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M.I.T. Graduate Program in Economics Brochure, 1974-1975

Post author By Irwin Collier
Post date 2024-08-06

It was fifty years ago this September that I entered the graduate program in economics at M.I.T. This is why the brochure outlining the graduate program as of the academic year 1974-75 is something I am particularly delighted to add as the newest digitized artifact to Economics in the Rear-view Mirror.

In other news, I just realized that I am now older than everyone seen on the faculty portrait taken in 1976.

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Most of the faculty members of the MIT department of economics on the steps of the Sloan Building (E52) in 1976.

Names of the assembled have been provided in an earlier post.

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MIT’s 1961 graduate economics brochure has been transcribed and posted earlier.

_______________________

MASSACHUSETTS INSTITUTE OF TECHNOLOGY
The Graduate Program in Economics
1974 – 1975

General Information
The Ph.D. Program in Detail

Schematic Schedule of Typical Entering Student

1. Dissertation
Graduate Subjects in Economics
The Faculty in Economics

MASSACHUSETTS INSTITUTE OF TECHNOLOGY
The Graduate Program in Economics
1974–75

1. General Information
  [Table of Contents]

Graduate study in economics began at M.I.T. in 1941 and has since developed to its present size of some 110 full-time students and 33 faculty members. Its major emphasis is on the training of doctoral candidates in a broad program of advanced study and research for professional careers in universities or colleges, in governmental and private research organizations, or in business or financial concerns. At the present time the demands on a professional economist are such that the depth and breadth of the doctoral program have become indispensable training for a successful career. The Department, therefore, ordinarily admits to full-time graduate study only candidates for the Ph.D. In order to maintain a close and continuing contact between students and faculty, the entering class is normally held to 30.

1. Program of Studies
  [Table of Contents]
  1. Ph.D. in Economics
    [Table of Contents]

The doctorate normally requires the full-time concentration of the student for three or four years. Formal requirements are limited in number. The candidate must (1) demonstrate a mastery in five fields of study in economics, one of which is economic theory, both micro and macro; (2) achieve a specified level of competence in economic history, econometrics, and statistics; (3) submit and defend a dissertation that represents a contribution to knowledge; and (4) be in residence for a minimum of two years.

These requirements are met not merely by passing some appropriate set of subjects, but through an over-all preparation of subject matter and techniques that goes beyond course work. Candidates may differ in their rate of progress toward the satisfaction of these requirements, depending on their background, preparation, and interests. Normally, however, the satisfaction of requirements, other than the dissertation, is completed by the end of the second year.

The dissertation is a test of the candidate’s ability to conduct independent research — to formulate a significant topic and to bring to bear on it the analytic and quantitative tools of economics. The dissertation is prepared under the direction of departmental committee. Upon submission of the completed thesis, the candidate is examined orally by the thesis committee.

The Department has no general foreign language requirements. When a foreign language is essential for full access to the literature in the field of the student’s major interest (for example, European Economic History, Communist Economies) or to his thesis research, a language requirement will be imposed by the Department upon the recommendation of the Thesis Supervisor or the Graduate Registration Officer. Such a requirement will be administered by the Department of Foreign Literatures and Linguistics, and can be met by satisfactory course work at other schools, at M.I.T., or by examination.

1. 1. Interdepartmental Ph.D. Program
    [Table of Contents]

Occasionally students may desire a program that overlaps more than one department, but which in content and depth meets doctoral standards. At the initiative of the student, and with the approval of faculty members of each department, arrangements can be made to have the Dean of the Graduate School appoint a committee to guide the entire Ph.D. program. For details see the Graduate Student Manual. One such program, for instance, has been worked out with the Department of Urban Studies and Planning.

1. 1. Master’s Program
    [Table of Contents]

In very special and rare cases, students are admitted for study programs leading to the M.S. in Economics. This is awarded upon the satisfactory completion of a program, approved by the Graduate Registration Officer, of a year’s full-time study, including the presentation of a satisfactory thesis. The master’s program usually involves completion of the Department’s core requirements (see below), a semester of econometrics, and two semesters of a special field, in addition to the thesis.

1. Admission to the Graduate School
  [Table of Contents]

To be admitted into the program, a student must hold a Bachelor’s degree or its equivalent from an accredited college or university. It is not essential that the undergraduate degree be in economics. Graduate students entering the Department have had a wide variety of major background preparation varying from literature to physics. Some preparation in undergraduate economics, especially in economic analysis, is almost a necessity. Candidates who, upon admission, are deficient in mathematics are strongly urged to take mathematics in the summer before entering the program or work on a recommended self-study program in calculus to prepare for 14.102 Mathematics for Economists.

Completed application forms for admission must be submitted to the Admissions Office at M.I.T. by January 15 of the calendar year in which the applicant wishes to enter. In addition to the Institute application forms, the Department expects each applicant to submit a statement (one or two pages) explaining his interest in economics. An informal questionnaire is provided for his general guidance. Entrance is normally in September. February entrance is granted only under exceptional circumstances, since many subjects given in the spring are continuations of work given in the fall.

All applicants are urged to take the Graduate Record Examinations no later than the January preceding the September in which they wish to enter. They should take the quantitative and verbal aptitude tests as well as the test in economics. (Information can be obtained by writing to Graduate Record Examinations, Educational Testing Service, Box 955, Princeton, New Jersey 08540. Students in western states or in eastern Asia or the Pacific should write to 1947 Center Street, Berkeley, California 94704.)

Decisions regarding admission are the responsibility of the Departmental Graduate Admissions Committee, which bases its judgment on the undergraduate academic record of the applicant, both in general and with respect to particular subjects, on the letters of recommendation, and on the Graduate Record Examinations. Further information may be secured by writing to the chairman of the committee. Notices of acceptance are sent out by April 1, and candidates have until April 15 to notify the Department of their choice.

1. Fellowships, Scholarships, and Financial Assistance
  [Table of Contents]

While in the past virtually all graduate students received financial aid through scholarships, fellowships, or assistantships, the financial situation has changed to such an extent that complete support can no longer be assured. Moreover, the outlook is so uncertain that no definite statement is possible, even about minimum aid. Every effort will be made within the limits of our financial resources to support students who perform effectively. In view of this uncertainty, the Department is making efforts to expand the number of research assistantships, but students should expect to earn or borrow a larger proportion of their support than has been true in the past.

The sources of financial support are varied. (1) Many students are assisted by fellowships for which there is a national competition, such as those given by the National Science Foundation (NSF), the Ford Foundation, the Danforth Foundation, the Canada Council, and by foreign governmental agencies. Applications for such fellowships must be made directly to the appropriate foundation or agency, and an application for admission must also be made to M.I.T. (2) Awards of scholarships or fellowships are also made from M.I.T. funds or endowments. These include the Hicks Fellowship in Industrial Relations, the Graduate Economics Alumni Fellowships, endowed Institute fellowships, and a limited number of departmental awards. (3) A third group of students is supported by part time teaching and research assistantships and instructorships. In the past, research and teaching assistantships have been limited to candidates who have passed their general examination and are engaged in thesis research. However, in the light of the present financial stringency, these rules may be relaxed somewhat with respect to limited research assistantships for second year students. (4) Finally, students in good standing can avail themselves of loans through the Office of Financial Aid. U.S. citizens who are planning to be teachers may avail themselves of an NDEA loan, a substantial portion of which is forgiven upon entry into and continuance in teaching. They are also eligible for government-insured loans that are partially subsidized. Foreign students. however, may borrow only through the Graduate Loan Fund at the prime interest rate.

Entering students should apply for financial aid not later than January 15 of the calendar year in which they plan to enter. First-year awards are made on April 1, and applicants are given until April 15 to accept. Departmental awards for second and subsequent years are made in June. It is entirely appropriate for students to apply both for national awards and to M.I.T., since the outcome of national competitions is known before our awards are announced. Fellowships normally will include some cash payment toward living expenses, up to $2,000 for a single or married person without dependents, made in two equal installments at the beginning of each term. In offering scholarships and fellowships, the Department takes into account need as well as professional promise.

Remuneration for research assistantships varies, but in 1974-75 is normally at the rate of $6,585 per academic year for half-time work, out of which tuition of $3,350 must be paid. A half-time teaching assistantship in 1974-75 covers the tuition and pays $3,510 for the academic year — a total of $6,860. A very few half-time instructorships, for students who have demonstrated conspicuously effective teaching as an assistant, cover tuition plus $4,345 for living expenses — a total of $7,695 for the academic year.

As a supplement to academic-year appointments, both interdepartmental and departmental research groups are possible sources of full-time summer employment.

The academic performance of the student body is periodically reviewed to determine whether or not normal academic progress is being made. Failure to maintain normal progress may result in reduction or withdrawal of financial support. Students are invited at all times to discuss academic problems with their graduate registration officer, and the Department makes every effort to accommodate the needs of individual students.

1. Foreign Students
  [Table of Contents]

The Department has always welcomed foreign graduate students. They have typically constituted a significant portion of the student body. Some M.I.T. fellowships are available to entering foreign students, though the number is limited and the competition severe. Foreign students have an additional burden of transportation expense to cover and for this reason it is highly desirable to try to obtain at least partial support from other sources as well.

General information on scholarships, grants and travel can be obtained from the Institute of International Education, 809 United Nations Plaza, New York, New York, 10017, or from the Cultural Affairs Officer or the United States Information Service Office nearest the student’s place of residence.

Foreign applicants are required to submit evidence of their ability to carry on studies in English. Applicants whose native language is not English are required to take the test of English as a Foreign Language (TOEFL). Students whose schooling has been in English may request a waiver from the Advisor to Foreign Students at M.I.T. TOEFL is administered by the Educational Testing Service, Princeton, New Jersey, 08540; registration material and information about the test may be obtained by writing to the above address.

1. Living Arrangements
  [Table of Contents]

The Department is located in the Sloan Building, which, along with the adjoining Hermann Building, contains contiguous faculty offices, classrooms and seminar rooms, and student and faculty lounges. This complex also houses the Sloan School of Management, the Department of Political Science, and the Center for International Studies. The Dewey Library occupies two floors of the Hermann Building and contains the social science collection at M.I.T., reading rooms, and carrels to which thesis writers are assigned individually.

On-campus housing for graduate students is limited. Applications should be sent to the On Campus Housing Office, Room E18-307, M.I.T. Help in securing off-campus housing is given by the Community Housing Service, E18-306, M.I.T. Students should be alerted to the fact that Cambridge rental units are limited and in heavy demand. Transportation is convenient; the Sloan Building is located one block from the Kendall Square subway station.

1. Graduate Economics Associations
  [Table of Contents]

The Graduate Economics Association, composed of all graduate students, is a lively organization that sponsors monthly seminars and social events, and is one of the channels through which mutual student-faculty problems are discussed. The seminars permit discussions of current research by distinguished economists and occasional dialogues between faculty members. They are often followed by small dinners to which graduate students and faculty are invited, permitting more discussion among visitors, students and faculty. The Association annually elects nine student representatives to participate as voting members in Department meetings and other Department committees. Student representatives are full participants in all matters except those involving specific, identifiable individuals, or undergraduate matters. This policy at present excludes the discussion of details, but not the general policy, of tenure decisions, review of non-tenure faculty, new appointments, review of student performance, admissions and financial support.

