAL METHODS IN INSURANCE

Stphane Villeneuve

1 Some aspect of stochastic analysis

- Representation theorem for brownian martingale - Girsanov theorem - stochastic differential equations

2 Stochastic control with application in finance

- Portfolio optimization - irreversible investment - Dynamic programming and HJB equation

3- Singular Control in corporate finance

- Liquidity management - Introduction to Dynamic moral hazard

cole dconomie de Toulouse - TSE Microfinance, Land and Labor

Instructor: Pepita Miquel-Florensa Email: pepita.miquel@tse-fr.eu Office: MF123bis The aim of this course is to study the peculiarities of credit, land and labor markets in Developing countries. The first part of the course will cover the structure of the credit markets in developing countries, and will center on microfinance. We will study the constraints for access to credit in LDC's, and how the contractual arrangements have been influenced by adaptation to problems of information and contract enforcement. On the second part of the course, we will study the different land and labor agreements prevalent in LDC's. We will study the contractual agreements (sharecropping, interlinked contracts, ...) and how they are influenced by information problems and farmer's financial constraints. The course will cover both theoretical models and empiric papers. Here comes a preliminary reading list of papers. Two of the books suggested (Bardham and Udry and Ray) can be a good support specially for the theoretical part. Suggested books: Banerjee and Duflo (2011) "Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty" Armendariz and Morduch (2007) "The Economics of Microfinance" Bardham and Udry (1999) "Development Microeconomics" Ray (1998) "Development Economics" Credit markets in developing countries, Microfinance: Ghosh, P., Mookherjee, D. and D. Ray (2000), "Credit Rationing in Developing Countries: An Overview of the Theory," Chapter 11 in Readings in the Theory of Economic Development, edited by D. Mookherjee and D. Ray, London: Blackwell. Ghatak, Maitreesh and Timothy W. Guinnane: "The Economics of Lending with Joint Liability : Theory and Practice" Journal of Development Economics, Vol.60, No.1, October 1999. Xavier Gine, P. Jakiela, D. Karlan, and J. Morduch (2010) " Microfinance Games," American Economic Journal: Applied Economics Land and Labor in Developing countries: Banerjee, A., Gertler, P. and M. Ghatak (2002), "Empowerment and Efficiency: The Economics of Agrarian Reform," Journal of Political Economy

Banerjee, A.V., P. Gertler and M. Ghatak (2002) : "Empowerment and Efficiency - Tenancy Reform in West Bengal", Journal of Political Economy. Ackerberg, D. and M. Botticini (2002): "Endogenous Matching and Empirical Determinants of Contractual Form", Journal of Political Economy. Mukherjee, A., and D. Ray (1995). ``Labor Tying,'' Journal of Development Economics Shaban, R. (1987), Testing between Competing Models of Sharecropping, Journal of Political Economy

Optimization 1. Optimization in Hilbert spaces Theoretical tools : examples, projection theorem, separation results, Riesz representation theorem, convex cones, Farkas lemma Convex functions : continuity issues, characterizations of convexity, existence and characterization of minimizers, second-order conditions for minimization Fenchel duality and subdierentiation Convex programming : Lagrange method and KKT conditions, Lagrange multipliers, duality theory Nonlinear programming : KKT conditions 2. Introduction to the calculus of variations Sucient conditions : Euler-lagrange conditions, transversality condition Regularity of the solutions: continuously dierentiable solutions, piecewise continuously dierentiable solutions, Erdmann-Weierstrass corner condition A sketch of an Hilbertian approach : the space H 1 = W 1,2 (existence results, duality) Problems with innite horizons. Examples 3. Introduction to optimal control Pontriagyne maximum principle Sucient conditions Dynamic programming : Bellman principle Problems with innite horizons

