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Exam Questions M.I.T. Suggested Reading Syllabus

M.I.T. National Income and Employment Theory. Readings and Final Exam. Domar, 1960-61

 

 

For this post I have transcribed Evsey Domar’s graduate core macroeconomics course outline/reading list along with the questions for the final examination from the first term of the 1960-61 academic year at M.I.T. Students from both course XIV (economics) and XV (management) took this course.

Note: Evsey Domar distributed a questionnaire to the students to obtain feedback on his course.  The next post provides the results from that survey. It is fairly apparent that Domar did not cover the last topic on the course reading list (economic growth).

Final exam grade distribution (50 exams)

A 16%
A- 12%
B+ 10%
B 20%
B- 14%
C 18%
D 8%
F 2%

Fun Fact. Among the students enrolled in the course and who took the final examination: Michael D. Intriligator, Peter A. Diamond, Ann Fetter Friedlaender, and Stephen Goldfeld.

The much expanded course reading list/bibliography and  both the midterm and final examinations from the 1965-66 academic year have been posted earlier.

_________________________

MASSACHUSETTS INSTITUTE OF TECHNOLOGY

THEORY OF NATIONAL INCOME AND EMPLOYMENT
14.451 Reading List
E. D. Domar Fall Term 1960-61

The purpose of this list is to suggest to the student the sources in which the more important topics of the course are discussed from several points of view. His objectives should be the understanding of these topics and not the memorization of opinions and details.

Items marked with an * are strongly recommended. (I don’t like to use the expression “required” in a graduate reading list.)

No term paper will be required, but each student is expected, in addition to his general reading, to choose one of the eight major divisions of the course (except that Part VIII should not be taken without prior consultation with the instructor) as a field of concentration. A part of the final examination will be designed to test his broader knowledge of the chosen field.

 

I. NATIONAL INCOME AND RELATED ITEMS

*Kuznets, S., National Income and Its Composition, (New York, 1941), particularly Vol. 1, Chapter 1

*Jaszi, G., “The Statistical Foundations of the GNP,” Review of Economics and Statistics, Vol. 38, 1956)
Ruggles, R. and N., National Income Accounts and Income Analysis (New York, 1956)

*U.S. Department of Commerce, U. S. Income and Output, A Supplement to the Survey of Current Business, 1958

*National Bureau of Economic Research, The National Economic Accounts of the United States, Review, Appraisal and Recommendations, General Series 64, Washington, 1958

Ruggles, “The U.S. National Accounts,” American Economic Review, March, 1959
Organization for European Economic Co-operation, A Standardised System of National Accounts, Paris, 1952

Gilbert, M. and I. B. Kravis, An International Comparison of National Products and the Purchasing Power of Currencies, A Study of the United States, the United Kingdom, France, Germany and Italy, Organization for European Economic Cooperation, Paris, 1954

Nove, A., “The United States National Income A La Russe,” Economica, Vol. 23, 1956

Gilbert, M., Comparative National Products and Price Levels, A Study of Western Europe and the United States, Organization of European Economic Cooperation, Paris, 1958

*Leontief, W. W., “Output, Employment, Consumption and Investment,” Quarterly Journal of Economics, Feb., 1944

Leontief, W. W. The Structure of American Economy (New York, 1951)

*Dorfman, R., “The Nature and Significance of Input-Output,” Review of Economics and Statistics, Vol. 36, 1954

Stewart, I. G., “The Practical Uses of Input-Output Analysis,” Scottish Journal of Political Economy, Vol. 5, (Feb. 1958)

Dosser, D. and A. T. Peacock, “Input-Output Analysis in an Under-Developed Country: A Case Study,” Review of Economic Studies, Vol. 25, Oct. 1957

*Sigel, S. J., “A Comparison of the Structures of Three Social Accounting Systems,” National Bureau of Economic Research, Input-Output Analysis: An Appraisal, The Conference on Research in Income and Wealth, Studies in Income and Wealth, Vol. 18, pp. 253-89

Board of Governors of the Federal Reserve System, Flow of Funds in the United States 1939-53 (Washington, D. C., 1955)

 

II. GENERAL AGGREGATIVE SYSTEM

Students without prior training in this field are advised to study D. Dillard, The Economics of John Maynard Keynes (New York, 1948), A. H. Hansen, A Guide to Keynes (New York, 1953), or K. Kurihara, Introduction to Keynesian Dynamics (New York, 1956).

