- Class Number 8235
- Term Code 2960
- Class Info
- Unit Value 6 units
- Mode of Delivery In Person
- Prof Ligang Song
- Prof Ligang Song
- Class Dates
- Class Start Date 22/07/2019
- Class End Date 25/10/2019
- Census Date 31/08/2019
- Last Date to Enrol 29/07/2019
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.
Institutions, Institutional Change and Economic Performance
Author: North, C. Douglass
Publisher: Cambridge University Press: Cambridge
Edition: First Edition, 1990
This is the primary textbook of the course. 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 supplmented 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
Staff FeedbackStudents will be given feedback in the following forms in this course:
- Written comments
- Verbal comments
- Feedback to the whole class, to groups, to individuals, focus groups
Student FeedbackANU is committed to the demonstration of educational excellence and regularly seeks feedback from students. Students are encouraged to offer feedback directly to their Course Convener or through their College and Course representatives (if applicable). The feedback given in these surveys is anonymous and provides the Colleges, University Education Committee and Academic Board with opportunities to recognise excellent teaching, and opportunities for improvement. The Surveys and Evaluation website provides more information on student surveys at ANU and reports on the feedback provided on ANU courses.
|Week/Session||Summary of Activities||Assessment|
|1||Week 1: Institutions, institutional change and economic performance: an introduction||Readings North, Douglass C., 1990, Institutions, Institutional Change and Economic Performance, Cambridge University Press: Cambridge, Chapters 1, 9, 10, 11 and 12. Menard, Claude (ed.), 2000, Institutions, Contracts and Organizations, Edward Elgar: Cheltenham, Chapters 2 and 3, pp. 7-36. North, Douglass C., 1994, "Economics Performance Through Time," the American Economic Review, Vol. 84, No. 3, pp. 359-368.|
|2||Week 2: Institutional economics: theories and evidence||Readings North, Douglas C., 1990, Institutions, Institutional Change and Economic Performance, Cambridge University Press: Cambridge, Chapters 3 and 4. Williamson, Oliver, 2000, "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, Vol. 38, pp. 595-613. Hodgson, Geoffrey M., 1998, "The Approach of Institutional Economics," Journal of Economic Literature, Vol. 36, Issue 1, pp. 166-192.|
|3||Week 3: Institutional approaches on economic change: methodology and applications||Readings Hodgson, Geoffrey M., 1993, The Economics of Institutions, Edward Edgar Publishing Limited, Chapters 4, 7 and 26, pp.50-80, pp. 128-151, pp. 570-592 . Chang, H., 2011, "Institutions and economic development: theory, policy and history",Journal of Institutional Economics, Vol.7, Issue 4, pp. 473-498. Aron, J., 2000, "Growth and Institutions: A Review of the Evidence", World Bank Research Observer, Vol. 15, Issue 1, pp. 99-135.|
|4||Week 4: Institutions in a historical perspective: the path to the modern economy||Readings North, Douglas C., 1990, Institutions, Institutional Change and Economic Performance, Cambridge University Press: Cambridge, Chapters 13 and 14. Greif, Avner, 2006, Institutions and the Path to the Modern Economy, Cambridge University Press: Cambridge, Chapters 6 and 7, pp. 158-216. Engerman, Stanley L. and Kenneth L. Sokoloff, 2008, "Debataing the role of institutions and economic development: theory, history and findings", Annual Review of Political Sciences, Vol. 11, pp. 119-135.|
|5||Week 5: Firms, transaction costs and market mechanisms: information and coordination||Readings North, Douglas C., 1990, Institutions, Institutional Change and Economic Performance, Cambridge University Press: Cambridge, Chapters 4 and 8. Coase, Ronald, 1937, “The nature of the firm”, Economica, New Series, Vol. 4, No. 16, pp. 386-405 Hodgson, Geoffrey M., 1993, The Economics of Institutions, Edward Elgar, Chapters 18 and 20, pp. 369-388, pp. 417-439.|
|6||Week 6: Institutions, contracts and organizations: towards the institutional evolution||Readings North, Douglas C., 1990, Institutions, Institutional Change and Economic Performance, Cambridge University Press: Cambridge, Chapters 9, 10 and 11. Kingston, C. and Caballero, G., 2009, "Comparing theories of institutional change," Journal of Institutional Economics, Vol. 5, pp.151-180. Roland, G., 2004, "Understanding institutional change," Studies in Comparative International Development, Vol. 38, pp.109-131.|
