Department of Economics
Gene M. Grossman
Faruk R. Gul
Director of Graduate Studies
Patrick J. Kehoe
Dilip J. Abreu
Orley C. Ashenfelter
Roland J. Benabou, also Woodrow Wilson School
Alan S. Blinder, also Woodrow Wilson School
Markus K. Brunnermeier
Anne C. Case, also Woodrow Wilson School
Angus S. Deaton, also Woodrow Wilson School
Henry S. Farber
Gene M. Grossman, also Woodrow Wilson School
Faruk R. Gul
Harrison G. Hong
Bo E. Honoré
Patrick J. Kehoe
Alan B. Krueger, also Woodrow Wilson School
Paul R. Krugman, also Woodrow Wilson School
David S. Lee, also Woodrow Wilson School
Burton G. Malkiel
Alexandre Mas, also Woodrow Wilson School
Stephen E. Morris
Christina H. Paxson, also Woodrow Wilson School
Stephen J. Redding, also Woodrow Wilson School
Uwe E. Reinhardt, also Woodrow Wilson School
Harvey S. Rosen
Esteban A. Rossi-Hansberg, 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
James Trussell, also Woodrow Wilson School
Mark M. Watson, also Woodrow Wilson School
Robert D. Willig, also Woodrow Wilson School
Thomas J. Sargent
Visiting Associate Professor
Anne Morrison Piehl
Carol Hua Shiue
Sylvain Chassang, also Woodrow Wilson School
Jan DeLoecker, also Woodrow Wilson School
Taryn L. Dinkelman, also Woodrow Wilson School
Jakub W. Jurek
Ilyana Kuziemko, also Woodrow Wilson School
Visiting Assistant Professor
Elizabeth C. Bogan
Lecturer with Rank of Professor
Gregory C. Chow
Visiting Lecturer with Rank of Professor
Eric S. Maskin
Smita B. Brunnermeier
Jean Baldwin Grossman, also Woodrow Wilson School
Thomas C. Leonard
Silvia Weyerbrock, also Woodrow Wilson School
O. Griffith Sexton
Iqbal Zaidi, also Woodrow Wilson School
Thomas J. Espenshade, Sociology
Jianqing Fan, Operations Research and Financial Engineering
Adam Meirowitz, Politics
Thomas Romer, Woodrow Wilson School, Politics
Further details and updates regarding undergraduate requirements and procedures may be found at the website of the Department of Economics.
Students who scored 5 on the AP microeconomics exam are exempted from ECO 100. Students who scored 5 on the AP macroeconomics exam are exempted from ECO 101. Students who scored 5 on the AP statistics exam are exempted from ECO 202. (Note: Exemption from 100 and 101 will be accorded to students who pass the British A-levels with a grade of A, and to those who earn a 7 on the higher-level International Baccalaureate.)
Students exempted from ECO 100, 101, and 202 may still benefit from taking these courses, which provide important basic materials for the study of economics. However, proficient freshmen (those exempted from ECO 100 and 101 and who receive a 4 on the Math AB AP exam), may wish to consider ECO 200 Advanced Principles of Economics: Concepts and Applications. This course applies the economic ideas and techniques learned in the AP courses to some contemporary economic problems.
The department will permit freshmen to enroll in ECO 310, 311, or 312, only in very rare instances, subject to the approval of the instructor for the course. The requirements are: (1) completion of, or exemption from, ECO 100, 101, and/or 202, as appropriate in each case, and (2) sufficient knowledge of multivariable calculus and vector and matrix algebra. For the latter, ask the mathematics department to certify that they regard your previous knowledge of mathematics as equivalent to completion of MAT 200, or MAT 201-202, or better.
To enter the department, a student must complete, by the end of sophomore year, the prerequisite courses ECO 100, 101, 202, and MAT 103 (or equivalents), earning a letter grade of C- or better in each. ORF 245 can be substituted for 202; PSY 251 and SOC 301 are not acceptable; WWS 303 may be depending on each year's content.
A meeting for sophomores interested in joining the department will be announced in the spring. Underclass students are welcome to discuss department requirements with the departmental representative. Students considering study abroad are urged to meet with the departmental representative at the earliest opportunity in their freshman year.
