DEPARTMENT OF ECONOMICS AND FINANCE UNDERGRADUATE AND POSTGRADUATE COURSES pot

1 UNIVERSITY OF CANTERBURY DEPARTMENT OF ECONOMICS AND FINANCE UNDERGRADUATE AND POSTGRADUATE COURSES 2013 (1 st Edition) “The master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher. … He must be purposeful and disinterested…; as aloof and incorruptible as an artist; yet sometimes as near the earth as a politician.” John Maynard Keynes. This publication is issued for information only. The University Calendar is the authoritative source for all regulations and prescriptions, and also for detailed information on the content and prerequisites of courses offered by other departments. 2 CONTENTS FROM THE HEAD OF DEPARTMENT OF ECONOMICS AND FINANCE 4 THE DEPARTMENT 5 LOCATION AND CONTACT DETAILS OF THE DEPARTMENT OF ECONOMICS AND FINANCE 5 Where is the Department of Economics and Finance? 5 Where do I get help with course advice? 5 STUDYING ECONOMICS AND FINANCE 6 WHAT IS ECONOMICS? 6 WHAT IS FINANCE? 6 PATHWAYS OF STUDY 7 First year 8 Second Year - Economics 9 Second Year - Finance 9 Third year - Economics 10 Third year – Finance 10 Economics Pathways for different types of student 12 Finance Pathways for different types of student 13 Pathway for students interested in Macroeconomics and Monetary Economics 14 An LLB and an Honours degree in Economics in five years. 15 Economics options in the Bachelor of Arts (B.A.) 15 The Economics Honours Programme 17 Where did the 2011 Honours Graduates go? 18 The Graduate Diploma in Economics 18 Master of Commerce or Master of Arts in Economics 18 The Postgraduate Diploma in Economics 19 The Finance Honours Programme 19 The Graduate Diploma in Science 19 Master of Commerce in Finance 20 The quality of the Honours programme 20 SOME COMMONLY ASKED QUESTIONS 21 Do I need to have studied Economics or Finance before? 21 What should I study at secondary school? 21 What Mathematics and Statistics do I need? 21 I have studied economics at school, can I go directly into 2nd year classes? 21 What level of English language do I need? 22 What is the difference between ECON 202/203 and 207/208? 22 In what circumstances can prerequisites be waived? 23 Do any courses have limitation of entry? 24 Should I do a BA, BCom or a BSc? 24 What can I combine economics and/or finance with? 24 How do marks relate to grades in the Department of Economics and Finance? 25 How is the class of honours determined in the Department of Economics and Finance? 26 What happens if I am unable to hand in a piece of assessment on time or attend a test or exam? 27 UNDERGRADUATE COURSES 28 ECON 104-S1/S2INTRODUCTION TO MICROECONOMICS 28 ECON 105-S1/S2INTRODUCTION TO MACROECONOMICS 29 ECON 202-S1 INTERMEDIATE MICROECONOMICS WITH CALCULUS I 30 ECON 203-S2 INTERMEDIATE MICROECONOMICS WITH CALCULUS II 31 ECON 206-S2 INTERMEDIATE MACROECONOMICS 32 ECON 207-S1 INTERMEDIATE MICROECONOMICS I 33 ECON 208-S2 INTERMEDIATE MICROECONOMICS II 34 ECON 213-S1 INTRODUCTION TO ECONOMETRICS 35 ECON 222-S1 INTERNATIONAL TRADE 36 ECON 223-S1 INTRODUCTION TO GAME THEORY FOR BUSINESS, SCIENCE AND POLITICS 37 ECON 224-S2 ECONOMICS AND CURRENT POLICY ISSUES 38 ECON 225-S1 ENVIRONMENTAL ECONOMICS 39 FINC 201-S1/S2 BUSINESS FINANCE 40 FINC 203-S1 FINANCIAL INSTITUTIONS AND MARKETS 41 FINC 205-S2 PERSONAL FINANCE WITH MATHEMATICS 42 ECON 321-S1 MATHEMATICAL TECHNIQUES IN MICROECONOMICS 43 3 ECON 322-S2 GAME THEORY 44 ECON 323-S2 TIME SERIES METHODS AND STOCHASTIC PROCESSES 45 ECON 324-S1 ECONOMETRICS 46 ECON 325-S2 ADVANCED MACROECONOMICS 47 ECON 326-S1 MONETARY ECONOMICS 48 ECON 327-S1 ECONOMIC ANALYSIS OF LAW 49 ECON 329-S1 INDUSTRIAL ORGANISATION 50 ECON 331-S2 FINANCIAL ECONOMICS 51 ECON 332-S2 ECONOMICS AND PSYCHOLOGY 51 ECON 333-S2 EXPERIMENTAL ECONOMICS 52 ECON 336-S2 PUBLIC CHOICE 53 ECON 337-S1 ECONOMIC EVALUATION IN HEALTH 54 ECON 340-S1 DEVELOPMENT ECONOMICS 55 ECON 341-S2 ECONOMICS OF EDUCATION 56 ECON 342-S2 ECONOMIC HISTORY 57 ECON 344-S2 INTERNATIONAL FINANCE 58 ECON 345-S1 ECONOMICS OF RISK AND INSURANCE 59 FINC 301-S1 CORPORATE FINANCE THEORY AND POLICY 60 FINC 302-S1 APPLIED CORPORATE FINANCE 61 FINC 305-S2 FINANCIAL MODELLING 62 FINC 311-S1 