The Black Graduate Economics Association provides a forum for the development and utilization of economic tools for solving the problems faced by Black people, encourages policies and programs which help increase the supply of highly qualified Black economists, opens lines of communication with other Black graduate students, Black economists, and the Black community, stimulates academic excellence, and provides outlets for various social activities. The BGEA has helped develop audio-visual aids now in use in many Black colleges’ economics departments, engaged in Institute recruiting projects, and participated in conferences of Black economists and administrators of Black colleges and universities. An econometric model of income and expenditures in Black communities is in its initial stage of development as a research project.

The Ph.D. Program in Detail
[Table of Contents]
1. General Plan of the Program
  [Table of Contents]

Students who complete the Ph.D. program should have a thorough understanding of the existing principles of economic theory and of the economic structure; an ability to think systematically about, and apply quantitative methods to, economic problems. The program gives roughly equal emphasis to these two goals, with formal courses and examinations to meet the first, and seminars, workshops, papers and the dissertation to meet the second. The student spends most of his first two years attempting to understand the existing ideas of economics. A basic principle of the program is that these ideas are sufficiently worthwhile so that their study is a necessary prelude to their use or criticism.

Throughout the program, there are formal provisions for students to engage in original work. During the first two years, term papers are often required. During the second year each student prepares a research paper as part of the requirement in econometrics. Second-year students are also encouraged to take part in workshops in their fields of primary interest. After passing the general examination, at the end of the second year or earlier, students spend full time in their own independent, original work. Their only formal obligation is to participate actively in the weekly meetings of the workshops in their fields of research.

1. The Core of the Graduate Curriculum
  [Table of Contents]

The Department offers an integrated set of subjects in economic theory, mathematics, econometrics and economic history.

1. 1. Economic Theory
    [Table of Contents]

The core in economic theory consists of two subject-years equally divided between microeconomics (14.121-14.124) and macroeconomics (14.451-14.454). These subjects are described in Section III of this report. The material is divided into half-semester subjects. The microtheory sequence starts in the fall term and runs through the first year, while the macrotheory sequence starts in the spring term and continues through the fall term of the second year. A qualifying examination on these subjects is offered three times a year — in September, December-January, and May — that must be passed in order to satisfy this part of the core requirement. The examination will cover each of the eight portions of the theory core, and a syllabus is available for each.

When a student feels sufficiently well qualified in the subject matter of any of the theory core subjects, he may take the qualifying examination, either before or after a particular set of lectures is offered. Only a passing grade is recorded when the examination is taken in advance of the lectures. If he fails to pass, he can then enroll for that particular section of theory and take the examination again at the end of that term. Should he pass some portion of theory by the preliminary examination, he could substitute a subject in advanced economic theory in the half-term in which he would have taken the basic theory subject. In principle, it is possible to pass all eight units of the theory core in this way and to proceed directly to more advanced work.

The Schedule for the Qualifying Examination in Theory is as follows:

Subject matter covered in:	Preliminary	Regular	Make-up
14.121-122	Sept.-Year I	Dec.-Year I	Sept.-Year II
14.123-124, 14.451-452	Jan.-Year I	May-Year I	Jan. Year II
14.453-454	Sept.-Year II	Dec.-Year II	Sept.-Year III

1. 1. Mathematics
    [Table of Contents]

The minimal core requirement in mathematics is calculus and linear algebra. Calculus is required for Statistics (14.381). While not stated as a formal prerequisite for the core theory subjects, it is virtually a necessity for mastering them.

If a student’s preparation in calculus were inadequate to satisfy the prerequisite for 14.102 Mathematics for Economists, the completion of the statistics and economics core requirements would be postponed a year. Econometrics (14.382 and 14.383 and most advanced theory subjects (14.141-14.149) require linear algebra. Students who have had a year of calculus and who want more mathematical training normally would take Mathematics for Economists (14.102) in the first term.

1. 1. Econometrics
    [Table of Contents]

The econometrics and statistics core requirement can be satisfied by (1) Statistics (14.381); (2) either Econometrics (14.382 and 14.383) or Applied Econometrics (14.388); and the completion of a piece of empirical research the equivalent of a term paper. This paper is due by the end of the fall term of the second year.

Entering students who lack calculus, and cannot take 14.102 in the first term, have two choices: either to postpone the three-term sequence: 14.381, 14.382, and 14.383 — to their third through fifth terms, or to take the two-term sequence, 14.381 and 14.388, in their third and fifth terms.

1. 1. Economic History
    [Table of Contents]

The core requirement in economic history is the satisfactory completion of one subject in American Economic History (14.731), European Economic History (14.733), or Russian Economic History (14.781).

1. Special Fields
  [Table of Contents]

In addition to the satisfactory completion of the core requirements, competence in four special fields must be demonstrated, two by passing a general examination and two by either satisfactory course work or a general examination. Preparation for a field examination normally consists of a year’s course work. Satisfaction of a field by course work alone requires the achievement of a grade of B or better in each of the two terms of subject matter. (The econometrics and history requirements can be satisfied with a grade of B-.) The areas in which the Department offers specialization are: advanced economic theory, international economics, labor economics, economic development, urban economics, monetary economics, fiscal economics, statistics and econometrics, economic history, industrial organization, comparative economic systems, Russian economics, human resources and income distribution, and, outside the Department, finance, production, transportation, and operations research. It is possible to use econometrics as a field without preparation beyond the core requirements. Economic history can be offered as a field by adding a second subject to the one satisfying the core requirement.

Students normally demonstrate competence in all four fields by the end of their second year. That is, they normally finish their required course work and general examinations by that time. In the event that scheduling or other difficulties interfere with this timing, one field other than theory or econometrics (including the paper — see II.B.3 above), or one subject in a field and in history, may be postponed until the third year. Before making such a deferment, students should consult with their Graduate Registration Officer.

Students planning to take the general examination before the end of the second year — the usual time — should consult in advance with their Graduate Registration Officer. In any case, such students would still be held to the above schedule.

Schematic Schedule of Typical Entering Student
[Table of Contents]

	[First year]		[Second year]
	1^st [term]	2^nd [term]	3^rd [term]	4^th [term]
Theory: Micro	14.121-2	14:123-4
Theory: Macro		14.451-2	14-453-4
Statistics and Econometrics	14.381 or 14.381	14.382	14.383 14.388
Mathematics	14.102
Special Fields and History	1 subject	1-2 subjects	2 subjects	4 subjects
Total Number of Subjects	4	4	4	4

*The minimal number of subjects to satisfy the special field and history requirements depends on whether history or econometrics is offered as a special field. If neither are offered, 9 subjects are required; if history, 8 subjects; if econometrics, 7 subjects; if both, 6 subjects.

1. Dissertation
  [Table of Contents]

Upon satisfaction of the core and field requirements, the Ph.D. candidate embarks on original research culminating in a completed dissertation that is defended orally. Thesis writers are required to participate in the workshop most germane to the subject of their thesis over the period of time they are working on it. Upon agreement on a topic with a primary thesis supervisor, a secondary thesis supervisor will be chosen by the student, subject to the approval of the Graduate Committee. A third faculty reader will be appointed by the Graduate Committee in consultation with the candidate when a final draft of the thesis will reasonably be expected to be completed within six months. The third faculty reader will have as his main function the unitary reading of the complete final draft of the thesis. These three faculty members will be the candidate’s thesis committee and are responsible for its acceptance and final defense.

In order to give adequate time for the final thesis review and revision, the completed draft must be submitted for final review a month before the Institute dates for submission of the dissertation. In 1975 the formal Institute dates are January 5, May 2, and August 11.

Graduate Subject in Economics
[Table of Contents]
1. General Economics and Theory
  [Table of Contents]

14.101	Mathematics for Economists Prereq.:—————	Units
14.101	Year: G(1)	3-0-6
Elementary calculus. Applications in economics. (Not offered 1974-75)

14.102	Mathematics for Economists Prereq.: 14.101	Units
14.102	Year: G(1)	3-0-6
Vector spaces and matrices; multivariate calculus and maximization with equality constraints; elementary differential equations.		H. A. Freeman

14.121	Microeconomic Theory I (A) Prereq.: 14.04	Units
14.121	Year: G(1) (1^st half of term)	2-0-4
Monopoly, oligopoly, product differentiation, monopsony. Comparison with pure competition. Comparative statics. Partial equilibrium welfare analysis.		R. L. Bishop

14.122	Microeconomic Theory II (A) Prereq.: 14.121	Units
14.122	Year: G(1) (2nd half of term)	2-0-4
Introduction to the theory of resource allocation and the price system. Emphasis on the use of efficiency prices as a guide to decentralized decision making.		M. L. Weitzman

14.123	Microeconomic Theory III (A) Prereq.: 14.122	Units
14.123	Year: G(2) (1^st half of term)	2-0-4
Theory of the producer and consumer. Cost functions, expenditure functions. Theory of distribution. Introduction to general equilibrium.		H. R. Varian

14.124	Microeconomic Theory IV (A) Prereq.: 14.123	Units
14.124	Year: G(2) (2nd half of term)	2-0-4
Capital theory and welfare economics.		P. A. Samuelson

14.132	Schools of Economic Thought (A) Prereq.:14.122	Units
14.132	Year: G(2)	3-0-6
Economic ideas developed by different groups of economists in recent times.		R. L. Bishop, P. A. Samuelson

14.141	General Equilibrium Theory Prereq.:14.124	Units
14.141	Year: G(1) (2^nd half of term)	2-0-4
General equilibrium. Existence and stability of competitive equilibrium. The core of an economy. (Not offered in 1974-75)		F. M. Fisher

14.142	Mathematical Programming and Economic Theory (A) Prereq.:14.122	Units
14.142	Year: G(2) (1^st half of term)	2-0-4
A rigorous treatment of linear and non-linear programming with applications to economic model building, including activity analysis and input-output.		M. L. Weitzman

14.143	Advanced Theory of the Market III (A) Prereq.: 14.122	Units
14.143	Year: G(2) (2^nd half of term)	2-0-4
Oligopoly and product differentiation, advertising, equilibria with seasonal or cyclical demand shifts.		R. L. Bishop

14.144	Applied Price Theory Prereq.:14.122	Units
14.144	Year: G(1) (1^st half of term)	2-0-4
Applications of price theory treated topically. Selected topics in price theory, with focus changing from year to year. Current emphasis is on the economics of exhaustible and renewable natural resources.		R. M. Solow

14.145	Economics of Uncertainty Prereq.:14.124	Units
14.145	Year: G(2)	3-0-9
Individual behavior under uncertainty. Equilibrium and welfare under uncertainty. Search and information.		J. A. Hausman, P. A. Diamond

