SAN JOSÉ STATE UNIVERSITY
ECONOMICS DEPARTMENT
Thayer Watkins
email: watkinst@email.sjsu.edu
tel no: 924-5420
Office: DMH 214

Econ 193
Institutional Economics
Website: http://www.sjsu.edu/faculty/watkins/econ193.htm

Texts:
Thràin Eggertsson, Economic Behavior and Institutions
Paul Craig Roberts and Karen LaFollette Araujo, The Capitalist Revolution in Latin America

Course Content: There are three major segments to the course.

The segment on American Institutionalism will start with the German Historical School and then procede to the ideas of Thorstein Veblen, John R. Commons and John Kenneth Galbraith. There will be some material on Flow-of-Funds Analysis by Morris Copeland, an American Institutionalist economist. This segment will finish with Latin American Structualism, including the ideas of Raul Prebisch. The implementation of Structualism will be illustrated by the experience of the Alan Garcia regime in Peru.

Modern Institutionalism began with the ideas of Ronald Coase in his articles on the theory of the firm and social cost (the Coase Theorem). This line of thinking was developed further by Douglass North and his school of thought at Washington University in St. Louis. This school of thought is called "Neoinstitutionalism." Another line of development of institutionalism was created by Oliver Williamson of the University of California at Berkeley. This school of thought is called the "New Instituionalism." Together Neoinstitutionalism and the New Institutionalism constitute an important extention of microeconomic theory that has a good deal of practical importance in economic policy. A related area of development is the field of "Property Rights" economics.

The third segment is the matter of institutional reform. The economies of Eastern Europe and the former Soviet Union are still in the throes of making transitions from centrally planned socialism to market-type economies. They are having varying degrees of success. By and large this transition is a matter of substituting one set of institutions for another. But Eastern Europe and the former Soviet Union countries are not the only one undergoing institutional reform. Latin American countries in the past decade have undergone revolutionary political and economic transitions. In the past few years the economies of East Asia have been forced to reform their institutional structures. India also has been, albeit slowly, attempting institutional reform. There is no end of examples of countries trying to reform their economic structures.

Grading: Grading will be based upon two midterms and one final examination plus two homework assignments. The examinations will be multiple-choice. The two midterm examinations will have approximately equal weight. The final, which will be comprehensive, will have approximately twice the weight of one midterm. The homework assignments combined will have the weight of one-half of a midterm examination.

The homework is the creation of two webpages on topics in institutional economics. The topic for the first web page is the summarization of an article from the journal for institutional economics, The Journal of Economic Issues. The topic for the second web page is the experience of a country undertaking institutional reform, such as in Eastern Europe, East Asia or Latin America. One web page must be created writing the HTML code on a text editor. The second can be done using MS Frontpage or MSWord. Time will be made available in a computer lab on Tuesdays and Thursdays. I will upload student webpages to the University server so it is important that such webpages do not contain material protected by copyright.

The first midterm, covering the readings from the web site for the segment concerning American Institutionalism and the first two chapters of the Thràin Eggertsson text, Economic Behavior and Institutions, plus lecture material will be given on Monday, August 9th starting at 10 AM. The second midterm, covering of the rest of the Thràin Eggertsson text, Economic Behavior and Institutions, plus lecture material, readings from the website and handouts, will be given Monday, August 16th starting at 10 AM. The final, which will be comprehensive, can cover anything in the texts or lecture material, will be given Monday, August 23rd starting at 9 AM. The final will emphasize material from the text, The Capitalist Revolution in Latin America.