Department of Economics

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In essence the study of Economics helps to form judgements on the way in which society should use its limited resources to achieve a high and rising standard of living.

Department of Economics

Why you should study an Economics Degree?

Department of Economics

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Welcome to the newly designed website for the Department of Economics and Economic History. The Department is one of the largest on the Rhodes University campus and has a staff complement that is a mixture of experience and youthful exuberance. Although the Economics Department is large, by Rhodes University standards, students are allocated a tutor and have weekly or bi-weekly small group tutorial sessions for all undergraduate courses. The website provides information on study options in the Department, staff, research, Department activities and contact details.

In essence the study of Economics helps to form judgements on the way in which society should use its limited resources to achieve a high and rising standard of living.

The Department of Economics and Economic History allows students the choice of a range of courses at both the under graduate and Honours level. These include Money and Banking, Finance Economics, Monetary Economics, Public Finance, Econometrics, International Trade, Development Economics and Environmental and Natural Resource Economics. These career-focused courses will allow the students to become an ECONOMIST in a range of cutting-edge occupations.

Economics is required study for every student in the Commerce Faculty and is recommended as complementary to the Social Sciences. Since Economics touches so many parts of life it may equally be taken together with any of the Sciences, Journalism, Law and many others.

Economics at Rhodes is offered at a number of distinct levels. The first-year course is intended as a broad introduction to the discipline which will give students taking only one year of Economics a sound understanding of basic issues of microeconomics and macroeconomics, while laying the foundations on which more advanced study is based. In the second year students proceed with intermediate level microeconomics and macroeconomics, after which the third-year and Honours studies allow further specialisation in career-focused disciplines.

The Department offers Masters and doctoral degrees by research thesis.  These options are available to students wishing to pursue a clearly defined field of research.  Acceptance to these degrees depends on the candidate’s previous academic record, an acceptable research proposal and the availability of expertise in the Department to supervise the project. A Master of Commerce degree in Financial Markets is also offered by coursework and dissertation. This degree is aimed specifically at a specialised career in the financial/banking sector.

Research in the Department has been boosted by the award of the Environmental and Natural Resource Economics Focus Area (ENREFA) by the University.  The motivation behind the focus area is that the Eastern Cape Province has an extremely diverse environment including one of the three globally recognised biodiversity hotspots found in South Africa, viz. the Maputoland-Pondoland-Albany Centre of Endemism.  The intention of ENREFA is to focus primarily on the institutional economic aspects of the research area, wherever possible. Specific topics within the research focus area include environment, ecological and natural resources, agriculture and sustainable development, with a special focus on water management and allocation.

Why study Economics at Rhodes University?

The Department of Economics Educating Leaders for a better future

Department of Economics

Academic Courses

Undergraduate Studies

Economics 1 consists of TWO one-credit courses (1 per semester):


ECO 101, Microeconomics , 1.00 , 1
ECO 102, Macroeconomics , 1.00 , 2


* Fundamental economic concepts
* Comparative economic systems
* Demand, supply and market equilibrium
* Elasticities of demand and supply
* Consumer behaviour
* Production and costs
* Price and output determination under competitive and monopolistic conditions
* The South African economy, structure and development


* National income accounts
* Index numbers
* Determination of national output, income and employment
* Money and banking
* Quantity theory of money
* Money, prices and output
* Unemployment
* Inflation
* Introduction to international economics

Economics 2 consists of TWO one-credit courses (1 per semester):


ECO 201, Microeconomics, 1.00, 2
ECO 202, Macroeconomics, 1.00, 1


* The economist’s view of human nature
* Preferences, budgets, and consumer equilibrium
* Income and substitution effects
* The Chicago school
* Production, technology and costs
* Fundamentals of market structure
* General equilibrium and second best
* Asymmetric information
* The South African labour market
* Oligopoly and oil
* Product differentiation (automobiles and airlines)
* Globalization


* Measurement of macroeconomic variables
* Classical macroeconomics
* The role of aggregate demand
* Money, interest and income
* Policy effects in the IS-LM model
* Aggregate supply and aggregate demand
* Output, inflation and unemployment
* The balance of payments and exchange rates
* Monetary and fiscal policy in the open economy
* The Mundell-Fleming model
* Cases of imperfect and perfect capital mobility
* Money and monetary policy
* The role of the Central Bank
* Changing nature of monetary control
* The budget and fiscal policy (functions of fiscal policy, expenditure issues, revenue issues, and debt and the deficit)
* Internal balance (unemployment and inflation)
* External balance (the balance of payments)
* The growth debate in South Africa.

