Department of Economics
We are currently ranked as the best economics department in the world. Our goal is to make sure we stay there.
Highlights of the Year
Two department graduates received important honors. Joseph Stiglitz (PhD 1967) and George Akerlof (PhD 1966) were co-recipients of The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel for 2001, along with A. Michael Spence. The Nobel Prize was awarded to them for their analyses of markets with asymmetric information.
A number of faculty members also received important honors and awards. Professor Peter Temin received a Guggenheim Fellowship. Assistant Professor Esther Duflo received a Sloan Foundation Research Fellowship for 2002-2003. Assistant Professor Sendhil Mullainathan received an Olin Faculty Fellowship for 2002-2003. Assistant Professor Xavier Gabaix received a Russell Sage Foundation Fellowship for 2002–2003.
Professor Abhijit Banerjee is the co-winner of the Mahalanobis Memorial Medal for 2000 from The Indian Econometric Society, along with Alan Krueger of Princeton University. This prestigious award is presented for "outstanding contributions to quantitative economics." It is given once every five years.
Professor Ricardo Caballero was co-recipient with Eduardo Engel of the 2002 Frisch Medal of the Econometric Society for their paper "Explaining Investment Dynamics in U.S. Manufacturing: A Generalized (S,s) Approach."
The Frisch Medal was established by the Econometric Society to encourage the creation of good applied work and its submission to the journal Econometrica. It is given every two years for an applied article (empirical or theoretical) published in Econometrica during the past five years.
Professor Rudiger Dornbusch was awarded the Perkins Award for Excellence in Graduate Advising by MIT. The Frank E. Perkins Award was created on the occasion of Dr. Perkins's retirement from the position of dean of the graduate school (1983–1995). The award is presented to a faculty member who, as a graduate student advisor, demonstrates unbounded compassion and dedication towards students.
A number of faculty members serve in leadership positions in various economics associations. Institute Professor Peter Diamond is the president-elect of the American Economic Association, and Professor James Poterba is a member of the executive committee. Professor Olivier Blanchard is on the Council of the Econometric Society. Professor Temin is the president of the Eastern Economic Association.
Turning to students, graduate and undergraduate:
Dr. David Finch gave the department an additional contribution to the David Finch Fellowship Fund that will allow the department to award it two out of every three years.
Next year's entering class of 23 Ph.D. students will include 14 international students and 7 women (30 percent). Seven members of our entering class have won National Science Foundation Fellowships.
Undergraduate enrollment decreased this year by 9 percent. This is a dip on an overall positive trend in enrollment. Taking a longer view, the increase has been nearly 20 percent over the last fifteen years.
There were 109 undergraduate majors in economics (27 of whom are double majors), 196 undergraduate minors, and 337 concentrations completed in economics. 46 students received their S.B. in economics in 2002.
Our graduate students on the job market did well this year, with 41 percent receiving assistant professorships in the top 20 economics departments and business schools. A total of 65 percent accepted academic positions, 23 percent took positions in government, and 12 percent obtained positions in the private sector.
The World Economy Laboratory (WEL), directed by Professor Dornbusch, continued to provide resources for the department. Two WEL conferences were held in Washington, DC during the academic year.
Future Plans
Our department is doing very well. The atmosphere is warm and friendly, the research atmosphere is exciting, and faculty members are productive. Our junior faculty are particularly outstanding, and we see this as our main strength for the future. Some fields where we were less strong—labor economics and development, in particular—are expanding and attracting an increasing number of students. A new field, behavioral economics, is becoming increasingly popular.
We feel we still have two major senior needs, one in theory and one in macroeconomics. We had two search committees looking at potential candidates. We made an offer in theory to Ilya Segal; the offer is still outstanding.
Competition from other departments is becoming more intense, and our few competitors are often bigger and richer. We strongly feel that, to thrive in the long run, the department must increase in size, both by expanding its core, and the number of faculty members in major fields. We made the case to the visiting committee last spring, and later to the senior administration. We are happy with their response, and intend to fill the new positions given to the department over the coming three years. We also have to secure one of our main assets, the quality of our student pool, by increasing the number of fellowships we can offer. This is all the more urgent, given the decline in many of the traditional external sources of such fellowships.
