In an earlier post I provided the outline, reading lists and exam questions (only for Economics 202a) for the second year graduate course, “Economic Theory II”, Economics 202a and 202b, taught by Wassily Leontief in 1948-49. The following course outline with reading assignments is for the year 1956-57. The course in both years has essentially the same readings for the first semester. The second semester of 1956-57 does add an entirely new section “Principles of Dynamics”. I have highlighted in blue boldface additions to the reading assignments in the 1956-57 course compared to the 1948-49 version.
Economics in the Rear-view Mirror thanks Juan C. A. Acosta who found these Leontief reading lists in the Franco Modigliani Papers (Box T6) at the Duke University Economists’ Papers Project and has graciously shared them for transcription here.
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Wassily Leontief
HARVARD UNIVERSITY
Ec. 202a
ECONOMIC THEORY
Fall Term 1956-57
The following outline covers the first semester of the two semester course.
I. Analysis of Production and the Theory of a Firm:
- Costs; total, average, marginal.
Theory of the multiple plant firm.
Revenue; total, average, marginal.
Long and short run analysis
Supply under competitive and monopolistic conditions. - Production function, marginal productivity, increasing and decreasing returns.
Stocks and flows.
Joint products.
Demand for factors of production.
Discontinuous relationships and non-marginal analysis (Linear Programming).
Internal and external economies. - Production over time.
Reading assignments:
Oscar Lange, “The Scope and Method of Economics,” Review of Economic Studies, Vol. XIII, (1), 1945-46, pp. 19-32.
E. A. G. Robinson, Structure of Competitive Industry, Chs. II, VII, VIII, pp. 14-35, 107-133.
E. H. MacNiece, Production, Forecasting, Planning and Control, 292 pp. This book presents a concise description of the actual operation of a manufacturing enterprise and thus supplies the factual background for the theory of the firm.
K. E. Boulding, Economic Analysis, (revised edition, 1948) Chapters 20-26, 31, and 32; or (3rded., 1955) Chapters 23-29, 34, and 35.
E. H. Chamberlin, “Proportionality, Divisibility, and Economies of Scale,”Quarterly Journal of Economics, February, 1948, pp. 229-262.
R. Frisch, “Alfred Marshall’s Theory of Value,” Quarterly Journal of Economics, Vol. LXIV, No. 4, November 1950, pp. 495-524.
K. E. Boulding, “The Theory of the Firm in the Last Ten Years,” The American Economic Review, Vol. XXXII, No. 4, December 1942, pp. 791-802.
A. Lerner, Economics of Control, Chs. 15, 16, 17, pp. 174-211.
National Bureau of Economic Research, Cost Behavior and Price Policy, Ch. VII, pp. 142-169; Appendix C, pp. 321-329.
W. W. Cooper, “A Proposal for Extending the Theory of the Firm,” Quarterly Journal of Economics, February 1951, pp. 87-109.
Robert Dorfman, “Mathematical or ‘Linear’ Programming,” American Economic Review, December 1953, pp. 797-825.
A. G. Hart, Anticipations, Uncertainty and Dynamic Planning, reprinted 1951, 98 pp.
II. Theory of the Household:
- Theory of utility and indifference lines analysis.
Individual demand, prices and income.
Dependent and independent, competing and complementary, superior and inferior goods. - Measurability of utility.
“Marginal utility of money,” Consumer surplus.
Interpersonal interdependence in consumers’ behavior.
Economic theory of index numbers.
Choices involving risk.
Reading assignments:
J. Hicks, Value and Capital, Part I, Chs. I-III, pp. 1-54.
K. E. Boulding, Economic Analysis, (Revised edition, 1948) Chapters 33, 34; or (3rded., 1955), Chapter 36 and 37.
Duesenberry, Income, Saving and the Theory of Consumer Behavior, Chapters I-III, pp. 1-46.
J. R. Hicks, A Revision of Demand Theory, Parts I and II, also the summary and conclusion.
A. A. Alchian, “The Meaning of Utility Measurement,” American Economic Review, March 1953, pp. 26-50.
G. Katona, Psychological Analysis of Economic Behavior, Part II, #1-7, pp. 63-149.
III. Theory of Market Relationships:
- Pure competition; individual and market supply and demand curves.
