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Department of Economics


Janet M. Currie

Associate Chair

Ulrich K. Mueller

Departmental Representative

Henry S. Farber

Smita B. Brunnermeier

Director of Graduate Studies

Stephen E. Morris


Dilip J. Abreu

Mark A. Aguiar

Yacine Aït-Sahalia

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

Jan De Loecker, also Woodrow Wilson School

Henry S. Farber

Mikhail Golosov

Gene M. Grossman, also Woodrow Wilson School

Faruk R. Gul

Harrison G. Hong

Bo E. Honoré

Nobuhiro Kiyotaki

Greg Kaplan

Alan B. Krueger, also Woodrow Wilson School

Ilyana Kuziemko

David S. Lee, also Woodrow Wilson School

Alexandre Mas, also Woodrow Wilson School

Atif R. Mian, also Woodrow Wilson School

Stephen E. Morris

Ulrich K. Mueller

Wolfgang Pesendorfer

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

Yuliy Sannikov

Harold T. Shapiro, also Woodrow Wilson School

Hyun Song Shin

Christopher A. Sims

Mark W. Watson, also Woodrow Wilson School

Robert D. Willig, also Woodrow Wilson School

Wei Xiong

Motohiro Yogo

Visiting Professor

Nancy E. Reichman

Associate Professor

Oleg Itskhoki, also Woodrow Wilson School

Jakub Kastl

Assistant Professor

Will Dobbie, also Woodrow Wilson School

Kirill Evdokimov

Maryam Farboodi

Thomas Fujiwara

Valentin Haddad

Myrto Kalouptsidi

Michal Kolesár, also Woodrow Wilson School

Benjamin Moll, also Woodrow Wilson School

Eduardo Morales, also Woodrow Wilson School

Christopher A. Neilson, also Woodrow Wilson School

Ezra Oberfield

Tom S. Vogl, also Woodrow Wilson School

Juan Pablo Xandri

Senior Lecturer

Elizabeth C. Bogan

Lecturer with Rank of Professor

Roman Weil


Swati Bhatt

Smita B. Brunnermeier

Jean Baldwin Grossman, also Woodrow Wilson School

Thomas C. Leonard, also Council of the Humanities

Stephan Luck

Andres Maggi

Jean-Christophe de Swaan

Silvia Weyerbrock, also Woodrow Wilson School

Iqbal Zaidi

Visiting Lecturer

Anne-Laure Delatte

Wenli Li

O. Griffith Sexton

Min Wei

Associated Faculty

Jianqing Fan, Operations Research and Financial Engineering

Marc Fleurbaey, Woodrow Wilson School, University Center for Human Values

Johannes A. Haushofer, Psychology, Woodrow Wilson School

Adam Meirowitz, Politics

Thomas Romer, Woodrow Wilson School, Politics

Leonard Wantchekon, Politics, Woodrow Wilson School

Information and Departmental Plan of Study

Further details and updates regarding undergraduate requirements and procedures may be found at the website of the Department of Economics.

Advanced Placement

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, ECO 101, and/or ECO 202 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 Vlad Vicol, 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 must complete, by the end of sophomore year, the prerequisite courses ECO 100, 101, 202 (or equivalent), earning a letter grade of C or better in each and a letter grade of C or better in MAT 175. ORF 245 can be substituted for 202; PSY 251, WWS 200 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 Henry S. Farber (

Students who wish to take ECO 312 or upper-level finance certificate courses (such as ECO 462, 465 or 466), or pursue graduate studies in economics or finance should 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.

Program of Study

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 thesis.
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 201 + MAT 202.

Qualified students are encouraged to take the more mathematical versions of our core courses. It is not necessary to take all three core 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 cognates. These courses need to have substantial economics content. 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 TigerHub as cognates are listed below. No application is necessary for these courses.

COS 445 Networks, Economics and Computing

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 350 Analysis of Big Data
ORF 405 Regression and Applied Time Series
ORF 417 Dynamic Programming

POL 347 Mathematical Models in the Study of Politics
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 408 Finance and Public Policy
WWS 466/HIS 467 Financial History
WWS 472 Economics of the Welfare State
WWS 524 Political Economy of Central Banking
WWS 582c Topics in Applied Economics: Growth, International Finance and Crises

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).

Independent Work

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.

Senior Departmental Examination

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.

Study Abroad

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.

Preparation for Graduate Study

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), an upper-level mathematics course such as MAT 320; Operations Research courses such as ORF 309, 311, or 405; and an advanced econometrics or economic theory course such as ECO 313, 317 or 418. 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

Economics is the study of how people and societies deal with scarcity. The subject of this course is microeconomics, which examines the decision-making of individuals and firms in the presence of scarcity, and how these decisions are coordinated. We focus on the advantages and disadvantages of market systems for allocating scarce resources. Two lectures, one class. U. Reinhardt, H. Rosen

ECO 101 Introduction to Macroeconomics   Fall, Spring SA

The theory, and some of the evidence, of how and why national economies fluctuate, with periods of boom and bust, and periods of high and low inflation. Substantial emphasis is given to fiscal policy and monetary policy including the novel policy responses to the 2007-2009 financial crisis and the ensuing recessions in the US and abroad. Attention is also paid to international economic issues and to problems of economic growth. Two lectures, one class. E. Bogan, D. Blinder

ECO 202 Statistics and Data Analysis for Economics   Spring QR

An introduction to probability and statistical methods for empirical work in economics. Descriptive statistics, probability, random variables, sampling, estimation, confidence intervals, hypothesis testing, introduction to the regression model. The class uses STATA as statistical software package. Two 90-minute classes, one preceptorial. Prerequisites: 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. Staff