INVESTMENTS 63 FINC 312-S2 DERIVATIVE SECURITIES 64 FINC 316-S1 FIXED INCOME SECURITIES 65 FINC 331-S2 FINANCIAL ECONOMICS 66 FINC 344-S2 INTERNATIONAL FINANCE 67 FINC 345-S1 ECONOMICS OF RISK AND INSURANCE 67 POSTGRADUATE COURSES 68 ECON 603-S1 MICROECONOMICS I 68 ECON 605-S1 MACROECONOMICS I 68 ECON 641-S2 MONETARY ECONOMICS: THEORY 69 ECON 642-S1 MONETARY ECONOMICS: POLICY 69 ECON 643-S2 INTERNATIONAL FINANCE 70 ECON 653-S2 PUBLIC ECONOMICS 71 ECON 655-S2 ENVIRONMENTAL ECONOMICS 72 ECON 663-S2 ECONOMETRICS I-600 73 ECON 664-S1 ECONOMETRICS II-600 73 ECON 665-S1 WELFARE ECONOMICS 74 ECON 667-S2 BEHAVIOURAL ECONOMICS 75 ECON 668-S1 EXPERIMENTAL ECONOMICS 76 ECON 669-S1 SPECIAL TOPIC: ECONOMICS OF PROPERTY RIGHTS AND INSTITUTIONS 77 ECON 678-S1 DIRECTED READINGS IN ECONOMICS I 77 ECON 679-S2 DIRECTED READINGS IN ECONOMICS II 77 ECON 680-W RESEARCH EXERCISE 78 FINC601-S2  ADVANCED CORPORATE FINANCE 79 FINC 604-S2 ADVANCED DERIVATIVE SECURITIES 79 FINC609-S1 ADVANCED INTERNATIONAL FINANCE 80 FINC611-S1 SPECIAL TOPIC: CORPORATE GOVERNANCE 80 FINC 612-S2 SPECIAL TOPIC: APPLIED FINANCIAL MANAGEMENT 81 FINC615-S1 FINANCIAL RISK MEASUREMENT 81 FINC 641-S2 MONETARY ECONOMICS: THEORY 82 FINC 643-S2 INTERNATIONAL FINANCE 82 FINC 651-S2 FINANCIAL MODELLING 83 FINC 652-S1 FINANCIAL RISK MANAGEMENT 84 FINC 680-W RESEARCH PROJECT 84 DEPARTMENTAL STAFF 85 DISHONEST PRACTICE 86 Group Work 86 Plagiarism 86 STUDENT COMPLAINTS 87 CLASS REPRESENTATIVES 87 SCHOLARSHIPS AND PRIZES 88 4 From the Head of Department of Economics and Finance Welcome to the Department of Economics and Finance. We are a diverse department, comprising two subject areas and teaching into three undergraduate degrees. Economics and Finance are united in a single Department with the two subjects retaining their distinct nature and value. Economics courses are labelled ECON and Finance courses FINC. Students can choose to major in either subject alone or to follow a coherent combined path of study. Some of the Department’s 300-level courses are double coded across the two subjects to reflect this approach. Economics and Finance combine well with most other subjects, which is reflected in the fact that Economics is a major in the B.A., B.Com. and B.Sc. degrees, and Finance is a major in the both the B.Com and the B.Sc. Students in the B.A. can major or minor in Economics with a number of courses aimed at the interests of these students. We value diversity in our student body and strongly encourage students to take courses from across the University. The lecturers in our Department are passionate about what our subjects have to offer and are passionate about the teaching programme. We are always happy to help students plan their degrees. Work hard and enjoy your studies. Prof. Bob Reed Head of Department “A government could print a good edition of Shakespeare's works, but it could not get them written. Every new extension of Governmental work in branches of production which need ceaseless creation and initiative is to be regarded as prima facie anti-social, because it retards the growth of that knowledge and those ideas which are incomparably the most important form of collective wealth.” - Alfred Marshall, "The Social Possibilities of Economic Chivalry", Economic Journal, 1907 5 The Department Location and Contact details of the Department of Economics and Finance Where is the Department of Economics and Finance? The department is currently located on the Kirkwood Oval Village. To arrange to see your lecturer or another staff member you are best to contact them in advance since access to office pre-fabs is by swipe card. General enquiries can be made via the Departmental Administrator. The postal address and phone/fax/email codes are: Department of Economics and Finance University of Canterbury Private Bag 4800 Christchurch 8041 New Zealand Telephone: +64 3 364 2631 economics@canterbury.ac.nz Where do I get help with course advice? Economics Undergraduate enquiries: stephen.hickson@canterbury.ac.nz Postgraduate enquiries: alfred.guender@canterbury.ac.nz Finance Undergraduate enquiries: debra.reed@canterbury.ac.nz Postgraduate enquiries: glenn.boyle@canterbury.ac.nz