*Keynes, J. M., The General Theory of Employment, Interest and Money (New York, 1936)

*American Economic Association, Readings in Business Cycle Theory (Philadelphia, 1944), Essays 5, 7

Harris, S. E., The New Economics (New York, 1947), essays 8-19, 31-33, 38-46.

*Lerner, A. P., Economics of Control (New York, 1944), chapters 21-23, 25

*Kurihara, K. K., Post Keynesian Economics (New Brunswick, N. J., 1954), essays 1, 11*

*American Economic Association, Readings in the Theory of Income Distribution (Philadelphia, 1946), essay 24

Klein, L. R., The Keynesian Revolution, (New York, 1947), chapters 3-5.

Ellis, H. S., A Survey of Contemporary Economics (Philadelphia, 1948), Vol. 1, chapter 2

*Income, Employment and Public Policy, Essays in Honor of Alvin H. Hansen (New York, 1948), essay I

*Burns, A. F., “Economic Research and the Keynesian Thinking of Our Times,” in his The Frontiers of Economic Knowledge, (Princeton, 1954), or in the Twenty-Sixth Annual Report of the National Bureau of Economic Research, Inc. (New York, 1946). See also the discussion by Hansen and Burns in the Review of Economic Statistics, November, 1947

Dillard, D., “The Influence of Keynesian Economics on Contemporary Thought,” American Economic Review, Papers and Proceedings, 1957

Patinkin, D., Money, Interest, and Prices (Evanston, Ill., 1956).

 

III. THEORY OF INTEREST

Readings in the Theory of Income Distribution, essays 22, 23, 26

*Hicks, J. R., Value and Capital (Oxford, 1957), Chapters 11-12

Readings in Monetary Theory, essays 6, 11, 15

*Gurley, J. G., and E. S. Shaw, “Financial Aspects of Economic Development,” American Economic Review, September, 1955)

Hart, A. G., Money, Debt and Economic Activity, Second Ed., (New York, 1953)

Patinkin, D., “Liquidity Preference and Loanable Funds: Stock and Flow Analysis,” Economica, Vol. 25, November, 1958

Patinkin, D., Money, Interest, and Prices (Evanston, Ill., 1956).

*Lydall, H., “Income, Assets, and the Demand for Money,” Review of Economics and Statistics, Vol. 40, Feb. 1958

Lutz, F. A., “The Interest Rate and Investment in a Dynamic Economy,” American Economic Review, Dec. 1945

See also Section VI — INVESTMENT DECISIONS

 

IV. CONSUMPTION FUNCTION

*Duesenberry, J. S., Income, Saving, and the Theory of Consumer Behavior (Cambridge, Massachusetts, 1949)

Haley, B. F., A Survey of Contemporary Economics (Homewood, Illinois, 1952), Vol. II, essay 2

Davis, T. E., “The Consumption Function as a Tool of Prediction,” The Review of Economics and Statistics, August 1952

Heller, W. W., Boddy, F. M., and C. L. Nelson, Savings in the Modern Economy, a Symposium (Minneapolis, 1953)

*Friend, I., and S. Schor, “Who Saves?,” The Review of Economics and Statistics, Vol. 41, May, 1959, Part 2

*Friend, I., and I. B. Kravis, “Entrepreneurial Income, Saving and Investment,”American Economic Review, June, 1957, pp. 269-301

Zellner, Arnold, “The Short-Run Consumption Function,” Econometrica, (Oct. 1957

*Ferber, R., “The Accuracy of Aggregate Savings Functions in the Post-War Years,” Review of Economics and Statistics, Vol. 37, May, 1955

