Department of Economics

Chair

Bo E. Honoré

Associate Chair

Christina H. Paxson

Director of Graduate Studies

Christopher A. Sims

Professor

Dilip Abreu

Yacine Aït-Sahalia

Orley C. Ashenfelter

Roland Benabou, also Woodrow Wilson School

Alan S. Blinder

Markus K. Brunnermeier

Anne C. Case, also Woodrow Wilson School

Angus S. Deaton, also Woodrow Wilson School

Avinash Dixit

Henry S. Farber

Gene M. Grossman, also Woodrow Wilson School

Faruk Gul

Harrison G. Hong

Bo E. Honoré

Nabuhiro Kiyotaki

Alan B. Krueger, also Woodrow Wilson School

Paul R. Krugman, also Woodrow Wilson School

Per Krusell

Giovanni Maggi

Burton G. Malkiel

Stephen Morris

Christina H. Paxson, also Woodrow Wilson School

Wolfgang Pesendorfer

Uwe E. Reinhardt, also Woodrow Wilson School

Harvey S. Rosen

Michael Rothschild, also Woodrow Wilson School

Cecilia E. Rouse, also Woodrow Wilson School

José A. Scheinkman

Harold T. Shapiro, also Woodrow Wilson School

Hyun Song Shin

Christopher A. Sims

Lars Svensson

James Trussell, also Woodrow Wilson School

Mark M. Watson, also Woodrow Wilson School

Robert D. Willig, also Woodrow Wilson School

Visiting Professor

Eytan Sheshinski, also Woodrow Wilson School

Associate Professor

Marc J. Melitz, also Woodrow Wilson School

Jonathan A. Parker, also Woodrow Wilson School

Assistant Professor

Marco Battaglini

Laura Chioda

Adriana Lleras-Muney, also Woodrow Wilson School

Ulrich K. Mueller

Ricardo Reis, also Woodrow Wilson School

Helene Rey, also Woodrow Wilson School

Esteban Rossi-Hansberg, also Woodrow Wilson School

Jesse M. Rothstein, also Woodrow Wilson School

Tymon Tatur

Noah M. Williams

Wei Xiong

Senior Lecturer

Elizabeth C. Bogan

Lecturer

Andres Aradillas-Lopez

Swati Bhatt, also Woodrow Wilson School

Smita B. Brunnermeier

Xavier Gabaix

Thomas C. Leonard

Laura Veldkamp

Silvia Weyerbrock, also Woodrow Wilson School

Stephen Yeaple

Visiting Lecturer with Rank of Professor

Eric Maskin

Visiting Lecturer

Tobias Adrian

Linda S. Goldberg

O. Griffith Sexton

James Vickery

Associated Faculty

Thomas J. Espenshade, Sociology

Jinqing Fan, Operations Research and Financial Engineering

Daniel Kahneman, Woodrow Wilson School, Psychology

Thomas Romer, Politics

 

Graduate instruction in the Department of Economics is designed to lead to the degree of Doctor of Philosophy (Ph.D.) in economics. The general purpose of the graduate program is to provide thorough training in both the techniques and the applications of economic analysis. Generally, courses are small in size and conducted in an informal manner. Reading courses that treat subjects not covered in the regular courses listed below may be arranged with individual faculty members. In addition, students are encouraged to do independent work and to participate in the several workshops sponsored by the department. Students may also take courses in the Woodrow Wilson School of Public and International Affairs, or other departments.

Requirements

Satisfactory performance in the six first-year courses is required for passing the first part of the general examination. Students need to demonstrate competency in basic mathematics by passing a written examination. A course in mathematics for economists (ECO 500) is offered annually by the department and entering students with inadequate preparation are advised to take this course.

Students are expected to take at least six advanced courses during their second year. At the end of the second year, they are required to take examinations in two fields that are usually chosen from among the following list: (1) advanced macroeconomic theory, (2) advanced microeconomic theory, (3) behavioral/experimental, (4) demography, (5) econometrics, (6) economic development, (7) financial economics, (8) industrial organization, (9) international money and finance, (10) international trade, (11) labor economics, (12) political economy, and (13) public finance. Students may also participate in the Program in Political Economy. Participation in this program requires that students take two designated graduate courses in politics and that they choose political economy as one of the two fields for the examination. Students are advised to consult with appropriate faculty members on the extent and the coverage of the fields.

In the second year, students are also required to write a research paper on a topic of their choice.