Universit de Toulouse 1 Capitole Program Evaluation Methods and Microeconometrics Pierre Dubois pierre.dubois@tse-fr.eu General Presentation In this course, we will study microeconometrics methods for applied program evaluation and estimation of treatment eects. Recent development in microeconometrics improved our understanding of selection and endogeneity issues in applied economics. The course will be organize in two parts. The rst part will be based on formal lectures on treatments eects always with applications and examples in mind. The second part will be based on the critical reading of recent papers in applied development economics Part I: Lectures We will study several recent developments on the identication and estimation of treatments eects models. This recent literature helped in understanding the very meaning of estimated coe cients, the assumptions needed for their identication, their policy relevance, ... These methods are used in several contexts where one can sometimes nd what is called natural or controlled randomized experiments. After looking at the denitions of the several parameters of interests generally studied (average treatment eect, treatment eect on the treated, marginal treatment eect, local average treatment eect), we will look at their identication conditions (parametric or non-parametric) and at the dierent methods of estimation (instrumental variables, matching estimators, propensity score matching, ..) according to the selection process, heterogeneity assumptions, .. These methods are used in a large number of research areas generally policy oriented like labor economics, development economics, health economics, economics of education, public policy evaluation in general, ... For example, they are very useful to evaluate the impact of targeted programs for education, poverty alleviation, enhancement of access to credit, improvement of labor markets functioning, the impact of training programs, as well as health prevention or therapeutical programs. Part II: Here is a possible non exhaustive reading list of recent papers for presentation in class. 1. "The Impact of Credit on Village Economies." Joseph P. Kaboski and Robert M. Townsend. American Economic Journal, Forthcoming 2. "A Structural Evaluation of a Large-Scale Quasi-Experimental Micronance Initiative." Joseph Kaboski and Robert M. Townsend. Econometrica 79(5), September 2011: 1357-1406. 3. "Measuring the Impact of Financial Intermediation: Linking Contract Theory to Econometric Policy Evaluation." Robert M. Townsend and Sergio Urzua. Macroeconomic Dynamics 13 (S2), September 2009: 268-316. 4. "Comparing IV With Structural Models: What Simple IV Can and Cannot Identify" Sergio Urzua and J. Heckman. Forthcoming Journal of Econometrics, 2009. 5. "Education Choices in Mexico: Using a Structural Model and a Randomized Experiment to Evaluate Progresa" (2011), Orazio Attanasio Costas Meghir and Ana Santiago. Forthcoming in Review of Economic Studies. 6. "The Demand for Food of Poor Urban Mexican Households: Understanding Policy Impacts using Structural Models", Orazio Attanasio Manuela Angelucci. Draft September 2011. 1

7. "The impact of Oportunidades on Consumption, Saving and Transfers", Orazio Attanasio Manuela Angelucci and Vincenzo Di Maro. Draft October 2011. 8. "Subsidizing Vocational Training for Disadvantaged Youth in Colombia: Evidence from a Randomized Trial" (2011), Orazio Attanasio Adriana Kugler and Costas Meghir. American Economic Journal. Applied Economics. July, 3(3): 188-220 9. Class-Size Caps, Sorting, and the Regression Discontinuity Design. Eric Verhoogen, Miguel Urquiola. American Economic Review, v. 99 no. 1, pp. 179-215, March 2009. 10. "Modern Medicine and the 20th-Century Decline in Mortality: Evidence on the Impact of Sulfa Drugs" Seema Jayachandra A. Lleras-Muney and K. Smith, American Economic Journal: Applied Economics, April 2010, vol. 2 (2), pp. 118-146. 11. "The Price Eects of Cash Versus In-Kind Transfers" Seema Jayachandra J. Cunha and G. De Giorgi, September 2011 12. Generalized Roy Model and the Cost-Benet Analysis of Social Programs,Ed Vytlacil, Philipp Eisenhauer and James J. Heckman, 2010. 13. Pedro Carneiro & James Heckman & Edward Vytlacil, 2010. "Estimating marginal returns to education," CeMMAP working papers CWP29/10 14. "Does Staying in School (and not Working) prevent Teen Drinking and Smoking?" February 2010. Adriana Lleras-Muney and Rob Jensen 15. Miriam Bruhn and David McKenzie (2009), "In Pursuit of Balance: Randomization in Practice in Development Field Experiments", American Economic Journal: Applied Economics, 1(4):200-32 16. Dubois P. A. de Janvry and E. Sadoulet (2011) "Eects on School Enrollment and Performance of a Conditional Transfers Program in Mexico", forthcoming Journal of Labor Economics.