*Tobin, J., “On the Predictive Value of Consumer Intentions and Attitudes,” The Review of Economics and Statistics, Vol. 41, Feb., 1959

Dennison, E. F., “A Note on Private Saving,” Review of Economics and Statistics, August, 1958
Post-Keynesian Economics, essay 15

Friedman, M., A Theory of the Consumption Function (Princeton, N. J., 1957)

Friedman, M., and G. Becker, “A Statistical Illusion in Judging Keynesian Models,” Journal of Political Economy, Vol. 65, Feb., 1957

Klein, L. R., “The Friedman-Becker Illusion,” Journal of Political Economy, Vol. 66, Dec., 1958

Morgan, J. N., Consumer Economics (New York, 1955)

Katona, G., and E. Mueller, Consumer Expectations 1953-56 (Ann Arbor, Michigan, 1956)

Klein, L. R., ed., Contributions of Survey Methods to Economics (New York, 1954)

 

V. MULTIPLIER AND ACCELERATOR

*Kahn, R. F., “The Relation of Home Investment to Unemployment,” Economic Journal, 1931. Republished in Hansen and Clemence, Readings in Business Cycles and National Income (New York, 1953), essay 15

*Readings in Business Cycle Theory, essays 11-12

*Haavelmo, T., “Multiplier Effects of a Balanced Budget,” Econometrica, 1945; reprinted in Readings in Fiscal Policy, pp. 335-343

*Salant, William A., “Taxes, Income Determination, and the Balanced Budget Theorem,” The Review of Economics and Statistics, May, 1957

Peston, M. H., “Generalizing the Balanced Budget Multiplier,” and “Comment” by W. A. Salant, The Review of Economics and Statistics, August, 1958

Bowen, W. G., “The Balanced-Budget Multiplier: A Suggestion for a More General Formulation,” The Review of Economics and Statistics, May, 1957

*Kuznets, S., “Relation Between Capital Goods and Finished Products in the Business Cycle,” in Economic Essays in Honor of Wesley Clair Mitchell, (New York, 1935)

*Knox, A. D. “The Acceleration Principle and the Theory of Investment: A Survey,” Economica, Vol. 19, 1952

*Tsiang, S. C., “Accelerator, Theory of the Firm, and the Business Cycle,” Quarterly Journal of Economics, Vol. 65, 1951

*Tinbergen, “Statistical Evidence on the Acceleration Principle,” Economica, Vol. 5, 1938

Harrod, R. F., Towards a Dynamic Economics (London, 1948)

Hicks, J. R., A Contribution to the Theory of the Trade Cycle (Oxford, 1950)

Goodwin, R. M., “Problems of Trend and Cycle,” Yorkshire Bulletin, Vol. 5, August, 1953

Ott, A. E., “The Relation Between the Accelerator and the Capital Output Ratio,” Review of Economic Studies, Vol. 25, June, 1958

Minsky, H., “Monetary Systems and Accelerator Models,” American Economic Review, Vol. 47, 1957

See also VI — INVESTMENT DECISIONS.

 

VI. INVESTMENT DECISIONS

Lutz, F. A., and V., The Theory of Investment of the Firm (Princeton, 1951)

*Heller, W. W., “The Anatomy of Investment Decisions,” Harvard Business Review, March, 1951, pp. 95-103

*Pitchford, J. D. and A. J. Hagger, “A Note on the Marginal Efficiency of Capital,” The Economic Journal, Vol. 48, 1958

*Meade, J. E., and P. W. S. Andrews, “Summary of Replies to Questions on Effects of Interest Rates,” and “Further Inquiry into the Effects of Rates of Interest,” Oxford Economic Papers, No. 1, 1938 and No. 3, 1940

*Ebersole, J. F., “The Influence of Interest Rates,” Harvard Business Review, Vol. 17, 1938, pp. 35-39

*Henderson, H. D., “The Significance of the Rate of Interest,” Oxford Economic Papers, October, 1938, pp. 1-13

Andrews, P. W. S., “Further Inquiry into the Effects of Rates of Interest,” Oxford Economic Papers, Feb., 1940, pp. 32-73

