Second Year Courses

The second year of the KSE curriculum is divided into the two MA Programs – the MA in Economic Analysis and the MA in Financial Economics. In order to earn a master’s degree from the Kyiv School of Economics in each specific MA, second-year students are required to take the majority of courses in the area of the selected field of studies and a smaller set of courses from the other MA. Furthermore, students of both MAs should take four mandatory courses in Research & Economic Policy Analysis and one in Thesis Writing Methods, and to defend a thesis, written in English, on a topic related to the field area. English Language course is included into the second-year curriculum in miniterms II and IV in order to help students in their thesis writing process.

Since some second-year courses are being taught for the first time in 2010–2011, exact content and complete syllabi, will have to await further input from the instructors. The student workload is comparable to that of the first year, i.e. students will have on average four courses per term, one of which will be in the form of either the Research & Policy Analysis Workshop or the Thesis Workshop.

The precise second-year courses offered each year vary, the following course descriptions are general. More detailed information is made available by course instructors.

Research & Policy Analysis Workshop I, II, III, IV.  Four miniterms.

A course in economic research methods covers the specific aspects of research presentation: how to organize the research paper, how to cite references, how to make a proper table of contents, index, appendices, etc. It also addresses the issue of how to carry out research: whether to use experimental and/or surveys, and how to find proper techniques for use. Research and Policy Analysis Workshop course leads the students to examine research sources, tools and methods, as well as essays, outlines, precis, etc., explore the literature and start to devise a proper research agenda and methodology. 10% of the total grade for Research Workshop also comes from participation in the KSE Speaker’s Series, Open Lectures and Academic Seminars. Per miniterm student should attend no less than 2 of the latter. Main text: Kate L. Turabian A Manual for Writers. Collected readings.

Thesis Workshop. One miniterm.

Within this course students acquire the research presentation skills most essential in preparation to the thesis defenses that are held at the end of the second year. Students make presentations of their thesis in front of a group of students using PowerPoint and get experience making presentations, leading discussions, reasonably defending their own conceptions and making conclusions.

Advanced Econometrics I. One miniterm.

Course is taught for the first time. Syllabus will be available from the instructors at the beginning of the course.

Advanced Macroeconomics I. One miniterm.

The course aims to introduce the students to dynamic macroeconomics. First, it covers basic theoretical concepts of economic dynamics such as dynamic (stochastic) programming, value function, Bellman equation, Euler equation, recursive equilibrium, etc. Second it reviews some topics of time series analysis that are particularly useful for applied macroeconomic research, e.g. Markov process, Hodrick-Prescott filter, etc. Finally, it discusses the issues of calibration of economic models and simulating the solutions by using numerical methods. The problem sets include both theoretical and computer exercises. The programming language is MATLAB. Collected readings.

Economic Policy Analysis I. One miniterm.

This course explores economic policy from the point of view of policy practitioners. In particular, the course focuses on practical guidance for writing policy papers of different types. A framework theory of economic policy is presented, as well as an overview of the nuts and bolts of policy making and policy dialogue in practice. This gives students a framework for thinking about policy issues and policy design, which is realistic, implementable, and politically acceptable. It also encourages them to think about the policy relevance of primary empirical and theoretical economic research conducted for their master’s theses. 
The course introduces a set of practical tools for empirical analysis of various policy actions. It is designed to provide an intensive overview of the two core methods of policy evaluation: statistical (econometric) and cost-benefit analysis. Main texts: Carol H. Weiss Evaluation; Gittinger, J. Price Economic Analysis of Agricultural Projects; Edward M. Gramlich A Guide to Benefit-Cost Analysis. Collected readings, case studies.

Emerging Capital Markets.  One miniterm.

Emerging Markets comprise all those countries that are “developing” or are in “transition”, including countries in Eastern/Southern Europe, East/South Asia, Latin America and Africa. They exclude the USA, Canada, Western Europe and Japan. The course provides with techniques and insights to handle successfully investment and related financial matters concerning Emerging Capital Markets. It deals with fundamental theoretical topics (such as foreign exchange determination) as well as practical issues (such as how to build an equity and debt portfolio in Emerging Markets). It covers such topics as Capital Outflows to Emerging Markets; Foreign Exchange Determination and Forecasting; Hedging Foreign Exchange Exposure; Emerging Markets Debt; Emerging Stock Markets; Financial Crises in Latin America, East Asia and Eastern Europe; Country Economic Analysis and Management (including macroeconomic stabilization and liberalization); Financial Sector Reform, Banking Crises and Privatization. Main text: B. Solnik International Investments. Collected readings.

Financial and Managerial Accounting. One miniterm.

Course is taught for the first time. Syllabus will be available from instructor at the beginning of the course.

Financial Econometrics. Spread within two miniterms.

