14.01
Principles of Microeconomics
Taught by Jonathan Gruber: from supply and demand, it derives consumer demand from utility maximisation under a budget constraint and models firm decisions through production functions and cost curves, then analyses perfect competition, monopoly and oligopoly and their welfare consequences (consumer and producer surplus). The second half turns to factor markets (labour and capital), choice under uncertainty and international trade, then externalities, public goods, taxation and redistribution, showing when markets work, when they fail, and what justifies government intervention and what it costs.
14.02
Principles of Macroeconomics
Taught by Ricardo Caballero from Blanchard's Macroeconomics: from the goods and financial markets it builds the IS-LM model, adds the labour market and the Phillips curve to derive AS-AD, and traces how monetary and fiscal policy act differently in the short, medium and long run. It then covers the Solow growth model and technological progress, the role of expectations in consumption and investment, and exchange rates and the Mundell–Fleming model in the open economy, applying these tools to financial crises and the liquidity trap, building a complete framework for analysing macroeconomic fluctuations and policy.
14.771
Development Economics: Microeconomic Issues and Policy Models
MIT's graduate course in development economics, in the J-PAL tradition of studying poverty through randomised controlled trials: from agricultural household models and market imperfections, it covers human capital (education and health), intrahousehold allocation, credit markets and microfinance, risk sharing and consumption smoothing, savings, land and labour markets and technology adoption, extending to governance, corruption and political economy. Built around close reading of current empirical papers, it stresses causal identification through randomised trials, instrumental variables and natural experiments, showing how households in developing countries actually behave and which policies genuinely improve the lives of the poor.
Taught by John Geanakoplos, it builds finance from the ground up on general equilibrium: from Irving Fisher's intertemporal model it derives interest rates and present value, applying them to bond pricing, the yield curve, mortgages and prepayment, and social security. Uncertainty follows, with risk aversion, portfolio choice, the capital asset pricing model (CAPM) and dynamic hedging, closing with the leverage cycle, Geanakoplos's own theory of how leverage and collateral amplify boom and crash, applied to the 2008 financial crisis, recasting Wall Street practice as rigorous economic models.
ECON 252
Financial Markets
Taught by Robert Shiller, 2013 Nobel laureate in economics, it examines the financial system as a machine for managing risk: from probability, diversification and the principles of insurance, it weighs the efficient-markets hypothesis against behavioural finance, then works through the markets for bonds, stocks, real estate, forwards and futures, and options, and the institutional design of banks, investment banks, central banks and monetary policy, and financial regulation, with guest lectures from practitioners, showing how finance serves society and why it produces bubbles and crises.
Taught by Ben Polak, who introduces each idea through games played in the lecture hall: from strict dominance and the iterated deletion of dominated strategies, it covers Nash equilibrium and its application to Cournot and Bertrand competition, mixed strategies and evolutionarily stable strategies, then sequential games, with backward induction, the Stackelberg model, information sets and subgame-perfect equilibrium, extending to cooperation in repeated games, bargaining, signalling and auctions under asymmetric information, training the ability to formalise and solve real strategic interaction.