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Economics


Administrative Unit:Economics
College/School: College of Letters & Science
Admitting Plans:M.S., Ph.D.
Degrees Offered:M.S., Ph.D.
Minors and Certificates:Ph.D. Minor
Named Options: Graduate Foundations (M.S.)
Specializations: Econometrics, Industrial Organization, International Economics, Labor Economics, Macroeconomics and Monetary Economics, Microeconomic Theory, or Public Economics

Faculty: Professors Scholz (chair) Corbae, Deneckere, Durlauf, Engel, Hansen, Hendricks, Kennan, Porter, Sandholm, Seshadri, Smith, Staiger, Taber, Walker, West, Williams, Wolfe, Wright; Associate Professors Lentz, Sorensen; Assistant Professors Aradillas-Lopez, Bilir, Decarolis, Fu, Fukushima, Gandhi, Houde, Penta, Quint, Rostek, Roys, Serrano-Padial, Shi, Weretka; Affiliate Professors Chinn, Montgomery, Ortalo-Magne, Smeeding; Affiliate Associate Professors DeLeire, Schechter, Wallace; Affiliate Assistant Professor Kamata 

Overview

The graduate program in economics offers a firm grounding in the theory and tools of economics as well as in a variety of fields of specialization. Facilities within the department include faculty and student offices, a library of core materials, and a computer center. The size of the department, the breadth of specialties represented among the faculty, the abundance of research workshops and research facilities, and the related programs of other university departments combine to provide an unusually supportive atmosphere for study and research. Students are encouraged to work together; study groups for course work and preliminary examinations are standard. The department currently has roughly 35 faculty members and more than 155 graduate students. All students are assigned desk space. The department and students sponsor social events throughout the year. A graduate advisor is on staff to help students with problems and questions.

The primary focus of the Department of Economics is on the doctoral degree. Although a master's degree is offered officially, students are not admitted for a terminal master's degree. The first year of study concentrates on economic theory and statistics courses. In addition, the department holds seminars for first-year students that feature faculty presentations. The presentations provide first-year students the opportunity to meet the faculty and learn about research in each field. The department offers seven fields of concentration: econometrics, industrial organization, international economics, labor economics, macroeconomics, microeconomic theory, and public economics.

For more information, see the Economics Graduate Program Guide.

Econometrics

Econometrics is concerned with the methods for empirical analysis in economics. The program provides strong preparation and training for students interested in econometric methods and theory, and as well as for students whose primary interest lies in applied economics.

All doctoral students in economics, regardless of field, take one year of econometrics (Economics 709 and 710, which has an enrollment of about 40-50). In their second year of study, students who choose econometrics as their major field, or who simply want more advanced training, will take Economics 715, which covers the core theory of nonlinear estimation and inference. They will also take one or more of Economics 716, 718 or 719, which cover selected topics on the frontiers of theoretical and applied econometrics. These courses have enrollments of about 10-20 students.

The scope of econometrics at Wisconsin is suggested by a list of recent research projects by the econometrics faculty (often with the assistance of graduate students). These include the generalized method of moments, nonparametric likelihood, bootstrap methods, interactions-based models, macroeconometrics, nonlinear time series, and semiparametric estimation. In addition, studies conducted by other faculty members and students—in public economics, labor, industrial organization, macroeconomics, trade, and microeconomics—often draw on appropriately sophisticated econometric techniques.

The econometrics program can be augmented by course offerings in the statistics department.

Industrial Organization

The standard graduate preparation in industrial organization consists of two courses covering applied microeconomic theory and empirical industrial organization. Preparation usually also includes one or more courses in advanced topics, such as game theory, and dynamic models of competition, and/or courses on advanced econometrics or computational methods. Students planning to write a dissertation in industrial organization should plan on attending the industrial organization workshop during their second year of study. After completing the field requirements, students are expected to actively participate in the industrial organization workshop, by presenting their own research and critically analyzing and discussing that of others. The two required courses focus on recent developments in theoretical and empirical industrial organization. Modern theoretical industrial organization studies the theory of the firm and contracting, static and dynamic models of oligopoly, the theory of price discrimination, the determinants of entry and exit behavior, models of product differentiation and advertising, and dynamic competition through R&D and the adoption of new technologies. The focus of modern empirical industrial organization has mostly shifted from discovering robust empirical regularities that hold across a broad cross section of industries to the detailed study of individual industries backed by a theoretical framework. This reflects the belief that industries have important idiosyncrasies, and that empirical regularities can be understood only in the context of a well-specified theoretical model. The range of topics studied includes the determinants of price-cost margins and numbers of entrants, the formation and enforcement of collusive arrangements, the dynamics of entry and exit, and the testing of auction theory and models in information economics. The workshop draws participation from internal faculty members as well as invited speakers from other universities. Topics that have been recently discussed in the workshop include studies of discrete choice models and hedonics, auction theory and empirics, asymmetric information, vertical integration and franchising.

