Northwestern University - Department of Economics Graduate Connection Vol. 19 No. 2 December 2013

News...... 1 News Duval. This fellowship is awarded annually to a graduate student who has Events ...... 2 distinguished him- or herself in both Teaching ...... 2 Happy Holidays! teaching and research. Formal Announcements ...... 4 Funding Opportunities ...... 5 The faculty and staff extend their best Susan Bies Research Prizes Notes ...... 6 wishes for a happy holiday season. The University will be officially closed on Also at the Buffet, the Department Tuesday December 24, Wednesday 25, presented the annual Susan Schmidt Bies Tuesday 31 and Wednesday January 1. Prizes for Doctoral Student Research on The winter quarter commences on Monday, Economics and Public Policy. The awards January 6. are given to the best public policy papers

presented as part of the Economics 501 Distinguished Teaching seminar. The winners for 2012-13 were

Assistants Arlene Chu for a paper on how households lower the prices that they pay at ______The Distinguished Teaching Assistant grocery stores during downturns by Awards for 2012-13 were presented at the increasing their coupon usage, sale purchasing, buying larger sizes and buying Published 3 times a year in start-of-year buffet on October 13. The winners of a certificate, a limited edition generic products; and Yana Gallen for a September, December and coffee mug, and a year's subscription to paper on how workers anticipate March by: Econometrica were Yana Gallen, Bridget unemployment by saving more than Hoffman, Alexander James, Christian workers in the same firm who ultimately keep their jobs during a mass layoff. The Department of Economics Lund, Sangyoon Park, Assaf Patir, Ricardo Pique Cebrecos, Ariell Zimran prizes were generously donated by alumna Northwestern University (all reawards), John Farragut, Sebastian Susan Schmidt Bies (PhD, 1972). Her 2001 Sheridan Road Kohls, Andreas Kropf, Teddy professional career included serving on the Evanston, IL 60208-2600 Mekonnen, Juan Prada Sarmiento, Board of Governors of the Federal Reserve www.econ.northwestern.edu Christopher Romeo, Yi Sun, and Thiago System. Teixeira Ferreira. These awards are given to the top third of our Teaching Assistants, Visitors based on student and faculty evaluations. These awards have been listed prominently The Center for Study of Industrial on the vita of our students on the job Organization will be hosting Gautam market, and act as a strong signal to Gowrisankaran of the University of potential employers of your teaching Arizona for the Winter and Spring capabilities. This is especially true for Quarters. students from countries where English is not the first language. Congratulations

Robert Eisner Memorial Fellowship The Associated Student Government’s Ian Savage, editor Faculty Honor Roll for 2012-13 included 847-491-8241 Also, at the start of year buffet, a Jim Hornsten, Eric Schulz, Mark Witte [email protected] fellowship in honor of our late colleague and Richard Walker for their work in the Robert Eisner was presented. For 2013-14 classroom, and Ronald Braeutigam in his the Fellowship was awarded to Laura administrative role.

December 2013 Graduate Connection • 2

Congratulations to Aviv Nevo who has Philadelphia on Friday to Sunday, January that we will not be offering Econ 501 and been elected as a Fellow of the 3-5. If you are at the conference, stop by the 500-level workshop classes in the Econometric Society. The Department now the NU annual cocktail party in the Winter Quarter when these classes usually has 16 faculty members elected as Fellows “Congress C” room of the Loews do not meet. They will return in the Spring of the Econometric Society, with a further Philadelphia Hotel, 1200 Market Street, Quarter. Students who need to register for five Fellows among the economists in the from 6-8pm on the Saturday. additional credits to maintain full-time Kellogg School of Management. status should use Econ 590 (for second Martin L. King Jr. Day year students) and TGS 500 (for older Leon N. Moses 1924-2013 students). On Monday, January 20, the University The Department is sad to announce the is closed and all classes are canceled in This Quarter’s Course Descriptions passing of Emeritus Professor Leon Moses observance of Dr. Martin Luther King Jr. on October 12. Professor Moses was a Day. The Department has a policy to avoid faculty member at Northwestern from 1959 the problem of excessive awarding of to his retirement in 2005. He is Memorial Service for Leon N. incomplete grades. Please see our web site remembered for the high standard of his Moses for a complete statement. Report any teaching particularly in the undergraduate problems to the Director of Graduate intermediate microeconomics course. He A memorial service for Leon Moses, Studies. was also well known for his research in who passed away in October (see News transportation and urban economics and section) will be held on Friday February 7 regional science. at noon in the Jeanne Vail Chapel (corner Economics 412-1 of Chicago Avenue and Sheridan Road), Economy Theory and Methods Northwestern advances to National with a lunch reception afterwards in the Professor Strulovici Finals of the College Federal Guild Lounge in Scott Hall. MW 1:00-2:50 Jacobs 3245 Reserve Challenge This course covers optimal control and Mark Your Calendars stopping theories, as well as their On November 25, a team of Northwestern applications to economic problems. The undergraduates won the regional contest Mark your calendars for these special course starts with an introduction to against 13 other universities to advance to events in the Spring Quarter. Full details stochastic processes, stochastic calculus, the national finals of the College Federal will be given in the March Graduate and stochastic control, with a focus on Reserve Challenge. The competition Connection. continuous time, including topics such as involved two rounds, where each the team the smooth pasting condition, the had to present a discussion of about the April 4 (Friday): Prospective graduate Hamilton-Jacobi-Bellman equation, and the state of the economy and proposing Federal student visit day Martingale Representation Theorem. The Reserve responses to it, and then taking April 29 (Tuesday) at 4pm: Personal techniques are then applied to models such questions from a panel of Federal Reserve chair investitures for Professors as optimal portfolio choice, optimal economists. Northwestern’s team will Eichenbaum and Tamer entry/exit decisions, and dynamic travel to compete for the national May 16-17 (Friday-Saturday): Joint principal-agent models. Students will also championship at the Federal Reserve Board Northwestern - University of Toulouse see how to establish comparative statics of Governors in Washington, DC on industrial organization conference results in dynamic models, such as December 2nd, 2013. The team consists of May 21 (Wednesday) at 5:45pm: Nancy monotonicity of the value function and of Nikhil Byanna, Yuxuan Chen, Jonathan L. Schwartz Memorial Lecture featuring the optimal stopping time or optimal Cohen, Kyle Isaacson and Ranjodh Colin Camerer of the California Institute of control, as well as other properties of the Singh, and is advised by Professor Mark Technology value function (convexity, homogeneity). Witte. The course also covers models of optimal