or jedzrej.bialkowski@canterbury.ac.nz Or contact the Student Advisors: See http://www.bsec.canterbury.ac.nz/course_advice/index.shtml for how to contact the student advisors. This booklet is designed to give a brief introduction to the Department of Economics and Finance. Details are correct at time of printing but may change over time. For more information on our people, courses and other options please see the department’s web page at http://www.econ.canterbury.ac.nz “Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless.” Milton Friedman, Nobel Laureate in Economics, 1976 6 Studying Economics and Finance What is Economics? Economics is the study of how societies allocate scarce resources among competing uses. It is about the choices made by people, individually and collectively, in the production, exchange, distribution and consumption of goods and services. Central to economic analysis is the study of how people respond to incentives in a market economy, how these incentives may be modified by government intervention, and whether and how government intervention is warranted. At Canterbury, emphasis is placed on the three core areas of study. These are:  Microeconomics , which examines the behaviour of individuals, households and firms, and their interactions in markets. Microeconomics examines economic choices in decentralised markets and reaches conclusions about economic welfare. Markets which are regulated by government, or have only a few participants, or are characterized by different amounts of information, are also examined.  Macroeconomics, which examines the performance of an economy as a whole, and provides insights into the reasons for fluctuations and trends in national income, unemployment, inflation, interest rates, and exchange rates. It also involves examination of a government's taxation, expenditure, monetary and exchange rate policies.  Econometrics, which brings economic theories to the data. It is the study of methods aimed at i) testing economic theories and ii) providing quantitative information on economic relationships for policy analyses and decisions. Courses provide both an accessible account of available econometric methods, and numerous illustrations of these methods with applications to real data sets in hands-on laboratory classes that introduce students to the latest developments in computing and web technology. What is Finance? Finance is the study of savings, investment and risk. It describes the ways in which individuals form, or should form, investment portfolios; the ways in which firms make, or should make, investment decisions, and how they can best pay for these investments; and the ways in which markets, institutions, regulators and governments facilitate these decisions. As in economics, incentives play a pivotal role, but with the added dimension that responses have uncertain and long-reaching consequences. Finance draws heavily on the tools of mathematics, statistics (including probability), and accounting, as well as economics and econometrics. At Canterbury, emphasis is placed on the three core areas of finance. These are: 7  Corporate Finance, which focuses on the financial decisions of the business firm. Topics include the cost of investment capital, the impact on firm value of managerial decisions about investment, and the methods used to pay for these investments.  Investments, which is the application of scientific tools to personal investment decisions. Topics include the ways in which assets and securities can best be combined for individual investors, how these instruments are priced by markets, and how their performance can be measured.  