14.148	Advanced Topics in Microeconomic Theory (A) Prereq.:14.124	Units
14.148	Year: G(2)	Arr.
14.149	Advanced Topics in Microeconomic Theory (A) Prereq.:14.124
14.149	Year: G(2)	Arr.
Advanced topics in microeconomic theory of current interest.		Staff

14.151	Mathematical Approach to Economics (A) Prereq.:14.122	Units
14.151	Year: G(2)	3-0-6
The use of mathematical methods in all the fields of economics.		P. A. Samuelson

14.191	Economics Seminar (A) Prereq.:14.121, 14.122	Units
14.191	Year: G(1)	3-0-6
14.192	Economics Seminar (A) Prereq.:14.121, 14.122
14.192	Year: G(2)	3-0-6
Special economic problems. In 1974-75, 14.192 — Economics of Public Sector.		J. Rothenberg

14.193	Seminar: Topics in Economics (A) Prereq.:14.121, 14.451	Units
14.193	Year: G(1)	3-0-6
14.194	Seminar: Topics in Economics (A) Prereq.:14.122, 14.452
14.194	Year: G(2)	3-0-6
Topics in economics of current interest.		Staff

14.195	Reading Seminar in Economics (A) Prereq.:14.122	Units
14.195	Year: G(1)	Arr.
14.196	Reading Seminar in Economics (A) Prereq.:14.122
14.196	Year: G(2)	Arr.
Reading and discussion of special topics in economics. (Open to advanced graduate students by arrangement with individual numbers of the staff.)		Staff

14.197	First-Year Graduate Seminar (A) Prereq.: 14.04	Units
14.197	Year: G(1)	2-0-6
Seminar limited to first-year graduate students. Discussion of projects of students, professional literature, methodology, economic policy, extending beyond regular curriculum.		J. N. Bhagwati

1. Industrial Economics
  [Table of Contents]

14.271	Problems in Industrial Economics (A) Prereq.: 14.04	Units
14.271	Year: G(1)	3-0-6
Small and large enterprises in the American economy; market structures; degrees of monopoly and competition; requisites of public policy.		M. A. Adelman

14.272	Government Regulation of Industry (A) Prereq.: 14.271	Units
14.272	Year: G(2)	3-0-6
Follows 14.271. Development of anti-trust policy, generally and in specific cases. “Public utility” price fixing, government ownership as alternative.		P. L. Joskow

14.291	Industrial Economics Seminar (A) Prereq.:14.271	Units
14.291	Year: G(1)	3-0-6
14.292	Industrial Economics Seminar (A) Prereq.:14.271
14.292	Year: G(2)	3-0-6
Readings, discussions, reports on such topics as industrial price policies, government regulation of industry, competitive practices, and similar problems in industrial economics.		Staff

1. Statistics and Econometrics
  [Table of Contents]

14.371

Statistical Inference (A)
Prereq.: 18.02

Units

Year: G(1)

3-0-9

A compact one-term course in elementary probability and statistical Inference. Axiomatic probability, random variables, distribution functions, mathematical expectation, generating functions, transformations of random variables, simple correlation and regression models, the normal distribution, sampling theory, point and interval estimation, maximum likelihood, least squares, testing statistical hypotheses. The exposition is somewhat more mathematical than

14.381.

H. A. Freeman

14.373	Time-Dependent Probability (A) Prereq.: 14.371 or 18.303	Units
14.373	Year: G(2)	3-0-6
Markov chains and Markov processes, the relevant ergodic theorem, Kolmogorov equations, time series theory; spectral density functions, harmonic representation, autoregressive models.		H. A. Freeman

14.374	Design and Analysis of Scientific Experiments (A) Prereq.: 14.381	Units
14.374	Year: G(2)	3-0-6
Application of statistical theory to the design and analysis of scientific experiments. Factorial and fractional factorial designs. Applications to experimentation in the physical, chemical, biological, medical, and social sciences.		H. A. Freeman

14.381	Statistical Method in Economics (A) Prereq.: 14.101 or 18.02	Units
14.381	Year: G(1)	4-0-8
Self-contained introduction to probability and statistics which serves as a background for advanced econometrics. Elements of probability theory, sampling theory, asymptotic approximations, decision theory approach to statistical estimation focusing on regression, hypothesis testing and maximum likelihood methods. Illustrations from economics and application of these concepts to economic problems.		J. A. Hausman

14.382	Econometrics I (A) Prereq.:14.102, 14.381	Units
14.382	Year: G(2)	4-0-8
14.383	Econometrics II (A) Prereq.:14.382
14.383	Year: G(1)	4-0-8
Theory and economic application of the linear multiple regression model. Identification and structural estimation in simultaneous models. Analysis of economic policy and forecasting in macroeconomic models. A term paper involving substantive original empirical research is required in 14.383.		R. F. Engle, R. E. Hall, J. A. Hausman

14.386	Advanced Topics in Econometrics (A) Prereq.: 14.383	Units
14.386	Year: G(2)	3-0-6
Selected topics including specification error, non-linear estimation, simulation, aggregation, and the derivation of economic policy models. (Not offered in 1974-5)		R. F. Engle, R. E. Hall, J. A. Hausman

14.388	Applied Econometrics (A) Prereq.: 14.102, 14.381	Units
14.388	Year: G(1)	3-0-9
Theory and practice of econometrics. The linear regression model, tests of hypotheses, generalized least squares, distributed lags, and simultaneous equations. Emphasis on applications. A term paper required.		R. F. Engle

14.391	Workshop in Economic Research (A) Prereq.:14.124, 14.454	Units
14.391	Year: G(1)	2-0-10
14.392	Workshop in Economic Research (A) Prereq.:14.124, 14.454
14.392	Year: G(2)	2-0-10
Designed to develop research ability of students through intensive discussion of dissertation research as it proceeds, carrying out of individual or group. research projects, and critical appraisal of current reported research. Workshops divided into various fields, depending on interest and size.		Staff

1. National Income and Finance
  [Table of Contents]

14.451	Macroeconomic Theory I (A) Prereq.: 14.06	Units
14.451	Year: G(1) (1^st half of term)	2-0-4
Macroeconomic analysis of general equilibrium. Financial markets and investment. Intertemporal equilibrium and growth models.		S. Fischer

14.452	Macroeconomic Theory II (A) Prereq.: 14.451	Units
14.452	Year: G(2) (2^nd half of term)	2-0-4
Determination of aggregate output, employment, and prices under static conditions. Keynes and alternate theories. The Phillips Curve. Inflation in the short and long run.		R. E. Hall

14.453	Macroeconomic Theory III (A) Prereq.: 14.452	Units
14.453	Year: G(1) (1^st half of term)	2-0-4
Quantitative macroeconomics. Consumption, investment, and other components of aggregate demand. Structure of complete econometric models of the U.S. economy		R. E. Hall

14.454	Macroeconomic Theory IV (A) Prereq.: 14.453	Units
14.454	Year: G(1) (2^nd half of term)	2-0-4
Growth models. Capital theory.		R. M. Solow

14.458	Advanced Topics in Macroeconomic Theory (A) Prereq.: 14.454	Units
14.458	Year: G(1)	Arr.
14.459	Advanced Topics in Macroeconomic Theory (A) Prereq.: 14.454
14.459	Year: G(2)	Arr.
Advanced topics in macroeconomic theory of current interest.		Staff

14.462	Monetary Economics I (A) Prereq.: 14.122, 14.452	Units
14.462	Year: G(2)	3-0-6
Examination of sources and determinants of supply of money with special attention to roles of commercial banks, Federal Reserve System, and Treasury. Discussion of nature of demand for money. Role of monetary policy in determination of level of economic activity. (Not offered in 1974-5; substitute 15.432 Capital Markets and Financial Institutions)		F. Modigliani

14.463	Monetary Economics II (A) Prereq.: 14.122, 14.452	Units
14.463	Year: G(1)	3-0-6
General equilibrium theory of money, interest, prices, and output; portfolio problems, cost of capital, and the effects of monetary phenomena on investment and accumulation of wealth with special reference to problems arising from uncertainty.		S. Fischer

14.471	Fiscal Economics I (A) Prereq.:14.122, 14.452	Units
14.471	Year: G(1)	3-0-6
14.472	Fiscal Economics II (A) Prereq.:14.122, 14.452
14.472	Year: G(2)	3-0-6
Examination, both theoretic and quantitative, of governmental fiscal institutions and behavior: the budget process, taxation, expenditure, pricing, and debt activities.		P. A. Diamond, A. F. Friedlaender

14.482	Income Distribution Economics (A) Prereq.: 14.124	Units
14.482	Year: G(1)	3-0-9
Modern theories and empirical studies of the determinants of the distribution of income and wealth.		L. C. Thurow

1. International, Interregional, and Urban Economics
  [Table of Contents]

14.572J	Regional Economic Analysis (A) Prereq.: 14.03 or 14.05	Units
14.572J	Year: G(2)	3-0-6
Analysis of regional economies with emphasis on the sources, characteristics, and implications of spatial concentrations of economic activities. Urban development in its regional setting is examined and the special problems of lagging areas in both developing and developed countries. Methods of integrating national and regional planning.		J. R. Harris

14.573J	Urban Economic Analysis I (A) Prereq.: 14.03 or 14.05	Units
14.573J	Year: G(1)	3-0-6
Patterns and processes of growth and structural change within metropolitan areas. The land use market and the spatial structure of the metropolitan community. The housing market: demand and supply, growth, aging, and renewal. The urban transportation system and its problems. Models of the metropolis. In each of these topics, emphasis on the resource allocation process, its efficiency and implications for income distribution.		W. C. Wheaton

14.574J	Urban Economic Analysis II (A) Prereq.: 14.573J	Units
14.574J	Year: G(2)	3-0-6
Continuation of 14.573J. The nature and problems of government decision-making in metropolitan areas. The economies of segregation, congestion, and pollution in the metropolitan area. Urban-suburban relations; market and government. Welfare economics and the normative theory of local public policy. Applied normative analysis: criteria for public expenditures; cost benefit analysis. Examination of public policy issues in current urban problems; poverty, race, the spatial form of the city, optimal land use patterns, growth and renewal, development and new communities.		J. Rothenberg

14.581	International Economics I (A) Prereq.: 14.04, 14.06	Units
14.581	Year: G(1)	4-0-8
Theory of international trade and applications in commercial policy.		J. N. Bhagwati

14.582	International Economics II (A) Prereq.: 14.581	Units
14.582	Year: G(2)	4-0-8
Adjustment in international economic relations with attention to foreign exchange markets, balance of payments, and the international monetary system.		C. P. Kindleberger

1. Labor Economics and Industrial Relations
  [Table of Contents]

14.671J	Labor Economics (A) Prereq.: 14.64 or 15.663	Units
14.671J	Year: G(1)	3-0-6
Primary emphasis on the structure of labor markets and the determinants of wage levels, unemployment, the distribution of income and employment opportunity. Special attention will also be given to the impact of unions on both wage and non-wage elements of collective bargaining in the light of the characteristics and objectives of particular unions. Other special topics growing out of recent research in labor economics.		M. J. Piore, C. A. Myers