learning and experimentation, including a Events Teaching study of the multi-armed bandit problem in discrete time. AEA Annual Meeting Seminar Registrations Evaluation is by problem sets, a paper presentation, and the submission of a The annual meetings of the American The Department has updated the 500- research project or review paper. Economics Association will be held in level seminar offerings. One implication is

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Economics 414-2 Economics 420-2 Economics 440-1 Economics of Information European Economic History Economics of the Labor Market Professor Siegel Professor Mokyr Professor Mortensen MW 5:00-6:50 Jacobs 3245 TTh 9:00-10:50 Jacobs 3204 The start of this course has been The course introduces several In the past decade, a great deal of postponed. It is possible that it may conceptual and technical approaches economic history has been written by commence later in the Winter Quarter. If commonly used in microeconomic theory. scholars (some full time economic that is the case, an announcement will be Topics include: private- and common-value historians, others part timers and circulated. Formal registration, credit and auctions, single- and multi-agent interlopers) who are applying economic grades will occur in the Spring Quarter. mechanism design, equilibrium existence in theory and econometric methods to discontinuous games, and complete- and historical issues and producing new and incomplete-information contests and wars innovative databases, raising new issues or Economics 450-2 of attrition. The emphasis is on developing answering old ones with new methods. The Industrial Organization and Prices economic intuition and an understanding of purpose of this course is to survey some of Professor Porter the mathematical underpinnings of the this recent literature and stimulate similar MW 11:00-12:50 Jacobs 3245 models. research. Each student will be in charge of Evaluation will be based on problem class presentations (starting in week 2) of a An introduction to several topics in sets, participation, and a final exam. There subset of the assigned papers. industrial organization theory and is no textbook for the course; detailed Evaluation will be based on the class empirical analysis. Topics include: slides and some lecture notes will be presentation and participation, and a oligopoly pricing; production, costs and provided. research paper that is due one year after the technology; differentiated products; entry, course ends. growth and turnover; advertising; cartels and collusion; and auction markets. The Economics 416-2 emphasis will be on the estimation and Advanced Macroeconomics Economics 436-1 testing of game theoretic models, and Professor Berger Theory and Practice of Public Finance especially on recent developments in the TTh 11:00-12:50 Jacobs 3245 Professor Lockwood field. MW 1:30-3:20 Jacobs 3204 Evaluation will be by several problem This is a course on empirical sets and a final exam. macroeconomics. The first goal of the class This stand-alone course covers the core is to introduce students to models of both theoretical results and empirical techniques household and firm heterogeneity to try and used in public finance. The emphasis is on Economics 460-2 understand under what conditions combining theoretical models and International Economics heterogeneity at the micro level matters for empirical evidence. Topics include the Professors Eichenbaum and Lorenzoni aggregate dynamics. The course focuses incidence and efficiency of government TTh 1:30-3:20 Jacobs 3204 on models that consider the aggregation of taxation and expenditure programs, optimal infrequent and lumpy microeconomic taxation, taxation and saving, and social The class covers topics in international behavior, with applications to the aggregate insurance programs including Social finance and open economy dynamics of inflation, investment, Security, Medicare, and Medicaid. The macroeconomics, including: the employment and consumer durables. The main goal of the course is to prepare determinants of the trade balance and of second goal of this class is to introduce students to contribute to the literature on capital flows across countries; how goods students to a variety of empirical public finance or related fields. are priced in international markets; how approaches (reduced form and structural) Evaluation is by problem sets, short asset prices and exchange rates are and data sources that have been used writing assignments, and a final exam. determined when the capital account is recently to discipline structural models and There is no single main text, though open; the role of monetary and fiscal policy to address important macroeconomic and selected readings from the Handbook of in an open economy under different policy questions. Public Economics comprise an important exchange rate regimes; capital flights, component of the course. This course may currency crises and sovereign debt crises; be combined with courses from related the role of international banking in the fields to satisfy a field requirement (please transmission of shocks across borders. see the course instructor or the Director of Graduate Studies for details).