Financial Institutions and Markets, which describes the role of banks, regulators and other institutions intrinsic to the financial system, explains the ways in which financial markets operate, and analyses the determination of interest rates. Both Economics and Finance are about decisions and decision makers, consumers, employers, investors and policy makers in government agencies and industry. The objective of both disciplines is to help decision makers make better decisions. By studying economics or finance (either as your major or simply as part of your degree) you may have the chance to have an important impact on the well-being of many people - and there is also the possibility of earning a good living yourself. You can choose to major in economics or finance (or both), but even if you don’t, including some courses in your degree will equip you with some valuable critical thinking and analytical skills that will enhance your understanding of the world we live in. Pathways of Study The flexibility of University of Canterbury degrees allows students to design a personal course of study to meet their needs. Set out below are possible courses of study but they are suggestions only and our team will be happy to advise you. The University Calendar sets out the definitive rules for the various degrees and if in doubt, students should check the Calendar. First year students in particular should seek advice at enrolment time. “It has been my experience that competency in mathematics, both in numerical manipulations and in understanding its conceptual foundations, enhances a person's ability to handle the more ambiguous and qualitative relationships that dominate our day-to-day financial decision-making.” Alan Greenspan 8 Along with the general requirements of the degree, students who wish to major in economics must meet the following conditions: 100-level ECON104 and ECON105 200-level ECON 202 or 207; and ECON 203 or ECON 208 or ECON 213; and ECON 201 or 206 or 15 points ECON at 200-level which has not been used to satisfy other 200 level majoring requirements 300-level At least 60 points of 300-level Economics, which must include ECON 325 if ECON201 or ECON206 have not been credited to the degree. (Note that ECON202/203 and 207/208 replaced 230 and 231 respectively). Along with the general requirements of the degree, students who wish to major in finance must meet the following conditions: 100-level ACCT102 200-level FINC201 and FINC203 300-level At least 60 points of 300-level Finance, which must include at least two of FINC301, FINC311, FINC312. Students do not specialise in any one area of economics or finance as such (as you might in engineering with civil, mechanical, chemical etc). Students who progress to the 300 level and then on to honours will usually take courses that suit their particular strengths and interests though the end result is still an “economics” or “finance” degree. Students who wish to minor in economics with the B.A. will need to include ECON 207 (or they can take ECON 202 if they have taken MATH 102). So what courses should students take? Here’s some general advice. First year Economics students should take ECON 104 and ECON 105. Finance students should take ECON 104 and ACCT 102 and probably ECON 105. We recommend that students also take STAT101 (a course required for the BCom. anyway.) Students who wish to keep open the option of continuing to honours in economics should also take MATH 102. Students who do not take MATH 102 in their first year can still progress to level 200 math based courses but will usually need to take MATH 102 in their second year, and for finance students this will need to be in semester 1 (for finance students not continuing to honours, MATH 101 is sufficient). Finance students intending to proceed to honours should also take MATH 103. 9 WARNING: Students without a mathematics background equivalent to NCEA Level 2 should pass MATH 101 before enrolling in any second year courses in finance. Most third year courses have a prerequisite of MATH101 or MATH102. (MATH102 is recommended and is a prerequisite for some 300 level FINC courses. If you do not take MATH102, there is no guarantee there will be enough 300 level FINC courses offered every year to allow you to graduate.) Many students have no interest in mathematics. However, there is a very good pathway through to a major in economics that does not require mathematics. In the B.A., economics is also a very attractive minor option. This handbook contains more specific information on those various pathways. Students should plan the rest of their first year to allow them as much second year flexibility as possible. Many