INSTITUTIONAL ECONOMICS

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This course is designed for students interested in the impact of institutions (both formal and informal) on economic processes and outcomes, and the reciprocal influence of economic conditions on the existing rules, social norms, and values. It aimes at providing students with interdisciplinary approach to analysis of various constraints (both humanly devised and spontaneously created) which shape human behaviour and human beliefs. The course is tought in lecture. Assesment will be based on written examination. Students need to receive positive mark for tutorials in order to be allowed to write final exam

During our lecture we will try to improve our understanding of economics by analysing, among others, the following questions:

• What do property rights, cocoa trees and welfare in Ghana have in common?

• Are Nepalese irrigation systems more efficient under public or private supervision?

• What can we learn from studying medieval guilds?

• How to explain the phenomenon of child labour?

• Do microcredits provide a solution to poverty?

• How can we explain vertical linkages between successive stages in the food chain?

These questions, as well as many others will be covered to highlight specific examples of how institutions (broadly understood as rules of the game) can affect human behavior, economic exchange and economic outcomes.

Will be given during the first class, exemplary reading list which we will refer to include:

D. Acemoglu, S. Johnson, (2005). “Unbundling institutions.”, Journal of Political Economy 113(5), 949-995.

D. North: Institutions, institutional change and economic performance, Cambridge University Press, 1996

O. Williamson: Economic institutions of capitalism, Free Press 1985, Chapters. I-III, XI, XV

Besley, Timothy, Maitreesh Ghatak (2009), “Property Rights and Economic Development.”, in Dani Rodrik and Mark Rosenzweig (eds.) Handbook of Development Economics Vol. V, Amsterdam: Elsevier.

Besley, Timothy, Anne Case (2003). “Political Institutions and Policy Choices: Evidence from the United States.” Journal of Economic Literature, 41(1), 7-73.

E.L. Glaeser, R. La Porta, F. Lopez-de-Silanes, A. Shleifer (2004). “Do institutions cause growth?”, Journal of Economic Growth, 9(3), 271-303.

Persson, Torsten, Guido Tabellini (2003). The Economic Effects of Constitutions: What do the Data Say?, Cambridge: MIT Press. Chapter 4.

D. Rodrik, (2007). One Economics, Many Recipes: Globalization, Institutions, and Economic Growth, Princeton University Press, 2007. Chapters 5 & 6.

Upon completion of the course a student knows basic theories that describe relationships between political and economic institutions. He/she is able to recognise the complexity of the collective decision making process. Based on economic theories, a student is able to provide explanations for why and how economic nad political institutions may differ across different settings

Upon completion of the course a student is able to discuss arguments in favor and against the importance of specific institutions for economic outcomes. He/she is able to critically asses the current debate on the relationship between political and economic institutions.

Upon completion of the course a student is able to present his views in front of the class. He/she knows how to participate in the discussion, paying due respect to other discussants and their views.

Students will get marks from 2 to 5.