Stability of market equilibrium, statics and dynamics.
Monopoly and price discrimination. - Monopolistic competition.
Duopoly, oligopoly, bilateral monopoly, etc.
“Theory of games.”
Reading assignments:
A. Marshall, Principles of Economics, Book V, Chs. III, V.
E. H. Chamberlin, The Theory of Monopolistic Competition, Chs. II, III, IV, and V.
Joan Robinson, The Economics of Imperfect Competition, Chs. 15 and 16.
Robert Triffin, Monopolistic Competition and the General Equilibrium Theory, Chs. I and II.
William Fellner, Competition Among the Few, Chs. II-V.
W. H. Nicholls, Imperfect Competition within Agricultural Industries, Ch. 18.
Leonid Hurwicz, “The Theory of Economic Behavior,” American Economic Review, December, 1945, pp. 909-925.
IV. General equilibrium theory:
- Basic Concepts of a General Equilibrium Theory.
Data and variables. Price system and general interdependence. Linear model of a general equilibrium system.
Reading assignments:
O. Lange, The Economic Theory of Socialism, pp. 65-72.
Cassel, The Theory of Social Economy, Vol. I, Ch. IV, pp. 134-155.
E. H. Phelps Brown, Framework of the Pricing System, in particular chapters dealing with general equilibrium theory.
T. W. Schultz, Agriculture in an Unstable Economy, Ch. I, pp. 60-70; Ch. IV, pp. 128-137.
R. S. Eckaus, “The Factor Proportion Problem in Underdeveloped Areas,” The American Economic Review, September 1955, pp. 539-565.
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ECONOMICS 202b
ECONOMIC THEORY
Spring Term, 1956-57
V. Economics of Welfare
- Individual maximum and social welfare.
- Efficiency and distributive justice.
- Efficiency of the purely competitive system.
Monopoly and economic welfare.
External economies. - Pricing and allocation for public enterprise.
READING ASSIGNMENTS:
J. Hicks, “The Foundation of Welfare Economics,” Economic Journal, December 1939, pp. 696-712.
Meade and Hitch, An Introduction to Economic Analysis and Policy, Part II, Chs. VI-VII, pp. 159-220.
Coase, “Note on Price and Output Policy,” Economic Journal, Vol. LV, April 1945, pp. 112-113.
Samuelson, “Evaluation of Real National Income,” Oxford Economic papers, Jan. 1950.
T. Scitovsky, “The State of Welfare Economics,” The American Economic Review, Vol. XLI, June 1951, pp. 303-315.
VI. Capital and Interest
- Stock and Flow Concepts.
Productivity of Capital.
Period of production and “turnover” of capital. - Theory of saving.
Risk and uncertainty. - Partial equilibrium theory of interest.
READING ASSIGNMENTS:
Edward F. Denison, “Theoretical Aspects of Quality Change, Capital Consumption, and Net Capital Formation,” in Problems of Capital Formation, Studies in Income and Wealth, Vol. 19, National Bureau of Economic Research 1957, pp. 215-260.
Robert Eisner, “Interview and Other Survey Techniques and the study of Investment,” in Problems of Capital Formation (same as above)
Irving Fisher, The Theory of Interest, Chs. VII, VIII, IX, X, XI, XVI, XVII, and XVIII. 1930.
Readings in the Theory of Income Distribution(Blakiston, 1946)
F. Knight, “Capital and Interest,” pp. 384-417.
Keynes, “The Theory of the Rate of Interest,” pp. 418-424.
D. H. Robertson, “Mr. Keynes and the Rate of Interest,” pp. 425-460.
John Rae, John, New Principles of Political Economy, 1834, Chs. I-V.
Irving Fisher, Nature of Capital and Income, Chs. I, IV, V, XIV, XVII, Macmillan, 1906.
Friedrich & Vera Lutz, The Theory of Investment of the Firm, 1951.
Joel Dean, Capital Budgeting,1951, Chs. VI, VII.
