Department of Economics
Gene M. Grossman
Mark W. Watson (fall)
Wolfgang Pesendorfer (spring)
Faruk R. Gul
Smita B. Brunnermeier
Director of Graduate Studies
Stephen E. Morris
Dilip J. Abreu
Mark A. Aguiar
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
Sylvain Chassang, also Woodrow Wilson School
Janet M. Currie, 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
Alan B. Krueger, also Woodrow Wilson School
Paul R. Krugman, also Woodrow Wilson School
David S. Lee, also Woodrow Wilson School
Alexandre Mas, also Woodrow Wilson School
Atif R. Mian, also Woodrow Wilson School
Stephen E. Morris
Stephen J. Redding, also Woodrow Wilson School
Uwe E. Reinhardt, also Woodrow Wilson School
Richard Rogerson, 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 W. Watson, also Woodrow Wilson School
Robert D. Willig, also Woodrow Wilson School
John Tomas Sjostrom
Visiting Associate Professor
John Romalis, also Woodrow Wilson School
Jan DeLoecker, also Woodrow Wilson School
Jakub W. Jurek
Greg W. Kaplan
Benjamin Moll, also Woodrow Wilson School
Tom S. Vogl, also Woodrow Wilson School
Visiting Assistant Professor
Jonathan E. Vogel
Elizabeth C. Bogan
Smita B. Brunnermeier
Amy Craft, also Woodrow Wilson School
Jean Baldwin Grossman, also Woodrow Wilson School
Thomas C. Leonard, also Council of the Humanities
Jean-Christophe de Swaan
Silvia Weyerbrock, also Woodrow Wilson School
O. Griffith Sexton
Thomas J. Espenshade, Sociology
Jianqing Fan, Operations Research and Financial Engineering
Marc Fleurbaey, Woodrow Wilson School
Adam Meirowitz, Politics
Thomas Romer, Woodrow Wilson School, Politics
Leonard Wantchekon, 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 can also be granted an exemption from our MAT 175 prerequisite if they have earned a 5 on the AP Calculus BC exam, an A on the British A-Level Math exam, or a 7 on the IB Math Higher Level exam. Please note that the Calculus BC curriculum teaches only univariate calculus, while MAT 175 focuses on multivariate mathematics. Students who are confident of their ability to fill the gaps in their knowledge may skip MAT 175.
Students exempted from ECO 100, ECO 101, ECO 202, and/or MAT 175 may still benefit from taking these courses, which provide important basic materials for the study of economics.
The department will permit freshmen to enroll in ECO 310, 311, or 312, 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 officer concerned (currently Micah Warren, email@example.com) to certify that your previous knowledge of mathematics is regarded as equivalent to completion of MAT 175, or MAT 201-202, or better.
To enter the department, a student in the Class of 2015 must complete, by the end of sophomore year, the prerequisite courses ECO 100, 101, 202, and MAT 175 (or equivalent), 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. The statistics requirement cannot be satisfied with summer courses taken after the student has begun studies at Princeton, except in unusual circumstances approved by the departmental representative, Professor Faruk Gul (firstname.lastname@example.org).
Students who wish to take ECO 312 or upper-level finance certificate courses (such as ECO 465 or 466), or pursue graduate studies in economics or finance are strongly encouraged to take the two-semester sequence MAT 201 + 202 (or MAT 203 + 204) rather than MAT 175.
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.
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 during or before 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.
Note: The calculation of the departmental average is described in Departmental Average. The treatment of failed courses is described in Advancement to Senior Standing.
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 175; ECO 310 and 311 require MAT 175 or MAT 201; and ECO 312 requires MAT 175, but uses some material from MAT 201-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 can be any 300-, 400-, or 500-level economics courses, 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. Economics majors are allowed to count a maximum of two courses from other departments as departmental courses. A course with an economics cross-listing (indicated by an ECO 3XX, ECO 4XX, or ECO 5XX number in its first or second listing) counts as a regular departmental, not as a cognate. Courses that will be automatically recognized by SCORE as cognates are listed below.
ELE 381 Friends, Money and Bytes
HIS 474 American Economic Crises, 1873-2009
ORF 307 Optimization
ORF 309 Probability and Stochastic Systems
ORF 311 Optimization under Uncertainty
ORF 405 Regression and Applied Time Series
ORF 417 Dynamic Programming
POL 349 Political Economy
POL 352 Comparative Political Economy
POL 385 International Political Economy
WWS 340/PSY 321 Psychology of Decision Making and Judgment
WWS 524 Political Economy of Central Banking
If you would like us to consider a course that is not on the previous, routinely approved list, please complete a cognate approval form and submit it, along with a copy of the course syllabus, to Noelina Hall, 001 Fisher Hall. To be approved as a cognate, a course must have substantial content in theoretical or empirical economic analysis. Permission should be obtained before the semester's deadline for the grading option change (usually in week eight or nine of each term).
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 exam that covers the department's required courses (intermediate microeconomics, macroeconomics, and econometrics). 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 preapproved 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 advance 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, 320, or 365; Operations Research courses such as ORF 309, 311, or 405; and an advanced econometrics or economic 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. H. Farber, H. Rosen
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, A. Adsera
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 175 or equivalent. S. Bhatt
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. N. Kiyotaki
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 175 or equivalent. Two 90-minute classes, one preceptorial. K. Evdokimov
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 175 or 201 or equivalent. D. Abreu, W. Pesendorfer
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 175 or 201 or equivalent. B. Moll
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 175 or 201 or equivalent. Two 90-minute lectures, one class. A. Norets
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 Not offered this year 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: 300, MAT 175 or equivalent, and basic probability. S. Morris
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 175 or equivalent. M. Kalouptsidi
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 328 Disease Ecology, Economics, and Policy (see ENV 304)
ECO 329 Environmental Economics (see WWS 306)
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 175 or equivalent. O. Ashenfelter
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. Staff
ECO 341 Public Finance Fall 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. Golosov
ECO 342 Money and Banking Spring 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. V. Haddad
ECO 349 Public Economics (see WWS 307)
ECO 351 Economics of Development Spring 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. T. Fujiwara
ECO 352 International Trade (see WWS 301)
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. M. Aguiar
ECO 359 International Development (see WWS 302)
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, 310 and MAT 175 or equivalent. 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) Not offered this year 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) Not offered this year 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 386 History of Economic Thought (also HIS 311) Spring HA
A survey of the history of economics, with emphasis on the origins, nature, and evolution of leading economic ideas. This course will situate economic ideas in their historical context, from Aristotle to early 20th century writers, to provide a deeper understanding of economic life and theories of it, emphasizing foundational issues such as the nature of human action and the social good; the role of the state in the economy; and the social and economic consequences of property, prices, money, production, trade and other defining attributes of commercial society. Two 90-minute lectures. Prerequisite: ECO 100. 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 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 175 or 201, or equivalent. Two lectures, one preceptorial. D. Abreu
ECO 429 Issues in Environmental and Natural Resource Economics (see WWS 406)
ECO 448 Economics and Politics Not offered this year SA
Questions at the intersection of politics and economics will be analyzed using economic methods. Particular emphasis will be placed on mathematical and game theoretic methods. The course will cover economic models of political institutions, such as elections or political parties. Topics include lobbying and interest groups, political business cycles, economic reform, and the size of government. Two 90-minute lectures. Prerequisite: MAT 203 or equivalent, or permission of instructor. W. Pesendorfer
ECO 462 Portfolio Theory and Asset Management Not offered this year 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. Y. Aït-Sahalia, H. Hong
ECO 463 International Financial Markets Not offered this year 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 175 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 Spring 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