Economics 3 General consists of TWO semester courses: ECO 301 and ECO 302.


Both of these involve TWO half-credit courses from the following list:


ECO 312, International Trade Theory & Policy, 0.50, 1
ECO 313, Public Finance, 0.50, 2
ECO 314, South African Economy, 0.50, 2
ECO 315, Econometrics, 0.50, 1
ECO 316, Money Banking & International Finance, 0.50, 2
ECO 317, Environmental Economics, 0.50, 1
ECO 318, Mathematical Economics, 0.50, 1
ECO 319, Any other paper approved by the Department, 0.50

Economics 3B consists of TWO half-credit courses (normally one per semester) from the list under Economics 3. Students registered for both Economics 3 and Economics 3B would take 6 courses (three per semester) in total.

Econometrics is strongly recommended for students planning to do honours. The department reserves the right to offer second and third year courses in either Semester 1 or Semester 2 and to withdraw any of the third-year courses.


ECO 201,202
Economics 1 or ECO101 & ECO 102

ECO 311,312,313,314, 315, 316, 318
Economics 2 or ECO 201 & ECO 202

ECO 317
ECO 101

In addition to the above admission prerequisites, students are normally only allowed to register for third-year courses after successful completion of a total of 14 semester credits.

Economics 312
International trade theory: the classical (Ricardian) model and extensions

* Neoclassical trade theory and income distribution
* Technology theories of trade
* The Linder theory
* New trade theory based on economies of scale and imperfect competition
* Economic growth and international trade

Trade policy: the instruments of trade policy and their effects

* the arguments for protection; economic integration
* trade and development
* South Africa’s trade policy and the World Trade Organization


* Economic basis for investment activity
* Public versus private goods
* Externalities
* Government intervention in the market
* Financing of government expenditures
* Effect of taxation on the economy
* The budget deficit
* Theory and structure of taxation
* Provincial expenditure and intergovernmental fiscal relations


* South African economy in the 20th century
* Political economy of development
* Role of the state in industrialization
* Inward industrialization versus export led growth
* Changing labour relations
* Development in the financial sector
* Foreign direct investment
* Balance of payments and fiscal discipline
* Primary sector developments

Economics 315

* The nature and scope of econometrics
* Basics of probability and statistics
* The linear regression model: the two-variable model, estimation and hypothesis testing
* Multiple regression estimation, goodness of fit and hypothesis testing
* Functional forms of regression models: how to measure elasticity and the growth rate, reciprocal models
* Regression on dummy explanatory variables
* Regression analysis in practice: multicollinearity and heteroscedasticity
* Autocorrelation and spurious regression in economic time series data

*Econometrics(ECO 315) is strongly recommended for students planning to do Honours.


* Money and interest rates
* The demand for money
* Interest rate behaviour
* Transmission mechanism
* Rational expectations theory (traditional, new classical and new Keynesian models)
* Financial instruments and markets
* Central banking and depository institutions
* Foreign exchange markets and the balance of payments accounts (monetary, portfolio balance, price adjustments approaches to the external balance)
* National income and current account
* The exchange rate systems and international monetary system, and macroeconomic policy in the open economy
* Contemporary issues
* Macroeconomic policy in South Africa


* Scope and development of environmental economics
* A model of the economy and the environment
* The economics of pollution
* Measuring economic impacts on the environment
* Resource economics
* Sustainable development
* Issues and applications


* Analytic and mathematical models in economics
* Linear models
* Leontief input-output analysis
* Optimisation - single and several variables with constraints
* Consumer theory
* Demand theory
* Expenditure minimisation
* Production theory
* Profit maximisation
* Equilibrium and its basic welfare properties
* Portfolio Optimisation
* Honours level includes: All of the above as a Python Programming Course

Postgraduate Studies

A four year honours degree is normally required to obtain the necessary exposure to the appropriate range of specialist courses in economics and the necessary research experience in order to take up a career as an economist.