RISK MANAGEMENT
Stphane Villeneuve

Content:

1 Risk Management Tools ) Basics of Risk Modeling Value at Risk Risk measures Risk management in Finance and Insurance 2 Shareholder va lue ) Financial structure: trade-off theory Default and credit risk Liquidity management -

Prerequesite : Strong background in probability and financial economics

References: Beneplanc rochet (2011) Risk Management in Turbulent times. Bjork (2004) Arbitrage theory in Continuous time, Oxford university press Stultz (2003) Risk Management and derivatives, South western Tirole, The theory of Corporate Finance. Princeton University press

Toulouse School of Economics Master 2 EMO 2011-2012 Strategic Analysis

Paul Seabright Alban Thomas First semester, Mondays 15.30-17.00 and Fridays 9.30-11.00 Course Outline This course examines the principles of decision-making in strategic environments, those where the results of a decision-makers actions depend on the actions of other decision-makers. Most of the applications will be to the decisions of firms in imperfectly competitive environments, but we shall also consider possible applications to other strategic decision makers such as governments, international organizations, political parties, central banks The classes run by Paul Seabright will focus on principles of strategic analysis, essentially the application of game theory to real-world situations. Those run by Alban Thomas will focus on the use of statistical and econometric methods by decision-makers for understanding their own competences and the nature of their strategic environment. Depending on the numbers of students enrolled and their preferences with respect to applications, we may hold some pooled classes later in the semester in which we apply both theory and econometrics to a single problem. This will be decided around two weeks after the beginning of the course.

Topics to be covered: Part I: Paul Seabright (Monday class): This will cover applications of the theory of games. Some previous familiarity with game theory will be assumed, as the object is not to teach the theory, or to find ways to solve elaborate games, but rather to teach by repeated example how to find the game characterization that best captures the essence of a real-world strategic interaction. The aim is to understand strategic interactions between a) different groups within the firm (these are questions about corporate governance and internal management) b) The firm, its competitors and the regulatory authorities (these are questions about competitive strategy) The method is to combine general principles with examples and case studies. The following topics will be covered: 1. 2. 3. 4. 5. Game Theory, Corporate Strategy and Public Policy Business Strategies for Different Games Monopoly and Oligopoly Behavior Collusion Markets and Auctions Platform Competition and Two-Sided Markets

Examples will be drawn from areas as diverse as software, online auctions, motor vehicles, international diplomacy, and consumer electronics. Preliminary reading: Avinash Dixit and Barry Nalebuff: Thinking Strategically Jean Tirole: The Theory of Industrial Organization, MIT Press 1988, game-theoretical appendix.

Part II: Alban Thomas (Friday class): This part of the course will consist in providing students with a consistent set of statistical techniques for the analysis of firm strategic decisions as well as consumer behaviour on product markets. Particular attention will be paid to the use of econometric tools in the representation of consumer demand for new and differentiated products. Using real-world data and popular software packages, students will estimate demand systems for a variety of goods (especially differentiated ones) and learn techniques of calibrating for strategic price policy models. Flexible demand systems and discrete-choice models in cross-section and panel-data contexts will be the major ingredients of consumer demand analysis in this course. 1.Introduction 2.Efficiency analysis for a competitive firm 2.1 Production analysis 2.2 Primal approach: estimation of production functions 2.3 Panel data econometrics 2.4 Dual approach: cost & profit estimation 2.5 Systems of equations 3.Consumer analysis 3.1 Different ways of measuring consumption 3.2 Basic theory 3.3 Applied consumer analysis 3.4 The AIDS demand model 4.Structural analysis of markets 4.1 Oligopoly and firms entry 4.2 Differentiated goods 4.2.1 Consumer valuation & individual-level data 4.2.2 Econometric methods for discrete-choice data 4.3 Market-level econometric analysis of differentiated goods Reading: B. Baltagi, 2008. Econometric Analysis of Panel Data. Wiley and Sons. S. Berry and P. Reiss, 2007. Empirical models of entry and market structure. Chapter 29 in Handbook of Industrial Organization, volume 3. Elsevier, Amsterdam. R. Chambers, 1988. Applied Production Analysis: A Dual Approach. Cambridge University Press. A. Deaton and J. Muellbauer, 1980. Economics and Consumer Behavior. Cambridge University Press, Cambridge. W. Greene, 2007. Econometric Analysis. Prentice Hall, London.