14.672J	Public Policy on Labor Relations (A) Prereq.: 14.64, 15.663	Units
14.672J	Year: G(1)	3-0-6
Major trends in legislation and other government activities affecting the work place. Topics include wage and price controls, equal opportunity employment, and government regulation of union organization, collective bargaining, industrial disputes, wages and hours of work, and work-place health and safety. The broad economic and social questions raised by these trends also explored.		M. J. Piore D. Q. Mills

14.674J	Comparative Systems of Industrial Relations and Human Resource Development (A) Prereq.: 14.64, 15.663	Units
14.674J	Year: G(2)	3-0-6
International and comparative analysis of industrial relations systems and systems of human resource development. Concentration on an examination of selected issues involving interest groups and the strategies of economic development, including discussion of the nature and functions of labor and management organization in different contexts; the role of the state in establishing procedures and in shaping the substance of industrial relations; the participation of interest groups in the formulation of economic and social policy: manpower and economic growth in the context of comparative systems of human resource development; worker participation in management, and other topics.		C. A. Myers E. Tarantelli

14.691J	Research Seminar in Industrial Relations (A) Prereq.:14.671J or 14.672J	Units
14.691J	Year: G(1)	3-0-6
14.692J	Research Seminar in Industrial Relations (A) Prereq.:14.14.691J
14.692J	Year: G(2)	3-0-6
Discussion of important areas for research in industrial relations, frameworks for research, research techniques, and methodological problems. Centered mainly on staff research and the thesis research of advanced graduate students		C. A. Myers

14.672J	Public Policy on Labor Relations (A) Prereq.: 14.64, 15.663	Units
14.672J	Year: G(1)	3-0-6
Major trends in legislation and other government activities affecting the work place. Topics include wage and price controls, equal opportunity employment, and government regulation of union organization, collective bargaining, industrial disputes, wages and hours of work, and work-place health and safety. The broad economic and social questions raised by these trends also explored.		M. J. Piore D. Q. Mills

1. Economic History
  [Table of Contents]

14.731	American Economic History (A) Prereq.: 14.121	Units
14.731	Year: G(1)	3-0-6
Survey of the beginnings of American industrialization, emphasizing a quantitative approach and the nineteenth century. Topics include effects of government economic policies, such as land distribution and tariffs, the importance of railroads, profitability of slavery.		P. Temin

14.732	Russian Economic History (A) Prereq.: 14.122	Units
14.732	Year: G(2)	3-0-9
A comparative study of the major problems in Russian economic history prior to 1917 both for their own sake and as a background for understanding of the events of 1917 and of the Soviet policies since. The topics covered vary yearly depending on the interests of the participants, but the land and peasant problems and industrialization methods emphasized.		E. D. Domar

14.733	European Economic History (A) Prereq.: 14.121	Units
14.733	Year: G(1)	3-0-6
Development of the European economy since 1750 and, especially since 1850, with emphasis on growth and slowdown, the transition from local to national and European-wide institutions, and extra-European relations.		C. P. Kindleberger

14.734	Problems in Economic History (A) Prereq.: 14.731, 14.732, or 14.733	Units
14.734	Year: G(2)	3-0-6
Analysis of problems of industrial society, concentrating on the century after 1860 and on the American experience. Topics vary yearly and include effects of wars on welfare and growth, the nature of the long deflation of the late nineteenth century, the contrast in international relations before and after 1914, the depression of the 1930’s.		P. Temin

1. Economic Development
  [Table of Contents]

14.771	Problems of Economic Development (A) Prereq.: 14.122, 14.452	Units
14.771	Year: G(1)	3-0-6
Analysis of problems of the rural sector in developing countries, urban-rural migration, unemployment, sectoral balance and efficiency of private resource allocation.		R. S. Eckaus

14.772	Theory of Economic Development (A) Prereq.: 14.122, 14.452	Units
14.772	Year: G(2)	3-0-6
Analysis of problems of international trade and development; study of structure and use of planning models for development policy and use of cost benefit analysis.		J. N. Bhagwati

14.773	Optimal Growth Theory (A) Prereq.: 14.124, 14.454	Units
14.773	Year: G(2)	3-0-9
The optimal growth problem, duality theory, development and application of the maximum principle. The behavior of optimal trajectories for a variety of situations. (Alternate years. Offered 1974-75.)		M. L. Weitzman

14.774J	Transfer and Adaptation of Technology in Developing Countries (A) Prereq.: Permission of Instructor	Units
14.774J	Year: G(2)	3-0-6
Consideration of the problems of transferring and adapting technologies originating and used in the richer countries of the world to the developing nations. Specific topics include: political, institutional, economic, and engineering issues involved in the transfer of technology.		R. S. Eckaus, F. Moavenzadeh, N. Choucri

14.782	Capitalism, Socialism and Growth (A) Prereq.: 14.122, 14.452	Units
14.782	Year: G(1)	3-0-6
A comparative study of capitalist and socialist economies mainly from the point of view of development and growth, and with major emphasis on the economy of the Soviet Union.		E. D. Domar

14.783	Theory of Central Planning (A) Prereq.: 14.124	Units
14.783	Year: G(2)	3-0-9
Multilevel planning. Decomposition principles and their application. Planning with prices and with quantities. Materials balancing and input-output. Applications of inventory theory. The problems posed by non-convexities. (Alternate years. Not offered 1974-75.)		M. L. Weitzman

The Faculty in Economics
[Table of Contents]

Morris A. Adelman, Ph.D., Harvard; Professor of Economics.

Sidney S. Alexander, Ph.D., Harvard; Professor of Economics.

Jagdish N. Bhagwati, Ph.D., M.I.T.; Professor of Economics.

Robert L. Bishop, Ph.D., Harvard; Professor of Economics; Chairman, Graduate Admissions Committee.

E. Cary Brown, Ph.D., Harvard; Professor of Economics; Head of Department.

Peter A. Diamond, Ph.D., M.I.T.; Professor of Economics; Graduate Registration Officer; Chairman, Department Graduate Committee.

Evsey D. Domar, Ph.D., Harvard; Professor of Economics; Graduate Placement Officer.

Richard S. Eckaus, Ph.D., M.I.T.; Professor of Economics; Graduate Registration Officer; Chairman, Committee on Economic Research.

Robert F. Engle, III, Ph.D., Cornell; Associate Professor of Economics.

Stanley Fischer, Ph.D., M.I.T.; Associate Professor of Economics.

Franklin M. Fisher, Ph.D., Harvard; Professor of Economics (on leave).

Harold A. Freeman, S.B., M.I.T.; Professor of Statistics.

Ann F. Friedlaender, Ph.D., M.I.T.; Professor of Economics.

Robert E. Hall, Ph.D., M.I.T.; Professor of Economics; Graduate Registration Officer.

John R. Harris, Ph.D., Northwestern; Associate Professor of Economics.

Jerry A. Hausman, Ph.D., Oxford; Assistant Professor of Economics.

Karl G. Jugenfeldt, Ph.D., Visiting Professor of Economics (Spring Term).

Paul L. Joskow, Ph.D., Yale; Assistant Professor of Economics.

Charles P. Kindleberger, Ph.D., Columbia; Professor of Economics.

Edwin Kuh, Ph.D., Harvard; Professor of Economics.

Franco Modigliani, D.Jur., Rome, and D.Soc.Sci., New School of Social Research; Institute Professor; Professor of Economics.

Charles A. Myers, Ph.D., Chicago; Professor of Industrial Relations.

Michael J. Piore, Ph.D., Harvard; Associate Professor of Economics (on leave, Spring Term).

Jerome Rothenberg, Ph.D., Columbia; Professor of Economics.

Paul A. Samuelson, Ph.D., Harvard; Institute Professor; Professor of Economics.

Abraham J. Siegel, Ph.D., California (Berkeley); Professor of Industrial Relations; Associate Dean of Management.

Robert M. Solow, Ph.D., Harvard; Institute Professor; Professor of Economics.

Lance J. Taylor, Ph.D., Harvard; Professor of Nutritional Economics.

Peter Temin, Ph.D., M.I.T.; Professor of Economics.

Lester C. Thurow, Ph.D., Harvard; Professor of Economics (on leave, Spring Term).

Hal R. Varian, Ph.D., California (Berkeley); Assistant Professor of Economics.

Martin L. Weitzman, Ph.D., M.I.T.; Professor of Economics.

William C. Wheaton, Ph.D., Penn.; Assistant Professor of Economics.

Source: M.I.T., Institute Archives. MIT Department of Economics Records, Box 2, Folder “Department Brochures”.

Tags Adelman, Alexander, Bhagwati, Bishop, BrownEC, Diamond, Domar, Eckaus, Engle, Fischer, FisherFM, FreemanHA, Friedlaender, HallR, HarrisJR, Hausman, Joskow, Kindleberger, Kuh, MillsDQ, Modigliani, Myers, Piore, Rothenberg, Samuelson, Siegel, Solow, Tarantelli, TaylorLJ, Temin, Thurow, Varian, Weitzman, Wheaton

Exam Questions M.I.T. Suggested Reading Syllabus

M.I.T. First core graduate macroeconomics. Syllabus, readings, exams. Domar and Harris, 1967-68

Post author By Irwin Collier
Post date 2019-09-30

Four out of the five times that the first term of the macroeconomics sequence at M.I.T. (Theory of Income and Employment) was taught in the second half of the 1960’s, it was taught by Evsey Domar . Earlier posts with materials for Domar’s course include the reading list and final exam for 1960-61, reading list and exams for 1965-66 , the exams for 1968-69, and the course evaluations for 1967/68-1969/70.

Responsible for the course section in 1967-68 was the assistant professor John Rees Harris (b. 1934, d. 2018, 1967 Northwestern Ph.D. in economics) [copy of his c.v. archived 14 February 2019]. Here is link to a video lunchtime talk by Harris at the Boston University conference “Development that Works” (March 11, 2011). The picture is a screen-capture from the video.

______________________

M.I.T.
THE THEORY OF INCOME AND EMPLOYMENT
14.451
1967-68
[first session]

I. ADMINISTRATIVE QUESTIONS

1. Course number, my and Harris’s name, our office numbers, office hours Tu 2:30-3:30.
2. Sitting chart. No compulsory attendance.
3. Reading list. First part only. Required and recommended or optional. Responsible for all required reading, but not for the details. I don’t know them myself. Lectures are the skeleton of the course. Reserve in Dewey. Inform me if some books are absent.
4. The National Income problem. It is due….
5. Midterm exam in November. Final exam.
6. Other administrative problems?

II. THE PURPOSE AND NATURE OF THE COURSE

To fill in the gaps and bring everyone to a common denominator, without pulling anyone down. Hence, some will find it a bit boring. Attendance is not compulsory.

