Course Offerings - Catalog 2013-14

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Economics and Financial Economics

Division of Social Studies

The Economics Program offers a broad background in economics within a liberal arts educational philosophy. The economics curriculum has four goals: competence in the fundamentals of economic theory; capability in quantitative and communication tools for economic analysis and presentation; familiarity with economic processes, policies, and institutions; and acquaintance with critical perspectives on both economic theory and institutions. Within this framework, students can assemble courses to highlight concentrations in finance, international economics, and policy analysis, and to prepare for graduate programs in business, law, public policy, and economics among others. The financial economics major integrates the theory of finance with a broad background in economics.

The principles of economics course, ECO 110, is the foundation for course work in these programs. The course introduces topics in both macro and micro theory, as well as topics in institutions and policy analysis. A second tier of required major courses covers intermediate macro and micro economic theory (ECO 210, ECO 220) and basic statistics and differential calculus with review (MAT 130, MAT 140). It is recommended that the second tier be completed by the end of the sophomore year. Also recommended (but not required) are MAT 141 or 170 and MAT 171, and additional related courses of interest in the social sciences.

Junior/senior work emphasizes choice in the selection of courses. Various packages of courses, internships, foreign study, and independent studies can be assembled to highlight particular student interests. Upper-level requirements involve a minimum of seven junior/senior courses. These courses include a senior seminar (ECO 500) and an econometrics course (ECO 390). Economics majors may earn a B.A. or B.S. degree. The B.S. degree in economics adds requirements in empirical analysis (ECO 395) and in mathematical modeling (ECO 290). Financial economics majors also take accounting (ECO 260), and at least two of their junior/senior-level courses are selected from a list of financial courses.

The program encourages majors to consider course work or minors in mathematics, computer science, social studies, modern foreign languages, history, and philosophy. It is strongly recommended that students who are interested in international economics participate in a Centre College off-campus program.


John Perry(chair), David Anderson, Michael Fabritius, Bruce Johnson, Marie Petkus, Ravishekhar Radhakrishnan, Jason Rastovski, Steven Winrich


Ryan Arey, George Laventis, Zihui Li, Klea Xoxi

Requirements for the Economics Major

A. Requirements for Bachelor of Arts
POL 120 or 130;
MAT 130, MAT 140 or equivalent;
ECO 110, 210, 220, 390, 500, and five additional ECO courses numbered 300 or higher
B. Requirements for Bachelor of Science**
POL 120 or 130;
MAT 130, MAT 141 or 170 or equivalent;
ECO 110, 210, 220, 290, 390, 395, 500, and four additional ECO courses numbered 300 or higher

Requirements for the Financial Economics Major**

POL 120 or 130;
MAT 130, MAT 141 or 170 or equivalent;
ECO 110, 210, 220, 260, 290, 390, 395, 500;
Four additional ECO courses numbered 300 or higher to include two of ECO 301, 340, 385, 430, 435, 440, 460, 465, 475 or other such financial economics courses approved by the program.

A double major of Economics and Financial Economics is not permitted.

**ECO 290 should be completed by the end of the junior year. Students who expect to pursue graduate study in economics should elect the Bachelor of Science degree in economics or financial economics and, at a minimum, complete the requirements for a minor in mathematics. Students seeking the M.B.A. degree should complete MAT 171 in addition to the requirements for the B.S. degree in economics or financial economics.

Economics Courses

ECO 110 Introduction to Economics
An introduction to economic theory with attention to the construction of simple economic models dealing with consumer behavior, production, pricing, distribution, monetary theory, and national income determination.

ECO 210 Macroeconomic Analysis
An investigation of the economic factors determining the level of national income, prices, unemployment, and the rate of economic growth utilizing a number of different theoretical perspectives. Consumption, investment, and monetary and fiscal theories are studied in detail. Prerequisite: ECO 110.

ECO 220 Microeconomic Analysis
An investigation of the economic factors determining consumer behavior, production, pricing, and market structures in a partial equilibrium framework. Theories of distribution, welfare criteria, and general equilibrium are examined. Prerequisite: ECO 110 and MAT 140 or equivalent.

ECO 260 Financial Accounting
A study of accounting fundamentals leading to an analysis of of how accounting data is created and used. Particular emphasis is placed on the integral structure between income statements, cash flow statements, and balance sheets. Students learn the language of business and how to read and interpret financial statements.

