The objective of this course is to identify, justify, analyze and
evaluate policy options to various current economic problems, including
labor markets, social insurance, pensions, development, trade,
environment and product market competition. Using problem sets and
exercises, along with work on economic data will increase and deepen
understanding and help broaching a large number of microeconomic policy
Specific learning outcomes upon completion of this curricular item are:
• Ability to formulate the economic rationale for policy
intervention in various current economic problems
• Ability to develop policy options from economic theories
• Ability to evaluate existing and potential policy options, both
in theory and in practice
• Critical attitude to existing theoretical and empirical policy
analysis of current economic problems
• Ability to apply tools of economic modeling
• Ability to interpret economic data
Structural policy is on top of the agenda when it comes to keeping
individual countries on the path to stability and growth. Microeconomic
structural reforms (say, in labor and product markets, social security
and welfare systems) are often seen as long-run policy measures
complementary to short-term macroeconomic stabilization policies.
This course discusses the role of economic policy in the context of both
market failures and government objectives to adjust market outcomes.
Each problem is analyzed along four different dimensions: (1) statement
of the problem, (2) discussion of the rationale for government
intervention, (3) policy options, and (4) evaluation of the economic
outcomes of the policy in theory and practice. Current structural
economic problems arising in the following fields are prime candidates
to be discussed:
• Labor market: unemployment incidence, active labor market policy,
taxes and labor supply
• Social insurance and social security: disability insurance, moral
hazard, welfare payments, pensions (social security), adverse selection
• Environment: externalities, property rights, tragedy of the
commons, taxation, climate policy
• Development and trade: analysis of living standards, provision of
legal and political frameworks, trade protection, WTO
• Competition policy and regulation: imperfect competition, market
power, cartels, price-discrimination, regulation and de-regulation
During the course both theoretical and empirical economic work is
Lectures, guest lectures and working groups
Grade is average of problem sets (2/5) and written examination (3/5),
with written exam grade of at least 5.0.
Acemoglu, Daron, David Laibson and John A. List, 2016, Economics,
Harlow, Essex, Pearson Education Ltd. ISBN 13: 978-1-292-07920-2, incl.
access code MYECONLAB.
Basic knowledge of math and statistics, as provided in the academic core
of any academic program at VU University Amsterdam or equivalent.
Foundations of Microeconomics
Third-year bachelor students.
last updated: 20160523