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14.04 - Intermediate Microeconomic Theory

14.04 Intermediate Microeconomic Theory (Fall 2020, MIT OCW). Instructor: Prof. Robert M. Townsend. This course provides an introduction to theory and data designed to meet the needs of students interested in economic science. It provides an introduction to consumer choice, the theory of the firm, and general equilibrium models, with an overview of the main results and tools used in studying these topics, both directly in economics and indirectly in various other fields. This includes analysis of consumer and producer decisions, partial and general equilibrium analysis, insurance, the welfare theorems and failures of these theorems as with externalities but with resolutions, contract theory and mechanism design, policy analysis, the content of theory for data, and the design of media of exchange as with Bitcoin and markets made possible by distributed ledgers. (from ocw.mit.edu)

Lecture 09 - Risk Sharing with Production

Instructor: Prof. Robert M. Townsend. In modern economies with financial markets, a good stock is one that hedges aggregate risk, having high return when the rest of the market does poorly, on average. A stock which in contrast co-moves with the market bears a risk premium, to compensate for its failure to hedge market risk. In Thai village economies, no stocks are traded, and yet amazingly, the returns on real capital assets, from running small business and farms, are consistent with the theory.


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Lecture 01 - Economic Science
Lecture 02 - Consumer Choice
Lecture 03 - Income and Substitution Effects
Lecture 04 - Production and Profit Maximization
Lecture 05 - Uncertainty and Linear Problems
Lecture 06 - Dynamics and Programming
Lecture 07 - Pareto Optimality
Exam 01 - Review
Lecture 08 - Risk Sharing Application
Lecture 09 - Risk Sharing with Production
Lecture 10 - Ledgers and Management
Lecture 11 - Contracts and Mechanism Design
Lecture 12 - Contract Application, Obstacles
Lecture 13 - Walrasian Equilibrium and Trade
Lecture 14 - Real and Financial Flows: Thailand
Lecture 15 - Data and Policy in the United States
Exam 02 - Review
Lecture 16 - Fundamental Welfare Theorems
Lecture 17 - Existence of Equilibria
Lecture 18 - Aggregation
Lecture 19 - Identification and Falsification
Lecture 20 - Failure of Welfare Theorems
Lecture 21 - Bubbles
Exam 03 - Final Exam Review