Topics in Applied Econometrics and Development Toulouse School of Economics Spring 2012 Paul Seabright paul.seabright@tse-fr.eu O ce: MF 509 Priscila Souza priscila.souza@tse-fr.eu O ce: MF 121 Wednesdays, 9.30am-12:30pm, Room MD 102 This course covers some general principles of empirical investigation in development economics. We will discuss both econometric theory as well as important papers in the development literature with a focus on how the authors have accomplished identication. The 2 main questions we will be interested are: - How identication can be achieved? - What are the advantages and disadvantages of each empirical technique? The main topics are economic experiments, instrumental variables, and panel data. Readings (marked with *) will be covered in detail during lectures and we expect you to read them beforehand in order to participate in class discussion. Non-starred readings will not be discussed in detail but may be referred to and are listed here as a guide for further study. We also include a number of books, of which some are used for reference purposes (in which case chapter or page numbers will be indicated) while others are for background reading. Do not think that background reading is unimportant! It matters just as much to acquire a rigorous and scientic outlook on empirical investigation as to learn specic techniques.

Course Requirements Students are expected to participate actively in class discussions. A set of home assignments (in groups of up to 3 students) will constitute 50% of the grade; these will involve working on a data set, the details of which will be made available before the end of January. Also, there will be a nal exam (50%). We shall endeavor to make the reading material available either through a shared dropbox folder or, for some books, through lending you our personal copies. The logistics of this will be discussed in the rst class. 1) Experiments (Jan 4th - Jan 18th) *Miguel, Ted, and Michael Kremer. 2004. Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities , Econometrica, vol. 72(1), pp. 159-217, 01. *Cohen, Jessica, and Pascaline Dupas. 2010. Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment Quarterly Journal of Economics, 125(1), pp. 1-45. , *Du Esther, Michael Kremer, and Jonathan Robinson. 2011. o, "Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya." American Economic Review, 101(6): 2350 90. *Muralidharan, Karthik and Venkatesh Sundararaman. 2011. "Teacher Performance Pay: Experimental Evidence from India", Journal of Political Economy, Vol. 119, No. 1, February, pp. 39-77 *Karlan, Dean and Jonathan Zinman. 2009. "Observing Unobservables: Identifying Information Asymmetries With a Consumer Credit Field Experiment", Econometrica, November, 77 (6), pg. 1993-2008 *Banerjee, Abhijit V. and Esther Du 2009. The Experimental o. Approach to Development Economics, Annual Review of Economics, April, Vol. 1: 151-178. Books: Poor Economics, Bad Science, The Emperor New Drugs s 2