Sayers, R. S., “Business Men and the Terms of Borrowing,” Oxford Economic Papers, Feb., 1940, pp. 23-31

*White, W. H., “Interest Inelasticity of Investment Demand—The Case from Business Attitude Surveys Re-examined,” American Economic Review, Sept. 1956, pp. 565-587

Brockie, M. D., and A. L. Gray, “The Marginal Efficiency of Capital and Investment Programming,” Economic Journal, Vol. 46, December, 1956

White, W. H., “The Rate of Interest, the Marginal Efficiency of Capital, and Investment Programming,” Economic Journal, Vol. 48, March, 1958

Grey, A. L., and M. D. Brockie, “The Rate of Interest, Marginal Efficiency of Capital and Net Investment Programming: A Rejoinder,” Economic Journal, June, 1959

Spiro, A., “Empirical Research and the Rate of Interest,” Review of Economics and Statistics, Vol. 40 (February, 1958).

*Duesenberry, J., Business Cycles and Economic Growth (New York, 1958), Chapters 1-8

Meyer, John R., and Edwin Kuh, The Investment Decision (Cambridge, Mass., 1957)

Cunningham, N. J., “Business Investment and the Marginal Cost of Funds,” Metroeconomica, Vol. 10, August, 1958

Cunningham, N. J., “Business Investment and the Marginal Cost of Funds,” Part II, Metroeconomica, Dec., 1958

Wilson, T., “Cyclical and Autonomous Inducements to Invest,” Oxford Economic Papers, Vol. 5, 1953

Hirschleifer, J., “On the Theory of Optimal Investment Decision,” The Journal of Political Economy, Vol. 66, Aug., 1958

Lydall, H. F., “The Impact of the Credit Squeeze on Small and Medium Sized Manufacturing Firms,” Economic Journal, Vol. 47, Sept., 1957

*Penrose, E., “Limits to the Growth and Size of Firms,” American Economic Review Papers and Proceedings, May 1955, pp. 531-43

Friend, I., and J. Bronfenbrenner, “Business Investment Programs and Their Realization,” Survey of Current Business, December, 1950

*Foss, M. F., and V. Natrella, “Ten Years’ Experience with Business Investment Anticipations,” Survey of Current Business, January, 1957

*Foss, M. F., and V. Natrella, “Investment Plans and Realizations—Reasons for Differences in Individual Cases,” Survey of Current Business, June, 1957

See also III—THEORY OF INTEREST and V—MULTIPLIER AND ACCELERATOR

 

VII. PRICE FLEXIBILITY AND EMPLOYMENT

*Pigou, A. C., “The Classical Stationary State,” Economic Journal, Dec., 1943

*Lange, O., Price Flexibility and Employment (Bloomington, Indiana, 1944)

*Friedman, M., “Lange on Price Flexibility and Employment,” American Economic Review, Sept., 1946

Readings in Monetary Theory, Essay 13

Schelling, T. C., “The Dynamics of Price Flexibility,” American Economic Review, Sept. 1949

Patinkin, D., Money, Interest, and Prices (Evanston, Illinois, 1956)

Hicks, J. R., “A Rehabilitation of ‘Classical Economics’,” Economic Journal, Vol. 47, June, 1957

*Power, J. H., “Price Expectations, Money Illusion and the Real Balance Effect,” Journal of Political Economy, Vol. 67, April, 1959

*Mayer, T., “The Empirical Significance of the Real Balance Effect,” Quarterly Journal of Economics, Vol. 73, May, 1959

 

VIII. THEORY OF GROWTH

*Domar, E. D., Essays in the Theory of Economic Growth (New York, 1957), Foreword, Essays I, III-V

Fellner, W., Trends and Cycles I Economic Activity, (New York,1956)

Hansen, A. H., Fiscal Policy and Business Cycles (New York, 1941)

*Harrod, R. F., Towards a Dynamic Economics (London, 1948), Part III

Leontief, W. W., Studies in the Structure of the American Economy, (New York, 1953)

Robinson, J., The Accumulation of Capital, (London, 1956)

*Kuznets, Simon, “Towards a Theory of Economic Growth,” R. Leckachman, ed., National Policy for Economic Welfare at Home and Abroad, (New York, 1955)

*Solow, R. M., “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics, Feb. 1956, pp. 65-94

*Solow, R. M., “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics, August, 1957, pp. 312-320

 

Source:  Duke University, David M. Rubenstein Library. Economists’ Papers Archives. Papers of Evsey D. Domar, Box 15, Folder “Macroeconomics, Old Reading Lists”.

