Economics

28 Hillhouse, 432.3575
M.A., M.Phil., Ph.D.

Chair
David Pearce (28 Hillhouse, 432.3571)

Director of Graduate Studies
Truman Bewley (30 Hillhouse, Rm 30, 432.3719, truman.bewley@yale.edu)

Professors
Joseph Altonji, Donald Andrews, Dirk Bergemann, Steven Berry, Truman Bewley, William Brainard, Donald Brown, Stephen Coate, Eduardo Engel, Robert Evenson, Ray Fair, John Geanakoplos, Pinelopi Goldberg, Timothy Guinnane, Philip Haile, Koichi Hamada, Gerald Jaynes, Michael Keane, Yuichi Kitamura, Alvin Klevorick, Richard Levin, Robert Mendelsohn, Stephen Morris, Giuseppe Moscarini, Barry Nalebuff, William Nordhaus, David Pearce, Peter Phillips, Benjamin Polak, Gustav Ranis, John Roemer, Herbert Scarf, T. Paul Schultz, Robert Shiller, Martin Shubik, T. N. Srinivasan, Christopher Udry

Associate Professors
George Hall, Carolyn Moehling

Assistant Professors
Patrick Bayer, Irene Brambilla, Björn Bruegemann, Hanming Fang, Donato Gerardi, Galina Hale, Justine Hastings, Fabian Lange, Taisuki Otsu, Rohini Pande, Anthony Smith, Ebonya Washington

Fields of Study
Fields include economic theory, including microeconomics, macroeconomics, mathematical economics; econometrics; economic history; labor economics; market organization; money and banking; financial economics; economics of the public sector; international trade and finance; economic development; demography; history of economic thought; comparative economic systems; political economy.

Special Admissions Requirements
The GRE General Test is required of all applicants to the program. Students whose native language is not English must take the Test of English as a Foreign Language (TOEFL).

Special Requirements for the Ph.D. Degree
The following requirements must be satisfied in addition to those prescribed by the Graduate School.

1. Prior to Registration for the Second Year. (a) Students must have taken for credit and passed at least six economics graduate courses. (b) Students must pass written comprehensive examinations in micro- and macroeconomics. These examinations, which are given in May and late August of each year, must be taken in the spring term of the first year. Each exam will be graded separately, and in the event of failure, students will retake only the part of the exam they did not pass. Students may take the comprehensive examination no more than two times.
   
2. Prior to Registration for the Third Year. (a) Students must have met the two-Honors requirement specified by the Graduate School. (b) Students must have taken at least fourteen term courses in Economics and have received a grade of at least Pass– in each of them. With the permission of the director of graduate studies, courses in related fields and independent reading courses can be used to fulfill this requirement. Workshops may not be used to satisfy it. (c) Students must have received an average of at least High Pass in the courses they have taken. The admissibility of courses for this requirement is the same as for the fourteen-course requirement mentioned above.
   
3. Admission to Candidacy. The Graduate School requires that students be admitted to candidacy prior to registration for the fourth year of study. Students are recommended to the Graduate School for admission to candidacy by the director of graduate studies after having completed department requirements (1) and (2) above, the Graduate School's prospectus requirement, and the following additional requirements: (a) Students must have completed two one-term prospectus workshops. Prospectus workshops have the word “prospectus” in their title. (There are other workshops.) If students can find no workshop corresponding to their interests, they may substitute other workshops for this requirement. If students can find no workshop whatsoever in their areas of interest, they may substitute independent study guided by a faculty member, provided the independent study leads to a dissertation prospectus that is accepted. (b) Students must receive a grade of High Pass– or better in ECON 551b (Econometrics II) or 552b (Econometrics III). More advanced courses may be substituted for these with special permission of the director of graduate studies. (c) Students must receive a grade of Satisfactory on an applied econometrics paper, which is evaluated by the faculty adviser of the paper and another faculty member. In the paper, the student should (i) specify an economic model useful for the investigation of an interesting economic problem, (ii) select data and econometric methods appropriate to the question, (iii) conduct proper statistical analysis, and (iv) interpret the results in an intelligent way. (d) Students must complete with a grade of at least High Pass– a term of economic history, drawn from a list of courses approved by the director of graduate studies and economic history instructors. (e) Students must pass an oral examination.
   
