Download Slide 1

AIMS OF THE CAMBRIDGE COURSE
To educate students
• so that they can DO GOOD (provide informed
advice to policymakers in government, business
and international organisations);
• so that they can DO WELL (apply the
‘fundamental’ economic considerations which
influence outcomes in financial markets)
• so that they can DO MORE (have the skills
needed to continue to graduate study in
Economics)
WHAT CAMBRIDGE IS LOOKING FOR
Applicants with
• the intellectual curiosity to investigate
contemporary and historical patterns of
economic behaviour
• a wide-ranging interest in the evolution of
the global economy
• quantitative skills and an interest in
applying mathematical and statistical tools
to real problems
Economics at Cambridge 2011
SUBJECT CHOICES FOR A-LEVELS ETC
Applicants from other backgrounds (Sciences, Languages) welcomed,
provided you have Maths A Level
The course will teach Economics without assuming any prior knowledge
You must be taking
• A-level Maths
– Further Maths (at AS or A2) is also very useful – some Colleges may demand it
– IB candidates should be taking HL Maths
– better if you can take Pure and Statistics rather than Mechanics
Other desirable A levels
• Economics (Take Economics rather than Business Studies if your school
offers both subjects – do not take both at A2 level)
• History
• Geography
Economics at Cambridge 2011
THE ODDS
What qualifications you need
• Competition for places is strong - about 7 applicants per place
• You should have at least 6 GCSE’s at A or A*
• Offers are typically A*AA so you should have clear A-grade marks at
AS level – offer may require one A* grade
• Overseas applicants should also have very strong academic records
• Overseas applicants whose first language is not English must pass an
additional language test before admission
Economics at Cambridge 2011
DESIGN OF THE CAMBRIDGE COURSE
The course is a 3-year degree programme, known as the Economics
Tripos
Divided into three Parts, with an exam at the end of each year
Each year is free-standing – there is no cumulation of marks across
years
The Economics Tripos is a single-subject degree – but there are options
for switching to other subjects
• Switch to History/Law/PPSIS after one year
• Switch to Management Studies after two years
All switches require College approval – and there is a quota for
Management Studies entrants
Economics at Cambridge 2011
Economics is about understanding
• How each of us makes the best of what we have
got
– Opportunity costs (“no such thing as a free lunch”)
– Robinson Crusoe’s rationality and optimisation;
• How we co-ordinate the productive activities of
individuals and firms in a large society
– Through markets (“invisible hand”, prices as signals)
– Through managerial hierarchies (“visible hand”)
– Through spontaneous co-operation (“big society”)
The “wealth of nations” is about
• Division of labour
• Specialization and accumulation of assets
(investment)
• Technological progress
• Capital is accumulated by investment (today’s
jam sacrificed for more jam tomorrow)
• Perhaps! All investment is speculation – a
(hopefully reasonable) expectation of future
returns
A Generational Perspective
The evolution of economic thinking can be illustrated through
the experience of successive generations:
• Today’s university students (b. 1990s) - “the
return of depression economics” (2007-??)
• Their parents (b. 1960s)- “the end of history”
(1979-2007);
• Their grandparents (b. 1930s) – “the cradle-tograve welfare state” (1945-1973)
Two hypotheses on finance
• Efficient Markets
– Finance “oils the wheels”
of the market
– It speeds up income
convergence at lower
cost in current
consumption
– Rational expectations
ensure stability
– Competition empowers
rational expectations
• Financial Instability
– Expectations intrinsically
volatile
– Volatility creates real
economic damage
– This damage can be
long-lasting (hysteresis)
– Prudential regulation
must be strict
“GREED IS GOOD”
A BRANCH OF NORTHERN ROCK
13TH SEPTEMBER 2007
“YOU STUPID BOY!”
2010 – Denmark’s Windpower
2010 - Ireland’s Ghost Estates
Additional Readings
• The Keynes Hayek Rap
• The Keynes vs. Hayek Debate
• How Did Economists Get it So Wrong? (by Paul
Krugman)