2) Instrumental Variables (Jan 25th- Feb 15th) *Wooldridge. Chapter 5 *Angrist, Joshua D., and Alan B. Krueger. 2001. "Instrumental Variables and the Search for Identication: From Supply and Demand to Natural Experiments." Journal of Economic Perspectives, 15(4): 69 85. *Acemoglu, Daron, Simon Johnson, and James A. Robinson. 2002. "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution", Quarterly Journal of Economics, 117(4): 1231-1294. *Paxson, Christina H. 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand", American Economic Review,.Vol. 82, No. 1, March, pp. 15-33. *Butcher, Kristin F. and Anne Case. 1994. "The Eect of Sibling Sex Composition on Women Education and Earnings", Quarterly Journal s of Economics, Vol. 109, No. 3, August, pp. 531-563. *Rosenzweig, Mark and Kenneth Wolpin. 2000 "Natural Natural Experimentsin Economics", Journal of Economic Literature, 38(4):827-74. Angrist, Joshua and Alan Krueger. 1999. "Empirical Strategies in Labor Economics" in Handbook of Labor Economics, Vol. III, ed. Orley Ashenfelter and David Card, pp. 1277-1366 Angrist, Joshua, Guido Imbens, and Donald Rubin. 1996. Identication of Causal Eects Using Instrumental Variables. Journal of the American Statistical Association, 91(434):444-455. Bound, John, David Jaeger and Regina Baker. 1995. Problems With Instrumental Variables Estimation When the Correlation Between the Instruments and the Endogenous Explanatory Variable is Weak.Journal of the American Statistical Association 90(430):443-450. Heckman, James J, Sergio Urzua, and Edward Vytlacil. 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity", Review of Economics and Statistics, 88:3, 389-432. 3

Heckman, James and Edward Vytlacil. 2002. Structural Equations, Treatment Eects, and Econometric Policy Evaluation. Economet, rica 73(3):669-738. Imbens, Guido W. and Joshua D. Angrist. 1994. "Identication and Estimation of Local Average Treatment Eects", Econometrica, Vol. 62, No. 2, March, pp. 467-475P. Timothy G. Conley, Christian B. Hansen, and Peter E. Rossi. Plausibly Exogenous. Review of Economics and Statistics, Forthcoming. , 3) Regression Discontinuity, Propensity Score Matching, other Quasi-experiment Designs (Feb 29th) *Imbens, Guido W. and Thomas Lemieux. 2008. "Regression discontinuity designs: A guide to practice", Journal of Econometrics, 142, 615 635. *Souza, Priscila. "Informality and Labor Supply", working paper available at https://sites.google.com/site/priscilazsouza/home. Hahn, Jinyong , Petra Todd and Wilbert Van der Klaauw. 2001. "Identication and Estimation of Treatment Eects with a RegressionDiscontinuity Design", Econometrica, Vol. 69, No. 1, Jan, pp. 201-209. 4) Panel Data (March 7th and 14th) *Woodridge. Chapters 10 & 11 *Townsend, Robert M. 1994. "Risk and Insurance in Village India", Econometrica, Vol. 62, No. 3, May, pp. 539-591. *Jayachandran, Seema. 2006. Selling Labor Low: Wage Responses to Productivity Shocks in Developing Countries. Journal of Political Economy, Vol. 114, June, pp. 538-575. 5) StudentsPresentation (March 21st) 4

6) Discussion (March 28th) Popper, Karl. 1972. "Conjectural Knowledge: My Solution to the Problem of Induction." In Objective Knowledge: An Evolutionary Approach. pp.1-31. Friedman, Milton. 1953. "The Methodology of Positive Economics." In Essays in Positive Economics pp. 3-46. Heckman, James. 2000. Causal Parameters and Policy Analysis in Economics: A Twentieth Century Retrospective.The Quarterly Journal of Economics 115(1):45-97. Manski, Charles F. 1989. "Anatomy of the Selection Problem", Journal of Human Resources, Vol. 24, No. 3, Summer, pp. 343-360. Manski, Charles F. 1995. The Re ection Problem,In: Identication Problems in the Social Sciences. Cambridge: Harvard University Press, 127136.

Books: BANERJEE, Abhijit and DUFLO Esther, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty This book focus on research that investigates the behavior of poor people and how antipoverty programs and nancial aid impact their lives. It emphasizes the contribution of randomized control trials to the eld of development economics. A summary by the authors of the book message can be found s at www.foreignpolicy.com/articles/2011/04/25 CAMERON A. Colin and TRIVEDI Pravin, Microeconometrics: Methods and Applications This graduate-level book is oriented to researchers doing empirical work, as it covers a broad range of topics frequently encountered during microeconometrics applications. DEATON, Angus, The Analysis of Household Surveys: A Microeconometric Approach to Development Policy 5

Focusing on microeconometric empirical techniques, this book study issues that arise in the construction and analysis of household survey data from poor countries. It emphasizes policy questions from several dierent developing economies.

