About the Department
Since its founding in 1925, the students and faculty of the Department of Economics (including numerous Nobel laureates) have advanced the world’s understanding of society by extending economic analysis to new spheres of social life, spearheading the study of ideas ranging from economic growth to human capital. Over the decades, numerous new ideas in the field of economics emerged from the University of Chicago, including the economic theory of socialism, the economics of the household, the rationality of peasants in poor countries, the economics of education and other acquired skills (human capital), the economics of information, and the monetary approach to international finance. The unifying thread? The conviction that economics is a powerful tool for understanding society.
Graduate study in the Department of Economics is intensely mathematical. Prospective students who declare Economics as their primary field must have prior exposure to real analysis, econometrics, and advanced coursework in multivariable calculus, linear algebra, probability, and statistics. A solid foundation in micro and macroeconomics is strongly preferred.
Students admitted to the MAPSS/Economics concentration will receive a separate letter of admission.
Only those persons are eligible to work with a member of the Economics faculty on the MA thesis. To preserve that eligibility, they must also:
- Complete the doctoral math camp the Department offers in late August/early September.
- Complete two of the following three courses in the Fall Quarter, achieving a minimum grade of B+ in each: Price Theory (Econ 30100), Theory of Income (Econ 33000), Empirical Analysis (Econ 31000).
- Achieve a minimum grade of B in subsequent graduate courses in the Department.
Students will be supported in their course selections, choice of faculty advisor, and MA thesis by Victor Lima, Senior Lecturer in the Department of Economics, and by Min Sok Lee, Lecturer in the Department of Economics.
Students who find graduate work in the Department beyond their mathematical reach may find more accessible alternatives in the Harris School of Public Policy, in the Booth School of Business, in Political Science, and occasionally in Sociology, Law, or History.
ECON 30100. Price Theory. (Kevin Murphy) Theory of consumer choice, including household production, indirect utility, and hedonic indices. Models of the firm. Analysis of factor demand and product supply under competitive and monopolistic conditions. Static and dynamic cost curves, including learning by doing and temporary changes. Uncertainty applied to consumer and producer choices. Property rights and the effects of laws. Investment in human and physical capital.
ECON 30501. Topics in Theoretical Economics. (Philip Reny) Some of the topics covered in this course are: Nash equilibrium existence in discontinuous games, existence of monotone pure strategy equilibria in Bayseian games, defining sequential equilibrium in infinite extensive form games, efficient auction design, correlated information and mechanism design.
ECON 31000. Empirical Analysis-1. (Azeem Shaikh) This course introduces students to the key tools of econometric analysis: basic asymptotic theory, including convergence in probability, convergence in distribution, laws of large numbers, continuous mapping theorems, central limit theorems, and the delta method; conditional expectation; applications to linear regression, instrumental variables, maximum likelihood, and extremum estimators.
ECON 33000. The Theory of Income. (Fernando Alvarez) This course formulates and analyzes aggregate general equilibrium models to study classical questions in macroeconomics. The course starts with the formulation and analysis of competitive equilibrium in the general equilibrium models, including the 1st and 2nd welfare theorem. The first applications of this model are: social security (using an OLEG model), optimal risk sharing, and asset pricing (using a one period model with uncertainty). Most of the remaining applications focus on dynamic models without uncertainty. To do so we study tools to characterize optimal solutions of control problems: Hamiltonian, calculus of variations and dynamic programming. The main application of these tools is the neoclassical growth model in many variations: determinants of steady state and balanced growth path, endogenous growth, effect of variable labor supply, TFP changes and of investment specific technical progress, habit formation, the q-model of investment, taxation of capital and labor, optimal taxation a la Ramsey, among others.
ECON 33603. Macroeconomics and Financial Frictions. (Harald Uhlig) This course investigates the interrelationship between financial markets and macroeconomics, presenting some recent developments in that literature. We start from a log-linearized perspective on asset pricing and macroeconomic dynamics. We extend these tools to long-run risk and Epstein-Zin preferences. We discuss higher moments and large disasters. Next we turn to models of systemic risk as well as DSGE models incorporating a financial sector and house price booms and busts. Finally, we turn to sovereign debt crises. We will learn about tools to analyze stochastic dynamic general equilibrium models, such as Dynare.
ECON 34901. Social Interactions and Inequality. This course will focus on the theory, econometrics, and empirical analysis of social influences on economic behavior, termed social interactions. As such, the course will include topics ranging from social networks to social capital to discrimination. We will examine the effects of social interactions on individual and aggregate behaviors as well as the implications of social interactions for the formation of social structure. Particular attention will be given to the translation of theoretical models into econometric analogs and to the identification questions that arise when attempting to construct empirical evidence on social interactions. Applications of social interactions will focus on contexts in which their presence can help explain observed levels of socioeconomic inequality.
ECON 36101. Economic Models of Politics. (Roger Myerson and Richard Van Weelden) This course is an introduction to current research in political economics. The emphasis is on game-theoretic models that can be used to study the effects of different constitutional structures on the competitive behavior of politicians and the welfare-relevant performance of government.