Personnel
Professor Robert Gibbons of the Sloan School was given a joint appointment in the department. Associate Professor Jaume Ventura was awarded tenure. Professor Duflo was promoted to associate professor with tenure. Professor Mullainathan was promoted to associate professor. Assistant Professors Victor Chernozhukov and Muhamet Yildiz were reappointed.
Ivan Werning and Sergei Izmalkov will join the faculty as assistant professors as of July 1, 2002. Ivan received his Ph.D. from University of Chicago and is a macroeconomist. Sergei received his Ph.D. from Pennsylvania State University and is a theorist.
Assistant Professor David Spector resigned his position effective June 30, 2002. He will assume a position at CEPREMAP in France.
There were twelve visiting faculty for all or part of the 2001-2002 academic year. Visiting Professor Jean Tirole taught a topics course in industrial organization. Visiting Professor Roger Brinner taught macroeconomics. Visiting
Professor Mathias Dewatripont taught microtheory. Visiting Professor Kaushik Basu taught microeconomic theory and development economics. Visiting Professor Linda Bui taught industrial organization. Visiting Professor Mark Duggan taught public finance. Visiting Professor Ephraim Kleiman taught the economics of the Middle East. Visiting Professor Paul Milgrom taught microeconomic theory. Visiting Professor Stephen Machin taught labor and microeconomics. Visiting Professor Hans-Joachim Voth taught econometrics. Postdoctoral Associate Mark Wright taught macroeconomics . Instructor Christian Hellwig taught undergraduate advanced macroeconomics.
On women and minorities in the department. The department has three women faculty members, two of whom are tenured, and no minorities. All search committees are instructed to identify outstanding women and minority candidates as part of their search process. As part of the regular recruitment process for junior faculty, the department solicited/received 153 CVs. Twenty candidates (including two women) were selected for interviews. This year however, none of the three offers went to a woman or a minority.
Honors and Awards
Professor Daron Acemoglu was the Review of Economic Studies Lecturer at The Royal Economic Society Meetings. He was gave the keynote address at the European Association of Labor Economists meeting.
Professor Joshua Angrist was the Hooker Distinguished Visiting Professor at McMaster Univeristy.
Assistant Professor David Autor was a Fellow at the Center for Advanced Study in the Behavioral Sciences at Stanford University.
Professor Banerjee is the co-winner of the Mahalanobis Memorial Medal for 2000 from The Indian Econometric Society, along with Alan Krueger of Princeton University.
Professor Blanchard gave the Zvi Griliches lectures in Moscow in November of 2001. He was also elected to the Econometric Society Council.
Professor Caballero received the 2002 Frisch Medal of the Econometric Society.
Professor Diamond is the president of the American Economic Association.
Professor Dornbusch was awarded the Perkins Award for Excellence in Graduate Advising.
Professor Duflo was a John M. Olin Faculty Fellow. She has been awarded an Alfred P. Sloan Foundation Fellowship for 2002-2003.
Professor Gabaix has been awarded a Russell Sage Foundation Fellowship for 2002-2003.
Professor Bengt Holmstrom was awarded the American Finance Association's Smith Breeden Distinguished Paper Prize for his article "LAPM—A Liquidity-Based Asset Pricing Model" (with Jean Tirole.) He gave the Rogers Clark Lecture at North Carolina State University, the keynote address at the Annual Meeting of the Finnish Society of Sciences and Letters, and the Karl Borch Lecture at the Norwegian School of Economics. He was also elected a Fellow of the European Corporate Governance Institute.
Professor Paul Joskow is the president-elect of the International Society for New Institutional Economics. He gave the Fathauer Lecture at the University of Arizona. He also was awarded the Undergraduate Economic Association Teaching Award.
Professor Mullainathan was an Alfred P. Sloan Foundation Fellow. He has been awarded a John M. Olin Faculty Fellowship for 2002-2003.
Professor Poterba gave the Hahn Lecture to the Royal Economic Association. He was the American Council on Capital Formation Distinguished Scholar. He is a member of the executive committee of the American Economic Association. He was the recipient of the MIT Graduate Economics Association Teacher of the Year award.
Professor Nancy Rose is a member of the nominating committee of the American Economic Association.
Professor Temin is the president of the Eastern Economic Association. He was a Guggenheim Fellow.