It is an introductory course. Almost everything will be discussed in other courses, except National Income, Index of Industrial Production, etc. Growth and fluctuations; monetary economics, consumption function, investment decisions, etc.

III. COMMENTS ON MACROECONOMICS

At the beginning, was a very hot subject—the most interesting part of economics. Two reasons: (1) it was new: (2) the greatest deficiency was in the macro area. Emphasis in those days was on full employment, not growth. Growth came in after the second world war.

The close connection between macro economics and governmental policies.

Three [sic] aspects:

(1) understanding of macro problems by economists

(2) persuading the public—easy in England, very difficult here.

(3) Forecasts of the future—improvement

(4) The effectiveness of methods—also part of forecasts.

On the whole macro-policy has been very successful, sometimes by design, sometimes by luck. The tax reduction of 1964 was the first one for fiscal policy specifically. Less fear of a deficit—witness the present situation. But the tax rise is still a test.

Next step—economic growth. First models—macro type with one kind of goods, and investment with capital coefficients. Still being used, but they don’t get us far.

Growth is to a considerable extent a micro-problem, or at least a mixture of the two. Much more difficult for the government to legislate. How does one improve efficiency? Evaluation of investment projects, of economic effects of education, etc.

Some exaggeration—but the traditional macro theory suffers from its own success.

PART I NATIONAL INCOME AND RELATED ITEMS

First—to state the objectives, such as welfare (whose?), capacity to produce (what?), national prestige, evaluation of policies, curiosity about growth, etc.

How to bring order out of the chaos? Which goods and services, which transactions are to be recorded?

Define the purpose of economic activity:

(1) Welfare of all people (or citizens) of a given area

(2) Welfare of some people only (slaves or relatives excluded). Weights?

(3) Welfare of animals? The old lady and her cat?

The definition of welfare may lead to a definition of activities to be included.

Special activities: warfare (Sparta), capital formation, police protection, etc.

Market vs. non-market goods. Imputed items.

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Evsey D. Domar Papers. Box 17, Folder “Macroeconomics. Theory of National Income and Employment”.

_________________________

THEORY OF INCOME AND EMPLOYMENT
14.451
Fall Term 1967-68

E.D. Domar
J.R. Harris

READING LIST

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.

The “optional” reading has been included for those students who wish to pursue some of the subjects in greater detail. Some of the items on the optional list may be more effective in their exposition, at least for some individuals, than those on the required list.

There exists a good (if a bit obsolete) textbook on macroeconomics—Gardner Ackley, Macroeconomic Theory (The Macmillan Company, New York, 1961). Its knowledge is necessary but not sufficient for passing the course. While several copies are on reserve at Dewey, the acquisition of private copies is recommended.

Students may also find it convenient to acquire the following books: Readings in Macroeconomics edited by M.G. Mueller (which contains a number of relevant articles) and possible the three National Income volumes published by the U.S. Department of Commerce and listed in Section I.

I. NATIONAL INCOME AND RELATED ITEMS
(September 19 – October 12)

REQUIRED

Ackley, Chapters 1-4.

Kuznets, S., National Income and Its Composition, Vol. I (New York, 1941), Chap. 1.

National Income 1954 Edition, A Supplement to the Survey of Current Business, U.S. Department of Commerce (Washington, D.C., 1954), pp. 27-60, 153-58.

U.S. Income and Output, A Supplement to the Survey of Current Business, U.S. Department of Commerce (Washington, D. C., 1958), pp. 50-105.

The National Income and Product Accounts of the United States, 1929-1965. U.S. Department of Commerce (Washington, D.C., 1966). Browse through the statistics tables of the three volumes to find out what is available where.

Bergson, A. The Real National Income of Soviet Russia since 1928, Ch. 3 on “Methods and Procedures”, (Cambridge, Mass., 1961).

Griliches, Z. “Notes on the Measurement of Price and Quality Changes”, in Models of Income Determination, Studies in Income and Wealth, Vol. 28 by the Conference on Research in Income and Wealth, National Bureau of Economic Research, 1964, pp. 381-418.

Leontief, W. W., “Output, Employment, Consumption and Investment,” Quarterly Journal of Economics, Vol. 58 (February, 1944), pp. 290-314.

Leontief, Studies in the Structure of the American Economy (New York, 1953), pp. 27-35.

Dorfman, R., “The Nature and Significance of Input-Output,” Review of Economics and Statistics, Vol. 36 (May, 1954), pp. 121-33.

Domar, E. D., “On the Measurement of Technological Change,” The Economic Journal, Vol. 71 (December, 1961), pp. 709-29. [Read only pp. 709-14, 726-29.]

Board of Governors of the Federal Reserve System, Industrial Production 1959 Revision (Washington, 1960), pp. iii-41. [Look for the method, not for statistical details.]

Domar, E. D., “An Index-Number Tournament,” The Quarterly Journal of Economics, Vol. LXXXI (May, 1967), pp. 169-88.

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 (Princeton, 1955), pp. 253-89.

OPTIONAL READINGS:

Jaszi, G., “The Statistical Foundations of the GNP,” Review of Economics and Statistics, Vol. 38 (May, 1956), pp. 205-14.

Lewis, Wilfred, Jr., “The Federal Sector in National Income Models,” and comments by Hickman and Pechman, in Conference on Research in Income and Wealth, Models of Income Determination (Princeton, 1964), Vol. 28, pp. 233-78.

Bailey, M. J., National Income and the Price Level (New York, 1962), pp. 269-300.

Kuznets, S., National Income and Its Composition (New York, 1941).

Ruggles, R. and N., National Income Accounts and Income Analysis (New York, 1956).

Ruggles, “The U.S. National Accounts,” American Economic Review, Vol. 49, (March, 1959), pp. 85-95.

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

Organization for European Economic Cooperation, 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).

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

United Nations, Yearbook of National Accounts Statistics, the latest issue.

United Nations, National Income Statistics, the latest issue.

United Nations, World Economic Survey and other Economic Surveys.

Studenski, The Income of Nations. Theory, Measurement, and Analysis: Past and Present (New York, 1958). [A wealth of information, particularly of historical character.]

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

Bergson, A. The Real National Income of Soviet Russia Since 1928 (Cambridge, Massachusetts, 1961). (The rest of the book).

Kravis, I. B., “Relative Income Shares in Fact and Theory,” American Economic Review, Vol. 49 (December, 1959), pp. 917-49.

Samuelson, P. A., “Evaluation of Real National Income,” Oxford Economic Papers (New Series), 1950, pp. 1-29.

Samuelson, “The Evaluation of ‘Social Income’: Capital Formation and Wealth,” in F. A. Lutz and D. C. Hague, editors, The Theory of Capital (London, 1961).

Leontief, W. W., The Structure of American Economy (New York, 1941).

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

Taskier, C. E., Input-Output Bibliography 1955-1960, United Nations (New York, 1961).

Evans, W. D., and M. Hoffenberg, “The Interindustry Relations Study for 1947,” Review of Economics and Statistics, Vol. 34, (May, 1952), pp. 97-142.

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

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

Input-Output Analysis: An Appraisal, Studies in Income and Wealth by the Conference on research in Income and Wealth, Vol. 18 (Princeton, 1955).

Solow, R. M. “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics, Vol. 39 (August, 1957), pp. 312-20.

Abramovitz, M., “Resources and Output in the United States Since 1870,” American Economic Review, Papers and Proceedings, Vol. 46 (May, 1956), pp. 5-23, reprinted as National Bureau of Economic Research, Occasional Paper 52 (New York, 1956).

Kendrick, J. W., Productivity Trends in the United States (Princeton, 1961).

Denison, E. F., Sources of Economic Growth in the United States and the Alternatives Before Us (New York, 1962).

Abramovitz, M., “Economic Growth in the United States,” American Economic Review, Vol. 52 (September, 1962), pp. 762-82. [This is a review of Denison’s Book.]

Moorsteen, R. H., “On Measuring Productive Potential and Relative Efficiency,” Quarterly Journal of Economics, Vol. 75 (August, 1961), pp. 451-67.

Fabricant, S., The Output of Manufacturing Industries, 1899-1937 (New York, 1940), particularly Chapter 1.

United Nations, Statistical Office, Index Numbers of Industrial Production, St/Stat/ Ser/ F1 (New York, 1950).

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

Powelson, J. P., National Income and Flow-Of-Funds Analysis (New York, 1960).

Measuring the Nation’s Wealth, National Bureau of Economic Research, Studies in Income and Wealth, Vol. 29 (Washington, D. C., 1964).

READING LIST—SECOND INSTALLMENT
II. GENERAL AGGREGATIVE SYSTEMS—FIRST APPROXIMATION
(October 17 – October 31).

REQUIRED:

Ackley, Parts II and III.

Keynes, J. M., The General Theory of Employment, Interest and Money (London and New York, 1936). [Omit the appendixes to Chapters 6 and 19.]

Note: Neither book is arranged in the order of this reading list. Hence these two assignments apply to other sections of it as well.

Wells, P., “Keynes’ Aggregate Supply Function: A Suggested Interpretation,” The Economic Journal, Vol. 70 (September, 1960), pp. 536-42.

Johnson, H. G. and the discussants, “The General Theory After Twenty-five Years,” American Economic Review Papers and Proceedings, Vol. 60 (May, 1961), pp. 1-25.

Klein, L. R., “The Empirical Foundations of Keynesian Economics,” in K. K. Kurihara, ed., Post Keynesian Economics(New Brunswick, N. J., 1954), pp. 277-319.

OPTIONAL READINGS:

Lekachman, Robert, Keynes’ General Theory: Reports of Three Decades, (New York and London, 1964).

Patinkin, D., Money, Interest, and Prices, Second Edition, (New York, 1965).

American Economic Association, Readings in Business Cycle Theory (Philadelphia, 1944), Essays 5, 7, 8.

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

Metzler, “Three Lags in the Circular Flow of Income,” in Income, Employment and Public Policy, Essays in Honor of Alvin H. Hansen (New York, 1948), pp. 11-32.

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.K

Kurihara, K. K., Post Keynesian Economics (New Brunswick, N. J., 1954).

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

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

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.

Hutt, W. H., Keynesianism: Retrospect and Prospect (Chicago, 1963).

Friedman, Milton, and G. S. Becker, “A Statistical Illusion on Judging Keynesian Models,” Journal of Political Economy, Vol. 55 (February, 1957), pp. 64-75.

III. PRICE FLEXIBILITY AND EMPLOYMENT
(November 2-9)

REQUIRED:

Patinkin, D., Money, Interest, and Prices, Second ed., (New York, 1965), Chapters 9-11.

Pigou, A. C., “The Classical Stationary State,” Economic Journal (December, 1943).

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).

OPTIONAL READINGS:

Readings in Monetary Theory, Essay 13.

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

Lange, O., Price Flexibility and Employment (Bloomington, Indiana, 1944). [Get the main idea and omit the details.]

Friedman, M., “Lange on Price Flexibility and Employment,” American Economic Review (September, 1946).

