City University of New York Graduate Center Ph.D.

Program in Economics June 2013

Summer Reading List for Incoming Students

This reading list is distributed to students who will be enrolling in the Ph.D. Program in Economics at the City University of New York Graduate Center. It lists resources that will be helpful as a foundation for the study of economics at the doctoral level, in particular the core areas of microeconomics, macroeconomics and econometrics that are covered in the first year of study. The reading list covers five areas, one of which is subdivided. The readings for Microeconomics, Macroeconomics, and Econometrics refer to material that is usually covered in upper-level undergraduate or masters courses in Economics. In each of these sections, more advanced readings are listed for those who like to dig deeper into this good stuff; these readings may well end up on the syllabus of the first-year core courses. The readings listed for Mathematics and Statistics are somewhat more advanced, as they pertain to material that is sometimes covered in a first-semester review course in a PhD economics curriculum. We also include suggested readings to improve your programming skills. In each area, the list focuses on one or two textbooks, and substitutes are provided that can substitute very well for the texts that are highlighted here. The point is: the subject material is more important than the actual source where you find it. But it is true that some textbooks are better than others. There is a lot of material on this reading list. You should already be familiar with some of it otherwise, you would not have been admitted into our program. But no reading list fits all: some need to brush up on micro or macro, others are weaker in statistics, and most need to strengthen their math. Thus, tailor this reading list to your own needs. Our advice is: (i) make sure that your basics are strong; and (ii) give priority to the review of math, since it substitutes for the math boot camp that many programs require at (or prior to) the start of the first year.

I.

Mathematics

Probably the most important book on this reading list is: Carl P. Simon and Lawrence E. Blume, Mathematics for Economists, Norton, 1994. This text is used in many graduate programs in the first semester of enrollment in a math review course that lays the mathematics foundation for the rest of the curriculum. The Economics program at CUNY does not offer this course. Nevertheless, this material is a very useful foundation for a doctoral study in economics. The following text contains additional chapters that delve into deeper mathematical concepts. Elementary material o Ch.2-4: Univariate calculus o Ch.5: Exponents and logarithms o App.A2: Trigonometric functions Linear Algebra o Ch.6-7: Systems of equations Page 1 of 7

o Ch.8: Matrix algebra o Ch.9 (+26): Determinants o Ch.10-11 (+27-28): Spaces o Ch.16: Quadratic forms o Ch.23: Eigenvalues and eigenvectors Ch.12 (+29): Sets Calculus o Ch.13: Multivariate functions o Ch.14: Multivariate calculus o App.A4: Integral calculus o Ch.15: Implicit functions o Ch.17-19: Optimization o Ch.20-21: Homogeneous, homothetic, convex and concave functions Ch.24(+25): Differential equations

Texts with similar or more specialized coverage of topics: Alpha Chiang and Kevin Wainwright, Fundamental Method of Mathematical Economics, McGraw Hill, 2005. William Novshek, Mathematics for Economists, Emerald Group Publishing, 1993. Peter Lambert, Advanced Math for Economics: Static and Dynamic Optimization, Wiley-Blackwell, 1995. Martin Osborne, Mathematical Methods for Economic Theory, a creative online tutorial found at http://www.economics.utoronto.ca/osborne/ (look under tutorials). Dieter Balkenborg, Mathematics for Economists, a course webpage at the University of Exeter found at http://www.economicsnetwork.ac.uk/teaching/text/mathsforeconomists.htm . Paul Madden, Concavity and Optimization in Microeconomics, Blackwell Publishing, 1986. A.S. Anton, Elementary Linear Algebra, Harvard Univ. Press, 1991. Knut Sydsaeter, Arne Strom, and Peter Berck, Economists Mathematical Manual, Springer, 2005. Timothy Gowers, Mathematics: A Very Short Introduction, Oxford University Press, 2002. Real Analysis is an important tool which underlies the mathematical analysis of general equilibrium models. Familiarity with some basic concepts is essential if you are to use the tools of general equilibrium theory, most notably for modern macroeconomic analysis. In many programs, this is covered in the first year Mathematics sequence. A user friendly, undergraduate level text book is Maxwell Rosenlicht, Introduction to Analysis, Dover Publications, 1986. The essential material that you need from this is contained in the first four chapters. Set Theory o Sets and Elements, subsets o Operations on Sets o Functions The Real Number System o Field Properties o Least Upper Bound Metric Spaces o Definition of a metric space, open and closed sets, bounded sets o Convergent sequences, Cauchy Sequences, Limits o Complete metric spaces, compact spaces Page 2 of 7