Research Achievements
Faculty research includes:
Professor Acemoglu's paper "Technical Change, Inequality and Labor Market" was published in the Journal of Economic Literature.
Assistant Professor George-Marios Angeletos paper "Fiscal policy with Non-contingent Debt and the Optimal Maturity Structure" will be published by the Quarterly Journal of Economics in August of 2002.
Professor Angrist's paper "How Do Sex Ratios Affect Marriage and Labor Markets? Evidence from America's Second Generation," is forthcoming in the Quarterly Journal of Economics.
Professor Autor's article "Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment" is forthcoming in the Journal of Labor Economics.
Professor Blanchard's paper "The Dynamic Effects of Changes in Government Spending and Taxes on Activity" written with Roberto Perotti is forthcoming in the Quarterly Journal of Economics.
Professor Caballero's paper "International and Domestic Collateral Constraints in a Model of Emerging Market Crises," written with Arvind Krishnamurthy, was published in the Journal of Monetary Economics.
Professor Chernozhukov's paper "3-step Censored Quantile Regression and Extramarital Affairs," written jointly with H. Hong, was published in the Journal of the American Statistical Association.
Professor Costa's paper "Estimating Real Income in the U.S. from 1888 to 1994: Correcting CPI Bias Using Engel Curves" was published in the Journal of Political Economy.
Professor Duflo's paper "Participation and Investment Decisions in a Retirement Plan: The Influence of Colleagues' Choices," written with Emmanuel Saez, is forthcoming in the Journal of Public Economics.
Professor Glenn Ellison's paper "Geographic Concentration as a Dynamic Process" was published in theReview of Economics and Statistics.
Professor Frank Fisher wrote "U.S. v. Microsoft – An Economics Analysis" with D. L. Rubinfeld which appeared in The Antitrust Bulletin.
Professor Gabaix's paper "Similarities and Differences between Physics and Economics," written with L.A. N. Amaral, P. Gopikrishnan, H. Eugene Stanley, and V. Plerou, appeared in Physica A.
Professor Jonathan Gruber's "The Elasticity of Taxable Income: Evidence and Implications" was published in the Journal of Public Economics.
Professor Jeffrey Harris' paper "Smoke Yields of Tobacco-Specifics Nitrosamines in Relation to FTC Tar Level and Cigarette Manufacturer: Analysis of the Massachusetts Benchmark Study" was published in the Journal of the National Cancer Institute.
Professor Jerry Hausman published his paper "Mismeasured Variables in Econometric Analysis: Problems from the Right and Problems from the Left" in the Journal of Economic Perspectives.
Professor Holmstrom's paper "LAPM – A Liquidity –Based Asset Pricing Model," written with Jean Tirole, was published in the Journal of Finance.
Professor Joskow's paper "Transaction Cost Economics, Antitrust Rules and Remedies" was published in the Journal of Law, Economics and Organization.
Assistant Professor Guido Kuersteiner's work "Asymptotically unbiased Inference for a Dynamic Panel Model with Fixed Effects," written with Jinyong Hahn, is forthcoming in Econometrica.
Professor Whitney Newey's paper "Choosing the Number of Instruments" was published in Econometrica.
Professor Michael Piore's paper "Economics and Sociology" was published in Revue Économique.
Professor Poterba published his paper "Demographic Structure and Asset Returns" in the Review of Economics and Statistics.
Professor Rose's article "Regulating Executive Pay: Using the Tax Code to Influence Executive Compensation" is forthcoming in the Journal of Labor Economics.
Professor Spector's paper "Failure of communication despite close preferences" was published in Economic Letters.
Professor Temin's "A Market Economy in the Early Roman Empire," was published in the Journal of Roman Studies.
Professor Ventura's article "Product Prices and the OECD Cycle," written with Aart Kraay, was published in Advances in Macroeconomics.
Professor William C. Wheaton published his article "Intra-Urban Wages Variation, Employment Location and Commuting Time," written with Darren Timothy, in the Journal of Urban Economics.
Professor Yildiz's "Bargaining over risky assets" was published in Game Theory in the Tradition of Bob Wilson, edited by B. Holmstrom, B.P. Milgrom, and A. Roth.
More information about the Economics Department can be found on the web at http://econ-www.mit.edu/.