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

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

IV. The Theory of Interest and the Demand for Money

Required:

Keynes, General Theory, Chapters 13-17.

Hansen, A., Monetary Theory and Fiscal Policy, Chapters 3,4.

Hicks, J. R., Value and Capital, Chapters 11, 12.

Friedman, M., “The Quantity Theory of Money—A Restatement,” Studies in the Quantity Theory of Money.

Patinkin, D., Money, Interest and Prices, 2^nd ed., Chapters VIII, XV.

Tobin, J., “Liquidity Preference as Behavior Towards Risk,” The Review of Economic Studies, February 1958, pp. 65-86.

Optional:

American Economic Association, Readings in the Theory of Income Distribution (Philadelphia, 1946), Essays 22, 23, 26.

American Economic Association, Readings in Monetary Theory, (New York, 1951), Essays 6, 11, 15.

Friedman, M. and A. J. Schwartz, A Monetary History of the United States 1867-1960 (Princeton, 1963).

Gurley, J. G., and E. S. Shaw, “Financial Aspects of Economic Development,” AER, vol. 65, September 1955, pp. 515-38.

Gurley, J. G., and E. S. Shaw, Money in a Theory of Finance (Washington, 1960).

Hart, A. G., and P. B. Kenen, Money, Debt and Economic Activity, Third Ed., (Englewood Cliffs, N. J., 1961).

Lydall, H., “Income, Assets, and the Demand for Money,” Review of Economics and Statistics, vol. 40, February 1958, pp. 1-14.

Lutz, F. A., “The Interest Rate and Investment in a Dynamic Economy,” AER, December 1945).

Matthews, R. C. O., “Liquidity Preference and the Multiplier,” Economica, vol. 28, February 1961, pp. 37-52.

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

Review of Economics and Statistics Supplement, vol. 45, February 1963, on “The State of Monetary Economics.”

Wright, A. L., “The Rate of Interest in a Dynamic Model,” Quarterly Journal of Economics, vol. 72, August 1958, pp. 327-50.

Reading List—Third Installment
V. Consumption and Saving

Required:

Clower, R.W., “The Keynesian Counterrevolution: A Theoretical Appraisal,” in Hahn and Brechling (eds.), The Theory of Interest Rates (Macmillan, 1965).

Davidson, P., “A Keynesian View of Patinkin’s Theory of Employment,” E.J., September 1967.

Leijonhufvud, A., “Keynes and the Keynesians: A Suggested Interpretation,” AER, May 1967.

Ackley, Chapters 10, 11, 12.

Keynes, General Theory, Chapters 8, 9, 10.

Hagen, E.,”The Consumption Function: A Review Article,” Review of Economics and Statistics, XXXVII, Feb. 1955, pp. 48-54.

Duesenberry, J. S., Income, Saving, and the Theory of Consumer Behavior, Chapters 3, 4.

Friedman, M., A Theory of the Consumption Function, Chapters 1, 2, 3, 9.

Ando, A. and Modigliani, F., “The ‘Life Cycle’ Hypothesis of Saving,” AER, March 1963, pp. 55-85; March 1964, pp. 111—113.

Farrell, M. J., “The New Theories of the Consumption Function,” E.J., vol. 69, December, 1959, pp. 678-96.

Lintner, J., “The Determinants of Corporate Saving,” Savings in the Modern Economy (W. Heller, ed.), pp. 230-55.

Lintner, J. and discussants, “Distribution of Income of Corporations Among Dividends, Retained Earnings, and Taxes,” AER, vol. 46, May 1956, pp. 97-118.

Friend, I., and Kravis, I.B., “Entrepreneurial Income, Saving and Investment,” AER, vol. 47, June 1957, pp. 269-301.

Lubell, H., “Effects of Redistribution of Income on Consumers’ Expenditures,” AER, vol. 37, March 1947, pp. 157-170.

________, “A Correction,” AER, vol. 37, December 1947, p. 930.

Domar, E. D., Essays in the Theory of Economic Growth (New York, 1957), pp. 154-67, 195-201.

Bronfenbrenner, Yomana and Lee, “A Study in Redistribution and Consumption,” Review of Economics and Statistics, May 1955, pp. 149-59.

Tobin, J., “Asset Holdings and Spending Decisions,” AER May 1952, pp. 109-23.

Crockett, Jean, “Income and Asset Effects on Consumption: Aggregate and Cross Section,” and comments by D. B. Suits, in N.B.E.R., Models of Income Determination, pp. 97-136.

Tobin, J., “On the Predictive Value of Consumer Intentions and Attitudes,” The Review of Economics and Statistics, vol. 41, February 1959, pp. 1-11.

Optional

Bailey, M. J., “Saving and the Rate of Interest,” Journal of Political Economy, vol. 45, August 1957, pp. 279-305. Reprinted in Landmarks in Political Economy, edited by E. J. Hamilton, A. Rees, and H.G. Johnson (Chicago, 1962), pp. 583-622.

Brown, B., and F. M. Fisher, “Negro-White Savings Differentials and the Modigliani-Brumberg Hypothesis,” Review of Economics and Statistics, vol. 40, February 1958, pp. 79-81.

Brown, E. C., Solow, R. M., Ando, A., and J. Karekan, “Lags in Fiscal and Monetary Policy,” in Commission on Money and Credit, Stabilization Policies (Englewood Cliffs, 1963), pp. 1-165.

Clark, J.M., “Note on Income Redistribution and Investment,” AER, vol. 37, December 1947, p. 931.

Dennison, E. F., “A Note on Private Saving,” Review of Economics and Statistics, August 1958.

Dobrovolsky, S. P., Corporate Income Retention 1915-43 (New York, 1951). (Omit the details.)

Domar, E.D., Essays in the Theory of Economic Growth (New York 1957), pp. 154-67, 195-201.

Ferber, R., “The Accuracy of Aggregate Savings Functions in the Post-War Years,” Review of Economics and Statistics, vol. 37, May 1955, pp. 134-48.

Friedman, M., and G. Becker, “A Statistical Illusion in Judging Keynesian Models,” JPE, vol. 65, February 1957.

Friend, I., and S. Schor, “Who Saves?,” The Review of Economics and Statistics, vol. 41, May 1959, pp. 213-45.

Goldsmith, R. W., A Study of Saving in the United States, three volumes (Princeton, 1952).

Gordon, M. J., “The Optimum Dividend Rate,” presented at the sixth Annual International Meeting of the Institute of Management Sciences, Paris, September 1959. (On library reserve.)

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

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

Rees, and Johnson, H. G., (Chicago, 1962), pp. 583-622.

Klein, L. R., “The Friedman-Becker Illusion,” JPE, vol. 66, December 1958.

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

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

Modigliani, F., and R. Brumberg, “Utility Analysis and the Consumption Function: An Interpretation of Cross-Section Data,” in Kurihara, K. K., (ed.), Post Keynesian Economics (New Brunswick, N. J., 1954), pp. 388-436.

Mincer, J., “Employment and Consumption,” Review of Economics and Statistics, vol. 42, February 1960, pp. 20-26.

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

VI. Investment

Required

Ackley, Chapter 17.

Keynes, General Theory, Chapters 11, 12.

White, W. H., “Interest Inelasticity of Investment Demand,” AER, vol. 46, September 1956, pp. 565-587.

Knox, “The Acceleration Principle and the Theory of Investment,” Economica, August 1952, pp. 269-97.

Meyer, J., and E. Kuh, The Investment Decision, Chapters 2, 8, 12.

Eisner, R., “Investment: Fact and Fancy,” Jorgenson, D.W., “Capital Theory and Investment Behavior,” Kuh, E., “Theory and Institutions in the Study of Investment Behavior,”: all three in AER, May 1963, pp. 237-268.

Lovell, M.C., “Determinants of Inventory Investment,” in N.B.E.R., Models of Income Determination, pp. 177-216.

Solomon, E., ed., The Management of Corporate Capital, pp. 48-55, 67-73.

Witte, J. G., “The Microfoundations of the Social Investment Function,” Journal of Political Economy, vol. 71, October 1963, pp. 441-56.

Optional

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

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

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, December 1958.

Duesenberry, J., Business Cycles and Economic Growth (New York, 1958), Chapters 4-7.

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

Foss, M.F., “Manufacturers’ Inventory and Sales Expectations—A Progress Report on a New Survey,” Survey of Current Business, August 1961.

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

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

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

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.

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

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

Hirschleifer, J., “On the Theory of Optimal Investment Decision,” The Journal of Political Economy, vol. 66, August 1958, pp. 329-352. (An excellent but difficult paper.)

James, E., A Reconsideration of the Theoretical Criteria for Optimum Investment Planning (M.I.T. doctoral dissertation 1961).

Lerner, A.P., “On the Marginal Product of Capital and the Marginal Efficiency of Investment,” Journal of Political Economy, vol. 51, February 1953, pp. 1-14. Reprinted in Landmarks in Political Economy edited by E.J. Hamilton, A. Rees, and H.G. Johnson (Chicago, 1962), pp. 538-58.

Lovell, M.C., “Determinants of Inventory Investment,” in Conference on Research in Income and Wealth, Models of Income Determination (Princeton, 1964), vol. 28, pp. 177-232.

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

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

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.

N.B.E.R., The Quality and Economic Significance of Anticipations Data, A Conference of the Universities—National Bureau Committee for Economic Research (Princeton, 1960).

Penrose, E.T., The Theory of the Growth of the Firm (Oxford, 1959).

Penrose, E.T., “Limits to the Growth and Size of Firms,” AER Papers and Proceedings, vol. 45, May 1955, pp. 531-43.

Pitchford, J.D. and A.J. Hagger, “A Note on the Marginal Efficiency of Capital,” Economic Journal, vol. 48, September 1958, pp. 597-600.

Robinson, J., The Accumulation of Capital (London, 1956). (Wish we had time for it.)

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

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

Lintner, J., “Corporation Finance: Risk and Investment,” in N.B.E.R., Determinants of Investment Behavior (Robert Ferber editor), pp. 215-54.

Jorgenson, D.W., “The Theory of Investment Behavior,” in N.B.E.R., Determinants of Investment Behavior, pp. 129-55.

Miller, M.H. and F. Modigliani, “Estimates of the Cost of Capital Relevant for Investment Decisions under Uncertainty,” in N.B.E.R., Determinants of Investment Behavior, pp. 179-214.

Miller, M.H. and F. Modigliani, “Reply,” in N.B.E.R., Determinants of Investment Behavior, pp. 260-70.

Lovell, M.C., “Sales Anticipations, Planned Inventory Investment, and Realizations,” in N.B.E.R., Determinants of Investment Behavior, pp. 537-80.

Reading List—Fourth Installment
VII. Multiplier and Accelerator

Required

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 9-12.

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. Reprinted in Gordon and Klein (eds.) A.E.A. Readings in Business Cycles (1965).

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

Optional

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

Eisner, R., “Capital Expenditures, Profits, and the Acceleration Principle,” and comments by G.H. Hickman, in Conference on Research in Income and Wealth, Models of Income Determination, (Princeton, 1964), vol. 28, pp. 137-176.