4. Submitting the Dissertation. A student's dissertation research is guided by a committee of two Graduate School faculty members, at least one of whom must be a member of the Economics department. One of the committee members is designated as chair. When a first draft of the dissertation is completed, the director of graduate studies appoints, on request of the committee chair, a third reader.
   

Programs in Law and Economics
The Economics department participates in the J.D./M.A. and J.D./Ph.D. programs, which are described on pages 418–19 of this publication.

Master's Degrees
M.Phil. The M.Phil. degree is awarded to students in the Ph.D. program upon completion of fourteen term courses, with at least two grades of Honors. In addition, students must satisfy the qualifying requirements in economic theory, econometrics, economic history, and two special fields, as well as the oral examination.

M.A. (en route to the Ph.D.). The M.A. degree is awarded upon completion of eight term courses with an average grade of High Pass, and satisfactory completion of one of the following: the comprehensive examination in economic theory, the course requirement in econometrics, or the course requirement in economic history.

The M.A. in International and Development Economics is described under International and Development Economics.

Program materials are available on our Web site: www.econ.yale.edu.

Courses

ECON 500a, General Economic Theory: Microeconomics.  Truman Bewley, Benjamin Polak.
Introduction to optimization methods and partial equilibrium. Theories of utility and consumer behavior production and firm behavior. Introduction to uncertainty and the economics of information, and to noncompetitive market structures.

ECON 501b, General Economic Theory: Microeconomics.  Stephen Morris.
General equilibrium and welfare economics. Allocation involving time. Public sector economics. Uncertainty and the economics of information. Introduction to social choice.

ECON 510a, General Economic Theory: Macroeconomics.  Eduardo Engel, Anthony Smith.
Analysis of short-run determination of aggregate employment, income, prices, and interest rates in closed and open economies. Stabilization policies.

ECON 511b, General Economic Theory: Macroeconomics.  George Hall, Giuseppe Moscarini.
Theories of saving, investment, portfolio choice, and financial markets. Longer-run developments; economic growth, capital accumulation, income distribution.

ECON 520a, Advanced Microeconomic Theory I.  Itzhak Gilboa, Benny Moldovanu.
A formal introduction to game theory and information economics. Alternative noncooperative solution concepts are studied and applied to problems in oligopoly, bargaining, auctions, strategic social choice, and repeated games.

ECON 521b, Advanced Microeconomic Theory II.  Stephen Morris.
Contracts and the economics of organization. Topics may include dynamic contracts (both explicit and implicit), career concerns, hierarchies, Bayesian mechanism design, renegotiation, and corporate control.

ECON 522a and 523b, Topics in Game Theory.  Staff.
A forum for advanced students to examine critically recent papers in the literature and present their own work.

[ECON 524a, Behavioral Applied Theory.]  

ECON 525a, Advanced Macroeconomics: I.  Eduardo Engel, Anthony Smith.
Aggregation, inventory models, externalities, spillovers, information and adjustment. Time series models, expectations, models of financial markets, risk management, monetary policy, term structure of interest rates.

ECON 526b, Advanced Macroeconomics: II.  Björn Bruegemann, Giuseppe Moscarini.
Selected empirical topics.

ECON 527a, Behavioral and Institutional Economics.  Robert Shiller.
Behavioral economics incorporates insights from other social sciences, such as psychology and sociology, into economic models, and attempts to explain anomalies that defy standard economic analysis. Institutional economics is the study of the evolution of economic organizations, laws, contracts, and customs as part of a historical and continuing process of economic development. Behavioral economics and institutional economics are naturally treated together, since so much of the logic and design of economic institutions has to do with complexities of human behavior.

ECON 530a, Mathematical Economics I.  Truman Bewley.
The focus of the class is intertemporal problems in general equilibrium theory. One set of topics is the links between the theories of general equilibrium, overlapping generations models, and economic growth. Another topic is the link between the permanent income hypothesis and general equilibrium analysis. A third topic is the stability of equilibrium with and without the permanent income hypothesis.