GOLDACRE, Ben, Bad Science This excellent and very readable book shows how scientic methods and ndings can be distorted and abused by those who seek to borrow the credibility of science in pursuit of a private agenda. A very good reminder of the importance of rigor in both the conduct of research and the dissemination of its ndings. GREENE, William H, Econometric Analysis This is a widely used graduate-level book in econometrics that covers a vast number of topics. 6) KIRSCH, Irving, The Emperor New Drugs: Exploding the Antis Depressant Myth This book takes a particular example - the use of controlled trials for antidepressant drugs - and shows how problems of selectivity and experimental design can bias ndings. Particularly good on placebo eects. WOOLDRIDGE, Jerey, Econometric Analysis of Cross Section and Panel Data A graduate-level book on microeconometric methods with a well-organized and clear text. This is one of the most useds book by researchers doing applied work with cross section and panel data.

Topics in Applied IO Spring 2012 David Salant Office: MF214 Phone: +33(0) 5 6773 2759 Mobile: +33(0) 6 12 05 80 58 gvoice: +1-415-894-5262 dsalant@gmail.com Skype: dsalant

The main texts that will be relied upon are: Paul Klemperer (2004), Auctions: Theory and Practice, Princeton University Press Paul Milgrom (2004), Putting Auction Theory to Work, Cambridge University Press

Selected Readings: Allaz, Blaise and Jean-Luc Vila (1993) "Cournot Competition, Forward Markets and Efficiency," Journal of Economic Theory, Vol 59, Issue 1, pp 1-16. Borenstein, Severin. (2002) "The Trouble with Electricity Markets: Understanding California's Restructuring Disaster," The Journal of Economic Perspectives, Vol 16, pp 191 Borenstein, Severin, James Bushnell and Frank Wolak, Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market, American Economic Review, 92(December 2002). Bulow, Jeremy and Paul Klemperer (1996), Auctions vs. Negotiations, American Economic Review, 86: 180-94. Capen, E. C., Clapp, R. V., and Campbell, W. M. (1971) "Competitive Bidding in High-Risk Situations," Journal of Petroleum Technology, 23, 641-653. Cramton, Peter, Collusive Bidding: Lessons from the FCC Spectrum Auctions," (with Jesse Schwartz) Journal of Regulatory Economics, 17, 229-252, May 2000 Cramton, Peter, "Collusive Bidding in the FCC Spectrum Auctions," (with Jesse Schwartz) Contributions to Economic Analysis & Policy, 1:1, www.bepress.com/bejeap/contributions/vol1/iss1/art11, 2002 Cramton, Peter, Electricity Market Design: The Good, the Bad, and the Ugly," Proceedings of the Hawaii International Conference on System Sciences, January, 2003. Dasgupta, Partha and Eric Maskin, (1986) Equilibrium in Discontinuous Economic Games I: Theory, Review of Economic Studies.53:1-27. Friedman, James, (1977) Oligopoly and the Theory of Games, North Holland.