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.

Goodwin, R.M., “The Multiplier” in Seymour E. Harris, ed., The New Economics (New York, 1947), pp. 482-99.

Chenery, H.B., “Overcapacity and the Acceleration Principle,” Econometrica, vol. 20, January 1952, pp. 1-28.

Caff, J.T., “A Generalization of the Multiplier-Accelerator Model,” The Economic Journal, vol. 69, March 1961, pp. 36-52.

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.

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.

Friedman, M. and D. Meiselman, “The Relative Stability of Monetary Velocity and the Investment Multiplier in the United States, 1897-1958,” Stabilization Policies, Commission on Money and Credit (New Jersey, 1963), pp. 165-268.

Hester, D.D., “Keynes and the Quantity Theory: A Comment on the Friedman-Meiselman CMC Paper,” the reply by Friedman and Meiselman, and the rejoinder by Hester, The Review of Economics and Statistics, vol. XLVI, November 1964, pp. 364-377.

VIII. Employment and Inflation

Required

Ackley, Chap. XVI.

Bronfenbrenner, M. and F.D. Holzman, “Survey of Inflation Theory,” American Economic Review, LIII (Sept., 1963), pp. 593-661.

Higher Unemployment Rates, 1957-60, “Structural Transformation or Inadequate Demand,” Subcommittee on Economic Statistics of the Joint Economic Committee, Washington, 1961.

Hines, G.G., “Trade Unions and Wage Inflation in the United Kingdom,” R.E. Studies (October 1964).

Killingsworth, C.L., “Automation, Jobs and Manpower,” from Nation’s Manpower Revolution, Hearings before the Subcommittee on Employment and Manpower of the Committee on Labor and Public Welfare, 88^th Congress, 1^stsession, Washington, D.C., part 5, pp. 1461-1480.

Lipsey, Richard, “The Relation Between Unemployment and the Rate of Change in Money Wage Rates in the United Kingdom, 1862-1957: A Further Analysis,” Economica N.S. 27 (Feb. 1960). Reprinted in Klein and Gordon (eds.), Readings in Business Cycle Theory (1965).

Perry, George L., Unemployment, Money Wage Rates and Inflation (1966).

Phillips, “The Relation Between Unemployment and the Rate of Change of Money Wage Rates,” Economica (Nov., 1958), pp. 283-99.

Samuelson, P.A. and R. Solow, “Analytical Aspects of Anti-Inflation Policy,” American Economic Review (May 1960), pp. 177-94.

Solow, R.M., “The Case Against the Case Against the Guidelines,” in G. Schultz (ed.), Guidelines (1966).

Optional

Smithies, A., “The Behavior of Money National Income Under Inflationary Conditions,” Readings in Fiscal Policy, pp. 121-36.

Machlup, F., “Another View of Cost-Push and Demand-.Pull Inflation,” Review of Economics and Statistics, XLII, (May 1960), pp. 125-39.

Galbraith, J.K., “Market Structure and Stabilization Policy,” Review of Economics and Statistics (May 1957), pp. 124-33.

Hicks, J.R., “Economic Foundations of Wage Policy,” Economic Journal, (Sept. 1955), pp. 389-404.

Morton, W.A., “Trade Unionism, Full Employment and Inflation,” American Economic Review, (March 1950), pp. 13-39.

Slichter, S., “Do Wage-Fixing Agreements Have an Inflationary Bias,” American Economic Review, (May 1954), pp. 332-46.

Berman, B., “Alternative Measures of Structural Unemployment,” Employment Policy and the Labor Market, A.M. Ross, ed.

Joint Economic Committee, Higher Unemployment Rates, 1957-60, U.S. 87^th Congress.

Galloway, “Labor Mobility, Resource Allocation and Structural Unemployment,” American Economic Review (Sept. 1963), pp. 694-716.

Gordon, R.A., “Has Structural Unemployment Worsened,” Industrial Relations (May 1964), pp. 53-77.

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Evsey D. Domar Papers. Box 15, Folder “Macroeconomics. Old Reading Lists”.

______________________

The Theory of Income and Employment
14.451
E. D. Domar [and] J. R. Harris

Midterm Examination
November 30, 1967

(One hour and fifteen minutes)

Please answer all questions. Use a separate book for each question.

(25%) After the discovery that an hour of dancing a day increases a person’s efficiency, a hitherto unemployed dancing teacher was hired (to teach dancing to their employees or themselves) by the following units, one at a time;
1. A beginning sculptor
2. The Ford Foundation
3. Sears, Roebuck & and Co.
4. The Town of Concord
5. The Head of the Mafia
6. The Embassy of South Vietnam in Washington

Disregarding any indirect effects (such as the multiplier), indicate and explain how national income and product and the relevant subdivisions in money and in real terms are affected by this act on the assumption that (1) dancing is really effective, and (2) that it is not. Your reasoning is at least as important as your answer.

(20%) “The Federal Reserve-type index is a poor numerator for the measurement of the Residual (Total Factor Productivity), or of any other productivity.”
Comment fully.
A visitor to M.I.T. has suggested recently that if the Federal Reserve Board buys bonds in the open market in periods of unemployment, then real output, prices and the interest rate—all three—will increase.
Are these predictions consistent with those of Patinkin and Keynes? How would their predictions and your own results (you may or may not agree with those sages) be changed under conditions of full employment? Explain fully. (35%)
(20%) A Russian economist once stated that Keynes’ variables were as follows:

Independent variables	Dependent variables
1. Propensity to consume	1. Savings
2. Marginal efficiency of capital	2. Investment
3. Rate of interest	3. Level of employment
4. Liquidity preference

Comment. Be specific

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Evsey D. Domar Papers. Box 17, Folder “Macroeconomics. Examinations (1 of 3)”.

______________________

THE THEORY OF INCOME AND EMPLOYMENT
14.451
E. D. Domar [and] J. R. Harris

FINAL EXAMINATION
January 23, 1968

Three Hours

PLEASE ANSWER ALL QUESTIONS. THEY CARRY EQUAL WEIGHTS. USE A SEPARATE BOOK FOR EACH QUESTION.

(A) National Product is defined by the U.S. Department of Commerce as the sum of all final goods (and services), each multiplied by its price.

(B) National Income is defined by it as the sum of all net incomes of certain recipients.

Discuss the following questions:

1. What is a final good (or service) in (A)? What is the reason for this definition?
2. What is the rationale for multiplying each good (or service) by its price? What assumptions are implied in this procedure? Are they realistic?
3. Whose net incomes are aggregated? Why? What is a net income? What assumptions does this procedure imply? Are they realistic?
4. Could you suggest changes or improvements in the above procedures? Justify them.

1. “A high ratio of depreciation to investment is a sign of old age.”
2. Why is a special definition of money required in the “Price Flexibility and Employment” problems? What is the definition? What assumptions does it rest on?
3. “If the Balanced-Budget Multiplier is correct, isn’t Say’s Law also correct?

Assume that this country is being threatened by inflation and discuss the pros and cons of the following measures allegedly directed against it. Whenever you can, indicate the positions which several economists whose theories were discussed in the course would take on these measures:
1. (i) A temporary Federal sales tax on all goods and services, or
  (ii) a permanent tax of the same kind.
2. (i) A redistribution of income from wages to profits, or
  (ii) a more equal distribution of income.
3. Setting the rate of growth of labor productivity in each industry as the limit for the rate of increase of wages in that industry.
4. (i) Remitting domestic taxes on American exports, or
  (ii) a reduction in import duties.
5. A tax on all capital goods.

1. Define and discuss the applicability to investment decisions of the marginal efficiency of investment (also called marginal efficiency of capital, or the internal rate of return) and the discounted present value. Can they give different ranking of investment projects? Why? Which measure would you use?
2. What major modifications of investment criteria would be required if the investment was done by the U.S. Government in times of unemployment?
3. Same, if the investment was done by the government of some underdeveloped country?

Attempts to estimate the parameters of an aggregate consumption function for the U.S. have yielded the following results:
1. Cross-section and short-term series analyses estimate a marginal propensity to consume somewhere in the range of .55-.70, this magnitude being lower than the average propensity to consume.
2. Long-run time series analyses estimate a marginal propensity to consume equal to the average propensity of about .88.

Compare and contrast the assumptions, rationale and implications of the “Previous Peak Income”, “Permanent Income”, and “Lifetime Cycle” hypotheses, each of which purports to reconcile the above observations.

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Evsey D. Domar Papers. Box 17, Folder “Macroeconomics. Final Exams (2 of 3)”.

Image Source: Evsey D. Domar at the MIT Museum legacy website.

Tags Domar, HarrisJR

Courses Curriculum M.I.T.

M.I.T. Student evaluations of first term core macroeconomics. Domar, 1967-69

Post author By Irwin Collier
Post date 2018-05-03

The economic theory core courses at M.I.T. during the four academic years 1966/67 through 1969/70 consisted of two terms of microeconomic theory (“Economic Analysis”, 14.121 and 14.122) and two terms of macroeconomic theory (“Theory of Income and Employment”, 14.451, and “Economic Growth and Fluctuations”, 14.452). The instructors for the course by academic year were:

	14.121 (Term 1)	14.122 (Term 2)	14.451 (Term 1)	14.452 (Term 2)
1966/67	Bishop	Samuelson	Eckaus	Solow
1967/68	Bishop	Samuelson	Domar	Solow
1968/69	Bishop	Samuelson	Domar	Foley
1969/70	Bishop	Samuelson	Domar	Foley

A retrospective evaluation survey of these four courses was conducted (probably) sometime in late-1970. The original student responses wound up in Evsey Domar’s files and can be found today in his papers in the Economists’ Papers Archive at Duke University.

In other posts we have the responses for Robert Bishop’s Economic Analysis (14.121), Paul Samuelson’s term of Economic Analysis (14.122), and Robert Solow’s/Duncan Foley’s Economic Growth and Fluctuations (14.452).

In this post we’ll look at Evsey Domar’s course, Theory of Income and Employment (14.451), that covered the topics:

national income,
general aggregative systems,
price flexibility and employment,
theory of interest and demand for money,
consumption and savings,
investment,
multiplier and accelerator,
employment and inflation.

First I provide the information about the course found in the announcement in the MIT course catalogues that essentially remained unchanged for the years from which the evaluations were solicited. The official course staffing and enrollment data that follow the course announcement confirm that Evsey Domar taught 14.122 in the last three years surveyed. We also learn the names of the two instructors who taught the recitation sections for Richard Eckaus and Evsey Domar.

Next I include the cover letter for the questionnaire sent out along with a tabulation of responses to the qualitative questions regarding the amount of economics presumed, the amount of mathematics and the balance of the course among the topics nominally covered.

Finally, and very much worth reading!, the interested visitor will find transcriptions of the written student comments concerning Domar’s course.