Continuity

At a higher level, the following text offers a review of real analysis: Dean Corbae, Maxwell B. Stinchcombe and Juraj Zeman, An Introduction to Mathematical Analysis for Economic Theory and Econometrics, Princeton University Press, 2009. This is an excellent reference book, which you should keep handy in your entire graduate career. At some point during your doctoral coursework, you will encounter dynamic optimization models. For example, these models are used in growth theory, in lifecycle models of consumption and labor supply, and in financial economics. They rely on different mathematical techniques than are covered in Simon and Blume and on real analysis concepts covered in Rosenlicht. A good textbook is: Alpha C. Chiang, Elements of Dynamic Optimization, Waveland Press, 1992. The following chapters introduce the topic: Ch.1: The nature of dynamic optimization Calculus of variation o Ch.2: The fundamental problem of the calculus of variations o Ch.3: Transversality conditions for variable-endpoint problems o Ch.4: Second-order conditions Optimal control theory o Ch.7: Optimal control: the Maximum Principle o Ch.8: More on optimal control

There are quite a few textbooks that cover the same ground; you may find many in engineering libraries. One that is frequently referenced in the economics literature is: Morton I. Kamien and Nancy L. Schwartz, Dynamic Optimization: The Calculus of Variations and Optimal Control in Economics and Management, Elsevier, 1992.

Lastly, our more senior graduate students have recommended a number of books in terms of various and miscellaneous mathematical topics. These might be useful as reference books: 1. Schaum's Outline of Advanced Calculus, Third Edition (Schaum's Outline Series) 2. Thomas' Calculus (12th Edition) by George B. Thomas, Maurice D. Weir and Joel Hass 3. Schaum's Outline of Linear Algebra Fourth Edition (Schaum's Outline Series) 4. Understanding Analysis by Stephen Abbott 5. Matrix Algebra (Econometric Exercises) by Karim M. Abadir and Jan R. Magnus 6. Introduction to the Mathematical and Statistical Foundations of Econometrics (Themes in Modern Econometrics) by Herman J. Bierens 7. Introduction to Analysis (4th Edition) by W. R. Wade 8. Mathematical Analysis: A Concise Introduction by Bernd S. W. Schrder

II.

Microeconomics

Incoming students are expected to be familiar with intermediate microeconomics. Any text at the intermediate level would do. Here are three examples: Hal R. Varian, Intermediate Microeconomics: A Modern Approach, 8th ed., W.W. Norton, 2010. Page 3 of 7

Walter Nicholson and Christopher M. Snyder, Microeconomic Theory: Basic Principles and Extensions, 10th ed., Southwestern. Robert S. Pindyck and Daniel L. Rubinfeld, Microeconomics, 6th ed., Prentice Hall, 2004.

Varian takes a very formal approach to the topics. It would be a very good preparation for graduate level training. Nicholson and Snyders text is also formal but does not use math as much as Varian. Pindyck and Rubinfeld features many real-world examples, which are fun to read. The textbooks cover a standard set of topics, with only small variations: Consumer theory Producer theory Competitive markets Market power (monopoly, oligopoly, imperfect competition) Factor markets Uncertainty and risk Market failures

For the more ambitious summer reader, there are more advanced PhD-level texts that you might want to start browsing through: Hal R. Varian, Microeconomic Analysis, 3rd ed., W.W. Norton, 1992. Eugene Silberberg and Wing Suen, The Structure of Economics: A Mathematical Analysis, 3rd ed., McGraw-Hill, 2000.

III.

Macroeconomics

Incoming students are expected to be familiar with intermediate macroeconomics. Any text at the intermediate level would do. A familiar text is: Mankiw, N. Gregory, Macroeconomics, 7th ed., Worth Publ., 2010 (or an older edition). An outline of this textbook is: Ch.1-2: Introduction Classical theory: the economy in the long run o Ch.3-6: National income, money and inflation, open economy, unemployment Growth theory: the economy in the very long run o Ch.7-8: Economic growth, population, technology Business cycle theory: the economy in the short run o Ch.9-13: Business cycles, IS-LM, open economy, Phillips curve o Ch.14: Dynamic models Macroeconomic policy debates o Ch.15: Stabilization policy o Ch.16: Government debt and budget deficits More on the microeconomics behind macroeconomics o Ch.17-19: Consumption, investment, money.

There are several other good intermediate level textbooks on the market that cover similar material but perhaps with a different emphasis. For example, Stephen D. Williamson, Macroeconomics, 4th ed., Prentice Hall, 2011 (or earlier edition), introduces the open economy after the important theory is covered and then adds chapters on unemployment and the Phillips curve as leftover topics all the way at the end of the book. Page 4 of 7

For the more ambitious summer reader, there are more advanced PhD-level texts that you might want to start browsing through: David Romer, Advanced Macroeconomics, 3rd ed., McGraw-Hill, 2005. Olivier Jean Blanchard and Stanley Fischer, Lectures on Macroeconomics, MIT Press, 1989. Robert J. Barro and Xavier Sala-i-Martin, Economic Growth, 2nd ed., MIT Press, 2003.

