Reed College Catalog

Economics is a study of the choices that individuals and societies make about how to allocate their scarce human, natural, and capital resources among competing uses. It is a social science, applying scientific methods of analysis to problems of human interaction.

Economics courses at Reed blend presentation of classical and modern economic theories with discussion of empirical tests and policy implications of the theoretical models. The objectives of the department are to equip prospective professional economists with basic analytical techniques and to provide nonspecialists with the understanding necessary to explain economic phenomena and to evaluate economic policy alternatives.

The introductory course (Economics 201) covers microeconomic theory with substantial and varied applications including student participation experiments, group projects, policy discussions, and problem solving. Topical courses in economics, most of which have no more than Economics 201 as a prerequisite, allow students to explore further the application of economic theories and methods to a wide variety of subject areas. Although a textbook is sometimes used as the foundation for these courses, it is supplemented by reading from journal articles, conference papers, and other timely reports in order to provide students with a more critical appraisal of the field’s main findings and its newest developments.

A nonmajor taking economics to fulfill distribution or divisional requirements would take Economics 201 (open to all students without prerequisite) and one additional course chosen according to his or her interests. Students considering a major in economics are advised to take Economics 201 during their first year, though many students successfully complete the major starting their economics coursework as sophomores. Economics majors take core coursework in economic theory (Economics 313 and either 304 or 314) and statistics and econometrics (Economics 311 or 312), as well as a selection of elective courses. Economics 311 and 312 are alternative econometrics courses, not a consecutive sequence. Because there is considerable overlap between them, students should not plan to take both. Economics 304 and 314 are alternative courses in macroeconomics, not a consecutive sequence. Because there is considerable overlap between them, students should not plan to take both. Although there is no formal mathematics requirement, the methods of modern economic analysis require a working understanding of calculus, which is a prerequisite for the required courses in microeconomic and macroeconomic theory. Students considering graduate study in economics should take additional courses in mathematics as suggested below. An interdisciplinary major in mathematics–economics is offered for students desiring a stronger emphasis on quantitative analysis.

Economics majors are well prepared for a variety of postgraduate alternatives, including academic, public policy, law, business, or nonprofit career paths.

Requirements for the Major

  1. Economics 201.
  2. Economics 311 or 312.
  3. Economics 313.
  4. Economics 304 or 314.
  5. Economics 470.
  6. Four additional units in economics (at least three of which are from Economics 315469, excluding Economics 402), to make a total of 10 units of economics coursework.
  7. Although there is no formal mathematics requirement, Mathematics 111 or equivalent background in differential calculus is a prerequisite for Economics 313 and 314. Students intending to do graduate work in economics should take Economics 312 and as much mathematics as possible. Mathematics 111, 112, 141, 211, 212, 322, and 331 are especially useful. Such students may wish to consider the interdisciplinary major in mathematics and economics.

Economics 201 - Introduction to Economic Analysis

Full course for one semester. This course will introduce students to the analytical approaches and tools of the economics discipline, and how these are used to examine current issues and problems that arise in the functioning of economic systems. Microeconomic theories of consumption, production, and exchange provide much of the analytical framework that will be utilized, although we will also explore some relevant applications to the macroeconomy. A central feature of this course is the examination of markets and how they determine what is produced and how it is allocated. We also devote some attention to evaluating market outcomes, to thinking about remedies to resource allocation problems that markets cannot solve, and to thinking about the factors that determine long-run productive capacity and income potential. Lecture-conference.

Economics 281 - Collectivization and Decollectivization in the People’s Republic of China

Full course for one semester. This course will examine processes of collectivization and decollectivization in the People’s Republic of China, focusing on the 1950s and 1980s respectively. We will examine primarily the agricultural sector and consider the two-way nature of the transition—from a system of private ownership to collective—and the subsequent retreat to decentralization. This approach will facilitate contrasts and comparisons of the organizational changes experienced by the economy and its participants during each of the two decades under study. We will seek to understand the interests of various stakeholders, their subsequent roles in promoting or resisting the changes, and finally how various societal groups were affected. Among the materials we consider will be narrative accounts from various perspectives in addition to secondary sources that analyze the transition processes and their outcomes. Conference.

Economics 304 - Intermediate Macroeconomics

Full course for one semester. A survey of basic theories of economic growth and business cycles using graphical and algebraic methods. Studies the relationships among aggregate economic variables such as GDP, inflation, interest rates, unemployment, and exchange rates. Analysis of macroeconomic policy issues. Prerequisite: Economics 201 or consent of instructor. Lecture-conference.