Mathematics Prerequisites. MAT 103 (or equivalent) is sufficient preparation for the less mathematical versions of the department's core courses, ECO 300, 301, and 302 (see Core Courses). The sequence MAT 101-102 is acceptable as equivalent to MAT 103, but students with this background should consult with the departmental representative. The more mathematical versions of the department's core courses, ECO 310, 311, and 312, and some other electives, require MAT 200 or better.
Students considering graduate work in economics or finance or who wish to continue in mathematics should take MAT 201-202 (or MAT 203-204 or MAT 217-218) rather than MAT 200, which is a terminal course.
Students who are not considering advanced training, and who wish to take only one 200-level mathematics course, are advised to take MAT 200. This one-semester course covers, in less depth but with applications to economics, topics in multivariable calculus and linear algebra that are also covered in the two-semester advanced calculus sequences (MAT 201-202, 203-204 and 217-218). MAT 201 provides most of the sufficient background for the courses for which MAT 200 is a prerequisite, although some matrix algebra covered in MAT 202 is useful in ECO 310 and ECO 312. MAT 201 alone is acceptable, but the department strongly recommends following it with MAT 202. (Mathematics courses beyond MAT 201 may be taken on a pass/D/fail basis, but the department strongly recommends that they be taken on a graded basis).
General Requirements. The department requires concentrators to complete, and pass on a graded basis, the following:
Core Courses: Microeconomics (ECO 300 or 310), Macroeconomics (ECO 301 or 311), and Econometrics (ECO 302 or 312), to be completed the junior year.
Elective courses: Five other departmentals (see Other Departmentals for details).
Junior independent work.
Senior comprehensive exam.
Furthermore, the student must have a departmental average of at least C.
Core Courses. All concentrators must pass, on a graded basis, core courses in microeconomics (ECO 300 or 310), macroeconomics (ECO 301 or 311), and econometrics (ECO 302 or 312). These courses must be completed during or before the junior year.
Each of the three core courses is offered in two versions to accommodate different levels of preparation in mathematics: ECO 300, 301, and 302 require MAT 103 or equivalent, ECO 310, 311, and 312 require MAT 200, or MAT 201 plus MAT 202.
Qualified students are encouraged to take the more mathematical versions. It is not necessary to take all three courses in the same version.
Other Departmentals. In addition to the three core courses, concentrators must pass, on a graded basis, five other departmental courses. Departmentals may be any 300-, 400-, or 500-level economics course, or an approved cognate (see Cognates).
Students planning a senior thesis with empirical emphasis are strongly encouraged to take ECO 313; students planning a theoretical senior thesis are strongly encouraged to take ECO 317 and/or ECO 418.
Cognates. Concentrators may, with the written approval of the departmental representative before the semester's deadline for the grading option change (the end of the ninth week of the term), designate as economics departmentals up to two upper-level courses from other departments. The cognate approval form, which is submitted to the departmental representative, is available in the "Forms" section of the department's website.
Junior Independent Work and Senior Thesis. Independent work is designed to afford concentrators the opportunity to identify and explore their research interests in depth. Students are expected to develop a carefully reasoned exposition that critically analyzes a problem using basic principles of economics. Juniors complete a year-long research project, which consists of a research prospectus submitted in December and a final paper submitted in April. The senior thesis is expected to be more extensive, with a topic of greater scope and, correspondingly broader analysis and interpretation. Further details, from the assignment of advisers to the final deadlines, are available in the junior independent work and senior thesis sections of the department's website+.
The senior comprehensive examination is a written, multiple-choice examination that emphasizes the department's required courses through intermediate microeconomics, macroeconomics, and econometrics. Additional required questions are drawn from other fields in economics, with students given a liberal choice among fields. The senior comprehensive exam grade will appear on the student's transcript.
Potential economics concentrators who expect to study abroad for one or two semesters must plan well ahead. Because the department only rarely permits core courses to be taken abroad, and because core courses may not be postponed to senior year, potential economics concentrators planning study abroad must complete the appropriate core courses in their sophomore year. It is almost never feasible to spend a semester abroad in the senior year.
Economics courses taken abroad may be pre-approved as departmentals by the departmental representative, ordinarily up to one per semester. Plans for junior independent work must also be approved in advance.