____________________

Announcement in the Course Catalogues

14.451T Theory of Income and Employment(A)

[Eckaus]
Prereq.:14.05
Year:G (1) 4-0-8

Examination of principal determinants of aggregate levels of income and employment.

Source: MIT. Catalogue 1966-67: p. 291.

page 219:

“ ‘T’ at the end of a subject number indicates that (1) a change has been made in the content or units of the subject or (2) the number was previously assigned to a different subject.
(A)’ following the name of a subject indicates that it is an approved subject for a graduate degree…
‘G’ is a graduate subject.
The time distribution of the subject, showing in sequence the units allotted to: recitation and lecture; laboratory, design, or field work; and preparation. Each unit represents 15 hours of work. The total unit credit for a subject is obtained by adding together all the units shown. One unit of recitation or lecture credit, and two units of laboratory or design credit, are each equivalent to one semester hour.”

Catalogue 1967-68: Course number drops T; Domar is the instructor, p. 307

Catalogue 1968-69: Prerequisite for 14.451 changed to 14.06T, p. 312

Catalogue 1969-70: no change, p. 294.

____________________

Course staffing and enrollments 14.451
First term of 1966-1969

1966: Term I. 3 hours/week. 44 regular students, 2 Listeners.

Professor Eckaus with Instructor J. R. Harris

1967: Term I. 3 hours/week 55 regular students, 4 Listeners.

Professor Domar with Instructor J. R. Harris

1968: Term I. 3 hours/week, 55 regular students, 3 Listeners

Professor Domar with Assistant S. Lewis (1 hour per week recitation)

1969: Term I. 3 Hours/week. 51 regular students, 2 Listeners.

Professor Domar with Assistant Professor J.R. Harris (1 hour per week recitation)

Source:M.I.T. Archives. Department of Economics Records. Box 3, Folder “Teaching Assignments”

____________________

THEORY QUESTIONNAIRE

There are two problems that the theory sequence must continually face if it is going to be as useful as possible. The first of these is adjusting to the changing background of the incoming students. The second is adjusting to the changing needs of students who will use the theory course as background for other courses and research. This questionnaire is an attempt to gather information of the current state of the theory sequence relative to these two questions. The enclosed forms contain an outline of each of the theory courses and asks three questions.

These pertain to each heading in the course outline:

Does the course assume too much or too little economics background in this area?
Does the course use too much or too little mathematics in this area?
Given the overall constraint of time, is this area gone into too deeply or not deeply enough?

For each of the questions there is room to check too much or too little, no check at all to be given if the course is about right. Please put the year in which you took the theory courses at the top of each page. There is also room in each area for more detailed comment. Use this space to be specific on the changes in the given areas which you feel would be improvements—particularly in answer to question 3. Use the space at the bottom of each page to comment on topics that are not on the list, but should appear in the course; or to make other comments we haven’t thought to ask for.

Please return to 52-380 (Miss Pope) before Tuesday, October 21.

[Summary from 20 student responses:
of which 8 from 1967-68; 10 from 1968-69; 2 from 1969-70]

Ec 451:

Economic background

Math

Coverage

National Income

Too little: 4

Too much: 0

Too little: 1

Too much: 1

Too deep: 10

Not deep enough: 2

General Aggregative systems

Too little: 3

Too much: 1

Too little: 2

Too much: 0

Too deep: 1

Not deep enough: 4

Price Flexibility and employment

Too little: 2

Too much: 1

Too little: 1

Too much: 0

Too deep: 3

Not deep enough: 4

Theory of interest and demand for money

Too little: 2

Too much: 1

Too little: 1

Too much: 0

Too deep: 1

Not deep enough: 7

Consumption and savings

Too little: 3

Too much: 0

Too little: 1

Too much: 0

Too deep: 2

Not deep enough: 5

Investment

Too little: 2

Too much: 0

Too little: 1

Too much: 0

Too deep: 0

Not deep enough: 9

Multiplier and accelerator

Too little: 2

Too much: 0

Too little: 2

Too much: 0

Too deep: 0

Not deep enough: 5

Employment and inflation

Too little: 2

Too much: 1

Too little: 1

Too much: 0

Too deep: 0

Not deep enough: 13

Note: the responses from Richard Eckaus’ time (first term, 1966-67) have been excluded from this table, so the above are solely for the three years Evsey Domar taught the theory of national income and employment.

From the student comments
[each bullet point from a different student]

YEAR TAKEN: 1967-68

The Worst Course of the sequence, especially the section’s instructor. Applies to all these points. Tries to cover too much; being an authority in (almost) nothing. Applies to both instructors.
I don’t remember 451 very well—it was an awfully unstructured course (+ remains so in my mind), mybe because of the variety and profuseness of the subject matter. Too little guidance from Professor Domar + Harris—i.e., their considered opinion should be given more often.
National income: Too much on statistics, tho I agree some is needed. That problem in class was a pile of crap—I can’t add anyway.
General aggregative systems: more tournaments needed.
Theory of interest and demand for money: more needed, and more guidance from profs.
Investment: more needed and more guidance from profs.
Price flexibility and employment: I thought the section of the course on Patinkin was extremely interesting and well done.
Consumption and saving: A unified treatment of the competing theories would be preferred to the n-th repetition of Duesenbery, Friedman, Modigliani.
[for both 451 and 452]: As these courses were taught two years ago there was too little integration of the two terms. Partly this reflects a real gap in macro theory itself; I would like to see an integration of the Patinkin-type of analysis into growth theory.

YEAR TAKEN: 1968-69

National income: good that this is done, even if not very pleasant at the time
Price Flexibility and employment: Too much on Patinkin.
Employment and inflation: More important to cover this Phil curve., monet v. fiscal pol debate etc. than Patinkin
Perhaps 451 could have assumed more backgrd as it tended to be slow going sometimes. But that’s a minor point. And better that way than to blur over the material too fast. 14.451 exam questions tended to be well-set + testing e.g. the opera + arias.
National Income: The index no. prob. was discussed at too great length and too little depth.
General Aggregative systems/Price flexibility and employment: These two topics were covered fairly well.
Theory of interest and demand for money: coverage sketchy
Consumption and savings: very well discussed
Investment: All I know about investment I learned in other courses—14.452, monetary, econometrics.
Multiplier and accelerator: The Samuelson multiplier-accelerator article is read in 14.452; all of the items covered in 14.451 under this heading are silly.
Employment and inflation: no coherent coverage at all.
Multiplier and accelerator: Difference equations ought to be specifically covered, with some applications.
National Income “+index numbers”: Time should have been more carefully allocated in order to include appropriately the last part of the course.
National Income and General aggregative systems: too much, need new, simpler national income.
Pretty good presentation of money topics.
No coverage of Investment/Multiplier+Accelerator/employment and inflation at the end.
National income: Although this certainly should be covered—too much time is spent on this topic.
General aggregative systems: Nothing is done in the course on modern macro-static models & e.g.—the Correspondence Principle. The course must assume a complete background in standard macro—because this is hardly covered.
Much too much time is spent on Patinkin—which could be sued for covering Modern Macro-Static models.
Price flexibility and employment: the basics of Keynes should be discussed more.
Employment and inflation: inflation models of newer sort should be included.
I don’t want N.I. removed from 451, just reduced!
[comment for all topics besides national income]: I realize that this is an impossible preference [to have more depth in all the other topics of 451], maybe the answer is another course in macro theory! or less of other things in 452.
[For both 451 and 452]: I do not like the Socratic method, especially when applied to solving differential equations. All courses tend to move too slowly at the beginning.
National income: It was a mistake to spend so much time on this + none on inflation—change priorities.
Investment: Treated a little superficially
Multiplier and accelerator: Use difference equation techniques.
Employment and inflation: This was not covered at all unfortunately.
In general 452 was good, 451 seemed weak.

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library, Economists’ Papers Archive. Evsey D. Domar Papers.Box 16, Folder “Student Evaluations (1 of 2)”.

Image Source: MIT Museum website

Tags Domar, Eckaus, HarrisJR

MASSACHUSETTS INSTITUTE OF TECHNOLOGY The Graduate Program in Economics 1974 – 1975

TABLE OF CONTENTS

MASSACHUSETTS INSTITUTE OF TECHNOLOGY The Graduate Program in Economics 1974–75

M.I.T. THE THEORY OF INCOME AND EMPLOYMENT 14.451 1967-68 [first session]

I. ADMINISTRATIVE QUESTIONS

II. THE PURPOSE AND NATURE OF THE COURSE

III. COMMENTS ON MACROECONOMICS

PART I NATIONAL INCOME AND RELATED ITEMS

THEORY OF INCOME AND EMPLOYMENT 14.451 Fall Term 1967-68

READING LIST

I. NATIONAL INCOME AND RELATED ITEMS (September 19 – October 12)

READING LIST—SECOND INSTALLMENT II. GENERAL AGGREGATIVE SYSTEMS—FIRST APPROXIMATION (October 17 – October 31).

III. PRICE FLEXIBILITY AND EMPLOYMENT (November 2-9)

IV. The Theory of Interest and the Demand for Money

VI. Investment

Reading List—Fourth Installment VII. Multiplier and Accelerator

VIII. Employment and Inflation

The Theory of Income and Employment 14.451 E. D. Domar [and] J. R. Harris

Midterm Examination November 30, 1967

THE THEORY OF INCOME AND EMPLOYMENT 14.451 E. D. Domar [and] J. R. Harris

FINAL EXAMINATION January 23, 1968

Announcement in the Course Catalogues

Course staffing and enrollments 14.451 First term of 1966-1969

THEORY QUESTIONNAIRE

[Summary from 20 student responses: of which 8 from 1967-68; 10 from 1968-69; 2 from 1969-70]

From the student comments [each bullet point from a different student]

MASSACHUSETTS INSTITUTE OF TECHNOLOGY
The Graduate Program in Economics
1974 – 1975

MASSACHUSETTS INSTITUTE OF TECHNOLOGY
The Graduate Program in Economics
1974–75

M.I.T.
THE THEORY OF INCOME AND EMPLOYMENT
14.451
1967-68
[first session]

THEORY OF INCOME AND EMPLOYMENT
14.451
Fall Term 1967-68

I. NATIONAL INCOME AND RELATED ITEMS
(September 19 – October 12)

READING LIST—SECOND INSTALLMENT
II. GENERAL AGGREGATIVE SYSTEMS—FIRST APPROXIMATION
(October 17 – October 31).

III. PRICE FLEXIBILITY AND EMPLOYMENT
(November 2-9)

Reading List—Fourth Installment
VII. Multiplier and Accelerator

The Theory of Income and Employment
14.451
E. D. Domar [and] J. R. Harris

Midterm Examination
November 30, 1967

THE THEORY OF INCOME AND EMPLOYMENT
14.451
E. D. Domar [and] J. R. Harris

FINAL EXAMINATION
January 23, 1968

Course staffing and enrollments 14.451
First term of 1966-1969

[Summary from 20 student responses:
of which 8 from 1967-68; 10 from 1968-69; 2 from 1969-70]

From the student comments
[each bullet point from a different student]