All students are encouraged to attend weekly seminars in their area of interest. Students who have passed their generals are expected to regularly attend one weekly seminar. There is no language requirement.

Students are granted a master’s degree providing they pass the six first-year courses with an average of 2.5 or better and two field examinations, or six courses beyond the first-year core.

To obtain the Ph.D., the qualified candidate must also submit an acceptable written dissertation and pass a final public oral examination.

Library and Facilities

Seminar and Graduate Study Rooms. Founded and endowed by the Class of 1888, the graduate study room in the Firestone Library contains a reference collection of books and periodicals in economics. Adjacent to it is the seminar room used for classes and informal discussion.

Research Facilities. The department maintains facilities for the use of its graduate students and faculty members for the processing and analysis of their research materials; the facilities include computer terminals and instruction in the use of equipment is provided. The assistance and facilities of the Office of Information Technology described elsewhere in this catalog also are available. The Neil D. Sosnow Library in Fisher Hall contains journals from all major research institutions.

Pliny Fisk Library of Economics and Finance. Bobray Bordenlon, Librarian. By the gift of Pliny Fisk, of the Class of 1881, Princeton possesses an exceptionally comprehensive library in the field of American railroad and corporation finance. The library was collected and presented to the University in 1915 by the banking house of Harvey Fisk and Sons. It contains many statistical handbooks, bibliographies, and other reference works in the field of economics. Current economic journals, government documents, reports of research organizations, and pamphlets furnish up-to-date information on economic subjects.

The library is located on A Floor of the Firestone Library near the stacks containing the books on economics. It is convenient to the graduate study rooms for economics.

Special Lectures and Conferences

A feature of graduate work in the department is a series of lectures given by nonresident specialists in the various fields of economics, followed by informal conferences with the lecturers.

Special Programs

For information about related programs, students should see the catalog sections on the Bendheim Center for Finance, the Office of Population Research, Program in Population Studies, the Program in Transportation, and the Research Program in Development Studies.

Courses

ECO 500 Mathematics for Economists

Staff

An exposition of those parts of mathematics necessary to equip the graduate student in economics with modern techniques of analysis and empirical investigation. (This is a service course.)

ECO 501 Microeconomic Theory I

Staff

First term of a two-term sequence in microeconomic theory. Topics include consumer and producer theory, choice under uncertainty, and an introduction to game theory.

ECO 502 Microeconomic Theory II

Staff

Second term of a two-term sequence in microeconomic theory. Topics include static and intertemporal general equilibrium theory, public goods and externalities, auctions, mechanism design, bargaining, repeated games, social choice, and implementation.

ECO 503 Macroeconomic Theory I

Staff

This course is the first term of a two-term sequence in macroeconomics. Topics include consumption, saving, and investment; real interest rates and asset prices; long-term economic growth; money and inflation; and econometric methods for macroeconomics.

ECO 504 Macroeconomic Theory II

Staff

This course is the second term of a two-term sequence in macroeconomics. Topics include classical and Keynesian theories of cyclical fluctuations; the determination of employment and real wages; credit markets and financial stability; and stabilization policy.

ECO 509 Generalized Linear Statistical Models (see WWS 509)

ECO 511 Advanced Economic Theory I

Staff

Topics vary from year to year reflecting, among other things, current developments and the instructor’s interests. Topics covered in past years have included expected and nonexpected utility theory, intertemporal general equilibrium theory, evolutionary game theory, dynamic games, contract theory, theory of organizations, and bounded rationality.

ECO 512 Advanced Economic Theory II

Staff

Topics vary from year to year. See ECO 511.

ECO 513 Advanced Econometrics: Time Series Models

Staff

Concepts and methods of time series analysis and their applications to economics. Time series models to be studied include simultaneous stochastic equations and VAR, ARIMA, and state-space models. Methods to analyze trends, second-moment properties via the auto covariance function and the spectral density function, and methods of estimation and hypothesis testing and of model selection are presented. Kalman filter and applications as well as unit roots, cointegration, ARCH, and structural breaks models are also studied.

ECO 514 Game Theory

Staff

This course provides a broad treatment of game theory and its applications, particularly in economics. Coverage includes topics such as common knowledge and rationality, refinements of the Nash equilibrium, auctions, bargaining, mechanism design, dynamic games, and reputation. This follows up on the introduction to game theory provided in the microeconomic sequence.

