Black swans and dragon kings:
Why microeconomic data is often skewed

Microeconomic data is often skewed - consider income, wealth, stock market returns, firm sizes, profits, productivity and many other quantities. But why is this the case? What mechanisms are behind this? What mathematical caveats does this entail? What can we learn from it for economic analysis and policy? To provide answers, this seminar will cover the theory of stable distributions and heavy-tailed distributions and their applications in microeconomics. 

The seminar will follow the theory using Nolan's 2020 book "Univariate Stable Distributions: Models for heavy-tailed data" (https://doi.org/10.1007/978-3-030-52915-4). The book is available through the university library from campus or via TU Chemnitz VPN.) Complementary to this, the seminar will consider applications to economics and other fields; additional literature will be provided for this.

Organisation:
Students will be expected to give a short presentation (e.g., about one of the applications) and submit a term paper at the end of term. They will also be expected to attend the seminar regularly, to follow the readings and to participate in the discussion.

Examination:
There will be no examination. Students will write a term paper and present it in class.