Dr L. Rachel Ngai  32L 1.15

Dr Shengxing Zhang 32L 1.16

This course is available on the BSc in Econometrics and Mathematical Economics, BSc in Economics, BSc in Economics and Economic History, BSc in Economics with Economic History, BSc in Government and Economics, BSc in Mathematics and Economics, BSc in Philosophy and Economics, BSc in Philosophy, Politics and Economics, BSc in Politics and Economics and BSc in Social Policy and Economics. This course is available as an outside option to students on other programmes where regulations permit and to General Course students.

Students must have completed Macroeconomic Principles (EC210) and Microeconomic Principles I (EC201).

Mathematics to at least the level of Mathematical Methods (MA100).  Microeconomic Principles II (EC202) is also accepted (in place of EC201).

This course is divided into two sections introducing recent developments in economic theory. The first section focuses on the relationship between the financial sector and the macroeconomy, considering such questions as why there exist financial crises and asset bubbles. To answer these questions, this section aims to equip students with frameworks to understand the role of the financial market, connect theories with real life observations about imperfections of the market. Topics covered in this section include financial frictions and capital misallocation, banking and financial stability, asset pricing and market liquidity.  In the second section of the course we focus on economic growth, considering questions like these: Why was GDP per capita in the UK 15 times higher than China in 1960? Why did the factor of 15 decrease to 5 in 2000?  To gain an understanding of the “whys” we have to ask deeper questions: what drives economic growth? Why do some economies grow faster and other slower? Thus this part of the course studies the determinants of economic growth through capital accumulation, reallocation of resources from agriculture into manufacturing and services and, technology innovation.

15 hours of lectures and 10 hours of classes in the MT. 15 hours of lectures and 10 hours of classes in the LT.

There will be one 1.5hr lecture, immediately followed by a 30-minute class, taught by the lecturer (weeks 1-10 in both the MT and LT). Additionally, there will be a 1hr class every other week (weeks 3,5,7,9,11 in both the MT and LT).

Students will submit, and receive feedback on, two problem sets per term.

The course is mainly based on lecture notes and journal articles. As an example of the level and content of the reading in economics articles, students may wish to look at the following:

Allen, Franklin, and Douglas Gale. Understanding financial crises. Oxford University Press, 2009: 1-26.

Lucas, R. 2000. “Some Macroeconomics for the 21st Century.” Journal of Economic Perspectives, 14: 159-168.



Ngai, L. R. 2004. “Barriers and the Transition to Modern Growth “. Journal of Monetary Economics 51:1353-1383.

A good textbook reference for economic growth is:

Jones, C. and D. Vollrath (2013), Introduction to Economic Growth. W. W. Norton & Co.

Exam (100%, duration: 3 hours, reading time: 15 minutes) in the summer exam period.