POLITICAL ECONOMICS
Preliminary knowledge in economics is not required. The only prerequisite is constituted by the basic concepts in mathematics and geometry commonly taught in the upper secondary school. In particular, basic elements of graphical analysis (slope and translation of a linear function) and solution of two-linear-equations systems.
The aim of the course is twofold:
a)To provide a basic knowledge of micro and macroeconomic models, in order to allow the students to understand the main economic dynamics and their discussion both in the scientific and professional literature.
In particular, the theory of consumer choice and utility and the theory of production will be examined; in this second case, the main market configurations (competition, monopoly, oligopoly) will be studied and compared in terms of social welfare implications.
The market failures and public intervention in regulating the markets and the economic activity will be also considered.
The study of macroeconomic fundamentals (dynamics of macroeconomic aggregates, definition and composition of GDP, output gap) will be oriented to show the role of the economic policies - both fiscal and monetary – in determining the market equilibria and adjusting short-run disequilibria.
b)The second aim is to make the students familiar with the concepts and logic of economic rationality, providing the basic instruments of a methodologic approach to be integrated and compared to the legal logic and methodology, which characterizes the courses of law and the professional practice.
In this sense, in the study of non-competitive markets, some basic elements of game theory will be provided, in order to develop the attitude to the analysis of problems and contexts where the strategic interactions among agents play a crucial role.
The expected learning will be, consequently, twofold as well:
1.On one side, the students will have to show an adequate knowledge of the concepts and the micro and macroeconomic models presented in the course, being able to argue rigorously about the expected behavior of the agents and adjustment of the markets as a consequence of changes in the contextual variables.
2.On the other side, the students are expected to develop familiarity with the economic logic implied by the model presented in the course. The familarity should be sufficient to allow the application of the methodology to the solution of simple economic problems. To this aim, the learning achievement will be also verified through elementary exercises.
Contents of the course
After a short introduction to the contents of the course and the instruments (both analytic and graphic) required, the course is composed by two parts:
A.Microeconomics
1.Theory of consumer choice. Preferences and indifference curves. Optimal choice of the consumer. Single-agent and market demand. Consumer’s surplus. Price and income elasticity. Demand elasticity and total revenues.
2.Production theory. Short-run and long-run costs. Revenues. Optimal choice of the firm. Market configurations: perfect competition; monopoly; imperfect competition; monopolistic competition; oligopoly.
3.Market failures. Social efficiency, externalities, public goods. Public intervention: taxes and subsidies; market regulation.
B.Macroeconomics
1.The circular flow of income and main macroeconomic aggregates. National income (definition and equilibrium level). Consumption function and Keynesian multiplier. The role of taxation in the multiplier.
2.Money demand and supply: equilibrium on the financial markets.
3.The IS-LM model. The goods market and the IS curve. The money market and the LM curve. The equilibrium and the role of economic policies: fiscal and monetary policies. Macroeconomic schools of thought.
Teaching method
The course provides 55 hours of lectures. They are divided into:
-mainly theoretical lectures, whose aim is to provide the knowledge about instruments, methods and models of macroeconomics and microeconomics;
-mainly applied lectures, where simple quantitative or graphic exercises will be solved, aimed at developing a problem-solving attitude and assuming familiarity with the mechanisms and procedures of the economic approach.
As far as it is allowed by the duration and the organization of the course, seminars on specific institutional aspects (e.g., the role and functions of the central bank), held by external experts will be scheduled.
Interactive teaching will be encouraged, with a twofold aim: a) promoting moments of discussion and clarification of the most difficult aspects of the lectures; b) examining special topics proposed by the students.
Textbooks and readings
Textbook:
J. SLOMAN – D. GARRATT, Elementi di Economia, Il Mulino, Bologna, 2014 (6th edition).
In particular, Chapters 1-11 are indicated as mandatory readings.
In order to encourage the comparison of the economic and legal approach to problems and institutional aspects of the socio-economic systems, the following reading is suggested:
P. CIOCCA – I. MUSU, Economia per il Diritto, Bollati Boringhieri, Torino, 2006.
In particular, the following essays will be indicated as mandatory readings:
-Come funziona, e non funziona, una economia di mercato;
-Pensiero economico e diritto: più teorie economiche ma terreni comuni;
-L’interazione tra economia e diritto;
-Scelte economiche;
-Diritti di proprietà;
-Il rapporto di lavoro e il mercato del lavoro;
-Concorrenza e potere di mercato.
These readings are also suggested as self-assessment tests of the understanding of the economic phenomena and mechanisms regulated by legal norms and institutions.
In order to enhance the familiarity with the applied aspects of the course (quantitative and graphic analysis of economic dynamics), the texts and solution sketches of the examination paper will be posted on the e-learning platform, together with the texts of the exercises solved during the lectures.
Learning assessment
The learning assessment will be based on a written and an oral examination.
The written examination is intended as a pre-requisite to be admitted to the oral exam.
The written exam consists of (normally) six questions: some of them are quantitative exercises, some are open-ended questions. Exercises aim at assessing the familiarity of the candidate with the formal models and his/her proficiency in using them to solve simple problems. Open-ended questions aim at verifying the ability of correctly identifying the problem indicated by the question and to give a synthetic and effective answer.
The oral examination aims at assessing the ability of the candidate of arguing correctly about the economic mechanisms: the candidate will show his/her skill in giving consequential answers and explanations, properly using the rules of the economic methodology.
If the number of candidates allows for it, only an oral examination will be held, where both the problem-solving and the explanatory abilities will be assessed.
Possible midterm exam will be announced at the beginning of the course.