Applied Microeconomics

Coordinator: Thomas Crossley

This is largely a course in applied price theory. It begins with a review of consumer and producer theory, with a thorough discussion of duality. We then turn to extensions such as intertemporal choice and saving behaviour; household production, household bargaining and labour supply;  measuring the cost of living and the welfare cost of price changes; the demand for durables, investment and human capital investment; factor demand and supply under perfect and imperfect competition. These are basic tools on which is based much analysis in a range of fields of economics including public finance, development economics, industrial organization, labour economics, health economics and macroeconomics.

Throughout, there will be a heavy emphasis on the interplay between theory and data. We will consider, on the one hand, how theories can be tested and theoretical parameters estimated, and on the other hand, how theory can structure and inform our understanding of the data.

There will also be a strong focus on the use of a mix of price theory and relevant data to answer interesting and policy-relevant questions. The policy issues to be considered will vary from year to year according to the issues of the day, but illustrative examples include: the incidence of indirect taxation; inputs to competition policy; policies to raise household saving; the welfare costs of taxation; the welfare costs of monopoly power; the measurement of inflation; fiscal policies to promote household spending; policies to encourage employment and investment by firms.