ECON 531b, Mathematical Economics II.  John Geanakoplos.
This course examines the foundations of money and finance from the perspective of general equilibrium with incomplete markets. The relevant mathematical tools from elementary stochastic processes to differential topology are developed in the course. Topics include asset pricing, variations of capital asset pricing model, the “Hahn paradox” on the value of flat money, default and bankruptcy, collateral equilibrium, market crashes, adverse selection and moral hazard with perfect competition, credit card equilibrium, and general equilibrium with asymmetric information.

[ECON 532au, General Equilibrium under Uncertainty.]

[ECON 533a and b, Workshop on Discrete Mathematics and Applications.]

ECON 537a and 538b, Microeconomic Theory Workshop.  Staff.
Presentations by research scholars and participating students.

ECON 540a and 541b, Student Workshop in Macroeconomics.  Staff.
A course for third- and fourth-year students doing research in macroeconomics to prepare their prospectuses and to present their dissertation work. Each student is required to make at least two presentations per term. For third-year students and beyond, at least one of the presentations in the first term should be a mock job talk.

ECON 542a and 543b, Macroeconomics Workshop.  Staff.
A forum for presentation and discussion of state-of-the-art research in macroeconomics. Presentations by research scholars and participating students of papers in closed economy and open economy macroeconomics and monetary economics.

ECON 544a, Economic Analysis.  Cheryl Doss.
MW 9–10.15
An introduction for International Relations students to more advanced concepts of micro- and macroeconomic analysis in an applied context. Different economies in different stages of development are used as illustrations of these concepts. Areas covered include employment, income, and interest rate determination as well as theories of consumption, investment, pricing, money, and production. Also INRL 560a.

ECON 545a, Microeconomics.  Michael Boozer.
A survey of the main features of current economic analysis and of the application of the theory to a number of important economic questions, covering microeconomics and demand theory, the theory of the firm, and market structures. For IDE Students.

ECON 546a, Macroeconomics.  Douglas Gollin.
This course presents a basic framework to understand macroeconomic behavior and the effects of macroeconomic policies. Topics include consumption and investment, labor market, short-run income determinations, unemployment, inflation, growth, and the effects of monetary and fiscal policies. The emphasis is on the relation between the underlying assumptions of macroeconomic framework and policy implications derived from it. For IDE students.

ECON 550a, Econometrics I.  Donald Andrews.
Probability: concepts and axiomatic development. Data: tools of descriptive statistics and data reduction. Random variables and probability distributions; univariate distributions (continuous and discrete); multivariate distributions; functions of random variables and transformations; the notion of statistical inference; sampling concepts and distributions; asymptotic theory; point and interval estimation; hypothesis testing.

ECON 551b, Econometrics II.  Taisuki Otsu.
Provides a basic knowledge of econometric theory, and an ability to carry out empirical work in economics. Topics include linear regression and extensions, including regression diagnostics, generalized least squares, statistical inference, dynamic models, instrumental variables and maximum likelihood procedures, simultaneous equations, nonlinear and qualitative-choice models. Examples from cross-section, time series, and panel data applications.

ECON 552b, Econometrics III.  Yuichi Kitamura.
The treatment of the subject is rigorous, attentive to modern developments, and proceeds to research level in several areas. Linear models from core curriculum. Topics include linear estimation theory, multiple and multivariate regressions, Kruskal's theorem and its applications, classical statistical testing by likelihood ratio, Lagrange multiplier and Wald procedures, bootstrap methods, specification tests, Stein-like estimation, instrumental variables, and an introduction to inferential methods in simultaneous stochastic equations.

ECON 553a, Econometrics IV: Time Series Econometrics.  Peter Phillips.
A sequel to ECON 552, the course proceeds to research level in time series econometrics. Topics include an introduction to ergodic theory, Wold decomposition, spectral theory, martingales, martingale convergence theory, mixing processes, strong laws and central limit theory for weak dependent sequences with applications to econometric models and model determination.

ECON 554b, Econometrics V.  Staff.
The first half of this course is about nonlinear parametric models. Specification, estimation, and testing within the Likelihood and Generalized Method of Moments frameworks. First-order asymptotics for both smooth and non-smooth objective functions. Efficiency and robustness. A short account of high-order asymptotics for smooth problems. The second part is on nonparametric and semiparametric methods. Nonparametric estimation by kernels, series, splines, and other methods. Bias reduction and bandwidth selection. The curse of dimensionality and additive models. Specification and estimation of semiparametric models. U-statistics and asymptotic properties. Efficiency and adaptation.