students, when they enter university, are unsure as to which area of study they will eventually major in and their subject preference does not become clear until well into the first year. Students should plan with an eye to allowing a range of options in the second year. Students who would benefit from improving their written English skills should also consider enrolling in ENGL 117 or another course of interest that provides students with an opportunity to develop their written skills. Second Year - Economics Students who wish to keep open the option of continuing to honours should take ECON 202, 203, 206 and 213. You may choose to omit ECON 206 if that provides some space for a more preferred course but you must then take ECON 325. Students who do not wish to pursue the mathematics based set of courses are advised to take ECON 206, 207 and 208. ECON 213 is a very good addition to this set but is not required. Students can also choose from a range of elective economics courses such as ECON 222 (International Trade), 223 (Game Theory), 224 (Policy Issues) and 225 (Environmental) depending on specific interests. Second Year - Finance All Finance majors must take FINC 201 (Business Finance) and 203 (Institutions and Markets). Students without a mathematics background equivalent to NCEA Level 2 should pass MATH 101 before enrolling in any second year courses. Students intending to progress to honours should also take ECON 202, ECON 213 and FINC 205. 10 A frequent comment from honours students is that “more maths is useful”. MATH 103 therefore provides a useful addition to a course of study in economics or finance. Third year - Economics Students majoring in economics must take at least 60 points in economics at level 300. Students who are intending to continue to honours are advised to take 45 points from ECON 321 to 326. We strongly recommend taking ECON 324. Not only does this open up a greater range of projects at the honours level but quantitative skills are valued in the work place. For those who intend to progress to honours, it is also a really good idea to take at least one applied course at the 300 level. (Note that students who took ECON 208 rather than 203 prior to 2013 will be allowed to enter honours provided they also pass ECON 321. Students who take their 200-level intermediate microeconomics course from 2013 onwards will be required to take ECON 203 in order to enter honours). Students who are not intending to progress to the honours level should select their courses at the 300 level carefully. Many courses have a MATH or a STAT prerequisite (or both). This is a strong signal that there is a significant mathematical content to the course. Other 300 level courses are more language rather than mathematics intensive and will usually involve more reading, written work or sometimes presentations. Students should investigate carefully which courses are most likely to suit their needs. A good approach is to “shop around” in the first two weeks. You are free to change your course selection during this time. Third year – Finance Students majoring in Finance must take at least 60 FINC 300-level points. These must include 2 of FINC301, FINC311, FINC312. Most 300-level Finance courses have MATH101 or MATH102 as a prerequisite, but the latter is recommended. These courses differ in their requirements. FINC 312 and 331 make extensive use of mathematics (calculus, algebra and probability). FINC 305 requires considerable familiarity with spreadsheets. Enrolment in FINC 302 and 305 is limited to 70 students. Students intending to proceed to honours must take FINC 331. Students intending to major in Finance under the B.Sc. must be credited with FINC 331 or ECON 331. Note: there is no guarantee all of these courses will be offered every year. Plan your course sequence with flexibility in insure you can graduate. Specifically, consider taking MATH102 in your first or second year to maximise your options. [...]... the approval of Law Students wishing to pursue this option must consult the Law Student Advisors Some students may also wish to discuss the possibility of an LLB(hons) and an honours degree in economics This would involve increasing some years to 165 points Students should seek advice from both the School of Law and the Department of Economics and Finance Economics options in the Bachelor of Arts (B.A.)