2) Theory of Second Best i.e., where markets have multiple distortions, removing one to create purer market wont necessarily improve overall outcomes.
Siedlecki piece, LBJ Journal (Spring/Summer 2005 Link to article)Link to article Question: Do markets sometimes fail and, if so, whats to be done about it? Slide 12 The Imperial Market Considerable market worship Not just among economists, but policymakers of almost all stripes (Kuttner, ch.
MATEMATIKA EKONOMI DAN BISNIS FREE
So what? What share of GDP produced & sold in free markets? Slide 10 Considerations Influence of laws, institutions & rules of the game Effects of power & influence on market outcomes Issues surrounding one-man/one vote, one-dollar/one-vote The Endowment Issue Effects of policies & policy shifts on markets & on market outcomes Slide 11 Considerations Question: How deterministic is market analysis? Question: Is there play in markets? If so, how much? 2001 Austin Equity Comm. CEAs Slide 8 Welfare Reforms Success? Consider Blank (2002) Slide 9 Why POLITICAL ECONOMY? Why not just microeconomics taught by UTs econ tribe? Cheaper, easier? Why not? For starters, check out stark contrast in treatments by B&Z, Kuttner, Blank & McGurn QUESTIONS Do free markets exist? Yes & No. CEA, Bill Clinton, Al From, Bush, others: Was it policy or the economy & how much of each? J. Economists no better than anyone else at making these Slide 7 Value Judgments "When analysis comes in conflict with values, values trump analysis every time." Theda Skocpol (1997 Harvard) on 'welfare devolution Continuing debate on the success of welfare reform in U.S. Use value judgments to decide whether or not such effects are desired realm of normative analysis. Stats./econometrics & statistical significance Then, go further (Steps 1 & 2).
Normative Analysis Qualitatively determining expected effects of particular policy, based on micro theory Likely effects on employment, production, prices Quantitatively determining size of actual effects of particular policy. Positive analysis "WHAT IS Normative analysis "WHAT SHOULD BE" Important Distinction Much of micro in realm of positive analysis, dealing w/propositions that can be tested in terms of underlying logic (qualitative analysis) & empirical evidence (quantitative analysis) Slide 6 Positive v. Normative Analysis Economists & others often called on to assess best policy approach.
"Theory provides means or framework for explaining complex reality Simplifies/abstracts from reality Need not fully or precisely describe reality Basic Supply and Demand Curves Price Quantity S D Slide 4 Role of Theory Best test of 'good' theory? Whether it explains/predicts what it's designed to, NOT whether its assumptions are correct or reflect reality CAVEAT: Many controversies & issues here Can have seemingly good theory, but as result of non-modeled events or other supporting circumstances, lousy results Slide 5 Positive v.
Marshalls famous "scissors" Few changes to core of micro theory in many decades. Slide 3 Role of Theory Microeconomic theory evolved gradually 1700s & late 1800s. Mengetahui lingkungan ekonomi di dalam mana bisnis dilakukan Slide 2 What is MICROECONOMICS? MICRO: study of economic behavior of (relatively) "small" units, e.g., workers, firms Versus MACRO: study of economy as a whole, aggregate actor behavior Remarkable consensus on micro's underlying principles "laws" and tools of analysis, but vast differences in terms of what to do with the analysis. Ekonomi Bisnis dan Manajerial 1.Mengetahui ruang lingkup mata kuliah ini 2.
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