Economics 311 - Survey of Econometric Methods

Full course for one semester. An introduction to applications of empirical methods in economics. Students are introduced to the nature and sources of economic data and basic concepts of statistics and econometrics. Topics include the estimation of econometric models, hypothesis testing, and forecasting. Emphasis is placed on the use of these techniques in empirical economic literature. Prerequisite: Economics 201. Lecture-conference.

Economics 312 - Theory and Practice of Econometrics

Full course for one semester. An introduction to the statistical methods commonly used in economic research. Classroom development of theoretical material is combined with extensive hands-on practice of econometric techniques. Statistical methods discussed include estimation and inference in simple and multiple linear regression models, detection and correction of autocorrelation and heteroskedasticity, time-series models and distributed lags, and estimation of systems of simultaneous equations. Considerable emphasis is placed on learning to specify, implement, and evaluate tests of economic hypotheses. Prerequisites: Economics 201 and Mathematics 141 or similar introduction to statistics, or consent of the instructor. Lecture-conference.

Economics 313 - Microeconomic Theory

Full course for one semester. This course provides a thorough exposition of neoclassical theories of producer and consumer behavior. Considerable attention is devoted to understanding the economic concept of efficiency and demonstrating the efficiency of competitive equilibrium in a general equilibrium framework. The efficiency of market outcomes under alternative assumptions is also examined, and some time is devoted to discussing social choice theory and the limits of the market. Prerequisites: Economics 201 and Mathematics 111, or consent of the instructor. Lecture-conference.

Economics 314 - Macroeconomic Theory

Full course for one semester. A detailed introduction to modern theories of economic growth and business cycles. Emphasizes the derivation of relationships among aggregate variables from assumptions about the behavior of households and firms. Examines empirical evidence for and against macroeconomic theories. Prerequisites: Economics 201 and Mathematics 111, or consent of the instructor. Lecture-conference.

Economics 315 - Game Theory

Full course for one semester. Game theory is the study of strategy. This course introduces students to game theory and its application in a wide range of situations. We study various classes of games, including static and dynamic games as well as those of complete and incomplete information. We also consider various solution concepts, including iterated elimination of dominant strategies and Nash equilibrium. Numerous refinements of the Nash equilibrium concept, including subgame perfect Nash equilibrium, Bayesian Nash equilibrium, and perfect Bayesian equilibrium, are also considered. We apply game theory to the study of competition, the commons, bargaining, auctions, conventions, institutions, and political decision-making. Prerequisite: Economics 201 and Mathematics 111, or the equivalent. Lecture-conference.

Economics 321 - Economics of Reed College

Full course for one semester. This course examines the economics of undergraduate education, focusing on issues of relevance to Reed College and using Reed as a case study. Elements of institutional revenue and cost streams are analyzed. Among the specific topics considered are measurement of the inputs, outputs, and productivity of institutions; economic returns from higher education, especially at selective liberal arts colleges; the demand for higher education in general and for liberal arts colleges in particular; the effects of need-based and merit-based financial aid on demand; fund-raising and management of endowment resources; the market for faculty and models of faculty salaries and benefits; internal allocation of resources among academic and administrative departments; funding and maintenance of the physical plant; and the economics of residence halls, food service, and other nonacademic aspects of higher education. Prerequisite: Economics 201 or consent of instructor. Conference.

Economics 323 - American Economic History

Full course for one semester. This course introduces the student to the economic history of the United States from colonial times through the Great Depression. Emphasis is placed on understanding the sources of economic growth and key developments in the historical economy. Topics include colonial markets for labor and land, technological change, the economics of slavery and the Civil War, the growth of big business and regulation, the development of capital markets, immigration and internal migration, and the Great Depression. Prerequisite: Economics 201. Conference.

Not offered 2011–12.

Economics 324 - World Economic History

Full course for one semester. This course presents an overview of world economic history. Topics include ancient markets, the role of institutions in economic growth, the evolution of commerce, the Industrial Revolution, early modern divergence, the development of capital and labor markets, the economics of slavery and discrimination, wartime shocks, globalization, the Great Depression, and wage and income inequality over time. Emphasis is placed on exposing students to research techniques in economic history. Prerequisite: Economics 201. Conference.

Not offered 2011–12.