... Microeconomics I ECON207 is the first of two courses of a coordinated sequence of courses that provide a solid grounding in the theoretical and applied methods of microeconomics The courses use the concepts of choice, the co-ordination by prices leading to equilibrium, and the evaluation of people's choices according to the criteria of economic efficiency and equity ECON 207 uses these ideas to study... 'wisdom' of the popular media  Provide preparation for further study in the subject (specifically with reference to courses at Canterbury) ECON 104 studies microeconomics, which examines theories of how consumers and producers behave and interact in individual markets The course covers a general study of the workings of markets and a more in depth analysis of the two sides – supply (producers) and demand... directly into part II of the Masters programme Students interested in enrolling in the MCom should contact Professor Boyle The quality of the Honours programme The Department of Economics and Finance is proud of its honours programme and we produce graduates of a high calibre as the following comments from visiting Erskine Fellows makes clear: “I am especially impressed with the undergraduate honours... find a supervisor 18 The Postgraduate Diploma in Economics The Postgraduate Diploma in Economics is the course work part of the honours year (so is effectively equivalent to part I of the MCom.) Students who enrol in the MCom can elect to “cash in” their study at the end of part I and exit with a Postgraduate Diploma Students who initially enrol in the Postgraduate Diploma and successfully complete... 15 further FINC 300-level points Finance and Accounting Double Major Students Students who wish to major in both subjects should take ACCT 102 and ACCT 103 ECON 104 MATH 102 STAT 101 FINC 201 and 203 ACCT211 and ACCT222 ECON 202 or 208 60 points from 300-level FINC courses including at least 2 of FINC301,FINC311,FINC312 and 60 points from 300-level ACCT Economics and Finance Double Major students Students... any courses have limitation of entry? FINC 302 and 305 and 311 are limited to 70 students Should I do a BA, BCom or a BSc? It is not the title of your degree that matters – more important are the subjects that it contains and the grades achieved What type of degree you get in economics or finance is determined by the other subjects that you do For any of the general degrees, approximately 70% of the... John Kenneth Galbraith 25 How is the class of honours determined in the Department of Economics and Finance? For first class honours, students require an average GPA of 7 or greater over all their honours courses (A- and above) For second class honours division 1 students require an average GPA of 5.5 or greater but less than 7 (averaging half way between B and B+ but less than A-) For second class... when they stayed the same they said it was tacit collusion.” William M Landes in "The Fire of Truth: A Remembrance of Law and Economics at Chicago, 1932-1970", Journal of Law and Economics, Vol 26(1) (April 1983) p.193 26 What happens if I am unable to hand in a piece of assessment on time or attend a test or exam? For internal pieces of assessment such as essays or assignments where an extension to the... FINC201, FINC203 and FINC 205 FINC331 45 additional points from 300 level finance including at least 2 of FINC301, FINC311, FINC312 13 Pathway for students interested in Macroeconomics and Monetary Economics First Year: ECON 104 and 105 MATH 102 Second Year: Third Year: Honours Year: ECON 202 Microeconomics with calculus ECON 325 Advanced Macroeconomics ECON 605 Macroeconomics ECON 206 Macroeconomics ECON . HEAD OF DEPARTMENT OF ECONOMICS AND FINANCE 4 THE DEPARTMENT 5 LOCATION AND CONTACT DETAILS OF THE DEPARTMENT OF ECONOMICS AND FINANCE 5 Where is the Department. 4 From the Head of Department of Economics and Finance Welcome to the Department of Economics and Finance. We are a diverse department, comprising