ECON 130: Week 8(b) Game theory
One week, two big topics! Today we’re discussing Game Theory.
This topic is awesome, and really wish we could give it more space – in future economics you will.
So what are we thinking about here.
Read moreECON130 Week 8: Macroeconomics
Hi all,
As you know this is a course on microeconomics … so it is a bit random to teach macroeconomics. However, as this is the only economics course many students do we think it is a good idea to introduce some of the jargon you will see a lot in your work life!
Usually this is a week of lectures, but given the semester is a week shorter we teach this in a single lecture – and it will be assessed as such.
So what is macroeconomic, why do we care, and what are we measuring?
Read moreECON 130 Week 7: International Trade and Comparative Advantage
This weeks discussion is something a bit different. For the first six weeks we were building up models of producer and consumer choice, and finished with our market model of “perfect competition”. Given this we were able to discuss gains from trade where all producers were the same – but consumers were a bit different.
What we have done this week is actually quite similar – we have asked about gains from trade when the production possibilities were actually a bit different. Given that we have noted that, with different productive opportunities specialisation can generate gains from trade!
The example we use for this is international trade – and that is what we have done in the lectures here and here.
As a practice exercise, can you describe the current shock associated with COVID in terms of a Production Possibility Frontier diagram based on the Australia and NZ trade example in lectures. Graphically what does the shock look like? Could the shock increase New Zealand’s comparative advantage in making Wool? What does this mean?
I’ll put up an answer to this after you test on Monday – as this content is not in this test.
What does cash hoarding mean for the economy?
New Zealand banks noticed an increase in cash withdrawals by households since the day of lockdown announcement. Banks believe this might be due to the panic stockpiling of nervous households as was mentioned in the article.
In this post I want to discuss what drives the households to behave in this way, and how this comes into our thinking about economics and monetary policy.
Read moreECON130 Week 6: Markets and equilibrium
Hi all. As you will have noticed from the lecture videos there is a lot of content in this week – more than in any other single week. But it is because we are tying all the prior weeks together, and trying to make sure we are clear regarding what we are saying! The lecture slides can be found here and here.
Furthermore, we are focusing on a set of assumptions – so lets start with those:
Read moreMPCs, multipliers, and our 1st year ECON model
I have been preparing my lecture content for macroeconomics later in the year, and have thought it would be a bit of fun to finish with the following: discuss why the initial marginal propensity to consumer and the final multiplier on any “initial expenditure impulse” need not be related to each other.
This is an issue that I’d cover after discussing Ricardian Equivalence, and think it matters given the increasing relevance of zero-lower bound economics for students in the current environment – and some of the discussion on NBER about multipliers, and HANK vs RANK (heterogeneous vs representative agent models) models of monetary policy.
Note: These non-standard models are cool, and much more “Keynesian” – but I think the more basic description below is important for keeping us humble about our ability to control things.
Now none of this will go into any detail on the more complex models (and ideas of expectations) – it will just ensure that we aren’t “losing money as an asset from our mental model” and should be read as such.
The circular flow (the description ECON141 is all about) describes the flow of funds around the economy, and the key thing is showing that if there is more dollars going around that flow in a period of time there is by definition more nominal activity – be it through higher prices or higher output. This insight can easily get lost in the discussion of individual channels during the course.
Happy with thoughts below – this is likely to be a non-assessed topic for eager students.
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