​My Notes and Materials

​WARNING! This is currently a rough outline and I make notes and collect materials. Check in late January 2027 more final details.

Module 0: Review Materials

• Macro Review 00: Micro Supply and Demand Analysis

• Macro Review 01: National Income Identity

• Macro Review 02: Definitions and Nominal vs Real Variables

• Review AS-AD Basics

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Course Objective

The goal of this course is to understand the implications of AI and other emerging innovations for the economy.  We will discuss what innovation means and what AI specifically means.  We will discuss economic evaluation of whether these changes are “good” or “bad” and how economists define that.  We will learn how to model innovation and how current work is attempting to model AI.

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Module 1: Innovation Basics

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The History of Innovation

• The Industrial Revolution

• Railroads

• Mechanization and Agriculture

• Did productivity slowdown since the 1970s? (Gary Gorton)

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Normative vs Positive Economics

• Making welfare statements in economics: Is AI Good?

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Economic Thinking About Innovation

• Comparative Advantage

  • Optimal allocation within a firm (MB = MC or profit max and allocation)

• The importance of prices and the price mechanism

• Transaction Costs:

  • Coase, Williamson, and North

  • Uber, AirBnB, and BlockChains.​

• Will AI Replace us ALL?​

  • The circular flow diagram and macroeconomic reasoning​

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Module 2: Modeling Innovation in Economics

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Production Functions

• Cobb-Douglas

  • Application: Detecting productivity/innovation changes at the firm level

  • TFP and Long-Run Macroeconomic Growth

• Adding AI: Task-Based and other Models

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Pricing and AI: Will Everything Really be Free?

• Firm Profit Max when Underlying Resources are Limited

• Individualized Pricing (Varion’s 3rd degree perfect discrimination)

• Decentralization and Anti-Monopoly Economies

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Module 3: Markets, Competition and Tech Diffusion

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Transmitting Innovations Across Space and Time

• Markets and Competition

• Incentives and Endogenous Growth Theories

• Patents and Monopolies

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Module 4: Macroeconomic Implications

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• Capital Markets

• Blockchain and Crypto

• AI and the FED

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Appendix

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The IMF's AI page: https://www.imf.org/en/topics/artificial-intelligence

The Economics of Transformative AI website: https://ai.objectives.institute/ai-and-markets

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