December 2013 Graduate Connection • 4

Economics 481-2 Evaluation will be by presentation of performance evaluation; factor models in Econometrics papers and/or book chapters in class. In large cross sections; and hidden Markov Professor Tamer addition, students will either write an models. The econometric methods will MW 3:30-5:20 Jacobs 3204 original research paper, or write five include GMM and maximum likelihood. serious referee reports for recent, Course grade will be based on The course starts with a preview of semi unpublished papers in the field. homeworks, class presentation of recent parametric methods. These include: binary Initial readings will be from Two-Sided academic papers, and a final exam. response models, censored models, and Matching: A Study in Game-Theoretic general index models. The focus will be on Modeling and Analysis by Alvin E. Roth the required inference tools. Then, the and Marilda A. Oliveira Sotomayor Finance 489 course will turn to the problem of inference (Cambridge U.P., 1992). Empirical Corporate Finance in discrete games, including: simple Professor Sapienza complete information games, some games Th 2-5 Jacobs 4214 with incomplete information, network Finance 487 games, and linear in means games. The Dynamic Asset Pricing Theory The course discusses empirical papers discussion will be directed towards general Professor Skiadas that are related to the theories formulated approaches to inference. New and open F 9:30-12:30 Jacobs 4214 in the corporate finance theory class, but research questions are emphasized. also helps students to develop Evaluation is based on class participation This course offers an in-depth identification strategies for testing and a final class presentation. introduction to competitive asset pricing corporate finance hypothesis. The course is theory in dynamic settings. The main topics organized around published and working are dynamic trading, the arbitrage pricing papers in the field with an emphasis on the MECS 460-2 of derivative securities, foundations of identification problem and solutions. Foundations of Management Economics dynamic choice, consumption-based asset Rather than providing an exhaustive Professor Hu pricing and optimal consumption/portfolio overview of the field, the course focuses in M 2-5 Jacobs 586 choice using recursive utility. Both depth on selected topics to illustrate discrete-time models and continuous-time different empirical approaches to the same The goal of this course is to introduce methodology are covered. The necessary or related questions. Part of the course will students to dynamic optimization mathematical tools are introduced, be devoted to teaching how to use the basic techniques for both discrete and continuous including some martingale theory, the Ito databases in Finance (Computstat, CRSP, time stochastic problems. In particular, the calculus, and the theory of backward SDEs. WRDS databases), including an course will present results in discrete time Texts are: Costis Skiadas Asset Pricing introduction to UNIX and SAS. Stata dynamic programming and continuous time Theory (Princeton Univ. Press, 2009) and knowledge is assumed. Empirical exercises optimal control. Darrell Duffie Dynamic Asset Pricing to learn to extract and manipulate those Theory (Princeton Univ. Press, 2001). data will be given to the students. At the There will be weekly assignments. end of the course, the students will master MECS 468-2 Some of the questions assigned will be how to use the most common databases in Selected Topics in Economic Theory labeled as exam questions. Grading will be finance. Professor Schummer based 70% on homework and 30% on Finance 486 is a prerequisite. Grades Th 2-5 Jacobs 586 exam questions. will be based largely on referee reports, discussion of papers, and homework (90% This course covers the central results of of the total grade). The remaining 10% of matching theory along with recent Finance 488 the grade will be based on class applications. The course begins with an Econometrics of Financial Markets participation. overview of classic matching models Professor Jagannathan including the college admissions, house M 9-12:30 Jacobs 4214 market, and assignment models. It then Formal Announcements examines extensions of these models, some This course will cover topics in the of which have use in market design empirical capital markets literature and applications. There may be some room for related econometric methods. The topics Funding Guidelines flexibility in topics toward the end of the will include stock return predictability; course. asset pricing models; asset price bubbles; The Department has formal rules for the liquidity and systemic risk; portfolio allocation of funding for students in years