This course consists of the two equal parts of 7 classes each. Course parts are:

1). Financial Econometrics by Prof. Bent Sorenson (University of Houston) – miniterm I

This part of the course is concerned with empirical modeling and testing of financial models. The purpose is to introduce students to main models for financial prices and returns. Knowledge of statistics, econometrics and probability theory is required, although the main tools are expectations and regression models. This part is an intensive one and is taught in one week.

2). Financial Econometrics by Prof. Maksym Obrizan (KSE) – miniterm V

Second part of the course is taught for the first time. Syllabus will be available from the instructor at the beginning of the course.

Financial Economics I: Financial Theory. One miniterm.      
Financial Economics II: Financial Instruments. One miniterm.      

The first part of the course contains an introduction to fundamental financial theory and focuses on asset pricing in general and partial equilibrium. Main attention is devoted to the problems of choice under uncertainty, risk and investment decisions, modern portfolio theory, the capital asset pricing model, Arrow-Debreu pricing and market completeness. Main texts: Danthine and Donaldson Intermediate Financial Theory; Elton and Gruber Modern Portfolio Theory and Investment Analysis.

The second part of the course focuses on valuation of primary financial instruments, such as stocks and bonds, and some linear derivative products, such as forwards, futures and swaps. The objective is to equip students with fundamental analytical and quantitative skills necessary to understand asset pricing decisions and to detect arbitrage opportunities in the markets. Main texts: Bodie, Kane and Marcus Investments, Fabozzi and Modigliani Capital Markets: Institutions and Instruments; Hull Options, Futures and Other Derivatives; Baz and Chacko Financial Derivatives: Pricing, Applications, and Mathematics.

Financial Markets Analysis I, II. Two miniterms.

Course is taught for the first time. Syllabus will be available from instructor at the beginning of the course.

Financial Statements Analysis. One miniterm.

Course is taught for the first time. Syllabus will be available from instructor at the beginning of the course.

Game Theory I.  One miniterm.

Non-cooperative game theory is an abstract framework for analyzing strategic situations that involve multi-person interdependent decision making. Conflict, cooperation, coordination, bargaining, auctions are all topics that can be successfully analyzed within this framework. This course will teach the fundamentals of game theory. Game theory emerged as a branch of applied mathematics and is still quite mathematical. Although students rarely use anything more than algebra, the course is analytically demanding. Though the hard part of game theory is not the math, but the logic and mastering this takes time and effort. Main text:  Gardner R. Games for Business and Economics. Collected readings.

Industrial Organization I. One miniterm.

The objective of the course is to give comprehensive knowledge of the basic theory of industrial organization. Main attention is given to the market structure and organization, models of perfect competition, monopoly, oligopoly, markets for homogenous and differentiated products, and models of entry and entry deterrence. Main textbook: Shy, O. Industrial Organization: Theory and Applications.

International Finance. One miniterm.

This course introduces the theory of open macroeconomics that focuses on determinants of exchange rates, current and capital accounts, and implications of globalization on macroeconomic policy. The objective is to provide students with deep understanding of open macroeconomics and ability to apply it practically. Main texts: Krugman and Obstfeld International Economics; Obstfeld and Rogoff Foundations of International Macroeconomics.

International Trade I. One miniterm.

Several questions are of interest. Why do countries generally trade? What are the benefits from trade? What determines the pattern of trade? What are the effects on income distribution? What are the main policy issues? The course develops a systematic framework for the analysis of these questions. It considers the Ricardian model, specific factors, factor endowments, and imperfect competition models of trade, along with empirical evidence. Some of the trade policy issues including protectionism and trade agreements are also discussed. Collected readings.

Issues in Financial Economics: Option Pricing and Project Valuation. One miniterm.

This course is devoted to modern option pricing techniques and the two fundamental project valuation techniques: discounted cash flow analysis and real options approach. The objective is to provide students with a thorough understanding of the theory of risk-neutral valuation and to introduce them to the mathematical and numerical tools essential for practical implementation of derivatives pricing models. The course also discusses the use of derivatives in risk management and financial engineering. Main texts: Hull Options, Futures and Other Derivatives; Kolb Understanding Options; Rendleman Applied Derivatives: Options, Futures, and Swaps; Wilmott Howison and Dewynne The Mathematics of Financial Derivatives: A Student Introduction; Dixit and Pindyck Investment under Uncertainty; Mun Real Options Analysis: Tools and Techniques for Valuing Strategic Investments and Decisions.

Labor Economics I.  One miniterm.

Labor Economics course is designed to cover several topics in labor economics focusing on the investigation of wage differentials. During the course both classic papers and recent contributions explaining existence and magnitude of the wage differentials in the neoclassical tradition are examined and several alternative theories are briefly reviewed. Much of the course material is empirical in nature. Most of the readings for the course are journal articles or book chapters. To provide an introduction to the various topics, the following introductory text is used: George Borjas Labor Economics.

Monetary Economics. One miniterm.