IV.
IV.a.

Statistics and Econometrics

Statistics

Statistics underlies the study of econometrics. To be successful in graduate level econometrics, a good grasp of statistical concepts is needed. An excellent textbook is: George Casella and Roger L. Berger, Statistical Inference, 2nd ed., Duxbury Press, 2001. Ch.1: Probability theory Ch.2: Transformations and expectations Ch.3: Common families of distributions Ch.4: Multiple random variables Ch.5: Properties of a random sample Ch.6: Principles of data reduction Ch. 7: Point estimation Ch.8: Hypothesis testing Ch.10: Asymptotic evaluation: Section 10.1

This text is commonly used as a textbook in the first of a series of econometrics courses at the PhD level, i.e., as a statistics review course. It covers the topics in mathematical statistics that are the foundation of econometrics at the doctoral level. Texts with a similar coverage at various levels are: Robert V. Hogg and Allen Craig, Introduction to Mathematical Statistics, 5th ed., Prentice Hall, 1994. Robert V. Hogg and Elliot Tanis, Probability and Statistical Inference, 8th ed., Prentice Hall, 2009. Dennis Wackerly, William Mendenhall and Richard L. Scheaffer, Mathematical Statistics with Applications, 7th ed., Duxbury Press, 2007. IV.b. Econometrics

A familiar undergraduate (and sometime masters) textbook in econometrics is: Jeffrey M. Wooldridge, Introductory Econometrics, 4th ed., Southwestern, 2009. Ch.2: Bivariate regression Ch.3-7: Multivariate regression Topics o Ch.8: Heteroskedasticity o Ch.10-11: Time series analysis o Ch.15: Instrumental variables o Ch.16: Simultaneous equations o Ch.17: Logit and probit models

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As the title of this textbook says, it offers an introduction to econometrics. There are actually many good introductory econometrics texts on the market, which all cover more or less the same topics. A few of these are: Damodar N. Gujarati, Basic Econometrics, 4th ed., New York: McGraw-Hill Publ. Co., 2003. James H. Stock and Mark W. Watson, Introduction to Econometrics, 2nd ed., Prentice Hall, 2007. Ramu Ramanathan, Introductory Econometrics, with Applications, 4th ed., Dryden Press, 1998. Arthur S. Goldberger, A Course in Econometrics, Harvard Univ. Press, 1991. Robert S. Pindyck and Daniel L. Rubinfeld, Econometric Models and Economic Forecasts, 4th ed., McGraw-Hill, 1997. A bit more advanced is the following, which has many good empirical examples: Marno Verbeek, A Guide to Modern Econometrics, 3rd ed., John Wiley & Sons, 2008. For the ambitious summer reader, there are more advanced PhD-level texts on which you can sharpen your teeth; the text by Greene will be the required textbook for Econometrics I for Fall 2011. Ron C. Mittelhammer, George G. Judge, and Douglas J. Miller, Econometric Foundations, Cambridge University Press, 2000. Jeffrey M. Wooldridge, Econometric Analysis of Cross Sections and Panel Data, MIT Press, 2002. William H. Greene, Econometric Analysis, 7th ed. Pearson, 2012. Russell Davidson and James G. MacKinnon, Econometric Theory and Methods, Oxford University Press, 2004

V.

Computer Programming

At some point during your graduate studies in Economicsin fact, in your first year already, you will be solving mathematical models and running regression models on the computer. It is good to become at least somewhat familiar with appropriate software prior to the upcoming fall semester. For mathematical modeling, many economists use both Matlab and Maple. These software programs, which accomplish similar objectives, are used widely in the sciences, so it is not hard to find documentation about them. For Matlab, a book we have found useful is Brian D. Hahn and Daniel T. Valentine, Essential Matlab for Engineers and Scientists, Butterworth-Heinemann, 2007, but any book that gets good reviews on the internet should be fine. You may also find many how-to manuals on the internet that can get you started. Here are a few examples (without any endorsement of their quality on our part!): http://www.mccormick.northwestern.edu/docs/efirst/matlab.pdf http://www.physics.byu.edu/Courses/Computational/phys330/matlab.pdf For Maple, a quick browse on the internet will yield similar tutorials, and many books are published on Maple; when you buy one, just be sure that it refers to a recent version of the software. For statistical and econometrics software, many economists use Stata. The internet offers many tutorials; for example: http://fmwww.bc.edu/GStat/docs/StataIntro.pdf http://personal.lse.ac.uk/lembcke/ecStata/2009/MResStataNotesJan2009PartA.pdf Stata certainly isnt the only software out there. SAS is very popular in the business world. EView is an excellent program with strengths in time series analysis. Limdep has strengths in cross-sectional

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analysis. SPSS is used by many social scientists. S+, R, Gauss, and Matlab are more mathematically inclined programs. And even this list is certainly not all-inclusive. As of the day of this writing, CUNY Graduate Center offers server access to the following software: Matlab R2007, Matlab R2010a, Maple 14, Wolfram Mathematics, EViews 8, StataIC 11, SAS 9, and Statistica 10. You will be able to run these programs via this server on your own laptop when connected to the internet.

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