Grbik, Paul, Designing an Auction for QF Generation Resources in California: What Went Wrong, The Electricity Journal, Volume 8, Issue 3, April 1995, Pages 14-23 Joskow, Paul and Ed Kahn, (2002) A Qualitative Analysis of Pricing Behavior in the Californias Electricity Market During Summer 2000, The Energy Journal, 23(4), at http://econwww.mit.edu/faculty/download_pdf.php?id=548 Klemperer, Paul (2004), Auctions: Theory and Practice, Princeton University Press Milgrom, Paul (2004), Putting Auction Theory to Work, Cambridge University Press Milgrom, Paul and Robert Weber (1982), A Theory of Auctions and Competitive Bidding, Econometrica 50: 463-83. Mueller, Milton "New Zealand's Revolution in Spectrum Management," Information Economics and Policy 5, 2 (July 1993) 159-77. Riley, John G. and Samuelson, William F. (1981) "Optimal Auctions," The American Economic Review, 71, 381-392. Rosenthal, Robert W. and Balasz Szentes, (2003) Three Object, Two Bidder Simultaneous Auctions: Chopsticks and Tetrahedra, Games and Economic Behavior, 44:113-33. Salant, David, Default Service Auctions, with Colin Loxley, Journal of Regulatory Economics, Vol. 27, No. 3, 2004. Salant, David, Multi-Lot Auctions: Applications to Regulatory Restructuring. In Obtaining the Best from Regulation and Competition, edited by M.A. Crew and S. Spiegel. Boston, MA: Kluwer Academic Publishers (2004). Salant, David, Auctions and Regulation: Reengineering of Regulatory Mechanisms, introduction to special issue on Auctions and Regulation, Journal of Regulatory Economics, Vol. 17, No. 3, (May, 2000): 195 - 204 Salant, David, Up in the Air: GTEs Experience in The MTA Auction for PCS Licenses. Journal of Economics and Management Strategy, Vol. 6, No. 3 (Fall, 1997): 549-72. van den Berg, Gerard J., Jan C. van Ours, and Menno P. Pradhan, The Declining Price Anomaly in Dutch Dutch Rose Auctions AER 2001. Vickrey, William. (1961) "Counterspeculation, Auctions, and Competitive Sealed Tenders," Journal of Finance, 16, 8-37. (html) van Damme, Eric, (1983) Refinements of the Nash Equilibrium Concept, Springer Verlag. Weber, Robert (1983), Multiple-Object Auctions, in Auctions, Bidding and Contracting: Uses and Theory,R. Engelbrecht-Wiggans, M. Shubik and R.M. Stark, (editors), New York: New York University Press, 165-91.

Wolfstetter, Elmar. (1996) Auctions: An Introduction, Journal of Economic Surveys, 10(4), 367-420.

Master 2 TSE - Economics and Competition Law (ECL) Competition Law in practice
Instructor:
Fabienne Darbin-Lange, Avocate, 36h.

Object: EU competition law principles studied and applied through analyses of practical cases concerning distribution, intellectual property rights and mergers & acquisitions. French competition law principles studied and applied through analyses of practical cases relating to commercial practices between undertakings (supplier/distributor). I - Distribution and EU competition law (a) Nature of the operation; (b) Relevant market (product and geographical market); (c) Effect on trade between Members States; (d) Trade restriction; - The de minimis rule; - Hardcore restrictions; (e) Assessment under article 1013; - Block exemption? - Individual exemption? II - Intellectual property versus EU competition law (9 h) (9 h)

(a) Intellectual property rights and third party collaboration - Commission regulation n 1217/2010 of 14 December 2010 (Research and development agreements) - Commission regulation n 772/2004 of 27 April 200 4 (Technology Transfer Agreements) (b) Intellectual property and parallel import - Exhaustion of rights doctrine (c) Intellectual property and dominant position (art. 102TFUE) - Establishing dominance - Conduct which can be an abuse III - Mergers & Acquisitions and the Commission regulation n 139/2004 of 29.01. 2004 (9 h) (a) Nature of the operation - Merger, acquisition, full function joint venture (b) Community dimension (c) Appraisal of the concentration (d) Remedies IV - French competition law - Commercial practices (a) General and specific conditions of sale (b) Commercial cooperation / others services (c) Restrictive practices (9 h)

cole dconomie de Toulouse - TSE

WEB MINING
Olivier Teste

- Principes des Systmes d'Informations et SGBD - Conception de BD : E/A, Relationnel, SQLLDD/LMD - Interrogation de BD : Algbre Relationnelle, SQL-LID - Principes des Systmes Dcisionnels - Conception de BD en toile/constellation : Diagramme Multidimensionnel, R-OLAP, SQL-Oracle10g - Interrogations OLAP : Algbre OLAP