Advanced topics in US Economy

obligatory courses

Knowledge of basic notions of economics and basic facts about the US economy on the level required in "The US Economy" 4219-AW108 or "The History of the US Economy" 4219-AW030 courses offered on the ASC Licencjat Program is assumed and will be the starting point for this course. Previous participation in the “Introduction to Economics” 4219-SE019 at the ASC or any “Economics” course elsewhere would be helpful but is not required. Working knowledge of English language indispensable - tuition will be in English only.

The course deals with Economic Freedom in the US, North America and in the World. It offers a look at the US economy through the glass of economic freedom (EF) concept and its five major components: size of the government; legal structure and the security of property rights; access to sound money; freedom to trade internationally; and regulation of credit, labor and business.

It starts with the introduction of the concept of EF and its relation to political freedom, as well as with the notion of institutions. Then the concept of EF measurement and specifically of Economic Freedom Index (EFI) is introduced. Finally, the EFI is used to characterize the US economy vis-à-vis other countries of the world, and to compare particular US states with Mexican states and Canadian provinces. Both, the cross-sectional (static) and time-series (dynamic) analysis will be carried out.

Students will be provided with free access to the relevant literature, data and software (all available on-line).

[attention: text in brackets refers to the list of readings (required and additional)]

1. The course will start with theoretical discussion of the very concept of economic freedom, its aspects, its importance and its relation to other freedoms [Milton Friedman]

2. The concepts of economic institutions and economic policy will discussed – also in their historical context [Douglass North in Walter Block; Acemoglu & Robinson]

3. Then the idea of measuring economic freedom will be elaborated [Fraser Institute conferences – see additional readings]

4. The creation of the EFI by Fraser Institute will be discussed: components and subcomponents of the index will be presented [James Gwartney, Bob Lawson, Josh Hall]

5. Changes in the EFI formula introduced over time will be dealt with [James Gwartney, Bob Lawson, Walter Block]

6. Actual results (values of the EFI) for the United States, Canada and a host of other countries for the past forty plus years will be shown. [Fraser Institute EFI Dataset and EFI Software]

7. The regional (and inside-the-country) index concept will be introduced – in general and specifically for the United States of America, Canada and Mexico. Economic freedom for US States, Mexican States, and Canadian Provinces will discussed and assessed [ Economic Freedom of North America].

8. The use of EFI as a proxy for a measure of the institutional matrix of a country will be analyzed [lecture]

9. Correlation of EFI values for the US with other socioeconomic variables will be analyzed [James Gwartney, Bob Lawson, Josh Hall]

During the semester students will have access to the raw numerical data provided in the spreadsheet form by the Fraser Institute. Optionally, dedicated PC software “Economic Freedom of the World” provided by Global Economic Software, Ltd. may be used as a substitute.

The numerical value of the EFI is (almost) each year computed for (almost) all the countries of the world, as well as (separately) for some regions of the world (eg. the North America). The index consists of ratings for several large “areas” (e.g. the size of the government or freedom of citizens to carry transactions with the rest of the world, etc.) which, in turn, consists of more minute elements/categories (42 at present) . The ratings for all those categories are derived from the existing statistical and other sources. Therefore, the index value is objective – it is not based on subjective views of experts giving ratings according to “their best knowledge of a country” – as it is the case with other existing economic freedom indices (by the Heritage Foundation/WSJ and by the Freedom House). This opens a number possibilities for use of the index by academics – one is correlation between economic freedom as measured by the EFI and other socio-economic variables (you name them!). We will concentrate on the US economy and, to a degree, on the Canadian economy. Mexican economy will be treated only cursorily – on the basis of some examples only.

An in-class presentation of a Project will be required from participants. Generally, that will be some analysis based on the data provided, although a theoretical “paper” is also possible. The “numerical” Projects usually deal with the US economy presented vis-à-vis a background group of other countries or a specific US state vis-à-vis a background group of other US and Mexican states or Canadian Provinces. A more sophisticated approach would be to measure correlation between EFI and chosen socio-economic variables. “Theoretical” papers may go as far as attempting to build student’s own “EFI” that would be more suitable for particular tasks – e.g. measuring economic freedom differences at regional/local levels within the countries.

Required readings:

• Gwartney, J., Lawson, R. & Hall. J. (2015). Economic Freedom of the World. 2015 Annual Report. Vancouver: Fraser Institute.

- may be retrieved free of charge from: http://www.freetheworld.com/release.html along with the related dataset 2015 (Excel format)

• Stansel, D., Torra, J. & McMahon, F. (2014). Economic Freedom of North America 2014. Vancouver: Fraser Institute.

