New Economic School Annual Report, 2004-2005

РОССИЙСКАЯ ЭКОНОМИЧЕСКАЯ ШКОЛА

N E W E C O N O M I C S C H O O L

New Economic School
Annual Report,
2004-2005

Moscow, August 2005
TABLE OF CONTENTS

RECTOR’S INTRODUCTION ..............................................................................................4 ACADEMIC PROGRAM........................................................................................................7

NES ACADEMIC PROGRAM .....................................................................................................7 NES ACADEMIC REQUIREMENTS.............................................................................................9

FACULTY...............................................................................................................................11

FULL-TIME FACULTY MEMBERS ...........................................................................................11

Tenured Faculty................................................................................................................. . 1 1 Tenure-Track Facult y . ....................................................................................................... . 1 1

PART-TIME FACULTY MEMBERS ...........................................................................................12 VISITING FACULTY ................................................................................................................12

RESEARCH............................................................................................................................13

RESEARCH CENTER ...............................................................................................................13

Projects.............................................................................................................................. . 1 3 Conferences ....................................................................................................................... . 1 4 Publication s . ...................................................................................................................... . 1 5

SELECTED PUBLICATIONS OF NES FACULTY.........................................................................16 NES AND CEFIR SEMINARS..................................................................................................18

NES/CEFIR Public Seminars ............................................................................................ . 1 8 CEFIR/NES Research Seminars........................................................................................ . 1 8 NES/CEFIR Job Market Seminars .................................................................................... . 1 9

ZVI GRILICHES DISTINGUISHED LECTURES ...........................................................................20

STUDENTS AND APPLICANTS.........................................................................................21

PROFILE OF CURRENT STUDENTS ..........................................................................................21

Table 1: Students Enrolled at NES in 2004-2005 ............................................................. . 2 1

RECRUITING ACTIVITIES........................................................................................................21

Table 2: Applicants: 2004 vs 200 5 . ................................................................................... . 2 1

ENTRANCE EXAMINATIONS ...................................................................................................22 TUITION AND FINANCIAL AID................................................................................................22

Figure 1: Composition of the Incoming Classes With Respect to Tuition Waivers .......... . 2 3

GRADUATES.........................................................................................................................24

2005 GRADUATES AT A GLANCE ...........................................................................................24 CAREER OF NES GRADUATES ...............................................................................................24

Selected Employers in Russi a . ........................................................................................... . 2 5 Study Abroad ..................................................................................................................... . 2 5 Figure 2: Number and Share of the Students Going on to Get a PhD, 1994-2005........... . 2 6 Academic Placement.......................................................................................................... . 2 6 Table 3: Academic Placement of NES Graduate s . ............................................................ . 2 6 NES Graduates Baromete r . ............................................................................................... . 2 9 Table 3: Current Job Status and Location of the NES Graduates ............................................ . 2 9 Figure 3: Average income of NES graduates in 2004....................................................... . 2 9 Figure 4: Distribution of NES Graduates Income in 2004 ............................................... . 2 9

OUTREACH...........................................................................................................................31

REGULAR OUTREACH WORKSHOPS.......................................................................................31 REGIONAL SEMINAR FOR EXCELLENCE IN TEACHING............................................................31

2

NES Annual Report 2004-2005

EXECUTIVE EDUCATION ........................................................................................................31

FACILITIES...........................................................................................................................33

LIBRARY................................................................................................................................33 COMPUTER RESOURCES.........................................................................................................33

FINANCES..............................................................................................................................35

Figure 5: Distribution of NES Revenues in AY 2004-2005 by Sourc e . ............................. . 3 5 Figure 6: Sources of Revenues in AY 2005-2006, plan..................................................... . 3 5

MAJOR FUNDERS ...................................................................................................................35 AMERICAN FRIENDS OF NES (AFNES).................................................................................36

FINANCIAL SUPPORT FROM RUSSIAN BUSINESS, ORGANIZATIONS, AND INDIVIDUALS..........36

COST RECOVERY AND SELF-FINANCING ................................................................................36

Figure 6: Tuitions and Loans in 2002-2005...................................................................... . 3 7

GOVERNANCE .....................................................................................................................38

BOARD OF DIRECTORS (BOD) ...............................................................................................38 INTERNATIONAL ADVISORY BOARD (IAB)............................................................................38 RUSSIAN ADVISORY BOARD (RAB) ......................................................................................38 RECTORATE...........................................................................................................................39 ACADEMIC COMMITTEE ........................................................................................................39 ADMISSIONS COMMITTEE ......................................................................................................40

APPENDICES.........................................................................................................................41