Graduate study in economics requires special preparation and advanced planning, starting as early as the freshman year. Students contemplating graduate study in economics should see the departmental representative as early as possible. Preparation for graduate school should include the following: the more mathematical versions of the core courses (310, 311, and 312), two years of calculus (up through MAT 202, 204, or 218), two or more upper-level mathematics courses such as MAT 301, 305, 309, 310, 314, or 325, and an advanced econometrics or theory course such as ECO 313 or 317. Students may find the Program in Applied and Computational Mathematics or the Program in Engineering and Management Systems an interesting option. It is not necessary to be an economics concentrator to enter a graduate economics program, but the economics courses listed above are highly recommended. Graduate courses in economics (500 level) are open to qualified undergraduates. These courses are very demanding and must be started in the fall term. Taking one of these courses can be useful for students who intend to enter an economics graduate program, because it begins the student's advanced training, gives the student a flavor of graduate school, and provides evidence during the admissions process of the ability to do advanced work in economics.
ECO 100 Introduction to Microeconomics Fall, Spring SA
How price systems solve social choice problems. The operation of competitive, oligopolistic, and monopolistic product and factor markets. Proposals to alter markets (such as income redistribution, regulation of monopolies, pollution controls). Comparison of the operation of price systems with alternative methods of making social decisions. Two lectures, one class. R. Willig
ECO 101 Introduction to Macroeconomics Fall, Spring SA
The theory of the determination of the level of national income and economic activity, including an examination of the monetary system. Emphasis on such economic problems as inflation, unemployment, and recession, and on the appropriate policy responses. Some attention is also paid to international economic issues and to problems of economic growth. Two lectures, one class. E. Bogan
ECO 108 Games of Strategy Spring SA
The basic ideas of game theory. Examines strategically interdependent choices, where each person must take into account how the others will react. Involves little formal theorizing; the approach is through examples and case studies drawn from business, politics, sports, and even fiction and movies. Two lectures, one preceptorial. Staff
ECO 200 Advanced Principles of Economics: Concepts and Applications Fall SA
This course, which is taught in three modules, builds on students' previous knowledge of economic theory by analyzing a number of economic issues of topical and intellectual interest. Module topics, which vary from year to year, may include game theory, international trade, health and economic development, monetary policy, and industrial organizations. Designed for first-year students who have completed a rigorous year of economics before coming to Princeton. Two 90-minute lectures, one preceptorial. D. Abreu
ECO 202 Statistics and Data Analysis for Economics Spring QR
An introduction to probability and statistical methods for empirical work in economics. Probability, random variables, sampling, descriptive statistics, probability distributions, estimation and hypothesis testing, introduction to the regression model. Economic data sources, economic applications, and the use of statistical software packages will be emphasized. Two 90-minute classes, one preceptorial. Prerequisites: 100 and 101, MAT 103. U. Mueller
ECO 300 Microeconomic Theory Fall SA
This class is about markets. When do they work? When do they fail? And what can be done about it? Over the course of study the class will cover (1) choices made by consumers and firms, (2) competitive equilibrium, and (3) market failures. It will also touch on game theory and information economics. Two lectures, one class. Prerequisites: 100, MAT 103. S. Chassang
ECO 301 Macroeconomics Spring SA
The determinants of national income, unemployment, and inflation. Includes analysis of business cycle fluctuations, monetary and fiscal policy, consumption and saving, investment, growth, and international macroeconomics issues. Uses mostly verbal and geometric arguments. Two lectures, one class. Prerequisites: 100 and 101. P. Mizen
ECO 302 Econometrics Fall QR
The objective of this course is to prepare students for basic empirical work in economics. In particular, topics will include basic data analysis, regression analysis, testing, and forecasting. Students will be provided with the opportunity to use actual economic data to test economic theories. Prerequisites: 100 or 101, and 202, or ORF 245; MAT 103. Two 90-minute classes, one preceptorial. A. Norets
ECO 310 Microeconomic Theory: A Mathematical Approach Fall, Spring SA