ECO 270 Managerial Accounting
A study of financial techniques used by professionals to manage a business. Managerial accounting topics include: information and management decision systems, cost accounting, capital investment decisions, financial budgeting, planning, cost control, performance measurement, and internal control. Prerequisite: ECO 260.

ECO 290 Mathematical Methods for Economists
This course presents the major mathematical models used in modern economic theory. Students are introduced to the subjects of multivariate calculus with an emphasis on partial differentiation, matrix algebra, unconstrained and constrained optimization, integration, and difference equations in the context of economic applications. The mathematical underpinnings of economic models from both microeconomics and macroeconomics are analyzed. Prerequisite: MAT 141 or 170, ECO 210, and ECO 220.

ECO 301 Personal Finance and Implications
This course provides a hands-on immersion of the theory and practice of personal finance. An uncountable number of decisions an individual must make with respect to education, earning, spending, investing, insuring, fertility, career path, health care, and many more require an understanding of the law and economics of personal finance. Those individual choices have distinct implications as they impact the individual as well as families, organizations, governments, and societies. This course will incorporate the latest developments in finance and law but will provide a framework for understanding personal finance independent of the current-day details of law and financial markets. Prerequisite: ECO 110 and MAT 130.

ECO 310 Comparative Economic Systems
Comparative study of various economic systems, with major emphasis upon free-market capitalism, managed capitalism, and socialism. In this context, four perspectives are analyzed – Classical Liberal, Modern Liberal, Radical, and Conservative. Topics include efficiency, equality, liberty, democracy, economic growth, stability, inflation and unemployment, labor and industry, discrimination, gender, education, the environment, and economic democracy. Prerequisite: ECO 110.

ECO 335 Economic Growth
The differences in the level and growth of income across countries have profound implications on the standard of living of citizens across the world. This course looks at some of the fundamental factors that lead to these
differences and determine the long run performance of economies. Emphasis is on the role of physical and human capital accumulation, technological progress, and institutions in generating the wide income
disparities that we observe. Prerequisite: ECO 110; MAT 140 or equivalent. ECO 220 is recommended.

ECO 340 Managerial Finance
A study of how firms efficiently manage their financial resources and maximize the value of their owner’s investment. Capital budgeting, capital structure, and working capital management are the three fundamental management decisions discussed. Specific topics include financial statement analysis, long- and short-term financial planning, valuation, risk and return, cost of capital, mergers and acquisitions, international finance and options. Prerequisite: ECO 260 or permission of the instructor.

ECO 355 Environmental Economics
An examination of problems associated with pollution and resource depletion. Students are introduced to the usefulness and limitations of welfare economics as a tool in improving the quality of life. Prerequisite: ECO 110.

ECO 356 Law and Economics: American Colonialism
This course examines Hawaii as a microcosm of economic development in the face of political, cultural and environmental tensions. Students discover the history of our 50th state and how that history shaped the fate of native cultures and natural resources. Case studies include Hawaiian independence movements, coffee agriculture, ecotourism, environmental sustainability, and the political economy of Hawaii.

ECO 359 Dispute Resolution
A study of past, present, and future methods of resolving disputes over facts, rights, and decisions. The economist's tools of theoretical and empirical analysis are applied to prospective dispute resolution techniques to determine their viability. The procedures discussed facilitate negotiations over everything from wages and prices to where to go for dinner. Prerequisite: ECO 110.

ECO 360 Economic Development
Cross-cultural study of poverty in low-income societies relative to material affluence in high-income societies. Emphasis given to Third World rural communities with comparisons to Western individualist material cultures and values. Western economic-development thought critiqued via readings in anthropology and globalist perspectives. Prerequisite: ECO 110.

ECO 365 Sustainability
A hands-on immersion into the practices of sustainable architecture, permanent agriculture, alternative energy, urban environmental strategies, dining low on the food chain, and designing ecological communities. Case studies include shade-grown organic coffee and off-the-grid lifestyles.

ECO 370 History of Economic Thought
Study of the economic world views of major economists. Special emphasis is given to “classical” economic thought. The various theories are critically evaluated in order to focus attention on the strengths and weaknesses of modern economic thought. Prerequisite: ECO 110.