Economics honours consists of a research project plus EIGHT course modules from the following.


ECO 401, Research project, 1 & 2
ECO 418, Microeconomics , 1
ECO 403, Macroeconomics, 1

SIX courses are selected from the following list:


ECO 402, Mathematical Economics, 2
ECO 404, Econometrics, 2
ECO 405, Monetary Economics, 1
ECO 406, Growth and Technology, 1
ECO 407, Financial Economics, 2
ECO 408, Labour Economics, 1
ECO 409, Development Economics, 2
ECO 410, Environmental & Resource Economics, 1
ECO 414, Derivatives, Financial Market Regulation and Efficiency, 2
ECO 415, Public Finance, 1
ECO 416, Industrial Organization, 1
ECO 417 Any other paper approved by the Department

NB: Not all the above courses will be offered in any one year. Economics Honours can be taken full-time or part-time.

TWO compulsory and TWO elective courses will normally be taken per semester. Examinations are written in June and November. The research project is completed over the whole year (full-time) and over 2 years (part-time) and should be handed in by 1 October in order to be examined in November.

A student is permitted to take a paper from another department to the maximum weight of 0,2.

Students who have not done Econometrics at the third-year level, are allowed to take ECO 315 in lieu of one of the elective honours courses

The degree consists of FOUR papers and a long research essay from participating departments.


* A research project of limited scope (of not more than 15 000 words) on an approved topic in economics to be selected by 31 March, handed in by 1 October, involving either a a theoretical analysis or an application of economics
* Empirical work is strongly recommended
* A presentation of results is to be made at a departmental seminar
* Candidates are encouraged to present a paper at an economic conference


* Analytic and mathematical models in economics
* linear models
* Leontief input-output analysis
* Optimisation - single and several variables with constraints
* Consumer theory
* Demand theory
* Expenditure minimisation
* Production theory
* Profit maximisation
* Equilibrium and its basic welfare properties
* Dynamical models of economic processes


* The evolution of ideology and the economy in the 20th Century: South Africa and the world economy through the lens of macroeconomic thought
* Growth theory
* Keynes and the Keynesians
* Neo-Walrasian economics (new Classical and new Keynesian economics)
* Policital economy


* Dummy dependent variables: LPM, logit, probit and tobit models
* Panel data regression models: fixed versus random effects approaches
* Dynamic econometric models: distributed-lag and autoregressive models
* Time series econometrics: stationarity, unit roots, cointegration and the error correction mechanism
* Simultaneous equation systems: simultaneous equation bias
* The identification problem
* The methods of indirect and two-stage least squares


* The monetary sector
* Money and credit
* Monetary theory (classical, Keynesian, portfolio models and post Keynesian)
* The demand for money
* The transmission mechanism
* The money supply process
* Theory and application of the definition of money
* Monetary policy
* Monetary control in South Africa
* Monetary vs inflation targeting


* Technology and macroeconomic growth models
* Technical change and the economic system
* The sources of innovation
* The new manufacturing technologies
* International differences in growth and technology
* National systems of innovation
* Foreign direct investment and multinational corporations in developing countries
* Technology and industrial policy: government intervention in the market
* South Africa: a case study


* Financial markets and the economy
* Portfolio theory
* Interest rate theory
* Capital market theory and the valuation of assets (the capital asset pricing model and arbitrage pricing)
* Pricing of bonds and equities
* The cost of capital, corporate finance and investment
* Money, bond and equity markets


* Perspectives on labour
* Neoclassical fundamentals
* Monopoly, monopsony and the economics of information
* Traditional systems of industrial relations
* Labour and the law in South Africa
* Trade and labour
* New workforms
* Global trends in flexible labour
* Labour and the law in the global economy