The course familiarizes students with basic concepts and policy issues in monetary economics. These include the functions of money, monetary aggregates and empirical money demand functions. Different monetary mechanisms are discussed. The course also analyzes the monetary policy rules from theoretical and empirical perspectives. In the second part of the course students study the three topics prevalent in the policy-making and policy analysis of emerging market economies: 1). Exchange rate pass-through; 2). Dollarization and 3). Financial sector development and the interaction of financial sector with economic growth. Main readings: Bofinger P. Monetary Policy - Goals, Institutions, Strategies and Instruments; Dornbush R. Exchange Rates and Prices, American Economic Review, 1987, Vol. 77, No. 1; Koujianou Goldberg P. and Knetter M. Good Prices and Exchange Rates: What Have We Learned? Journal of Economic Literature, 1997, Vol. 35, No. 3.

Money and Banking. One miniterm.

The course provides an overview of the issues central to the economics of money, banking and financial intermediation, such as the role of financial sector in the real economy, the money demand and money supply analysis, and the current debate on the theory of monetary policy. In addition, a number of issues in the functioning of central banks, the regulation of banks, and some risk management techniques are considered. Main text: Frederic S. Mishkin The Economics of Money, Banking and the Financial Markets; Lewis Mervyn K. and Paul D. Mizen Monetary Economics.

New Economic Geography.  One miniterm.

The goal of the course is to make students familiar with recent developments in spatial economics and new economic geography. The emphasis will be given to practical tools designed to analyze spatial processes – e.g. MATA programming language - and empirical work in spatial economics and new economic geography. In the end of the course students should be able to model and analyze economic problems related to the spatial distribution of economic activities. Collected readings.

Nonparametric Econometrics. One miniterm.

The objective of the course is to present modern methods of statistical analysis for studying economic phenomena.  The level is advanced for Master degree or intermediate Ph.D. degree. The approach is integrated: main theoretical results with some proofs (60%), the computational part (20%), and some empirical examples (20%).  The computational part is handled in Matlab.

The major part of the course is dedicated to the Modern Non-Parametric Statistics, in particular to Kernel Density Estimation and the Bootstrap. For the sake of completeness, at the beginning of the course the refresh of the major statistical methods, such as generalized least squares and maximum likelihood estimators is conducted, with some interesting econometric examples. Overall, the resulting knowledge is intended to be sufficient for student’s future own applied research. Main reading material: Rudiments of Non-Parametric Statistics, Lecture notes by V. Zelenyuk. Main texts: Efron B. and Tibshirani R.J. An Introduction to the Bootstrap; Pagan A. and A. Ullah Nonparametric Econometrics.

Productivity Analysis. One miniterm.

The objective of the course is to disseminate contemporary methodology for advanced production economics, focusing on efficiency and productivity analysis of various economic systems (e.g., countries, regions, industries, firms, public sectors). The course is composed of three parts. The first part is focused on the introduction to axiomatic approach of Shephard-McFadden-Färe-Primont to production theory (covering the essence of its economic foundation and mathematical structure). The second part is focused on applications of the theory to efficiency and productivity measurement using Data Envelopment Analysis (DEA) approach. The third part is focused on applications of the theory to efficiency and productivity growth measurement. Overall, the resulting knowledge is intended to be sufficient for student’s future own applied research as well as teaching this subject at other institutions. Interested students will also obtain guidance for pursuing advanced theoretical research in the area. Main texts: R. Sickles and V. Zelenyuk Econometrics of Production Analysis; Coelli T.J., P. Rao and D.S. and Battese G.E. An Introduction to Efficiency and Productivity Analysis.

Public Economics I.  One miniterm.

Public economics (or, as other authors call it, ‘public finance’) is an applied microeconomics course about the role of the public sector in general and government in particular in an economic system. It discusses why we need public sector, when markets fail, what public goods are and how they are provided, what the social transfers are, and where to get funds for all those exciting spending programs. In short, the course focuses on government spending and taxing and their multiple effects on behavior of economic agents and economic system as a whole. Due to a shortage of local publications more attention is paid to theoretical and intuitive issues rather than on Ukraine-specific empirical findings. However, local documents are also used to the fullest extent possible. There is no any single textbook that would entirely satisfy the goals of this course. Main texts: Harvey Rosen Public Finance; Joseph Stiglitz Economics of Public Sector; John Cullis and Phillip Jones Public Finance and Public Choice. Journal articles are also provided.

Theory of Corporate Finance. One miniterm.

This course covers a number of topics in corporate finance such as investment valuation, debt-equity structure, dividend policy, financial contracts, corporate restructuring, the pricing of IPOs. The emphasis is on theoretical models and related empirical evidence, rather than on practical rules and details of institutional arrangements. The course examines a number of implications of asymmetric information and agency problems for financial decisions. Main texts: J.A. de Matos Theoretical Foundations of Corporate Finance; O. Hart Firms, Contracts, and Financial Structure; R. Brealey, S. Myers, and A. Marcus Fundamentals of Corporate Finance.