International Economics

International economics is divided into the real side and monetary side. The real side considers the causes and consequences of international trade and of policies that alter trade patterns. A variety of both general equilibrium and partial equilibrium models featuring selected distortions to various competitive norms are used to explore these issues, and empirical evidence relating to the theories is also emphasized. Recent work analyzes theoretical and empirical investigations of trade and factor movements in the presence of firm-level heterogeneity, dynamics, uncertainty, endogenous government policy reaction, strategic interaction across governments and firms, and the design and purpose of international trade agreements. Economics 871 introduces students to the core of the real side of international economics.

The monetary side of international economics includes the theory of open-economy macroeconomics and the theory of international financial markets. Open-economy macro-economic theory devotes attention to exchange rate determination and real and financial interaction among open economies. It treats traditional and current analytical approaches to understanding the macroeconomic consequences of monetary policy, fiscal policy, and policy coordination across borders; international capital mobility and default; economic growth; and, optimal portfolio choices. Economics 872 is the monetary-side analogue to the real-side course 871.

Economics 899 covers advanced topics and treatments in international economics, and its specific content depends on the instructor teaching it.

The weekly international economics workshop, 977/978 is an integral part of the program, in which both faculty and advanced graduate students actively participate.

Labor Economics

Labor economics has a long and distinguished history of scholarly research and the application of this research to policy issues. Wisconsin has traditionally been an important center for this work. Students majoring in this field are expected to (eventually) understand relevant institutional features of labor markets, sources of data and econometric techniques needed to draw inferences from these data, and the models of rational economic behavior needed to organize coherent economic thinking about labor markets.

The core material deals with labor supply decisions made by rational households, labor demand decisions made by profit-maximizing firms, and the equilibrium wage differentials and employment patterns implied by these decisions when markets are competitive. Applications include the analysis of wage differentials, life-cycle age-earnings profiles, and returns to human capital investments. Further topics, emphasizing deviations from the competitive ideal, include incentive schemes, discrimination, bargaining between workers and employers to divide monopoly rents, search and unemployment.

There are two required courses for the labor major, Economics 750 and 751, usually taken in the second year of the program. Both theoretical and empirical research is emphasized in these courses, and students begin work on a research paper that will help lay the foundation for dissertation research. These courses are supplemented by an active workshop program featuring speakers from various universities and research centers (including Wisconsin).

Labor economics is complemented by several research institutes connected with the department. These institutes are often a source for research assistantship positions and support for dissertation research for labor majors.

Macroeconomics and Monetary Economics

Macroeconomics and monetary economics at Wisconsin emphasizes research on dynamic stochastic environments, as these seem central to understanding basic macro problems like growth, business cycles, and income distribution. The graduate program in macroeconomics and monetary economics equips students to conduct research in this lively and rapidly changing field through a variety of advanced courses. The course selection varies from year to year, but typically it includes at least one course emphasizing macroeconomic theory and one course emphasizing empirical methods in macroeconomics. In recent years, the field has offered courses in 1) growth economics, which discusses recent advances in our understanding of the basic factors affecting long run levels of wellbeing, 2) monetary and financial theory, which provides conceptual foundations for understanding financial market equilibria as well as the effects of alternative monetary policies, and 3) economies with incomplete markets and heterogeneous agents, with an emphasis on both the development of theories as well as empirical tools studying complex environments, 4) policy evaluation, which considers the relationship between decision theory, econometrics and the assessment of alternative government policies.

In addition to the courses offered in the department (in general up to five per year), the field recognizes courses taken outside the department (e.g., mathematics courses for those interested in theory, probability and statistics, and courses for students planning to work on empirical topics) as well as other fields.

Students are required to participate in the weekly macro workshop. Students are encouraged to present their own research in this seminar. In addition, depending on demand, the field organizes a brown bag seminar designed to encourage students to present research at an early stage, and individual faculty members regularly form reading groups to discuss tightly focused bodies of state of the art research to help facilitate the development of dissertation ideas.

Microeconomic Theory

Microeconomic theory is a broad area that examines foundational issues in economic modeling and provides tools for applied economic research. The field includes partial and general equilibrium theory, game theory, the economics of incentives and information, and decision theory. Students often find it helpful to take courses in the microeconomics field to acquire the technical skills required to do rigorous applied work. Advanced courses in microeconomics offered by the Economics Department change as the frontiers of the subject and the interests of the faculty evolve.

