Course Outline for Comparative and transitional economics EC2252 200405

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Course Outline for Comparative and transitional
economics (EC2252) - 2004/05

• Course Code and Title
• EC2252 - Comparative and transitional economics
• Course Leader
• Cecilia Testa
• Aim
• The aim of this course is to introduce students
  to the comparative study of different economics
  systems. Focussing on the comparison between
  market economies and central planning, the course
  will provide the tools to analyse the transition
  of the China, Eastern European countries and the
  Ex-Soviet Union from socialist to market
  economies.
• Learning outcomes
• By the end of the course students should
• Have a broad knowledge of the main
  characteristics and functioning of different
  economic systems
• Be able to apply their knowledge of macroeconomic
  and microeconomic theory to the study of the
  reforms
• Understand the effect of different reform
  strategies in the transition from central
  planning to a market regime
• Be able to evaluate the welfare effects of the
  reforms and the factors behind the political
  support and opposition to the reform process
• Course Delivery
• The course will be delivered through a one-hour
  lecture and a one-hour seminar each week.
  Specific learning outcomes and prescribed reading
  are provided for each week of the course.
  Seminars will be based upon worksheets
  distributed in the previous weeks lecture.
• Lecturers and seminar leaders are available for
  consultation (either by you individually, or in
  small groups) during advertised office hours or
  by appointment.

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• Course Summary
• Lecture1 Central planning versus market
• Lecture 2 Price Liberalisation and the output
  fall
• Lecture 3 Dual-track liberalization
• Lecture 4 Private ownership, public ownership
  and production
• Lecture 5 Privatisation and soft budget
  constraint
• Lecture 6 Methods of Privatisation
• Lecture 7 Restructuring
• Lecture 8 Restructuring and privatisation
• Lecture 9 Optimal sequencing of reforms
• Lecture 10 Income distribution and transition

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• Assessment
• 2-hours unseen examination, which contributes
  100 of the final mark and is taken during the
  Summer term. The exam will test your knowledge
  and understanding of the material covered in the
  course your ability to manipulate diagrammatic
  and algebraic versions of the models you have
  learned your ability to apply models to real
  economic situations your ability to critically
  appraise models and their application.
• Formative assessment will consist of one piece of
  written work (essay) and 1 test during the year.
  The dates for these are laid out in the current
  Student Handbook. You will be provided with
  standardised feedback on these pieces of work.
• Students are also encouraged to make use of the
  self-assessment questions in the workbook which
  accompanies the standard course text, and on the
  associated website (see below).
• Reading
• The course will draw on two main textbooks.
  Additional readings, in the form of articles,
  will be provided as class material.
• Textbooks
• Gerard Roland , Transition and Economics
  politics, markets and Firms, The MIT press

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market versus Central planning

• Lecture 1

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Comparative and transitional economics

• Comparative and transitional economics- EC2252
• Lecture 1 market versus Central planning
• Reading Transition and Economics (Roland)
  chapter 1
• Learning objectives In addition to learning the
  material covered in the reading list and the
  lecture, by the end of this week you should
• Understand the main difference between a market
  economy and a centrally planned economy
• Be able to identify the main changes necessary to
  convert a centrally planned economy into a market
  economy

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. Comparative and transitional economics

• What do you expect from this course?
• Comparative?
• Transitional?
• Transition from where and toward what?
• From Central planning . Toward market
• Lets start with something you should be familiar
  with MARKET!

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Market

• Are you able to define a market?
• What is a market economy?
• Does the government have a role in a market
  economy?

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Central planning

• Central planning main features
• price system
• Prices are fixed by the central planner and
  changed only when the plan is revised
• sectors of the economy / firms
• The central planner decides the quantity that
  firm have to produce

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Central planning

• the productive system incentives
• output target
• soft budget constraint
• planning
• consistent plans for few goods
• planned demand-planned supply

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Central planning

• Problems
• chronic shortages and black markets
• effects of shortage on the consumer side
• Queues
• effects of shortage on the producer side
• bargaining power of workers and in house
  provision of goods and services

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From the Plan to the Market

• Solutions?
• introduction of market based allocation of
  resources
• reforms price liberalization, privatization,
  restructuring
• Problems
• Reforms show strong complementarities!
• What is the optimal speed of reforms?
• What is the optimal sequencing of reforms?
• Reforms create gains but also losses!
• Ex increase in prices
• Ex loss of social services provided by firms
• Ex unemployment following restructuring
• TOWARD a market economy without state?