ECON 555a, Applied Econometrics II: Microeconometrics.  Michael Boozer.
This course develops the concepts needed to approach empirical problems in microeconomics with econometrics. The focus is less on developing a catalogue of econometric methods than on developing a conceptual basis for understanding how data, econometric methodology, and assumptions combine to produce statistical inference.

ECON 557b, Time Series Econometrics II: Unit Roots and Co-Integration.  Peter Phillips.  
This course is an introduction to nonstationary time series and econometric applications covering the following topics. Weak convergence and functional central limit theory with unit root model illustrations. An introduction to stochastic calculus, and weak convergence to stochastic integrals. Unit root tests and applications. Testing stationarity. Spurious regression. General regression asymptotics for integrated processes with Hilbert projection geometry. Co-integration, tests for co-integration and reduced rank regression. Regression estimation of co-integrated systems and VARs with some unit roots. Bayesian approaches to unit root and co-integration analysis. Nonlinear functions of integrated processes and econometric applications. Fractional processes and long memory. Theory and empirical applications are discussed. Computer exercises in Gauss. Credit is obtained from a take-home examination and an empirical computer application.

ECON 558a, Statistics and Econometrics.  Michael Boozer.
Application of statistical analysis to economic data. Basic probability theory, linear regression, specification and estimation of economic models, time series analysis and forecasting. The computer is used. For IDE students.

ECON 561b, Computational Method for Economic Dynamics.  Anthony Smith.
The course aims to teach students how to use computational methods to solve and analyze dynamic economic models. The first part of the course covers standard tools of numerical analysis that are useful in economics (minimization of functions, root-finding, interpolation, approximation of functions, integration, simulation). The second part shows how to use these tools to study dynamic economic problems in macroeconomics, finance, labor economics, public finance, and industrial organization. This part of the course pays special attention to methods for solving stochastic dynamic programming problems and for computing equilibria in economic models with heterogeneous actors.

ECON 567a and 568b, Econometrics Workshop.  Donald Andrews, Peter Phillips.
A forum for state-of-the-art research in econometrics. Its primary purpose is to disseminate the results and the technical machinery of ongoing research in theoretical and applied fields.

ECON 570a and 571b, Prospectus Workshop in Econometrics.  Donald Andrews, Peter Phillips.
A course for third- and fourth-year students doing research in econometrics to prepare their prospectus and present dissertation work.

ECON 580a, General Economic History: Western Europe.  Timothy Guinnane.
A survey of some major events and issues in the economic development of Western Europe during the eighteenth and nineteenth centuries, stressing the causes, nature, and consequences of the industrial revolution in Britain and on the Continent, and the implications of the historical record for modern conceptions of economic growth. Prerequisites: simultaneous enrollment in or successful completion of ECON 500a and ECON 510a; or permission of the instructor.

ECON 581b, American Economic History.  Carolyn Moehling.
This course studies the process of economic growth as it has occurred in the American economy.

[ECON 582b, General Economic History: Latin America.]  

[ECON 583a, Topics in Economic History.]  

ECON 588a and 589b, Economic History Workshop.  Timothy Guinnane, Carolyn Moehling.
A forum for discussion and criticism of research in progress. Presenters include graduate students, Yale faculty, and visitors. Topics concerned with long-run trends in economic organization are suitable for the seminar. Special emphasis given to the use of statistics and of economic theory in historical research.

ECON 600a, Industrial Organization I.  Steven Berry, Philip Haile, Justine Hastings.
Begins by locating the study of industrial organization within the broader research traditions of economics and related social sciences. Alternative theories of decision making, of organizational behavior, and of market evolution are sketched and contrasted with standard neoclassical theories. Then turns to a detailed examination of the determinants and consequences of industrial market structure.

ECON 601b, Industrial Organization II.  Steven Berry, Philip Haile, Justine Hastings.
Examination of alternative modes of public control of economic sectors with primary emphasis on antitrust and public utility regulation in the U.S. economy. Public policy issues in sectors of major detailed governmental involvement.