Consumer and firm behavior, market structures, and the determination of value. Some attention is given to the interdependence of markets, to the social consequences of externalities in the economy, and to their policy implications. Uses multivariable calculus and linear algebra to treat the topics in greater depth and to better prepare for the 300-level courses on financial markets. Two lectures, one class. Prerequisites: 100; MAT 200 or 201. S. Morris
ECO 311 Macroeconomics: A Mathematical Approach Spring SA
The determinants of national income, unemployment, and inflation. Includes analysis of business cycle fluctuations, monetary and fiscal policy, consumption and saving, investment, growth, and international macroeconomic issues. Uses more formal mathematical models to treat the topics in greater depth. Two lectures, one class. Prerequisites: 100 and 101; MAT 200 or 201 or equivalent. S. Potter
ECO 312 Econometrics: A Mathematical Approach Fall QR
Statistical analysis of economic data. The two-variable regression model, multiple regression. Techniques for dealing with violations of the regression model's assumptions, including autocorrelation, heteroscedasticity, specification error, and measurement error. Dummy variables, discrete-choice models, time series models, and forecasting. Introduction to simultaneous equations. Estimation and testing of economic models will be an important part of the course. Prerequisites: 100 and 101 and 202 (or ORF 245); MAT 200 or 201 or equivalent. Two 90-minute lectures, one class. B. Honoré
ECO 313 Econometric Applications Spring QR
This course provides hands-on experience in econometric analysis designed to help students to acquire the skills necessary to carry out their own empirical research in economics. Various aspects of empirical research in economics will be covered, including development of testable economic models, appropriate use of data, and specification and estimation of econometric models. Prerequisites: 302 or 312; and calculus. Two lectures, one preceptorial. H. Farber
ECO 315 Topics in Macroeconomics Spring SA
Designed to provide students with the opportunity to study several topics in macroeconomics in depth, the course is taught in two modules. Module topics, which vary from year to year, may include economic growth, financial markets, political economy of central banking, speculative bubbles and financial panics, among others. Two 90-minute lectures, one preceptorial. Staff
ECO 317 The Economics of Uncertainty Spring SA
The microeconomic theory of individual decision making under uncertainty and economic interaction under asymmetric information. Topics include expected utility, value of information, risk-sharing in insurance and asset markets, contracting with moral hazard and adverse selection, and auctions. Applications include health insurance and finance. Two lectures, one preceptorial. Prerequisites: 310, MAT 200 or equivalent, and basic probability. S. Morris
ECO 318 Theory of Games (see MAT 308)
ECO 321 Industrial Organization Spring SA
An economic analysis of the structure of markets and of corporate behavior. The development and interpretation of public policies, including antitrust legislation and direct regulation related to market structure, corporate mergers, restrictive and discriminatory practices, advertising, and research and development. Two lectures, one class. Prerequisites: 300 or 310, and MAT 102 or MAT 103. Staff
ECO 324 Law and Economics Fall SA
An introduction to the economics of legal rule-making and enforcement. Application of elementary price theory and welfare analysis to problems and actual cases in the common law--property, contracts, torts--and to criminal and constitutional law. Topics include the Coase Theorem, intellectual property, product liability, deterrence, and social choice. Prerequisite: 100. Two 90-minute lectures. T. Leonard
ECO 329 Environmental Economics (also ENV 319) Fall SA
An introduction to the use of economics in thinking about and dealing with environmental issues. Stress on economic externalities and the problem of dealing with them as instances of organizing gains from trade. Applications to a wide variety of problems, among them air pollution (including, importantly, global climate change), water pollution, solid waste and hazardous substances management, species preservation, and population policy. Prerequisite: 100, basic calculus. Two lectures, one preceptorial. S. Brunnermeier
ECO 331 Economics of the Labor Market Fall SA
Applies microeconomic analysis to the demand for labor, labor supply, and the determination of wages. Examines investments in human capital, unemployment, discrimination, unions, government intervention in the labor market. Empirical findings as well as theoretical models are studied. Two lectures, one preceptorial. Prerequisites: 100, 302, and MAT 102 or 103. Staff
ECO 339 Introduction to Population Problems (also SOC 351) Not offered this year SA
