Policy Economics

The curriculum of the Master in Policy Economics provides students with economic theory and empirical tools that are essential to become an outstanding policy economist. Core courses of this master are Advanced Public Economics, Applied Econometrics, and Advanced Macro-economics. Furthermore, students can follow either Economics of Organisations, Industrial Organisation or Advanced Money, Credit and Banking.

Furthermore, students can choose from several elective courses: Policy Issues in Public Spending on Labour, Education and Health, Advanced Political Economy, and Advanced Development Economics.

The master also provides two large and intensive seminars. In the first seminar students become familiar with a wide array of applied research techniques (econometric methods of policy evaluation, cost-benefit analysis and field experiments) while discussing recent cases in policy evaluation. For the second seminar students can choose between the Seminar Economic Policy or the Seminar Quantitative Macro-economics.

The Seminar Economic Policy is devoted to analysing highly relevant policy issues. The Seminar Economic Policy changes every year to study policy issues that are most pressing at that time. In past years, the subjects were: the euro crisis, the Great Recession, globalisation, income inequality, and taxation of the wealthy and multinationals. In the Seminar Quantitative Macro-economics you learn how to analyse and estimate modern macroeconomic models. The last part of the master is devoted to writing the master’s thesis.

In many courses and seminars, you will work together with fellow students on assignments and papers. Moreover, during the seminars you will give presentations on your work or the course materials.


The curriculum consists of:

  • 29% Applications
  • 33% Theory
  • 38% Empirics

In class

In an assignment for Advanced Public Economics you are going to calculate how high the income tax rate should be at each income level for a country of your choice. You will work in groups of two students. To make your calculations, you will use an Excel programme that contains the optimal tax model of Nobelprize winner James Mirrlees. Use the programme to calculate the tax schedule for your country and explain why the tax schedule looks the way it does.

Study schedule

The Take-Off is the introduction event for all new students of Erasmus School of Economics. During this interesting introduction event, you will be provided with useful practical information and receive an introduction to your studies, meet your fellow students and our School.

At the centre of this course will be the recent advances in the development economics.

Topics discussed in class will include the role of human capital (health and education), access to financial services and the role of institutions in improving the lives of the poor.
Human capital is considered to be one of the most important determinants of economic growth and poverty reduction. Within the field of development economics several field experiments have been implemented to study how to improve access and demand of health care and attendance and performance of students in school. Also, the provision of financial services (credit, savings accounts, insurance) to poor people is a big challenge for the developing world. In the recent years, many countries experienced the "microfinance revolution", but access to formal savings accounts or insurance remains scarce. National and local institutions play an important role in shaping the economy and small changes can be crucial for improving the lives of many.

The final content and structure of the course will be discussed in the first session.

  • Consumption and Saving
  • Business Cycles

Banks, insurers and pension funds feature daily in the financial press. The credit crisis has triggered a public debate on the risks, rewards and the costs of the banking, pension and insurance industry.

Fundamental questions abound. Why do banks exist? Was it a good idea in 2008 to rescue Bear Stearns, the insurer AIG and let Lehman Brothers fail? What are the cost and benefits of bank supervision? Is there too much leverage in the system? Do financial conglomerates increase or lower the risks for the financial system? What about full reserve banking as an alternative for fractional reserve banking? How is the sector coping with the Corona crisis? What will be the effects of this new crisis in the longer run; will it turn into a financial crisis? We extensively discuss the role and risks of the financial industry and the connection with monetary policy.

This course addresses these kinds of questions by digging deeper.


  • Refreshing analytical tools
  • Theory and empirics about elections, polarization in politics, populism, trust, political accountability, role of the media, size of the government, redistribution.