ECON 606a and 607b, Prospectus Workshop in Microeconomics.  Staff.
For third-year students in microeconomics, intended to guide students in the early stages of theoretical and empirical dissertation research. Emphasis on regular writing assignments and oral presentations.

ECON 608a and 609b, Workshop in Applied Microeconomics.  Staff.
For advanced graduate students in applied microeconomics, serving as a forum for presentation and discussion of work in progress of students, Yale faculty members, and invited speakers.

ECON 630a, Labor Economics.  Joseph Altonji, Fabian Lange.
Topics include static and dynamic approaches to demand, human capital and wage determination, wage income inequality, unemployment and minimum wages, matching and job turnover, immigration and international trade, unions, implicit contract theory, and efficiency wage hypothesis.

ECON 631b, Labor Economics.  Joseph Altonji, Fabian Lange.
Topics include static and dynamic models of labor supply, human capital wage function estimation, firm-specific training, compensating wage differentials, discrimination, household production, bargaining models of household behavior, intergenerational transfers, and mobility.

ECON 638a and 639b, Labor and Population Workshop.  Staff.
A forum primarily for graduate students to exposit their research plans and findings. Discussions encompass empirical microeconomic research relating to both high- and low-income countries.

ECON 670a, Financial Economics I.  Zhiwu Chen.
Current issues in theoretical financial economics are addressed through the study of current papers. Focuses on the development of the problem-solving skills essential for research in this area. Also MGMT 740a.

ECON 671b, Financial Economics II.  Jonathan Ingersoll.
Current issues in theoretical financial economics are addressed through the study of current papers. Focuses on the development of the problem-solving skills essential for research in this area. Also MGMT 741b.

ECON 680a, Public Finance: I.  Patrick Bayer, Hanming Fang.
Theoretical and empirical topics in public finance. Some emphasis on the relation between taxation and the following problems: efficiency, equity, and income distribution, uncertainty in capital markets, and aggregate capital accumulation.

ECON 681b, Public Finance: II.  Patrick Bayer, Hanming Fang.
Topics include theory of public goods, an introduction to preference revelation, the problem of externalities and their control, and the methodology of cost-benefit analysis and some applications.

ECON 702b, International Economics.  Koichi Hamada.
International monetary theory and its implications for economic policy. Topics include mechanisms of adjustment in the balance of payments; fiscal, monetary, and exchange rate policy for internal and external balance; international movements of capital. For IDE students.

ECON 708b, International Economic Analysis.  Cheryl Doss.
MW 9–10.15
A continuation of ECON 544a/INRL 560a. It extends the use of economic analysis to international trade and monetary policy including exchange rates and balance of payments with an emphasis on their relation to international trade, cross-border capital flows, and national economic policies. Introduction to quantitative tools and analysis as a way to determine the effects of various policies, building on concepts introduced in ECON 544a and the first part of this course. Also INRL 561b.

[ECON 709a, International Economics and Open Economy Macroeconomics.] 

ECON 720a, International Trade I.  Irene Brambilla.
The course covers the theory of international trade, policy, and institutions. Classical, Neo-classical, and more recent Imperfect Competition Scale Economies–based static models of trade are discussed. Dynamic extensions of some of the models that explore the relations among trade, innovation, and growth are presented. The analytics of trade policy issues, such as gains from trade, tariffs and quotas, customs unions and free trade areas, and political economy of trade policy making, are discussed. The economic foundations of multilateral institutions governing world trade, i.e. GATT and its successor the WTO, are analyzed.

ECON 721b, International Trade II.  Pinelopi Goldberg.
This course covers empirical topics in international trade with particular emphasis on current research areas. Topics include tests of international trade theories; studies of the relationships among international trade, labor markets, and income distribution; recent trade liberalization episodes in developing countries; empirical assessment of various trade policies, such as VERs and Anti-Dumping; productivity (and its relation to international trade liberalization); exchange rates, market integration, and international trade. Methodologically, the course draws heavily on empirical models used in the fields of industrial organization and to a lesser degree labor economics; these courses are thus recommended (though not required).