December 2013 Graduate Connection • 5 two through six. This document is posted examinations, students can take their conduct of research. This will be on our web site. Please read this document remaining examination on one date, accomplished by a one-time registration in as the Department strictly enforces these Wednesday September 3 from 1PM - 4PM. ECON 519 that has two components: an funding criteria. This date is after Labor Day. online class and a "face-to-face" component. The online part asks the Preliminary Examinations – Class TA Periods in Residence student to complete a 2-3 hour online class of 2013 administered by a private company that Each quarter that you are a TA, you are Northwestern has hired. DGS Professor First year students should familiarize expected to be in Evanston on weekdays Wojciech Olszewski will lead the face-to- themselves with the Department’s rules on from the first day of classes until the face part of the class. continuation to the second year. These are Monday after examinations end (which is If you are being supported on an NSF posted on our web site. the day that grades are filed). Absences grants for the first time, please contact Dates for the prelim examinations for during this period require permission of the Professor Olszewski for instructions. the coming year have been set. The instructor. In the past people have left ordering of the three examinations rotates early and arrived back late, in some cases each year. without informing the instructor. The Funding Opportunities Department will not tolerate this. You must arrange your vacation airline flights July 2014 Sitting so as to be able to fulfill your duties. This Teaching Opportunities 2014-15 Mon July 14 Macroeconomics is especially true as you make travel Fri July 18 Econometrics Application forms for teaching as an arrangements for the coming holiday Wed July 23 Microeconomics instructor in the evening program (School season. Failure to do so will be grounds All examinations will be held 1PM - 4PM. of Continuing Studies) and in the regular for rescinding your TAship. For the WCAS day school will be circulated on coming year the dates for which you should Students in the entering class of 2013 February 3. Students will be appointed on be in attendance are: should note that they are exempt from the the basis of excellent performance as a Fall: until Mon Dec 16 prelim exam in any area in which they lecturer or as a TA. Winter: Mon Jan 6 - Mon March 24 achieved a GPA of 3.60 or greater in the three first-year classes (e.g. in 410-1,2,3 for Spring: Mon March 31 - Mon June 16 the microeconomics prelim exam). NU Dissertation Year Fellowships Graduate School Deadlines The Department has taken the

Preliminary Examinations – Class pedagogical decision that Dissertation Year February 7 is the last day for return of the of 2012 University Fellowships (DYUF) should be Application for a Degree for all taken in the spring quarter of the year prior candidates who expect their degrees to The Department has rules on the number to going on the job market, and the fall and be awarded in March. of times that students are allowed to take winter quarters of the job market year. To February 28 is the last day for submission prelim examinations, and the conditions for qualify for the spring quarter fellowship, of the COMPLETED dissertation and such retaking. These affect whether some students should ask their advisor to file the all supporting materials to the Graduate second year students will be allowed to Spring Certification of Intent to Enter the School for students who expect to continue into their third year. The rules Job Market (Form GS5) with the Graduate receive the Ph.D. degree in March. are posted on our web site. Please make Secretary between February 3 and February March 7 is the last day for receipt of the sure that you are familiar with them. 17 (the normal deadline is the 15th but that Final Examination Report and any Dates for the coming year are: falls on a Saturday). This form is available Change of Grade forms to the Graduate from the Graduate.>Current Students School for Master's candidates who Spring 2014 Sitting section of our web site. expect their degrees to be awarded in Mon July 14 Macroeconomics March. Fri July 18 Econometrics NU Summer Fellowships Wed July 23 Microeconomics Students Working on NSF Grants All examinations will be held 1PM - 4PM Summer Fellowships will again be

available to students in years two through Under new federal legislation, the Fall 2014 Sitting four (first year students will have been National Science Foundation (NSF) has Because a fourth sitting is only possible if a notified about summer funding in their started requiring all students supported by student has already passed two offer letter). A signed acceptance form and NSF to undergo training in the responsible

December 2013 Graduate Connection • 6 contract will have to be submitted. This will occur in May. More details will be given in the next Graduate Connection. Fifth year (and above) students should note that The Graduate School specifies that Summer University Fellowships are not available for students beyond year 4.

Funding for Research-Related Travel and Expenses

The Graduate School has available funds to pay for research expenses and for travel to conferences. The maximum one-time research grant is $3,000, and there is funding for one conference a year that covers up to a maximum of $700. Full details of the application procedures and links to application forms are on the funding web page.

Federal Aid Forms

If you are a U.S. citizen or a U.S. permanent resident you need to renew your FAFSA (Free Application for Federal Student Aid) application. You can complete the forms on-line at www.fafsa.ed.gov after January 1 and before June 30. The Graduate School recommends that you file by March 1. It is often useful to have completed and filed your 2013 income tax form (1040) before you complete the FAFSA.

Notes

Next Graduate Connection

Volume 19, number 3 will be published in the week of March 3.