* Meaning and measurement of development
* Theories of economic development: classical perspective and alternative perspectives on development (dependency theory etc)
* human rights; poverty
* Famine
* Entitlement and deprivation
* Role of the state in development
* Role of foreign aid
* The debt crisis
* Structural adjustment programs
* Post-Washington consensus
* Globalization
* Urban bias theory and rural development


* The application of economic principles to the valuation of environmental services and of degradation;
* The Environmental Kuznets Curve
* Global Warming
* Natural resource valuation issues
* Economic sustainability
* The development of Environmental Economics and of Ecological Economics


* Types of futures contracts
* Pricing of futures and the futures market
* Options
* Pricing of options including the Black-Scholes model
* The regulation of financial markets
* Banking supervision and financial market efficiency


* Origins of industrial organization.
* The Principle of total costs.
* The active firm, transaction costs and the firm market entry barriers
* Product differentiation
* Absolute cost advantages
* Economies of scale
* Imperfections in capital markets
* Theory of contestable markets.
* The paradigm of market Structure – Conduct – Performance
* Alternative theories of a complex firm
* Organization and economic efficiency
* Behavioural theory of the firm
* Agency theory
* Economics of transaction costs
* Evolutionary theory
* Recent developments in industrial organization


* Introduction to game theory, oligopoly and bargaining
* Bounded rationality and private information
* Moral hazard and performance incentives
* Risk sharing and incentive contracts, rents and efficiency, ownership and property rights
* Production, information costs and economic organization
* Auction theory
* Intertemporal microeconomics
* Outlook on industrial organization and on recent developments in microeconomics


Combining the Honours electives for a focused career as economist

•Economic Growth & Development Economist
Development Economics
Growth & Technology
Labour Economics
Capita Selecta from Economic History

•Banking and Financial Markets Economist
Financial Economics
International Finance
Public Finance
Industrial Organisation

•Public Sector Economist
Public Finance
International Finance
Development Economics
Growth & Technology

•Economic Planner/Forecaster
Public Finance
International Trade Policy
Growth & Technology
Industrial organisation

•Specialist in International Economic Affairs
International Trade Policy
International Finance
Financial Economics
Public Finance

•Labour Economist
Labour Economics
Development Economics
Growth & Technology
Capita Selecta from Economic History


This option is available to students wishing to pursue a clearly defined field of research and where such students have the ability to work independently.

Financial Markets


This degree is aimed specifically at a specialised career in the financial/banking sector. A minimum registration of 5 students is normally required for the degree to be offered.

The normal requirement for admission is an Honours degree or a four-year degree, preferably with a strong background in Economics and/or Management. Professional experience will also be taken into account.

The courses are structured with the above career in mind and are all compulsory. The degree consists of:

ECO 501, Dissertation, 1 & 2
ECO 507, Financial Institutions, Regulation and Monetary Policy, 1
ECO 508, Quantitative techniques in Financial Markets, 1
ECO 504, Debt & Foreign Exchange Markets, 1
ECO 505, Equity & Derivative Markets, 2
ECO 506, Portfolio Theory & Management , 2
ECO 502 - Financial Institutions and Regulation

* The theories underlying the role of financial system,
* Institutions and their regulation - financial system and institutions
* Asymmetric information and uncertainty
* Principal-agent theory
* Adverse selection and moral hazard
* Financial intermediaries and portfolio choice
* Financial sector and macroeconomic performance
* Institutional aspects of financial sector development
* Regulation and supervision of financial intermediaries and markets
* Main regulators (South African Reserve Bank and Financial Services Board)
* Arguments for and against
* Evolution
* Regulators’ vital function in terms of financial stability and guarding against systemic and other risks faced by financial intermediaries