ECO 515 Econometric Modeling

Staff

The construction, estimation, and testing of econometric models as a process, from theory to model formulation to estimation and testing, and back again to theory. Bridging the gap between theory and applied work. A series of topics in macroeconomic time series and microeconomic cross-sectional analysis that include consumption at the household and aggregate level, commodity prices, and nonparametric and parametric estimation.

ECO 517 Econometric Theory I

Staff

A first-year course in the econometrics sequence; it is divided into two parts. The first gives students the necessary background in probability theory and statistics. Topics include definitions and axioms of probability, moments, some univariate distributions, the multivariate normal distribution, sampling distributions, introduction to asymptotic theory, estimation, and testing. The second introduces the linear regression model, and develops associated tools. Properties of the ordinary least-squares estimator are studied in detail, and a number of tests developed.

ECO 518 Econometric Theory II

Staff

This course begins with extensions of the linear model in several directions: (1) predetermined but not exogenous regressors; (2) heteroskedasticity and serial correlation; (3) classical GLS; (4) instrumental variables and generalized method of moments estimators. Applications include simultaneous equation models, VAR’s, and panel data. Estimation and inference in nonlinear models are discussed. Applications include nonlinear least squares, discrete dependent variables (probit, logit, etc.), problems of censoring, truncation and sample selection, and models for duration data.

ECO 519 Advanced Econometrics: Nonlinear Models

Staff

ECO 519 is half of the second-year sequence in econometrics methodology (ECO 513 is the other). The course covers nonlinear statistical models for the analysis of cross-sectional and panel data. It is intended both for students specializing in econometric theory, and for students interested in applying statistical methods to statistical data. Approximately half of the course is devoted to development of the large-sample theory for nonlinear estimation procedures, while the other half concentrates on application of the methods to econometric models for discrete and limited dependent variables.

ECO 520 Economics and Politics (also POL 577)

Staff

Focused on analytical models of political institutions, this course is organized around canonical models and their applications. These include: voting models, menu auctions, models of reputation, and cheap-talk games. These models are used to explain patterns of participation in elections, institutions of Congress, lobbying, payments to special interest groups, and other observed phenomena.

ECO 521 Advanced Macroeconomic Theory I

Staff

Topics vary from year to year, reflecting current developments and the instructor’s interests. Topics covered in past years have included methods of numerical analysis and econometric testing of equilibrium business cycle models, the role of monetary and fiscal policy in inflation determination, the nature of optimal monetary policy, and dynamic games and time consistency in macroeconomic policy formation, central banking, and theories of price stickiness.

ECO 522 Advanced Macroeconomic Theory II

Staff

A continuation of ECO 521. Topics vary from year to year.

ECO 523 Public Finance I

Staff

This course provides a microeconomic examination of the role of government in the economy. Topics include the theory and measurement of excess burden, optimal tax theory, analysis of tax incidence, and examination of the effects of taxation on behavior.

ECO 524 Public Finance II

Staff

The course examines the collective-decision mechanisms through which government policy is formulated, with an emphasis both on theoretical models of social choice and positive studies of governmental decision making. Additional topics include social insurance and the study of intergovernmental fiscal relations, with attention given to the division of functions among levels of government and basic issues in state and local finance.

ECO 525 Financial Economics I (also FIN 595)

Staff

Asset pricing in competitive markets, where traders have homogeneous information, as well as empirical tests of asset-pricing models and associated “anomalies” are also surveyed. Measures of riskiness and risk aversion; atemporal asset-pricing models; dynamic portfolio choice; option pricing; and the term structure of interest rates, corporate investment and financing decisions, and taxation are studied.

ECO 526 Financial Economics II (also FIN 596)

Staff

Theories and empirical evidence regarding financial markets and institutions that focus on asymmetric information, transaction costs, or both; and rational expectation models of asset pricing under asymmetric information, dynamic models of market making, portfolio manager performance evaluation, principal-agent models of firm managerial structure, takeover bids, capital structure, and regulation of financial markets are studied.

ECO 531 Labor Economics I

Staff

An examination of the economics of the labor market, especially the forces determining the supply of and demand for labor, the level of unemployment, labor mobility, the structure of relative wages, and the general level of wages.

ECO 532 Labor Economics II

Staff

The course surveys both the theoretical literature and the relevant empirical methods and results in selected current research topics in labor economics.

ECO 541 Industrial Organization and Public Policy

Staff

Methods for empirical and theoretical analysis of markets composed of productive enterprises and their customers are studied. Analyses are applied to modern market structures and practices and the public policy toward them. Topics include the roles of technology and information; the structure of firms; modes of interfirm competition; determination of price, quality, and research and development investment; and criteria for government intervention.