ECO 301 Macroeconomics   Spring SA

The determinants of national income, unemployment, inflation, interest rates and exchange rates. Includes analyses of business cycles, monetary and fiscal policies, consumption, investment, economic growth, and issues in international monetary macroeconomics. Two lectures, one precept. Prerequisites: ECO100 and ECO101. I. Zaidi

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

Topics include consumer and firm behavior, market equilibrium, efficiency, an introduction to game theory, and information economics. Uses multivariable calculus and linear algebra to treat the topics in greater depth and to better prepare for advanced courses. Two lectures, one class. Prerequisites: ECO 100 or equivalent; MAT 175 or 201 or equivalent. W. Pesendorfer, S. Morris

ECO 311 Macroeconomics: A Mathematical Approach   Spring SA

This course examines the determinants of economic growth, business cycle fluctuations, and the conduct of monetary and fiscal policy. The first part of the course develops a framework for the analysis of households' consumption and savings behavior and firms' production decisions, and uses that to analyze long-run growth and financial crises. The second part of the course extends that analysis to examine business cycle fluctuations, including inflation, unemployment. Current issues in macroeconomic and financial policy are discussed throughout. Two lectures, one class. Prerequisites: 100 and 101; MAT 175 or 201 or equivalent. G. Kaplan

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. 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. M. Watson, M. Kolesár

ECO 315 Topics in Macroeconomics   Not offered this year SA

This course extends macroeconomic theory at ECO 301/311 level to study credit and asset price boom, financial crisis and public policy. The topics include historical overview of financial crises, asset price bubbles, bank panics, balance of payment crisis, sovereign debt crisis, and monetary, fiscal and macro prudential policies. Two 90-minute lectures, one preceptorial. N. Kiyotaki

ECO 317 The Economics of Uncertainty   Not offered this year 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. Staff

ECO 321 Industrial Organization   Fall 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

This course develops a conceptual framework for examining government taxing and spending, and uses this framework to analyze current public policy issues. We focus on both the efficiency and equity aspects of the government H. Rosen

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. Staff

ECO 349 Public Economics (see WWS 307)

ECO 351 Economics of Development   Not offered this year 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 (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. Y. Aït-Sahalia, 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, business cycles, 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 Economics Europe (also EPS 342)   Fall SA

Europe is at a crossroads. Political and economic integration in the European Union (EU) exceeds levels reached in other parts of the world. Economic integration not only affects trade but agriculture, competition, regions, energy, and money. Most euro areas economies have been struggling with crises involving debt, banking and growth, which challenge the viability of monetary union. This course studies economic integration in Europe, the ongoing euro crisis, and economic challenges facing EU countries. It uses economic analysis to study policy issues. 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. Staff

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, income inequality, 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)   Not offered this year 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 407 The Economics of Health Policy in Developing Countries (see WWS 407)

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 175 or 201, or equivalent. Some basic knowledge of probability theory is assumed. 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. 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. Staff

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 concerns the motives and methods of corporate actions such as dividend payments, share repurchases, recapitalizations, acquisitions, divestitures, joint ventures, with a focus on the implications of such actions for the prices of a corporation's publicly traded securities. The course should be of particular interest to students considering a career in financial services. Introductory courses in micro economics, investments, and probability and statistics are prerequisites. One 3-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. Financial derivatives are now indispensable parts of the modern financial markets. This course discusses the non-arbitrage principle for pricing financial derivatives, as well as how derivatives facilitate hedging, risk sharing and information discovery of different users. 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. One three-hour lecture, one class. Y. Aït-Sahalia, M. Wei

ECO 467 Institutional Finance, Trading, and Markets   Fall

The way in which financial markets work and securities are traded can often not be reconciled with the notion of a frictionless and self-equilibrating market. In this course, we try to account for this fact and cover important theoretical concepts and recent developments in market microstructure, asset pricing under asymmetric information, financial intermediation, and behavioral finance. Topics include market efficiency, market making, financial regulation, asset price bubbles, herding, and liquidity crises. Prerequisites: 300 or 310. S. Luck

ECO 468 Behavioral Finance   Fall

This course discusses how inefficiencies arise due to psychology and limits to arbitrage. The psychology of investors shapes their preferences and may impair judgment. Whether these psychological factors have an impact on financial markets ultimately depends on arbitrageurs' ability to fight against mispricing. These issues will be covered through lectures and exercises that will foster discussions about cognitive illusions and speculative bubbles. Prerequisite: 300 or 310. 362 recommended. H. Hong

ECO 491 Cases in Financial Risk Management   Spring

This course will teach students about financial risk management through the lens of the financial crisis that began in August 2007. Topics covered will include market risk, credit risk, liquidity risk, and systemic risk. Students will draw on their background in economics, finance, probability theory and statistics. The class will be in seminar format and active participation in the discussion is encouraged. Prerequisites: 362 and 465. Staff

ECO 492 Asian Capital Markets   Spring SA

The course explores the increasing weight of Asia in global financial markets. It frames the discussion in the context of the globalization of financial markets, with emphasis on concepts of economic development, institutional reform of markets, and public and private market investments. Discussions combine analysis of historical trends and recent events with insights from practical experience in Asian markets. Particular focus is devoted to China and Japan. The course explicitly considers China's gradual shift toward a capital market-based financial system and prospects for the development of the renminbi into an international currency. J. de Swaan

ECO 493 Financial Crises   Not offered this year

This course will use economic theory and empirical evidence to study the causes of financial crises and the effectiveness of policy responses to these crises. Particular attention will be given to some of the major economic and financial crises in the past century and to the crisis that began in August 2007. Prerequisite: 202 or equivalent, and 310. Staff