ECO 503 - Money, Banking and Monetary Policy

* The core theories underlying monetary policy formulation
* Analysis and implementation - central banking and monetary policy (goals, tool, targets, conflicts
* Independence and time consistency of policy)
* Monetary aggregation
* Empirical models of money demand and money supply
* Theory of interest rate and application
* Monetary transmission mechanism and international monetary system
* The practice of monetary policy formulation and implementation drawing extensively on the experiences of South Africa and other developed and emerging market economies
* Private sector banking
* Operation and management of banks- balance sheet and off-balance sheet activities
* Risk in banking; banking specialisations
* New developments in banking such as securitisation, structured finance
* Diversification of banking, financial consolidation and financial engineering
* International financial architecture

ECO 504 - Debt and Foreign Exchange Markets

* Financial econometrics: the application of statistical and econometric methods in financial market research, including multivariate regression models, ARCH and GARCH models, models of asset prices and volatility models
* Mathematics of the financial markets
* Economics of the money market, its instruments, its functions and developments
* Role of interest rates and monetary policy role of central bank via the two interbank markets
* Risk-free rate and the relationship between money market rates and other interest rates
* Microstructure of money market
* International aspects
* Bond market, its instruments, developments, importance and international aspects
* Economics of bond market
* Theory of pricing
* Term structure theories
* Emergence of the corporate sector in the bond market
* Role of the Bond Exchange of South Africa
* Microstructure of bond market
* Foreign exchange market
* Exchange rate theory and determinants
* Exchange rate systems
* Exchange rate policy in South Africa
* Participants, including importers, exporters, speculators, foreign sector
* Microstructure of forex market
* Derivatives - hedging tools, such as forex and currency swaps, forwards, futures

ECO 505 - Equity and Derivative Markets

* Equity market
* Primary and secondary markets
* Role of the regulator and the JSE as manager of the market
* Participants, mechanics of the market
* Microstructure of equity market
* Theories of valuation of shares
* Efficiency of equity market
* Behaviour of prices
* International aspects of the market
* Financial derivatives market - forwards, futures, options, swaps, hybrids such as swaptions, “other” such as weather and credit derivatives
* Valuation of derivatives
* Role of the exchange (Safex) and the regulator
* Use of markets – investors, hedgers, speculators, arbitrageurs; microstructure of derivative markets.

ECO 506 - Portfolio Theory and Management

* Macroeconomic analysis as it applies to the financial markets
* Asset class analysis and strategic asset allocation as the first level of analysis
* Sector / industry analysis and security analysis
* Aspects of security analysis: financial statement analysis and ratio analysis
* Behavioural finance
* Concepts, terminology and definitions in portfolio management
* Theory
* Modern approaches to portfolio management including resample efficiency
* Types of portfolio managers
* Asset classes
* Types of financial portfolios
* Life staging
* Portfolio monitoring including performance and risk attribution, statutory environment of the portfolio manager in South Africa.


The Financial Services Board (the regulator of financial exchanges) requires of financial exchanges in South Africa certain minimum education standards for traders and advisors. A number of the courses required by them have been included in the above-mentioned modules. Candidates who successfully complete the exchange courses will be recognised by the exchanges as traders and advisors, and by the Financial Services Board as portfolio managers. Successful candidates will receive certificates issued by the South African Institute of Financial Markets (SAIFM) and the JSE and their names will be entered into the registers maintained by the SAIFM and the JSE.

For more detailed information see the SAIFM’s

The SAIFM is a body set up by the financial exchanges and it administers most of the exams required by the financial exchanges. The JSE administers the other exams. The following exchanges and/or divisions require the following modules to be successfully completed.

In order to become a stockbroker, ie a member of the South African Institute of Stockbrokers (SAIS) (ie to start a stockbroking firm), the SAIS exams have to be completed. The entry level for the SAIS exams is:

* CFA (Chartered Financial Analyst)
* CA (SA)
* Honours degree in investments
* RPE exams plus other exams (compliance officer, settlement officer, etc)(Rhodes has applied to have the Masters in Financial Markets accredited in this regard)

For more detailed information see the SAIS


A PhD degree may be taken by research thesis. Acceptance of the candidate will depend on previous academic record, an acceptable research proposal and the availability of expertise in the department to supervise the project.

For any further information about Economics at Rhodes please contact Professor Hugo Nel, Head of Department at e-mail: or tel. (046) - 6038301

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