This course is concerned with normative public economics. A choice is made each year from the following topics:

  • The first and second welfare theorems
  • The theory of second-best and dead-weight loss
  • Optimal non-linear income tax
  • Optimal participation taxes
  • Optimal indirect taxes
  • Optimal capital income taxes
  • Optimal participation taxes
  • Optimal taxes/subsidies on human capital and provision of education
  • Optimal provision of public goods and social cost-benefit analysis
  • Optimal corrective (environmental) taxes/regulation
  • Optimal minimum wage policies

The course links the optimal tax principles to actual policy discussions, for example, the flat-tax debate, the optimal progressivity of the income tax, the top rate of the income tax, taxation of capital incomes, greening the tax system, discussions on the optimal size of the public sector, the role of the government in (higher) education, etc.

  • Sampling
  • Regression and Prediction (OLS, Lasso, etc.)
  • Causal Inference (Differences-in-Differences, Instrumental Variables, Regression Discontinuity)
  • Panel Data (Random Effects, Fixed Effects, Dynamic Panels)
  • Limited Dependent Variables (Probit, Logit, Poisson, etc.)

Traditionally, the firm is treated as a structure where inputs are transformed into output. Yet, 'the firm' is not a decision-making unit. Rather, production is shaped by the decisions of people within the organisation. People involved in an organisation (or, more generally, in any transaction) will have different objectives, which may hamper cooperation.

The issues we will discuss include the effects and limitations of various instruments that may improve efficiency, such as property rights, contracts, financial and non-financial incentives, and organisational structure. Throughout, we take a microeconomic perspective.

This course provides an overview of modern industrial organization that blends theory with real-world applications. It acquaints the students with the most important models for understanding strategies chosen by firms with market power and shows how such firms adapt to different market environments. These insights are then applied to study market outcomes and competition policy. Formal theory is complemented throughout by real-world cases that show how it applies to actual organizational settings.

The course will focus on the functioning of the markets for labor, education and health which typically are non-standard markets with a lot of government intervention. Questions that will be addressed are:

  • What are the main instruments for policy makers to improve the functioning of the markets for labor, education and health and what do we know about the effects?
  • How can the government stimulate optimal investment in human capital or in health capital?
  • What are the returns to investment in human capital at the individual or at the social level?

Guest lecturers will be invited to tell about recent policy issues.

The structure of the course roughly is as follows:

  1. Introduction, Stylized Facts, and the International Tax System
  2. Transfer Pricing and International Profit Shifting
  3. Tax-efficient Capital Structures in Multinationals
  4. Debt Shifting and Minority Ownership
  5. Anti-avoidance Regulation: Thin Capitalization Rules, CFC rules

During the seminar you learn about different ways to conduct policy research, using recent cases in policy evaluation.
Examples are:

  • What can we learn about the impact of unemployment policies using quasi-experimental research designs?
  • Can we measure the effect of additional funding for schools with a regression discontinuity design?
  • How to set up a fiel experiment to analyze the effects of teacher performance pay?
  • What does social-cost benefit analysis tell us about the costs and benefits of the Olympic Games?

Students are expected tot discuss and present policy research during the seminar.
Finally, students are expected to do an empirical case study, do research assignments, and write a policy research paper.

The definitive decision on the main topic(s) will be made before the start of the course. During the course, students will get an in-depth theoretical and empirical background into the economics of main topics of the course.

Guest lecturers with strong expertise in the main topics and policy makers will be invited. Students are expected to prepare lectures well. During the lectures students will present articles from a list of required reading to the whole class. Active student participation in the course will be rewarded.

During this course, each student will be writing a policy paper on an important aspect of the main topic(s) of this course. Students will provide a theoretically sound and empirically founded policy advice to solve the policy problem under consideration. Since policy questions will generally be very broad, different students will analyze different sub-questions in their papers.

The lecturers provide assistance with writing the papers. Students need to defend their analysis in a class presentation.

The thesis is an individual assignment about a subject from your Master's specialisation. More information about thesis subjects, thesis supervisors and the writing process can be found on the Master thesis website.

The overview above provides an impression of the curriculum for this programme. It is not an up-to-date study schedule for current students. They can find their full study schedules on MyEUR.

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