A survey of demographic trends throughout the world, the factors underlying them, and their social and economic implications, including the analysis of mortality, fertility, migration, changes in composition, problems of prediction, and issues of policy. Two lectures, one preceptorial. Prerequisite: 100. J. Goldstein
ECO 341 Public Finance Spring SA
The role of government in attaining an efficient allocation of resources and an equitable distribution of income. Emphasis is placed on criteria for the evaluation and selection of public expenditure and tax programs, including the problem of coordinating federal, state, and local finance. Special attention is given to current policy issues. Two lectures, one class or problem-oriented seminar. Prerequisite: 100. M. Manacorda
ECO 342 Money and Banking Fall SA
This course explores the role that money, financial markets and institutions, and monetary policy play in shaping the economic environment. The class investigates why these markets and institutions arise and may lubricate the resource allocation analytically (rather than descriptively), using tolls of economic theory. Two lectures, one class. N. Kiyotaki
ECO 349 Economics and Public Policy (see WWS 307)
ECO 351 Economics of Development Fall SA
Surveys development economics including current issues, historical background, growth theories, trade and development, markets and planning, strategies for poverty alleviation, agriculture, technology, employment, industry, population, education, health, and internal and external finance. Selective attention to particular countries and regimes. Two lectures, one class. Prerequisites: 101 and 300 or 310, or instructor's permission. Staff
ECO 352 International Trade Spring SA
Examination of the causes and economic consequences of international trade in goods and services, investment and migration. Stress on the possibility of aggregate national gains from trade, and the distributional conflicts generated by trade. Analysis of policies regarding these issues from the perspective of economics and political economy. Two lectures, one preceptorial. Prerequisites: MAT 102 or 103, and ECO 300 or 310. A. Dixit
ECO 353 International Monetary Economics Fall SA
Foreign exchange markets and balance-of-payments accounts. Effects of incomes, prices, interest rates, and exchange rates on trade and capital flows. Effects of exchange rate arrangements and capital mobility on macroeconomic policies. Current policy issues: exchange rate management, macroeconomic policy coordination, managing currency crises, the roles of international institutions. Two lectures, one preceptorial. Prerequisites: 100 and 101. A. Adsera
ECO 354 Special Topics in Public Affairs (see WWS 476)
ECO 362 Financial Investments Fall SA
A survey of the field of investments with special emphasis on the valuation of financial assets. Issues studied include how portfolios of assets should be formed, how to measure and control risk, how to evaluate investment performance, and how to test alternative investment strategies and asset pricing models. Prerequisites: 202 or equivalent, 310, and MAT 200. ECO 202 or equivalent may be taken concurrently, but students would remain responsible for statistical concepts as they arise in 362. Two lectures, one preceptorial. H. Hong
ECO 363 Corporate Finance and Financial Institutions Spring SA
Investigates the financing decisions of companies and financial institutions in the wider context of the workings of financial markets. Topics include capital budgeting, capital structure choice, risk management, liquidity, corporate governance, and the interactions between corporate finance and the workings of financial institutions and markets. Prerequisite: 362. Two lectures, one class. Y. Sannikov
ECO 364 Introduction to Financial Mathematics (see ORF 335)
ECO 370 American Economic History (also HIS 378) Spring HA
Survey of the growth and development of the U.S. economy from colonial times to the present. Introduction to the use of economic models and quantitative evidence in interpreting significant historical issues. Emphasis on technological change, property rights, credit markets, and labor markets. Two lectures, one preceptorial. Prerequisites: 100 and 101. E. Bogan
ECO 371 Topics in Country and Regional Economics (also LAS 346) SA
These courses will provide an opportunity to apply the concepts and methods studied in economics core courses and electives to analyze the economic problems confronting particular countries or groups of countries. The choice of the country or region, and of the economic problem, will change from year to year. Prerequisites depend on topic. Two 90-minute lectures. Staff
ECO 372 Topics in Country and Regional Economics (also EPS 342) Fall SA
These courses will provide an opportunity to apply the concepts and methods studied in economics core courses and electives to analyze the economic problems confronting particular countries or groups of countries. The choice of the country or region, and of the economic problem, will change from year to year. Prerequisites depend on topic. Two 90-minute lectures. S. Weyerbrock
ECO 379 The Chinese Economy (also EAS 346) Fall SA