ECO 542 Regulation of Industry and Antitrust Policy

Staff

Theoretical and empirical study of the public regulation and deregulation of rate of return, prices, and entry in public utilities and franchise oligopolies. Theory and practice of antitrust policy is examined, including some elements of antitrust law. In addition, regulation of product quality, advertising, and safety is examined. The course draws heavily on material developed in ECO 541.

ECO 551 International Trade I

Staff

The determinants of foreign trade: (1) intercountry differences of factor endowments and technologies and (2) scale economies and imperfect competition are studied. Dynamic comparative advantage; innovation and growth; factor movements and multinational corporations; gains from trade; tariffs and quantitative restrictions on trade and their role in dealing with market failures and oligopolies; the political economy of trade policy; international negotiations on trade policy; and economic integration are studied as well.

ECO 552 International Trade II

Staff

A continuation of ECO 551, with an emphasis on current research issues. Topics vary from year to year.

ECO 553 International Monetary Theory and Policy I

Staff

This sequence (with ECO 554) develops core models of international finance and open-economy macroeconomics, and surveys selected current research topics in the field. Topics treated in the first semester include the intertemporal approach to the current account; the determination of real exchange rates, and purchasing power parity; international CAPM and uncovered interest rate parity; sovereign debt crisis; speculative attacks and liquidity crises; international risk sharing and capital flows, home bias, and the stability of the international financial system.

ECO 554 International Monetary Theory and Policy II

Staff

Advanced topics in monetary economics, with an emphasis on open economies. Money demand and currency substitution; price-level and exchange-rate determination under alternative monetary policy rules; real effects of monetary disturbances; exchange-rate policy and macroeconomic stability; welfare consequence of inflation and exchange-rate stabilization; advantages and disadvantages of monetary union.

ECO 562 Economic Development I

Staff

An examination of those areas in the economic analysis of development, where there have been recent analytical or empirical advances. Emphasis is given to the formulation of theoretical models and econometric analysis and testing. Topics covered include models of household/farm behavior, savings behavior, equity and efficiency in pricing policy, project evaluation, measurement of poverty and inequality, and the analysis of commodity prices.

ECO 563 Economic Development II

Staff

Selected topics in the economic analysis of development beyond those covered in ECO 562. Topics are selected from theoretical and empirical models of economic growth, trade, and international finance; health and education policy; innovation in agriculture in developing countries; private and social security systems; and the political economy of development. Prerequisite: ECO 562.

ECO 571 Survey of Population Problems (see SOC 571)

ECO 572 Research Methods in Demography (see SOC 572)

ECO 573 Population and Development

Staff

Determinants of demographic behavior in developing countries and the economic consequences of population change. Participants investigate areas such as high fertility as a peasant economic strategy; the relationship between fertility, children’s education, and household savings; the impact of population growth rates on wages, rents, the distribution of income, aggregate savings, and technical change; models of internal migration and labor absorption; and the consequences of LDC to MDC migration. No previous knowledge of demographic techniques is required.

ECO 575 Topics in Financial Economics (also FIN 575)

Staff

This course is intended for Ph.D. students who have already completed the yearlong Ph.D. sequence in finance (ECO 525 and ECO 526), and who intend to write their dissertation in finance. Topics vary by year, focusing on recent developments in the field.

ECO 576 Foundations of Political Economy (see POL 584)

ECO 577 Laboratory Experiments in Economics and Political Science

Staff

Introduction to laboratory experiments in economics and political science on the graduate level. Survey of laboratory studies in economics and political science, with many applications. Topics include abstract games, auctions, bargaining, collective action, decision theory, markets, and voting. In this course, students design an experiment.

ECO 581 Seminars on Research in Progress

Staff

Drafts of papers, articles, and chapters of dissertations or books, prepared by graduate students, faculty members, or visiting scholars, are exposed to critical analysis by a series of seminars organized by field. The chief objectives are for the writers to receive the benefit of critical suggestions, all participants to gain experience in criticism and uninhibited oral discussion, and students and faculty members to become acquainted with the research work going on in the department. Third- and fourth-year graduate students are expected to attend; first- and second-year students and faculty members are invited to attend.

ECO 585 Extramural Summer Research Project

Staff

Summer research project, designed in conjunction with a faculty adviser and an industrial, NGO, or governmental sponsor that will provide relevant research experience. A final paper is required.