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 and Ukrainian Business Language in miniterm V.

Since some second-year courses are being taught for the first time in 2011–2012, 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. Main text: Kate L. Turabian A Manual for Writers. Collected readings.

10% of the total grade for the Research & Policy Analysis 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.

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: Time-Series. One miniterm.

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

Advanced Macroeconomics. One miniterm.

The course aims to introduce the students to dynamic macroeconomics. It reviews some topics in economic series analysis and covers topics like Markov process, Hodrick-Prescott filter, etc. Furthermore it studies the macroeconomic models that became the workhorses of modern macro, with the focus on the neoclassical growth model. It covers basic theoretical concepts of the economic dynamics such as dynamic (stochastic) programming, value function, Bellman equation, Euler equation, recursive equilibrium etc. Finally, it also discusses the numerical solution methods, calibration and simulation of the models. The problem sets include both theoretical and computer exercises. The programming language is MATLAB. Collected readings.

Computational Economics. One miniterm.

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

Corporate Finance. Two miniterms.

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

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.

Economic Policy Analysis II. One miniterm.

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

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.

The course is aimed at providing students with an understanding of how the four basic financial statements, such as the Balance Sheet, Income Statement, Statement of Cash Flow, and Statement of Changes in Owner's Equity are prepared. It covers the major accounting techniques used in preparing financial statements, as well as some basic analytic tools available to mangers to assist them in the operation of a business.

Upon completion of the course, students are able to:

- understand the general principles of how product costs and service costs are calculated and used in determining selling prices;

- use financial information to make decisions that use and manipulate the business factors of cost, volume, and profit;

- apply the principles of relevant costs when making decisions.

- apply the knowledge learned in the course to the various business situations they will encounter during their careers.

Textbooks: Financial Accounting in an Economic Context, Jamie Pratt, 10th Edition; Managerial Accounting, Garrison and Noreen, 9th Edition

Financial Economics I: Portfolio Theory and Financial Markets. 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 focus is on the modern portfolio theory, the capital asset pricing model and the arbitrage pricing theory. The second part of the course focuses on valuation of bonds, forwards and futures. 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: Danthine and Donaldson, Intermediate Financial Theory; Elton and Gruber, Modern Portfolio Theory and Investment Analysis; Bodie, Kane and Marcus, Investments, Hull Options, Futures and Other Derivatives; Baz and Chacko, Financial Derivatives: Pricing, Applications, and Mathematics.

Financial Economics II: Derivative Pricing. One miniterm.      

This course is devoted to modern derivative pricing techniques, with a particular focus on financial options and basic option pricing models (binomial, geometric Brownian motion, stochastic volatility). 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 problems of risk management for derivative portfolios. 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.

Financial Mathematics: Stochastic Calculus. One miniterm.

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

Financial Statements and Investment Analysis. One miniterm.

The ongoing economic transformation in Ukraine has been accompanied with an increased interest in and scrutiny of accounting numbers that are being disclosed by many publicly listed companies, as well as an increasing demand for qualified specialists able to analyze financial statements from accounting, auditing, legal, banking and investment companies to name a few. 

This course is aimed at providing students with the skills and tools needed to analyze financial statements and make sense out of them. This course is intended to follow a practical, rather than theoretical framework. Students should not expect to see many groundbreaking theories and cutting-edge tools in the class, but they should expect to see standard procedures ant instruments used by practitioners, as well as to have a chance to talk to the invited speakers from the business.

This course closely follows CFA Level I standard course of reading and by the end of the course students are familiar with nearly half of the CFA Level I’s Financial Statement Analysis component.

Primary Text: Understanding Financial Statements by Fraser and Ormiston; CFA Level I Financial Statement Analysis textbook.

Game Theory.  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 texts: Robert Gibbons “Game Theory for Applied Economists”, 1992; Osborne “An Introduction to Game Theory”, 2004

Industrial Organization. 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 research and development, price discrimination. At the end of the course students are asked to review and present a paper. Main textbook: Tirole, J. “The Theory of Industrial Organization”, The MIT Press, 1988.

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: Maurice Obstfeld and Rogoff Foundations of International Macroeconomics, MIT, 1996.

International Trade. 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. One miniterm.

This course consists of a series of topics, including the application of financial options theory to valuation of primary financial assets (stocks and bonds), the real options approach to project valuation, the value-at-risk analysis in risk management,  pricing of interest rate and foreign exchange swaps, and introduction to structured finance (mortgage and asset-backed securities). Main texts: Damodaran Investment Valuation, Hull Options, Futures and Other Derivatives; Fabozzi Bond Markets, Analysis, and Strategies.

Issues in Microeconomics: Information Economics. One miniterm.

Micro-economic literature in the late 1960's began focusing on the importance of information and initiated the relaxation of the Arrow-Debreu-Hahn assumptions. That relaxation allows microeconomics to explain a much broader scope of relationships among economic and social agents in the real world. This course focuses on incentives that guide the economic activities in a world of imperfect information and incomplete markets. Those incentives are created by contracts (both implicit and institutional) among the agents such as employer-employee, buyer and seller, tenant and landlord, bank and lender, etc.

The course builds on concepts of agency (principal-agent), asymmetric information, and high exclusion costs of certain types of information. The concepts of transaction costs, hidden information, hidden action, signaling, screening, optimum contract, segmentation induced by differential information, pooling and separating equilibrium, and hierarchical internal organizations are also explored and formalized. Main texts: Inés Macho-Stadler and David Pérez-Castrillo, An Introduction to the Economics of Information: Incentives and Contracts; Mas-Colell, Whinston, and Green, Microeconomic Theory; Yujiro Hayami and Keijuro Otsuka, The Economics of Contract Choice: An Agrarian Perspective; Debraj Ray, Development Economics.

Labor Economics.  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.

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.

Public Economics.  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.

English Language.  Two miniterms.

English language instruction is provided for the second-year students in the form of an auxiliary course in miniterms II and IV in order to help with the thesis writing process.

Ukrainian Business Language.  One miniterm.

Ukrainian Business Language instruction is provided for the second-year students in the form of an auxiliary course in miniterm V in order to help with research annotations writing process.