Economic analysis of the Chinese economy after 1949. Economic planning, market institutions, agriculture, industry, consumption, national income and capital formation, population and human capital, finance, banking, foreign trade and investment, economic reforms since 1979, and current issues. Prerequisites: 100 and 101. Two 90-minute lectures. G. Chow
ECO 385 Ethics and Economics (also CHV 345) Spring EM
Introduction to ethical issues in market exchange and in laws that regulate it. How ethical commitments evolve and influence cooperation. The moral dimension of low wages, price discrimination, distribution of resources, trade in inalienable property, and the separation of choice and consequence. As time permits, the influence of economic ideas on moral reasoning. Prerequisite: 100. Two 90-minute lectures. T. Leonard
ECO 414 Introduction to Economic Dynamics Not offered this year QR
Mathematical analysis of the evolution of markets and economies over time. Topics include growth, business cycles, asset pricing, and responses to policy changes. Particular attention is given to expectations as a determinant of economic behavior. Mathematical methods (difference equations, dynamic optimization, time series analysis) are introduced as needed. Prerequisites: 310, 311, and 312; and either MAT 201 and 202, MAT 203 and 204, or MAT 217; or instructor's permission. Two 90-minute lectures. Staff
ECO 418 Strategy and Information Fall SA
Explores basic themes in modern game theory and information economics. Non-cooperative solution concepts for games will be developed and applied to the study of repeated games and dynamic interaction in oligopolistic industries, reputation formation, auctions, and bargaining. Prerequisites: MAT 200, 201, or equivalent. Two lectures, one preceptorial. D. Abreu
ECO 461 Trading and Securities Markets Spring SA
An overview of the organization and regulation of major securities markets, such as the stock market. Topics include trading rules and systems in secondary markets and their effects on liquidity, volatility, and information revelation; primary securities markets and securities underwriting; financial intermediation; the structure of securities and the link to corporate governance; rules concerning insider trading and disclosure; and government regulation of financial markets. Prerequisites: 202 or equivalent, 310 and 362; or instructor's permission. Two lectures, one preceptorial. Staff
ECO 462 Portfolio Theory and Asset Management Spring SA
This course studies the asset allocation decisions and overall management of the risk and return characteristics of portfolios. It focuses on quantitative approaches to portfolio optimization, including dynamic strategies to control risks and to achieve investment goals; empirical studies of asset returns; and the money management industry. Prerequisites: 202 or ORF 245; 310; 362 (no exceptions). Two 90-minute lectures, one preceptorial. A. Sarkar
ECO 463 International Financial Markets Spring SA
A study of the assets and institutions of international financial markets. A key difference between these markets and others is the role of exchange rates relating the value of two or more national currencies. The course studies the market-making institutions, the market conventions and market practices as well as the interrelationships between different assets, their pricing, their trading and their use by corporations. Prerequisites: MAT 200 and ECO 202 or equivalent. Two 90-minute lectures. Staff
ECO 464 Corporate Restructuring Fall SA
This course applies topics from microeconomics and corporate finance to study corporate restructuring. Topics include mergers, acquisitions, joint ventures, divestiture and share repurchases. Each of these is discussed in the context of the relevant economic theory, institutional and regulatory environment, and with a focus on shareholder value. Prerequisites: 362 and 363. One three-hour seminar. O. Sexton
ECO 465 Options, Futures and Financial Derivatives Fall SA
Derivative securities are assets whose value depends on the value of other more basic underlying assets. Derivative securities are not only an important asset in their own right, but the central intuition provided by derivative securities pricing--the no-arbitrage principle--ties together many areas in finance. This course discusses the consequences of no-arbitrage for asset pricing and corporate finance. Prerequisites: 310 and 362; or instructor's permission. Two 90-minute lectures. W. Xiong
ECO 466 Fixed Income: Models and Applications Fall SA
A study of no-arbitrage models of contracts based on interest rates, including bonds, forward and future contracts, swaps, options, and other derivatives. The course develops the theory of arbitrage-free pricing of financial assets in discrete and continuous time, as well as special models that can be used to price and hedge fixed income securities. Prerequisites: ECO 362 (or FIN 501) and ECO 465. Two 90-minute lectures, one class. J. Jurek