 

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Economics 14-451
E. D. Domar

FINAL EXAMINATION—Three Hours
January 24, 1961

Please use a separate book for each question.

 

Part I—One Hour

Write an essay in the field of your concentration as instructed in class. Please be specific.

 

Part II—Two Hours

Answer the THREE questions which are furthest removed from the topic discussed in Part I. They carry equal weights.

  1. “Thus the rate of interest is what it is because it is expected to become other than it is: if it is not expected to become other than it is, there is nothing left to tell us what it is…”
    1. Can you identify the author of this famous statement?
    2. Can you recognize whose interest theory he referred to?
    3. Explain and evaluate that theory critically.
    4. Present your own (original or otherwise) theory of interest.
  2. Write an essay on the subject of “The treatment of intermediate products in:
    1. National Income and Product Accounting
    2. Input-output method
    3. Flow-of Funds system
    4. Federal reserve Index of Industrial Production.” (Don’t panic if you can’t do (d), but if you can you’ll get a premium.
      Hint: there is more in this question, and particularly in part (a) than meets the eye. Consider the whole rationale of the methods.
  3. Write a comprehensive essay on the subject of “The Rationale of Investment Decisions.” Consider as many cases as you can, but in each case specify clearly the assumptions made. (Don’t forget to include an undeveloped country case.) Can you generalize?
  4. Write a comprehensive and critical essay on the subject of “Price Flexibility and Employment.” Survey the relevant literature beginning with Keynes’ General Theory, and indicate clearly the nature of the assumptions, the definition of the concepts (hint: money), and the essence of the conclusions. What practical recommendations follow from your discussion?

 

Source: Duke University, David M. Rubenstein Library. Economists’ Papers Archives. Papers of Evsey D. Domar, Box 16, Folder “Macroeconomics, Final Exams”.

Image Source: Evsey D. Domar photo at the M.I.T. Museum website.

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Economists Exam Questions M.I.T. Suggested Reading Syllabus

MIT. Robert Solow’s Advanced Economic Theory Course, 1962

Robert Solow taught the course Advanced Economic Theory at MIT in the Spring of the 1961/62 academic year. Of the dozen graduate students who took the course for credit were a future Nobel prize winner (Peter Diamond), a future Princeton professor and later member of Jimmy Carter’s Council of Economic Advisers (Stephen Goldfeld), a future professor at University of Pennsylvania/Washington University (Robert Pollak), a future professor and later chairman of Hebrew University (David Levhari), and a professor of economics and the first woman to head an MIT academic department, economics! 1984-1990 and MIT’s first female academic dean, School of Humanities and Social Science (Ann Friedlaender).

The three A’s awarded in the course went to Diamond, Levhari and Goldfeld.

The comprehensive exam questions for advanced economic theory from May 1962 were transcribed in the previous post.

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14.123—Advanced Economic Theory
Spring 1962—Professor Solow

FIRST READING LIST: LINEAR PROGRAMMING AND RELATED SUBJECTS

This should occupy 6-9 weeks. Most of the reading is in Gale: The Theory of Linear Economic Models and Dorfman, Samuelson, Solow: Linear Programming and Econmic Analysis, referred to below as G and D respectively.