APPENDIX 1: COURSE OFFERINGS FOR 2004-2005................................................................41

Pre-Academic Year............................................................................................................ . 4 1 Module I: September 6 — October 31, 2004.................................................................... . 4 1 Module II: November 1 — December 26, 2004 ................................................................ . 4 3 Module III: January 10 — March 6, 2005 ........................................................................ . 4 4 Module IV: March 7 — May 1, 2005................................................................................. . 4 6 Module V: May 10 — July 3, 2005.................................................................................... . 4 8 English Language Instruction ........................................................................................... . 4 9

APPENDIX 2: RESEARCH PROFILES OF THE TENURED-TRACK FACULTY ...............................50

APPENDIX 3: THESES ABSTRACTS, 2004-2005 .....................................................................63 APPENDIX 4: SUMMARY OF RESEARCH PROJECTS, 2004-2005 .............................................78 APPENDIX 5: CONFERENCE PROGRAMS ................................................................................85

XVI Research Conference (October 2004)........................................................................ . 8 5 XVII Research Conference (May 2005)............................................................................. . 8 7

APPENDIX 6: NES PUBLICATIONS, 1998-2005......................................................................90

Best Student Paper s . .......................................................................................................... . 9 0 Working Paper s . ................................................................................................................ . 9 3 Lectures note s . ................................................................................................................... . 9 6

APPENDIX 7: BACKGROUND INFORMATION ON STUDENTS ....................................................97

Class of 2005 ..................................................................................................................... . 9 7 Class of 2006 ................................................................................................................... . 1 00

APPENDIX 8: APPLICANT PROFILE 2005 ..............................................................................102 APPENDIX 9: PLACEMENT OF CLASS OF 2005......................................................................103 APPENDIX 10: NES DIRECTORY ..........................................................................................105

3

RECTOR

The academic year 2004-05 has brought the School many changes and achievements. We have trained another 50 MAs in economics. The School’s faculty has expanded further and has made a breakthrough in terms of publications in the very top academic journals. The School has gone through a governance reform and a management succession. NES has also launched a bank-financed student loan program. Finally, the School has received first commitments for contributions to its endowment.

The most important change – certainly not an achievement – has been the retirement of Gur Ofer from the position of the Coordination of the International Advisory Board. Gur, a co-founder of the School in 1992 and the Coordinator of the IAB since then. He has essentially envisioned the School’s future and sketched the most unrealistic long-term plans in turbulent times when planning horizons spanned for months rather than decades. Building the School and implementing these plans required scores of truly outstanding individuals; many of them were united around Gur’s vision and inspired by his leadership.

In our annual conference in May we held a special session in Gur’s honor. While we hope that Gur has enjoyed it, we have only began to repay our debt to Gur and will continue to find ways to acknowledge the contribution of the missionary who made the School what it is today. The best way to do that is certainly to make sure that the School continues to accomplish the most ambitious goals set by Gur. In particular, last year we have managed to further increase our faculty by hiring Sergey Stepanov, PhD Free University of Brussels, NES’ 00. Sergey is joining NES in September 2005 to work in the field of corporate finance and microeconomics. We have also integrated faculties of NES and of the Center for Economics and Financial Research (CEFIR). The unified faculty of NES and CEFIR (now officially becoming “CEFIR at NES”) includes 13 full-time assistant and associate professors and 3 half-time full professors. Thirteen full-time faculty are certainly not enough for a sustainable department of economics, but it is thirteen more faculty members than we had in 1998. Also, it is already sufficient to be able to afford regular sabbaticals which are common in the Western universities, and are especially important in a small department like ours. After the sabbaticals of Ekaterina Zhuravskaya and myself in Princeton a year ago, and Konstantin Sonin’s last year, we will have Oleg Zamulin on leave to Stockholm next year. While we will miss Oleg’s teaching and have hard time replacing Oleg as Head of Admissions and Head of Outreach, we are happy that Oleg will have more time for his research.

The other achievement is the breakthrough in quality of faculty publications. Last year, the faculty’s work started to come out in the very top academic journals, including Quarterly Journal of Economics, Econometrica and American Economic Review.

In September 2004, IAB has also made the first tenure promotion. As it was my own case, I am not aware of the details, but it is my understanding that the process was very similar to those in the American research universities, with five letter writers from the best departments of economics.

Being rational homo economicus, we have never expected to replace Gur with one person however bright this person could be. Therefore we have created a collegial governance body, the Board of Directors, chaired by Maxim Boycko and including Erik Berglof, Arkady Dvorkovich, Barry Ickes, Valery Makarov (who has become the President of the School), and myself as Rector. The Board meets bimonthly to make strategic and operational decisions, evaluates the management of the School, and approves budget, audit, and executive compensation. On academic matters such as curriculum development, appointments and promotions of the faculty, the Rector and the Board consult International Advisory Board, chaired by Erik Berglof, which meets twice a year. The School’s Russian Advisory Board, also chaired by Maxim Boycko, meets annually and advices the School on its relations with Russia’s economics and economic policy community.