- may be retrieved free of charge from: http://www.freetheworld.com/efna.html along with the related dataset 2014 [attention: if the 2015 edition is already available, we will substitute it for the earlier version]

• Friedman, M. (1962). Capitalism and Freedom. Chicago: University of Chicago Press (Introduction and Chapters 1 and 2 only).

- copies will be made available to students on request via the e-learning platform

• North, D. (1988). Institutions, Economic Growth and Freedom. An Historical Introduction. In: Walker, M. (ed.) (1988). Freedom, Democracy and Economic Welfare. Vancouver: The Fraser Institute, p. 3-25. - copies will be made available to students on request via the e-learning platform

• Acemoglu, D. & Robinson, J. (2012). Why Nations Fail. The origins of Power, Prosperity and Poverty. London: Profile Books, p. 7-44. - copies will be made available to students on request via the e-learning platform

• Economic Freedom of the World Data System (Software + Database containing EF data and several hundreds of World Bank indicators) - to be downloaded free of charge from: http://efwdata.com/

Additional readings:

• Block, W. (ed.). (1991). Economic Freedom: Toward a Theory of Measurement. Vancouver: The Fraser Institute, [assigned fragments only, t.b.a.] - available at http://www.freetheworld.com/background.html

• Easton, S. & Walker, M. (eds.) (1992). Rating Global Economic Freedom. Vancouver: The Fraser Institute. [assigned fragments only, t.b.a.] - available at http://www.freetheworld.com/background.html

• Walker, M. (ed.) (1988). Freedom, Democracy and Economic Welfare. Vancouver: The Fraser Institute. [assigned fragments only, t.b.a.] - available at http://www.freetheworld.com/background.html

• Gwartney, J., Lawson, R. & Block, R. (1996). Economic Freedom of the World 1975 – 1995. Vancouver: The Fraser Institute. [assigned fragments only, t.b.a.] - available at; http://oldfraser.lexi.net/publications/books/econ_free95/

• Brennan, J. (2014). Why not Capitalism? New York & London: Routledge. available in the ASC Library.

1. KNOWLEDGE

After successfully completing the course the student should:

• Have a grasp of the meaning of economic freedom and the relationship between economic freedom, freedom as such, and civil liberties.

• Understand the meaning of economic institutions, as well as their importance in historical economic development.

• Understand the importance of measuring economic (and social) phenomena.

• Know the history of economic freedom measurement.

• Know the precise structure of the Economic Freedom Index (EFI) developed by the Fraser Institute (present state and historical changes).

• Know the precise structure of the Economic Freedom Index of North America (for the the US states, Canadian Provinces, and Mexican states) in its two versions, know how it differs from the general EFI, be able to retrieve the respective values of the indices from the web, and be able to assess their quality, meaning, and values as compared to the EFI.

• Understand the relationship between (measured) economic freedom and other socio-economic variables for the US, Canada, Mexico and other countries.

2. SKILLS

After successfully completing the course the student should:

• Be able to retrieve (from the web) the actual values of EFI for particular countries and years, to manipulate them (in a spreadsheet), and to use them in comparative analysis – including analysis of economic transformation process.

• Be able to assess the changes in economic freedom in the US and other countries of his/her choice in time, understand its causes and consequences.

• Be able to manipulate the Economic Freedom Software (provided) – including the use of all the statistical series of social and economic indicators provided by the World Bank (that are included in the software provided).

3. SOCIAL COMPETENCES

After successfully completing the course the student should:

• -- Irrespective of his/her ideological stance -- be able to objectively assess the importance of economic freedom for economic progress of any society, including Polish.

• Be open to different views of his/her discussants as to the general role of freedom - and economic freedom in particular – in our lives, irrespective of the country and/or historical period.

• Be able to cooperate in a small team in order to settle down the differences of opinion among its members as to achieve a common goal (a tangible result of the cooperative process).

• Be able to cooperate with teammates using the distance learning tools (the e-learning platform/Moodle).

The course grade will consist of three elements (with respective weights, as indicated):

20% = student’s in-class presentations of the assigned reading material;

60% = a Project and its in-class presentation;

20% = a final test (written; may contain multiple choice, true-false and short open questions)

A combined total of 50% is the passing threshold for the course.

There will be no formal final exam.

The make-up will consist of a comprehensive test only – the test will count as 100% (i.e. the Project and in-class performance will not count).

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