  1. Mathematical background: I hope to avoid spending any time on this. Mainly elements of matrix algebra—14.102 should be enough. For review, see D (Appendix B) and G (Ch. 2, more difficult).
  2. Elements of Linear Programming; D (Ch. 2,3), G (Ch. 1,3).
  3. Algebra and Geometry of Linear Programming, Simplex Method; D (Ch. 4, Sec. 1-11), G (Ch. 4).
  4. Applications; D (Ch. 5-7), Manne: Economic Analysis for Business Decisions (Ch. 4,5).
  5. Two-person zero-sum games; D (Ch. 15), G (Ch. 6,7).
  6. Leontief and similar systems; G (Ch. 8, 9 Sec. 1-3), D (Ch. 9, 10).
  7. Activity analysis; G (Ch. 9, Sec. 4), Koopmans: Three Essays on the State of Economic Science (pp. 66-104).
  8. Von Neumann’s model; D (Ch. 13, Sec. 6), G (Ch. 9, Sec. 5-7).
  9. Sraffa: Production of Commodities by Means of Commodities.
    Robinson: “Prelude to a Critique of Economic Theory”, Oxford Economic Papers, February 1961, 53-58.
  10. If time permits, the turnpike theorem; D (Ch. 12), Hicks: “Prices and the Turnpike”, Review of Economic Studies, February 1961, 77-88.
    Radner: “Paths of Economic Growth that are Optimal, etc.”, Review of Economic Studies, February 1961, 98-104.

(Further references may follow.)

 

SECOND READING LIST: PUBLIC INVESTMENT CRITERIA

  1. Hirshleifer: “On the Theory of Optimal Investment Decision”, Journal of Political Economy, August 1958, pp. 329-352.
  2. Graaff: Theoretical Welfare Economics, Chs. 6-8.
  3. Eckstein: “A Survey of the Theory of Public Expenditure Criteria”, in Public Finances: Needs, Sources and Utilization, with “Comments” by Hirshleifer.
  4. Margolis: “The Economic Evaluation of Federal Water Resource Development”, AER, March 1959, pp. 96-111.
  5. Steiner: “Choosing Among Alternative Public Investments”, AER, Dec. 1959, pp. 898-916.
  6. Maass, al.: Design of Water-Resource Systems, Chs. 2, 13 (and passim).
  7. Eckstein: Water Resource Development, Ch. 1-4.

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April 11, 1962

14.123—Exam

Answer all questions.

  1. A function f of vectors x,y,… is called subadditive if f(x+y) ≤ f(x) + f(y) for all vectors x, y, and called superadditive if the inequality is reversed.
    Consider the LP problem of maximizing C′x subject to Ax ≤ b. The value of the maximum is a function of C, b, and A. Show that it is a subadditive function of C and a superadditive function of b.
  2. A firm can produce n commodities with a linear technology involving one activity for each commodity. Production involves only fixed factors, m in number, m<n, of which specified amounts are available. The output is sold at market prices p, and the firm chooses non-negative vector x of outputs to maximize p′x subject to the fixed-factor limitations.
    (a) Prove that the supply curve is not negatively sloped; that is, prove that if p1 increases, other prices constant, the optimal x1 must increase or remain unchanged, but cannot decrease. (Hint: a straightforward procedure is to consider closely the final simplex tableau, the signs of various elements, and what can happen to require further iteration if p1 There is a much simpler proof, comparing the before-and-after optima.)
    (b) State and interpret the dual to the theorem just proved.
  3. Consider a simple linear model of production, with 2 goods, and with 2 fixed factors, land and labor, available in specified amounts.
    (a) Sketch possible shapes for the set of feasible net outputs, or net production-possibility curve.
    (b) Suppose demand conditions are such that consumption expenditures on the two commodities are always equal. Give a complete analysis of the determination of the prices of the two goods and also the rent of land and the wage of labor. Graphical methods will help. (Hint: at one key point the construction of an isosceles triangle is very useful.)

 

Source: Duke University. Rosenstein Library. Robert M. Solow Papers, Box 67, Folder “14.123 Final Exam Fall-1969[sic|”.

Image Source: Robert Merton Solow at the M.I.T. Museum website.

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Economists M.I.T.