Such a governance structure is very similar to those at Western universities and greatly facilitates running the School as it clearly delineates authority and defines the responsibilities. Being the major guardian of the School’s long-term strategy and mission, the newly created Board has launched a re-evaluation of the School’s mission. The process took several months. The special Task Force, led by Assistant Professor Andrei Bremzen, has interviewed 50 stakeholders in Russia and abroad. In the end of the day, the Board decided that the School’s mission should be broadened but not substantially. The School’s primary focus should remain to maintain quality and focus on excellence in economics education and research. Yet, the new mission and the five year strategic plan to be developed next year will also include further efforts to provide NES graduates with skills in finance and in economic policy. The latter will enhance their career opportunities in Russia’s private and public sector.

4

The changes in governance also included changes within the School. Victor Polterovich was appointed the First Vice Rector, Alexander Fridman assumed a position of Advisor to the President. Zarema Kasabieva has become Vice Rector for Academic and Student Affairs. Oleg Adamovsky, the General Director at CEFIR, has also become Chief Operating Officer at NES.

In July 2005, NES graduated its twelfth class bringing the total number of graduates to 469. Out of them, almost 300 are working in Russia, including 200 in the private sector, mostly in international companies, investment banks, and consulting. Others pursued a career in academia, government and think tanks, including NES and CEFIR. About 170 graduates are working or studying abroad. Out of 160 NES graduates who went to continue their studies in the top PhD programs (such Harvard, MIT, Chicago, Stanford, Yale, Northwestern, Columbia, NYU, Penn, LBS, Toulouse and others), 50 have already completed their degrees. More than 30 PhDs work as academic economists in Western universities including MIT, Stanford, Yale, Columbia, Penn, NYU, LSE and others, in the World Bank and IMF, 10 are working in the private sector abroad, and 10 have returned to Russia.

Our recent survey of graduates has shown that NES education pays off whatever career the graduates pursue. Not only the starting salaries are high, averaging USD 15K in 2004. NES graduates also see their incomes grow fast as the job market rewards the fundamental skills they possess. The average and median income after 10 years upon graduation is USD 60 thousand.

The majority of 2005 graduates are also staying in Russia. Out of 50 graduates, only 9 will continue their studies in doctoral programs abroad, 5 will work in academia and think tanks in Russia, and others will work in the private sector. While our program is not exactly built for training private sector economists for Russia, the recent introduction of applied courses and applied specialization in finance have greatly improved our graduates’ career potential in Russia. The majority of our graduates find jobs well ahead of graduation. Also, unlike the previous years, they can afford to request starting the work upon graduation rather than discontinuing their studies whenever a position opens up. This also reflects a growing competition for NES graduates among Russian employers. The latter are now more active in targeting NES students specifically. Last year we have received tens of direct requests for candidates. There have been 10 employer presentations throughout the year – quite a few given the size of the graduating class. Yet, we certainly know that we can do better in terms of placing the students and maintaining the links to NES alumni. This is why we have established a special position of Admissions, Placement, and Alumni Coordinator and are very happy to have Svetlana Volkova assume this job starting September 2005. We will also continue to enrich our curriculum with Russia-related content wherever it is not compromising the international compatibility and quality of our program.

Similarly to the years of “Russian boom” of 1996-98, only 20% of our graduates apply for PhD programs abroad. Counting graduates of previous classes, this year we placed only 12 people in the doctoral programs in the US and Europe. As the numbers are going down, the quality remains high: our graduates are going to Harvard, Stanford (3 of them!), Yale, Penn, Duke, Toulouse, etc. Of course, one should not compare the current situation in Russia’s economy with that of 1998 when the meltdown put many fresh NES graduates out of their jobs. Yet, the 1998 experience has also provided a lesson that it is never too late to reconsider. NES program provides transferable and durable skills so that whenever a NES alumnus reconsiders the decision to stay in Russia, there is always an option to continue the studies in a PhD program abroad.

NES has also made a reasonable progress in the direction of financial sustainability. Even losing two major donors – the Eurasia Foundation and the World Bank – and seeing a substantial increase in rent, NES has managed to avoid financial crisis by undertaking certain costcutting measures and by launching a bankfinanced student loan program. The leading Russian retail lending bank Russian Standard has agreed to provide student loans to NES students for the full amount of tuition for 12 years with 2 year grace period. While the interest is unprecedentedly low for Russia, it is still as high as 10% p.a. in dollar terms which amounts to $144 monthly payments for 10 years upon graduation. This is why it is crucial to make sure that (i) NES graduates are able to find highly-paid jobs (ii) communicate the level of private returns to NES education to applicants. We are currently seeking ways to subsidize interest rates but so far it seems hard as the subsidies are taxed at 35% rate and too costly to administer.