Public Economics

Public economics is the study of the government's role in the economy, particularly through tax and expenditure policy. Wisconsin has a long and distinguished tradition of teaching and research in public economics. Scholars in public economics examine a wide range of issues. Research by members of the Wisconsin public economics faculty examines, for example, the behavioral effects of taxation social insurance, savings, altruism, anti-poverty policy, education, peer effects, income distribution, and issues in health economics.

There are two required courses for the public economics field, Economics 741 and 742. These courses examine theoretical and empirical methods in the field. Specific topics will vary across years, but the sequence will typically cover optimal taxation; the effects of taxation on various aspects of household behavior, such as labor supply, consumption and saving, charitable giving, and household portfolio behavior; social insurance—insurance provided by the government for longevity risk, work-related injuries, unemployed, and disability; fiscal federalism, local public finance, and the provision of public goods; and the rationale and effectiveness of government efforts to ameliorate poverty. The two-course sequence will also typically address topics of active research interest in the field, in broad areas of education and health policy, for example. Like other fields of concentration at Wisconsin, in their second year, students begin work on a research paper. The public economics field also holds an active seminar series featuring invited guests from various universities and research centers (including Wisconsin).

There are many resources across campus that may be of interest to students writing dissertations in public economics. The Institute for Research on Poverty (IRP) has a graduate student fellows program where students receive interdisciplinary training in poverty-related research. Public faculty and students also participate in the Interdisciplinary Training Program in the Education Sciences (ITP). For students interested in health economics, the health economics program within the public economics group annually supports several graduate trainees with a grant from the National Institute of Mental Health. The program is open to students in any field. Special course offerings in health economics include a lecture course and a research seminar. The research seminar explores a particular topic each semester and students (individually or in small groups) conduct original research.

Placement 

The department has a well-organized placement service. Each year a faculty member functions as the placement officer. He or she is assisted by the placement secretary who coordinates the sending of resumes and letters of recommendation, makes available job vacancy information, and offers general guidance. Each job market candidate gives a regular faculty research seminar on his or her primary research paper; in addition to the placement officer these seminars are typically widely attended by faculty and students and provide a rigorous "test run" for the job market paper. To prepare for the job market convention of the American Economic Association, all students are given mock "job market interviews" by faculty members. Students also receive extensive help from their primary advisor, who in addition to providing general counsel during the process of job search, often is instrumental in contacting colleagues at other universities, or in bringing the student to the attention of the vast network of former Wisconsin Ph.D.'s employed in universities, colleges, government, and the private sector. Students also benefit from the fact that many government agencies, including the Board of Governors, the World Bank, the International Monetary Fund, and several Federal Reserve banks often actively recruit on campus. Finally, Wisconsin students typically self-organize additional presentations of job market papers, providing one another additional opportunities for practice.

Graduates generally seek and accept research positions in academia, though some sometimes gain employment with international organizations, government, or private consulting firms. Between 2004 and 2011, placements at U.S. universities have included positions as assistant professors at Yale University, Northwestern University, University of California at Berkeley, University of Michigan, University of Pennsylvania, University of California-San Diego, Washington University in St. Louis, University of Florida, University of California-Santa Cruz, Tufts University, and the University of Virginia. Placements at non–U.S. universities have included London School of Economics, McMaster University, University of British Columbia, National Taiwan University, and Tsinghua University. Students who prefer nonacademic employment have accepted positions at institutions including the Federal Reserve Board of Governors, the International Monetary Fund, the Congressional Budget Office, US Treasury Department, the Korea Development Institute, Bates White Consulting, Abt Associates, and Mathematica Policy Research Institute. 

Financial Aid 

To receive full consideration for financial aid, the application form must be paid and transcripts must be received by December 5.

All applications for admission to the Department of Economics will be considered for departmental financial support if application materials are received by this date. The department offers a limited number of financial support packages for the first year of study to incoming students with outstanding records. These packages guarantee support for four years of study and take the form of fellowship, teaching assistantship, research assistantship, or a combination of the three.

Students admitted to the program without a guarantee of funding for the first year of study will receive funding during years two through four as long as they are making satisfactory academic progress. In recent semesters, students in year five have also received funding. All continuing support is based on the condition that a student is making good progress in the program.

Admission 

Applications received after February 1 will not be processed by the department.

Admission requirements include a bachelor's degree, plus three semesters of calculus, a semester of linear algebra, and a semester of mathematical statistics, which must be completed before entering the program. Mathematics preparation should include multivariate calculus, elementary probability, and regression analysis. Applicants must submit three letters of recommendation and Graduate Record Exam (GRE) scores.

For more information: Graduate Program Office, Department of Economics, 7235/7239 Social Science Building, 1180 Observatory Drive, Madison, WI 53706; 608-262-3285 or 608-262-3559; gradpro@ssc.wisc.edu; www.ssc.wisc.edu/econ/grad.