MIT. Suggestions for New Fields. Domar, Kuh, Solow, Adelman, 1967

The following set of memoranda from the MIT economics department is found in a folder marked “Correspondence: Peter Temin” in Evsey Domar’s papers. The bulk of the material in the folder are letters of support that Domar solicited for the committee he chaired (which consisted of Domar, Charles Kindleberger and Frank Fisher) to review Peter Temin for tenure. It thus appears that Domar’s proposal to strengthen economic history at MIT in February 1967 was seen (at least by him) to have led later to granting Peter Temin tenure at MIT. See Peter Temin’s reflections on “The Rise and Fall of Economic History at MIT.”

In response to a request by the Head of the department, E. Cary Brown, for input to a long-range plan (1967-1975), we have here not only Evsey Domar’s response but also memos from Edwin Kuh (more econometrics!), Robert Solow (“poverty-manpower” or “a really high-class macro-numbers man”) and M. A. Adelman (energy economics).

Even Robert Solow’s intradepartmental memos sparkle with wit!

_________________________________

February 7, 1967

MEMORANDUM

 

To: Members of the Economics Department
From: E. Cary Brown
Subject: Long-Range Departmental Plans

President H. Johnson has asked that Departments submit long-range plans – by two-year intervals through the academic year 1974-5. The basic constraints, other than budgetary, are that the undergraduate student body is to remain fixed at its present level and that graduate students at M.I.T. Grow at only a 3% rate per year. The projection desired is of the expansion in existing fields, into new fields, the population of the department – faculty, staff, students, post-doctorals, and administration and supporting staff.

In order to get a dialogue started, I suggest that each of you send me a note on the need for new fields, the expansion of existing ones, and your views about our undergraduate and graduate size. I can then prepare an agenda for a meeting or two on this matter.

_________________________________

 

[Evsey Domar response]

  1. New Fields, etc.
    1. Economic History. Could tie in very well with our economic developers. Also help to create a better balance in the Department.
    2. Economics and Technology (Mansfield, etc.) MIT should be just the place for it.
    3. I hope Max continues to be interested in South-East Asia. The US will be involved there for a long time. Any chances for a South-east. Asia Center or something?
  2. Number of Students
    No strong feelings. A larger number of both faculty and students allows us to offer a greater variety of courses.

As you know, Economic History is my main concern.

_________________________________

 

[Edwin Kuh response]

February 13, 1967

MEMORANDUM

TO:                 Professor E. Cary Brown
FROM:          Professor Edwin Kuh
SUBJECT:     Some Economics Department Needs in the Long Run

Let me first grind my own econometric axe. We need additional support in two econometric areas. The first pertains to support for quantitative theses; Frank Fisher, Bob Solow and I carry a heavy load in this connection, which is unlikely to diminish. Second, we ought to have more strength than we do in econometric time series analysis, an important topic not covered by existing faculty. Marc Nerlove, for instance, ranks high on both counts. Less senior individuals include David Grether who combines both aspects (Stanford Ph.D. going to Yale this fall) and possibly Joseph Kadane also at Yale, who is more the statistician. Jim Durbin and Bill Phillips would be fine, too, qua statisticians contributing to econometrics.

Next, suppose we are fortunate enough to attract both Ken Arrow and C. V. Wiesacker [sic] ; the net balance in favor of theory would then become heavy indeed. There will be no need to panic and for instance, proceed instantly to hire Arthur Burns. But even so, it will behoove the department to push relentlessly on expanding the more empirical side. Since all tenure slots by then will have been sewed up, I don’t see how this can readily be done.

Finally, the department ought to raise more finance for computation. The burden has been disproportionately assumed by the Sloan School, even though several Economics Department research projects have made highly welcome and substantial contributions to the installation downstairs. In this connection, the department should seriously consider acquiring the long run services of someone with a major interest [in] computer systems; very different and high qualified individuals such as Mark Eisner or Don Carroll come to mind. The department will lag behind seriously unless it expands in this direction.

This has not been a balanced presentation of needs. I shall leave that to more balanced individuals.