Economics 326 - European Economic History

Full course for one semester. This course studies the economic history of Europe between 1300 and 1950. Emphasis is placed on understanding the sources of economic growth, especially technological and institutional progress, and key developments in the historical economy. Topics include the economic consequences of the Black Death, medieval agriculture and serfdom, the Industrial Revolution, welfare systems, the standard of living, the development of capital markets, varying patterns of development, and the Great Depression. Prerequisite: Economics 201. Conference.

Not offered 2011–12.

Economics 331 - History of Economic Thought

Full course for one semester. This course considers the development of economic thought by focusing on several crucial issues that economics has addressed throughout history, including resource scarcity, the sources of economic growth, the role of government in a market economy, and the effects of international trade. We focus primarily on the development of economic thought between 1770 and 1940. Readings come from the works of Smith, Malthus, Ricardo, Mill, Marx, Marshall, Keynes, and Schumpeter. Prerequisite: Economics 201. Conference.

Not offered 2011–12.

Economics 341 - Monetary and Fiscal Policy

Full course for one semester. A study of classical and contemporary monetary theory, the structure and operation of private and public monetary and financial institutions, and the techniques and objectives of monetary and fiscal policy. Contemporary policy problems emphasized include maintenance of full employment and economic growth, prevention of inflation, and economic stabilization. Prerequisite: Economics 201. Conference.

Not offered 2011–12.

Economics 342 - International Macroeconomics

Full course for one semester. This course examines the macroeconomic linkages between countries. The core of macroeconomic theory is extended to the open economy. In this context, a number of issues are addressed, including currency crises, international policy coordination, and the choice of an exchange rate regime. Illustrations come from the adoption and abandonment of the gold standard, the European monetary union, and financial crises both past and present, including a discussion of the origins and transmission of the current worldwide economic crisis. Prerequisite: Economics 201. Conference.

Not offered 2011–12.

Economics 348 - Economics of the Public Sector

Full course for one semester. This course considers the role of government in the economy. We examine the theoretical rationale for government intervention in the economy and the economic consequences of such government intervention, with examples coming primarily from the United States. In addition, the course studies how taxation affects economic efficiency, income distribution, capital formation, and microeconomic incentives. Major topics include environmental regulation, publicly funded education, welfare, social security, health care, tax reform, and international public finance. Prerequisite: Economics 201. Conference.

Not offered 2011–12.

Economics 351 - Environmental Economics

Full course for one semester. This course presents an economic analysis of environmental issues and policies. We will examine the impact of the economy on the environment, the importance of the environment to the economy, and how policies such as transferable permits, subsidies, taxes, and regulations affect the environment and economy. Concepts covered in this course include static efficiency, equity, property rights, discounting, cost-benefit analysis, risk and uncertainty, market failure, nonmarket valuation techniques, and sustainability. Prerequisite: Economics 201. Conference.

Economics 352 - Natural Resource Economics

Full course for one semester. This course presents an economic analysis of renewable and nonrenewable natural resources. Concepts introduced include static and dynamic efficiency, equity, property rights, discounting, market failure, nonmarket valuation, and sustainability. The course will cover current and proposed policies for resource management such as transferable quotas, taxes, subsidies, regulations, and public versus private ownership. Prerequisite: Economics 201 and Mathematics 111 or consent of instructor. Conference.

Not offered 2011–12.

Economics 354 - Economics of Science and Technology

Full course for one semester. An introduction to the economics of growth, innovation, and technological change in industrialized market economies. The neoclassical growth model is used as a theoretical basis for exploring empirical studies measuring the causes of economic growth. The causes and nature of innovative activity, as well as its effect on technological progress, are explored. Issues of appropriability and diffusion of technology are addressed. Industry and country studies are used to gauge the effect of technological change on economic performance. Prerequisite: Economics 201. Conference.

Economics 358 - Urban Economics

Full course for one semester. In this course, the focus is on the city, in determining its costs and benefits as well as location and land use. We explore policy issues specific to local governments in urban areas, including zoning, housing and segregation, poverty, homelessness, transportation, education, and crime. Prerequisite: Economics 201. Conference.

Economics 364 - Economics of Population, Gender, and Race

Full course for one semester. This course will consider race and gender as they influence and are reflected in decisions about schooling, work, and family. It will also examine trends in population and consider how and why they might change over time. We will use microeconomic models of fertility, migration, decisions to work, and decisions to invest in human capital in an effort to analyze and explain observed outcomes. Drawing on well-established literatures in the fields of labor economics and economic demography to provide frameworks for our discussions, we will consider the theoretical and empirical findings in light of their potential contributions to policy. Prerequisite: Economics 201. Conference.