ECO 385 Health Economics
This course applies the theoretical principles of economics to understand the health care sector. The demand and supply of health care services are explored. Attention is given to the intervention and function of government, the effect of health insurance and managed care, how practitioners and customers interact, the role of incentives, and the impact of externalities. In addition, current subtopics of health economics research and public policy are explored. Prerequisite: ECO 110.

ECO 390 Econometrics
A study of the regression and correlation methods that are used to test economic hypotheses using empirical observations. Bivariate and multivariate single equation models are discussed. Special topics include multicolinearity, serial correlation, specification error, and heteroskedasticity. An introduction to simultaneous equation systems is included. Prerequisite: ECO 210, 220, and MAT 130 or permission of the instructor.

ECO 395 Empirical Analysis in Economics and Finance
A course designed to give students working knowledge of the statistical tools routinely used in economics and finance. With computer-based projects, the course is taught in a laboratory setting. Topics covered include the use of spreadsheet programs for elementary statistical analysis and report writing, the applications of database software, and the use of state-of-the-art econometric programs for more sophisticated analysis. Prerequisite: ECO 390.

ECO 420 International Trade
A course covering the real side of international economics. The first half of the course focuses on theory, discussing models of the determinants and patterns of international trade. The second half of the course is policy oriented, and considers the relative efficiency of trade policy options, the relationship between trade and development, international trade agreements and organizations, trade and the environment, and the politics of trade. Prerequisite: ECO 220. ECO 210 is recommended.

ECO 430 Money and Banking
A study of the behavior of financial institutions including commercial banks, savings and loans, the Federal Reserve, and the U.S. Treasury, and the role of money in macroeconomic stabilization theory and policy. Prerequisite: ECO 110, 210.

ECO 435 Theory of Investment
Valuation of investment opportunities considering risk and return. Focus is on equity and fixed income securities, portfolio construction, and investment planning. Prerequisite: ECO 110; ECO 260 or permission of the instructor.

ECO 440 Public Finance
A study of the efficiency and equity aspects of government finance and public expenditures and revenues, stressing various taxes at the federal, state, and local levels. Prerequisite: ECO 110, 220.

ECO 455 Experimental Economics
An introduction to issues, methodology, and especially, applications in the field of experimental economics. Daily experiments and simulations explore bargaining, auctions, competition, market failures, voting, contributions to public goods, lottery choice decisions, and similar topics. Through experimental design and data analysis, student understanding of microeconomics will be reinforced. Prerequisite: ECO 110.

ECO 459 Regulating the Environment: The Economist's Perspective
This course examines how legislative rulings regarding the environment impact economic activity. A primary focus is on how environmental regulation impacts firm behavior, market structure, and competition in affected industries, in addition to the economic benefits of regulation. Case studies done on the major United States environmental regulations of the past sixty years, as well as that of some international treaties, help students understand the motivation, implementation, success, and unintended consequences of such regulations. Prerequisite: ECO 110; ECO 220 recommended.

ECO 465 Corporate Finance
This course deals with the foundations of finance, both in theory and in practice. Special emphasis is reserved for the two most important decisions taken by every firm: 1) the capital budgeting decision and 2) the financing decision. Risk measurement, evaluation, and management are integral parts of the course of study. Prerequisite: ECO 110 and ECO 260.

ECO 470 Managerial Economics
Development and practical application of tools of supply, demand, cost, capital, and profit analysis to organizational decision-making. Additionally, a study of the problems of economic measurement and forecasting methods, business planning, and product strategy. Prerequisite: ECO 110.

ECO 475 Financial Markets and Institutions
A survey of financial instruments, markets, and institutions. Approximately equal emphasis is placed on descriptive and theoretical material. Topics include money and capital markets, yield curves, interest rate risk management, futures markets, depository institutions, mutual and pension funds, insurance companies and finance companies. While the primary focus is on U. S. financial markets, the course also considers elements of foreign financial markets. Prerequisites: ECO 260; ECO 340 or 435.

ECO 480 Industrial Organization
A theoretical and empirical analysis of the structure of industrial markets and the behavior of business firms. Topics include strategic behavior, mergers, product differentiation, pricing, entry, and advertising. Prerequisite: ECO 220 or permission of the instructor.

ECO 500 Senior Seminar