 

_________________________________

 

[Robert M. Solow response]

MEMORANDUM TO: E. Cary Brown, Head
FROM: Robert M. Solow
SUBJECT: Yours of February 7

 

  1. Undergraduate program. I suppose basically we just passively accept as many majors as come along. We might attract more by improving the teaching and brightening up the course offering. So far we have got along just fine with a pretty dreary undergraduate program, and previous attempts to Do Something have petered out. Is history trying to tell us something? The only reason I can think of for trying again is this: if the department faculty is going to state bigger, especially among assistant professors, then we probably need some decent undergraduate teaching for them to do. (Not only them – I would volunteer to do some too.) Why not let the assistant professors do the planning – they probably have more ideas. Suggestions: new undergraduate subjects in mathematical economics, econometrics, “poverty”, transportation (or public investment); cancel one of the current Labor subjects (or convert to “poverty”), maybe cancel 14.06, 14.09; organize research seminar on one-big-project basis; keep 3 or 4 of the best seniors on as PhD candidates as a matter of course.
  1. Graduate program. Does it have to expand to justify slightly enlarged faculty? If so, then accept universe, but fight like hell for adequate space, scholarships, research funds. If not, think carefully. If faculty enlarges and improves, we should be able to do better on admissions. There will always be some lemons admitted; but it is a question whether one would not prefer current size of enrollment with improved bottom half to enlarged enrollment with current quality. If we get Arrow and Weizsäcker, and keep half-dozen assistant professors, some growth of graduate student body probably inevitable. But I’d keep it slow, and in line with admission quality, space, scholarships, research money. Aim for entering class of 40 by 1975? Certainly no more.
  1. New fields. If MIT goes into Urban Studies, I think we ought to move too. This means some joint research, perhaps offering a few fellowships specifically in urban economics, some new appointments (transportation, poverty, local finance), probably young guys. (I’d like to see Mike Piore and Frank Levy free to start something.) (Would Bill Pounds like to hire Joe Kershaw?) Maybe we ought to start looking next fall. This complex could be a major counterweight to theory. We could make a senior appointment, but I doubt we could find a good enough man. We also lack a really high-class macro-numbers man – like Art Okun or Otto Eckstein or George Perry. Should we try Les Thurow? Or try eventually for Steve Goldfeld? Goldfeld would help with Money, but Thurow would fit into poverty-manpower bit. I think I might seriously favor going for Thurow now if we can afford it.

_________________________________

 

[M. A. Adelman response]

March 16, 1967

Memorandum to:     Professor E. Cary Brown
From:                         M.A. Adelman
Subject:  President H. W. Johnson’s request to submit long-range plans: industrial organization field

  1. Enrollment in the graduate course has declined to the point where it is best given in alternate years. Theses written have not decreased, and there are six now in preparation. I wish to use the time made available to teach the course on energy economics when Paul Rodan retires. The remaining time is best devoted to undergraduate teaching (see below).
  2. Undergraduate enrollment seems to be on the increase in 14.02, 14.04, and 14.22. With the appointment of Robert Crandall, we are fully staffed. I would wish to have 14.02 taught exclusively by lecture and sections (teaching assistants) except where the undergraduates’ program will not permit it. Where we are compelled to fill in with three-recitation sections, I strongly urge that they should not be taught by teaching assistants. Since the transfer to lectures economizes manpower, these two changes should be offsetting, but will take more of my own time.
  3. I have given a joint seminar with Harvard (Economics Department and Middle East Center) on Eastern Hemisphere Oil, and will repeat it next year. It is still an uncertain venture, however, in a sensitive area, and the fuss about CIA influence in academic research may kill it.
  4. I join in concern over our weakness in economic history. East European economics might best be treated as an expansion of our current offering in Soviet economics, since there is sufficient unity of geography and practice. I wish some encouragement could be given to East Asian especially Japanese studies, where English sometimes suffices, but would not care to have it as a field of specialization.

 

Source: Duke University, Rubenstein Library. Evsey D. Domar papers, Box 7, Folder “Peter Temin” [apparently misfiled].

Image Source: MIT 1959 Technique (Yearbook).