Not offered 2011–12.

Economics 366 - Jobs, Technology and Trade

Full course for one semester. Investigation of the causes and consequences of changing patterns of labor demand. We will seek to understand how technological innovation and a rising volume of trade influence the structure of labor demand and the organization of the workplace.  Effects on wage levels, wage inequality, and patterns of employment will be examined.  The role of worker representation, in various forms, will be considered along with an analysis of factors that contribute to labor organizing efforts and outcomes.  We will focus our attention on the U.S. labor market although comparative analysis with the experiences of other industrialized countries will enhance our understanding.  Prerequisite: Economics 201.  Conference.

Economics 371 - Law and Economics

Full course for one semester. Applications of microeconomic theory focused on common law and the legal system. Topics include the effect of the legal system on resource allocation, the establishment and scope of property rights, allocation of risk and efficient investments in precaution, product liability, and an economic analysis of criminal behavior and punishment. Prerequisite: Economics 201. Conference.

Economics 382 - Economics of Development

Full course for one semester. The economic problems and policy concerns of poor countries with applications of economic analysis to explain and understand observed outcomes. Substantial attention is paid to the structure and the decisions of households in developing countries with supplemental focus on the market and nonmarket environments under which they operate, including their access to land, credit, and insurance, as well as their labor employment opportunities. Additional topics include population growth and its determinants, the role of technology, inequality and poverty, structural change, and trade and globalization. Case studies are used to motivate and illustrate the theories discussed. Prerequisite: Economics 201. Conference.

Economics 383 - International Trade

Full course for one semester. This course analyzes the causes and consequences of international trade. The theory of international trade and the effects of trade policy tools are developed in both perfect and imperfect competition, with reference to the empirical evidence. This framework serves as a context for a discussion of several important issues: the effect of trade on income inequality, the relationship between trade and the environment, the importance of the World Trade Organization, strategic trade policy, the role of trade in developing countries, and the effects of free trade agreements. Prerequisite: Economics 201. Conference.

Not offered 2011–12.

Economics 385 - Asian Economies in Transition

Full course for one semester. This course will compare and contrast plan-to-market transition processes across several Asian countries noted for their economic size and significance, including China, Japan, and India. We will take a sectoral approach, noting variation in policy objective, design, implementation, and outcome. Among the sectors we will consider are agriculture, industry, banking and finance, foreign trade and investment, and the public sector. Our focus will be contemporary rather than historical, although the roles of initial conditions and historical legacies also are relevant to our discussions. Prerequisite: Economics 201. Conference.

Not offered 2011–12.

Economics 401 - Contemporary Topics in Economics

One-half course for one semester. A detailed examination of a topic of current theoretical or policy interest. The course may be repeated when topics vary, up to a maximum of one unit of credit. Prerequisite(s) will vary according to topic; they will be announced in the class schedule. This course may not be used for Group B or divisional requirements. Conference.

Not offered 2011–12.

Economics 402 - Junior Seminar

One-half course for one semester. This course focuses on preparing students for economic research. Topics include choosing a research question, conducting a literature review, locating and collecting data, economic theorizing, writing, research design, hypothesis testing, and presentation skills. Prerequisites: Economics 304, 313, or 314, or consent of instructor. Conference.

Economics 428 - Topics in American Economic History: Macroeconomic Policy from the Great Depression to the Great Recession

Full course for one semester. This course provides a detailed analysis of U.S. macroeconomic history and policy since the Great Depression. The course emphasizes the role of history in guiding present-day macroeconomic policy. Topics include the effects of monetary and fiscal policy, historical changes in business cycles, financial panics, causes of the great depression, determinants of postwar monetary policy, the stagflation of the 1970s, the great moderation, and the financial crisis of 2007–2010. Emphasis is placed on exposing students to historical developments in macroeconomics and to empirical research techniques in economics. Prerequisite: Economics 304 or 314, or consent of instructor. Conference.

Not offered 2011–12.

Economics 454 - Economic Growth

Full course for one semester. Topics include theoretical analysis of the roles of population growth, capital accumulation, and technological progress on economic growth; diminishing returns and neoclassical growth theory; human capital, nondiminishing returns, externalities, and modern growth theory. We will examine empirical evidence through growth accounting and cross-country econometric studies. Prerequisite: Economics 314 or consent of the instructor. Conference.

Economics 470 - Thesis

Full course for one year.

Economics 481 - Independent Reading

One-half or full course for one semester. Credit in proportion to work done. Prerequisite: junior or senior standing.