- Code IDEC8081
- Unit Value 6 units
- Offered by Crawford School of Public Policy
- ANU College ANU College of Asia and the Pacific
- Course subject International and Developmental Economics
- Areas of interest Economics
- Academic career PGRD
- Prof Ligang Song
- Mode of delivery In Person
Second Semester 2019
See Future Offerings
Institutions are the engine of history as they constitute much of the structure that influences behaviour, including behaviour leading to new institutions (Greif 2006).
Individuals, firms as well as the states are facing choices in their decision-makings all the time. They are not, however, making decisions independently from the economic, legal, political and social institutions in which they operate. This is because institutions embody incentives to which all players are reacting. The ways in which institutions determine incentives are not given as often assumed in theory, but are an endogenous process in which incentives could be modified or changed in response to changes in institutions. At the same time, institutions are constantly forced to readjust in responding to changes in the behaviour of individuals, firms and the state resulting from changed incentives.
The key concerns of this course are therefore twofold: How do institutions evolve in response to changes in incentives, strategies, and choices made by individuals, firms and the states; and how do institutions affect the economic performance over time. The course examines this interrelationship between incentive and institutions and the role of institutions in societal progress more broadly by, 1) introducing the essential theories of and methodologies applied in institutional economics; 2) providing the historical and empirical evidence in applications of institutional economics; 3) discussing how individuals (entrepreneurship), firms and the states are responding to changes in institutions thereby affecting economic performance; and 4) analyzing the role of institutions in economic transition. The course will apply case study method that extensively relies on institutional theories, contextual knowledge of the situation and its history, and context-specific modeling.
The course is designed for students with the undergraduate-level training in microeconomics and an interest in advanced study and policy-oriented research in institution related areas.
Upon successful completion, students will have the knowledge and skills to:
On completion of the course, students should be able to:
1. Demonstrate knowledge of the key theories of institutional economies and their applications;
2. Demonstrate an understanding of the analytical approaches (methodologies or techniques) used to study the issues relating to incentives and institutions;
3. Apply the theoretical and empirical techniques to constructively design and analyse related institutional change and its impact as well as public policy issues with respect to nurturing good institutions;
4. Carry out research on a topic explaining the cross-country differences in economic growth performance due to institutional constraints.
Week 1: Institutions, institutional change and economic performance: an introduction
Week 2: Institutional economics: theories and evidence
Week 3: Institutional approaches on economic change: methodology and applications
Week 4: Institutions in a historical perspective: the path to the modern economy
Week 5: Firms, transaction costs and market mechanisms: information and coordination
Week 6: Institutions, contracts and organizations: towards the institutional evolution
Week 7: Institutions and the role of the state: enforcement issues
Week 8: Competition, incentives and regulations: formal versus informal constraints
Week 9: Entrepreneurship, innovation and technological progress: adaptive versus allocative efficiency
Week 10: Institutions in economic transition: the comparative incentive features of different institutional regimes
Week 11: Ethical values and the working of institutions: a missing link?
Week 12: Institutions, history and development: a summary
Research Essay 50%
Final Exam 50%
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One two-hour lecture and one one-hour tutorial per week.
The primary textbook for this course is Institutions, Institutional Change and Economic Performance, Author: North, C. Douglass
Publisher: Cambridge University Press: Cambridge. Edition: First Edition, 1990
This book, however, will not provide the full reference of the materials covered in this course. The course material will also draw on the following books supplemented by journal articles and book chapters on the relevant issues.
North, Douglass C., 2005, Understanding the Process of Economic Change, Princeton University Press
Greif, Avner, 2006, Institutions and the Path to the Modern Economy, Cambridge University Press: Cambridge
Menard, Claude (ed.), 2000, Institutions, Contracts and Organizations, Edward Elgar: Cheltenham
Eggertsson, Trainn, 1990, Economic Behaviour and Institutions, Cambridge University Press: Cambridge
Kasper, Wolfgang and Manfred E. Streit, 1998, Institutional Economics: Social Order and Public Policy, Edward Elgar: Cheltenham
Assumed KnowledgeAssumed Knowledge: Advanced undergraduate-level microeconomics and econometrics.
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- Unit value:
- 6 units
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