|7||Week 7: Institutions and the role of the state: enforcement issues||Readings North, Douglas C., 1990, Institutions, Institutional Change and Economic Performance, Cambridge University Press: Cambridge, Chapters 6. Burlamaqui, Castro and Chang (eds.), 2000, Institutions and the Role of the State, Edward Elgar Publishing Limited, UK and Edward Elgar Publishing, Inc. USA. , Chapters 1 and 2, pp. 3-26, pp. 27-52. Alston, L.J. and Mueller, B., 2005, “Property rights and the state,' in The Handbook of New Institutional Economics (edited by C. Menard and M.M. Shirley). Norwell, MA: Kluwer Academic Publishers.|
|8||Week 8: Competition, incentives and regulations: formal versus informal constraints||Readings North, Douglas C., 1990, Institutions, Institutional Change and Economic Performance, Cambridge University Press: Cambridge, Chapters 5 and 6. Kasper, Wolfgang and Manfred E. Streit, 1998, Institutional Economics: Social Order and Public Policy, Edward Elgar: Cheltenham, Chapter 8, pp. 220-255. Helmke, G. and Steven Levitsky, 2004, "Informal institutions and comparative politics: a research agenda", Perspectives on Politics, Vol. 2, Issue 4, pp. 725-740.|
|9||Week 9: Entrepreneurship, innovation and technological progress: adaptive versus allocative efficiency||Readings Baumol, W. J., 1990, “Entrepreneurship: productive, unproductive and destructive", Journal of Political Economy, Vol. 98 (5), pp. 893-921 Kasper, Wolfgang and Manfred E. Streit, 1998, Institutional Economics: Social Order and Public Policy, Edward Elgar: Cheltenham, Chapter 7, pp. 173-203. Hodgson, Geoffrey M. 1988, Economics and Institutions: a Manifesto for a Modern Institutional Economics, Polity Press, Chapter 11, pp. 262-274.|
|10||Week 10: Institutions in economic transition: the comparative incentive features of different institutional regimes||Readings Kasper, Wolfgang and Manfred E. Streit, 1998, Institutional Economics: Social Order and Public Policy, Edward Elgar: Cheltenham, Chapters 13 and 14, pp. 410-415, pp. 451-469. Lin, Justin Yifu and Jeffrey B. Nugent, 1995, "Institutions and economic development," in Behrman, J. and Srinivasan, T.N. (eds), Handbook of Development Economics, Vol. 3, pp. 2303-2370. Xu, Chenggang, 2011, "The Fundamental Institutions of China's Reforms and Development," Journal of Economic Literature, Vol. 49, Issue 4, pp.1076-1151. Burlamaqui, Castro and Chang (eds.), 2000, Institutions and the Role of the State, Edward Elgar Publishing Limited, UK and Edward Elgar Publishing, Inc. USA. , Chapter 11, pp. 267-280.|
|11||Week 11: Ethical values and the working of institutions: a missing link?||Readings Kasper, Wolfgang and Manfred E. Streit, 1998, Institutional Economics: Social Order and Public Policy, Edward Elgar: Cheltenham, Chapters 4 and 12, pp. 70-91, pp. 390-394. Nielsen, R.P. and Felipe G. Massa, 2013, "Reintegrating Ethics and Institutional Theories", Journal of Business Ethics, Vol. 115, No. 1, pp. 135-147. Shleifer, Andrei, 2004, "Does competition destroy ethical behavior?" American Economic Review, Vol. 94, No. 2, pp. 414-418.|
|12||Week 12: Institutions, history and development: a summary||Readings North, Douglas C., 1990, Institutions, Institutional Change and Economic Performance, Cambridge University Press: Cambridge, Chapter 14. Greif, Avner, 2006, Institutions and the Path to the Modern Economy, Cambridge University Press: Cambridge, Chapter 12, pp. 379-405.|
|Assessment task||Value||Due Date||Return of assessment||Learning Outcomes|
|Research essay||50 %||25/10/2019||28/11/2019||1,2,3,4|
|Final exam||50 %||31/10/2019||28/11/2019||1,2,3|
* If the Due Date and Return of Assessment date are blank, see the Assessment Tab for specific Assessment Task details
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Assessment Task 1
Learning Outcomes: 1,2,3,4
Essay topics will be provided on wattle. Students are required to consult with the lecturer about choosing a particular topic for writing. Students are also encouraged to come up with their own topics relating to the course contents. An essay outline is required and students are encouraged to discuss the outline with the lecturer before starting to write their essays.
Due date: Friday 25 October 2019, 11:55pm
Assessment Task 2
Learning Outcomes: 1,2,3
An three hour long close book final exam will be arranged during the exam period. The exam paper has two parts: Part A has 12 questions and students are required to select 10. Each question has 5 market; and Part B has three questions and students need to do all three consisting of 50 marks.
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