Department of Accounting, Taxation, and Business Law



Annual Report: Department of Economics

Revised: May 8, 2007

David Backus

The Dean’s Office has asked department chairs to draft Annual Reports for discussion at the annual leadership retreat. I drafted this report with the input and insights of my colleagues in economics – and a few outside the department, too.

Executive summary

The department has improved dramatically over the last 10-20 years and is now highly regarded among economists at top business schools and arts and science economics departments. It has three areas of focus, each of which has a strong external reputation: (i) microeconomics, (ii) macroeconomics, and (iii) economic and financial history. These areas of interest and expertise support contributions to all of Stern’s educational programs.

The faculty

As of Spring 2007, the department consists of 30 fulltime faculty members: 15 professors, no associate professors, 10 assistant professors, and 5 teaching faculty. See Exhibit 1. This head count includes an unusually large number of special appointments: Baumol is director of the Berkley Center, Lincoln is director of the Japan Center, Sargent is a joint appointment with FAS, Radner is a joint appointment with IOMS, and Srivatsan does much of his teaching for Management. The department is also well represented in administrative roles: Cooley is dean, Pugel is director of the Langone program and CITL, Yeung is director of the GBI and NYU’s China House.

Intellectual communities

The department’s strategy has been to build intellectual strength in three related areas of research, which then serve as a basis for educational programs. By focusing on a small number of research areas, we maximize the externalities across people and increase the department’s external visibility. Accordingly, the department revolves around three intellectual communities:

• Microeconomics, including industrial organization and strategy;

• Macroeconomics, including international economics and growth; and

• Economic and financial history.

In each of these areas, department members (and others) attend seminars and workshops together, write papers together, supervise PhD students together, and even develop teaching materials together. In the macroeconomics community, for example, faculty and PhD students from Stern economics and finance join with colleagues from FAS economics for an informal workshop at lunch-time on Thursday and a more formal seminar later the same day. Microeconomics has developed a similar model, with a formal seminar on Tuesday and an informal workshop on Friday. History is smaller, but runs a bi-weekly workshop that’s attended by faculty and PhD students from a broad cross-section of the university.

External comparisons

How do we know we’ve gotten better? There are no obvious simple benchmarks. Business school rankings do not include economics, and business schools incorporate economists into a variety of departments. At Columbia, for example, economics and finance are in the same department. At Wharton, macroeconomists are included in the finance department and microeconomists (for the most part) in management. Moreover, many outsiders do not distinguish between FAS and Stern economics – not such a bad thing overall, but a fact of life nonetheless. There are, however, some clear signals that the department is now highly regarded by people in the field:

• The market test. New members of the department increasingly choose us over high-quality competitors (not always, but often enough) and current members often find interest from good economics groups elsewhere. From a senior prospect who chose to remain at Stanford GSB: you have a great group of junior faculty, you may find it difficult to keep them.

• PhD placements. For a small program, our placements this past year were exceptional. In the economics profession, it reinforces our reputation for having a good research environment.

Other thoughts welcome. We’d love to have some simple metrics of quality, but none have occurred to us to date.

Teaching

The members of the department now contribute to all of Stern’s educational programs: undergraduate, MBA, and PhD. Most of these contributions are in core courses, but there are a small number of very successful electives. The department also contributes (more than most, I’d guess) to teaching needs elsewhere in the school: EMT, statistics, strategy.

UG. For several decades, the department played little role in the undergraduate program, which by long-standing agreement used the faculty of arts and science to deliver economics courses. This has changed over the last 10 years as, first, the international business course has evolved into a mainstream international economics course (now called Economics of Global Business) and, second, the school has “in-sourced” the economics principles course (Microeconomics) from arts and science. We also contribute to the International Study Program.

MBA. The full-time, Langone, and executive MBA programs all include core courses in microeconomics (Firms and Markets) and macroeconomics (Global Economy). We also deliver some high-volume electives that get consistently high ratings: Adam’s Game Theory and Nouriel’s International Macroeconomics are leading examples.

PhD. The PhD program had a banner year that we think reflects our ability to integrate PhD students into the intellectual activities of the department. One student had an offer from Chicago econ, he and another took jobs at Columbia GSB, two others took jobs at Rochester GSB, and another took a job at Brandeis. Sargent and Yeung deserve special mention, but this has really been a team effort.

Challenges

1. Retention. As the department improves, we are increasingly forced to deal with poaching. We lost two a year ago, and expect to see continued competition for our best people.

2. Age distribution. We have no associate professors.

3. Adjuncts. Our current team is thin – we need to develop a stronger bench.

Contributions to the strategic plan

The plan suggests we should do a small number of things that have high impact. We think decisions on what those things are should be made by the Dean’s Office, but thought we’d throw out a few ideas for further discussion.

1. Business speakers. Many of our core courses present opportunities for speakers from the business community. We could explore the possibility of 1-2 per class in sessions where their input would complement the content. Since it’s in the core, it would potentially have high impact, since all students would get the benefit of a unique mix of high academic quality and access to the business community. Some of us already do this, but it would have a bigger impact if we did it across the board.

2. Public events. We might think about organizing some kind of economics event once a year. On the macro side, Chicago runs an annual forecasting event that attracts students, alums, and experts from the business community to talk about their perspective on the coming year. Could we do something similar? Get a corporate sponsor? Join forces with the Salomon Center? GBI? There might be similar opportunities on the micro side, perhaps together with the law school.

3. Public intellectual. If the fit is right, the school might benefit from the appointment of a public intellectual, either in economics or elsewhere. Niall Ferguson, for example.

4. Use business contacts for research. Esp in micro, access to business data can be an important input to good research.

Exhibit 1. Members of the Stern Economics Faculty

a) Numbers by category

|Title |Number |

|Professors |17 |

|Associate professors |0 |

|Assistant professors |10 |

|Teaching appointments |5 |

|Total |32 |

b) List of individuals

|Faculty member |Title |

|Backus |Professor |

|Baumol |Professor |

|Brandenburger |Professor |

|Cabral |Professor |

|Cooley |Professor |

|Economides |Professor |

|Greene |Professor |

|Katz |Professor |

|Pugel |Professor |

|Radner |Professor |

|Roubini |Professor |

|Sargent |Professor |

|Sylla |Professor |

|Wachtel |Professor |

|Walter |Professor |

|White |Professor |

|Yeung |Professor |

|Asker |Assistant |

|Baccara |Assistant |

|Bar-Isaac |Assistant |

|Clementi |Assistant |

|Collard-Wexler |Assistant |

|De Loecker |Assistant |

|Edmond |Assistant |

|Esponda |Assistant |

|Skreta |Assistant |

|Veldkamp |Assistant |

|Foudy |Clinical |

|Lincoln |Clinical |

|Smith |Clinical |

|Srivatsan |Clinical |

|Wright |Clinical |

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