ECON 724b, International Finance.  Galina Hale.
International monetary economics covering the following topics: the balance of payments and the foreign exchange market; the elasticities, absorption, and monetary approaches to the foreign exchange market; the elasticities, absorption, and monetary approaches to the adjustment mechanism; long-term and short-term capital flows; Euro-dollars, portfolio and asset market approaches, policies for internal balance, flexible exchange rates, international reserves, and the monetary system.

ECON 730a, Economic Development.  Rohini Pande, T.N. Srinavasan, Christopher Udry.
Development theory at both aggregate and sectoral levels; analysis of growth, employment, poverty, and distribution of income in both closed and open developing economy contexts.

ECON 731b, Economic Development.  Rohini Pande, T.N. Srinavasan, Christopher Udry.
Analysis of development experiences since World War II. Planning and policy making across countries and time. Models of development, growth, foreign trade, and investment. Trade, capital, and technology flows and increasing interdependence. The political economy of policy making and policy reform.

ECON 732b, Economic Development.  Robert Evenson.
Examines the models of classical and modern economists to explain the transition of developing economies into modern economic growth, as well as their relevance to income distribution, poverty alleviation, and human development. For IDE students.

ECON 735au, Economics of Agriculture.  Robert Evenson.
This is a comparative course emphasizing the extraordinary diversity in the technology utilized in different agricultural systems in different countries. This diversity ranges from the technology employed in U.S. agriculture where only one percent of the labor force is engaged in agricultural production, to the primitive technologies still being employed in parts of Sub-Saharan Africa where 70 percent of the labor force is engaged in agriculture. The course covers models of agricultural households, models of institutions and transaction costs in markets, models of mechanization, and models of demand.

ECON 736au, Economics of Technology.  Robert Evenson.
Focus on an analysis of the microeconomic incentives for the discovery and adoption of new technology and on the macroeconomic implications of technical change. Topics include the incentives to conduct research and development; patents and other means of appropriating the returns from R&D investment; measuring the effects of technical change; national policies for directing technical change.

ECON 737au, Economics of Natural Resources.  Robert Mendelsohn.
Linking of abstract economic concepts to concrete policy and management decisions. Application of theoretical tools of economics to global warming, pollution control, fisheries, forestry, recreation, and mining.

ECON 738a/b, Workshop on Environmental and Natural Resources.  William Nordhaus, Robert Mendelsohn.

ECON 749a and 750b, Trade and Development Workshop.  Staff.
A forum for graduate students and faculty with an interest in the economic problems of developing countries. Faculty, students, and a limited number of outside speakers discuss research in progress.

ECON 756a/b, Prospectus Workshop in Development.  Christopher Udry.
Workshop for students doing research in development to present and discuss work.

ECON 776bu, Economics of Population.  T. Paul Schultz.
Analysis of economic aspects of population change, including fertility, mortality and health, composition of households, migration, and labor force behavior. Microeconomic models of household behavior and demographic measurement theory used to account for economic and demographic behavior of persons in low- and high-income countries.

ECON 788a, Political Competition.  John Roemer.
W 10–12
Political competition in democracies is party competition. We develop, from the formal viewpoint, theories of party competition in democracies. The familiar “median voter theorem” of A. Downs is the simplest example of such a theory, but it is inadequate in several ways. We develop a theory in which parties (1) compete over several issues, not just one issue, as in Downs; (2) are uncertain about how citizens will respond to platforms; and (3) represent interest groups in the population. Applications, particularly to the theory of income distribution and taxation, are studied. Also PLSC 575a.

ECON 790b, Political Economy.  Ebonya Washington.
Political economy is the study of public policy making from an economic perspective. This course provides an introduction to the field. The first part focuses on tools, providing an overview of theories of policy determination via the political process. Topics include voter behavior, electoral competition, legislative decision making, and interest group influence. The second part discusses applications, focusing on questions of interest to public economists. Topics include political failure, the implications of alternative electoral systems, campaign finance reform, citizen initiatives, and political transitions.

ECON 802au, Economic Development of Japan.  Koichi Hamada.
Economic performance of Japan: historical development since Meiji Restoration, postwar reconstruction and rapid growth including the industrial policy, government policy, the political economy of U.S./Japan economic relations.

ECON 899a or b, Individual Reading and Research.
By arrangement with faculty.

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