VII: Principles of Dynamics
- Change over time.
Period analysis.
Continuous change - Dynamic stability and instability.
READING ASSIGNMENTS:
W. Baumol, Economic Dynamics, Chs. I-VII, pp. 1-136.
P. Samuelson, “Dynamics, Statics and Stationary State,” The Review of Economics and Statistics, February 1943, pp. 58-68 (also reprinted in Readings in Economic Analysis, Vol. 1, edited by N. V. Clemens).
K. E. Boulding, A Reconstruction of Economics, Ch. I, pp. 3-26.
Erik Lindahl, Introduction to the Study of Dynamic Theory, pp. 21-73 in Studies in the Theory of Money and Capital.
VIII: Economic Development and Accumulation of Capital
- Dynamic interrelation of income, investment and the rate of interest.
- Linear interrelation of income, investment and the rate of interest.
Non-linear theory of economic development.
READING ASSIGNMENTS:
Bresciani-Turoni, “The Theory of Saving,” Economica; Part I, Feb. 1936, pp. 1-23; Part II, May 1936, pp. 162-181.
Schelling, “Capital Growth and Equilibrium,” American Economic Review, Dec. 1947, pp. 864-876.
Harrod, “An Essay in Dynamic Theory,” Economic Journal, March 1939, pp. 14-33.
Pigou, Economic Progress in a Stable Economy,” Economica, August 1947, pp. 180-188.
Stern, “Capital Requirements in Progressive Economies,” Economica, August 1945, pp. 163-171.
A. Sweezy, “Secular Stagnation?” in Harris, Postwar Economic Problems, McGraw-Hill, New York, 1943, pp. 67-82.
Hansen, “Economic Progress and Declining Population Growth,” American Economic Review, March 1939, pp. 1-15.
Also, Baumol, see above under VII.
IX: Keynesian Theory and Problems
- Over-all outlines of the General Theory.
Wage and price “stickiness.”
Demand for money. - Saving and “oversaving.”
Multiplier principle.
READING ASSIGNMENTS:
A. P. Lerner, The Economics of Control, Chs. 21, 22, and 25.
__________, “The Essential Properties of Interest and Money,” Quarterly Journal of Economics, May 1952, pp. 172-93.
J. M. Keynes, General Theory of Employment, Interest and Money, Chs. 1, 2, 8 &18.
G. Haberler, Prosperity and Depression, Ch. 8.
Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Franco Modigliani. Box T7.
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Reading assignments in the 1948-49 reading list that were not included in the 1956-57 reading list:
I. Analysis of Production and the Theory of a Firm:
I. Fisher, “A Three-Dimensional Representation of the Factors of Production and Their Remuneration Marginally and Residually,”Econometrica, October, 1939.
George Stigler, “Production and Distribution in the Short Run,” Journal of Political Economy, 1939, pp. 305-327. Reprinted in Readings in the Theory of Income Distribution, pp. 119-142.
Joe S. Bain, The Economics of the Pacific Coast Petroleum Industry, Part I, Ch. V, pp. 84-114.
III. Theory of Market Relationships:
Carl Kaysen, “A Revolution in Economic Theory?” The Review of Economic Studies, Vol. XIV (I), 1946-47, p. 1-15.
Jakob Marschak, “Theory of Games,” Journal of Political Economy, April, 1946, pp. 97-115.
V. Economics of Welfare
Meade, J. E., and Fleming, J. M.: Price and Output Policy of State Enterprise,” Economic Journal, Vol. LIV, December 1944, pp. 321-339.
VI. Capital and Interest
Kuznets: “On Measurement of National Wealth,” Studies in Income and Wealth, Vol. 2, National Bureau of Economic Research, 1936, pp. 3-61.
Kaldor: “Annual Survey of Economic Theory: The Recent Controversy on The Theory of Capital,” Econometrica, July 1937, pp. 201-233.
IX: Keynesian Theory and Problems
Domar: Expansion and Employment,” American Economic Review, March 1947, pp. 34-55.
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Image Source: Wassily Leontief in Harvard Class Album 1964.