Book Recommendations for Graduate School in Economics

Q:Â  If I want to achieve a Ph.D. in economics what steps would you advise me to take and what books and courses would I need to study to gain the knowledge that is absolutely needed to be able to do and understand the research that is needed for a Ph.D. A:Â  Thank you for your question. Its a question that Im frequently asked, so its about time that I created a page that I could point people toward. Its really difficult to give you a general answer, because a lot of it depends on where youd like to get your Ph.D. from. Ph.D programs in economics vary widely in both quality and scope of what is taught. The approach taken by European schools tends to be different than that of Canadian and American schools. The advice in this article will mainly apply to those who are interested in entering a Ph.D. program in the United States or Canada, but much of the advice should also apply to European programs as well. There are four key subject areas that youll need to be very familiar with to succeed in a Ph.D. program in economics. 1. Microeconomics / Economic Theory Even if you plan to study a subject which is closer to Macroeconomics or Econometrics, it is important to have a good grounding in Microeconomic Theory. A lot of work in subjects such as Political Economy and Public Finance are rooted in micro foundations so youll help yourself immensely in these courses if youre already familiar with high level microeconomics. Most schools also require you to take at least two courses in microeconomics, and often these courses are the most difficult youll encounter as a graduate student. Microeconomics Material You Must Know as a Bare Minimum I would recommend reviewing the book Intermediate Microeconomics: A Modern Approach by Hal R. Varian. The newest edition is the sixth one, bu if you can find an older used edition costing less you may want to do that. Advanced Microeconomics Material that Would be Helpful to Know Hal Varian has a more advanced book called simply Microeconomic Analysis. Most economics students are familiar with both books and refer to this book as simply Varian and the Intermediate book as Baby Varian. A lot of the material in here is stuff you wouldnt be expected to know entering a program as its often taught for the first time in Masters and Ph.D. programs. The more you can learn before you enter the Ph.D. program, the better you will do. What Microeconomics Book Youll Use When You Get There From what I can tell, Microeconomic Theory by Mas-Colell, Whinston, and Green is standard in many Ph.D. programs. Its what I used when I took Ph.D. courses in Microeconomics at both Queens University at Kingston and the University of Rochester. Its an absolutely massive book, with hundreds and hundreds of practice questions. The book is quite difficult in parts so youll want to have a good background in microeconomic theory before you tackle this one. 2. Macroeconomics Giving advice on Macroeconomics books is a lot more difficult because Macroeconomics is taught so differently from school to school. Your best bet is to see what books are used in the school that you would like to attend. The books will be completely different depending on whether your school teaches more Keynesian style Macroeconomics or Freshwater Macro which is taught at places like The Five Good Guys which includes the University of Chicago, the University of Minnesota, Northwestern University, University of Rochester, and University of Pennsylvania. The advice Im going to give is for students who are going to a school that teaches more of a Chicago style approach. Macroeconomics Material You Must Know as a Bare Minimum I would recommend reviewing the book Advanced Macroeconomics by David Romer. Although it does have the word Advanced in the title, its more suited for high level undergraduate study. It does have some Keynesian material as well. If you understand the material in this book, you should do well as a graduate student in Macroeconomics. Advanced Macroeconomics Material that would be Helpful to Know Instead of learning more Macroeconomics, it would be more helpful to learn more on dynamic optimization. See my section on Math Economics books for more detail. What Macroeconomics Book Youll Use When You Get There When I took Ph.D courses in Macroeconomics a few years ago we didnt really use any textbooks, instead we discussed journal articles. This is the case in most courses at the Ph.D. level. I was fortunate enough to have macroeconomics courses taught by Per Krusell and Jeremy Greenwood and you could spend an entire course or two just studying their work. One book that is used quite often is Recursive Methods in Economic Dynamics by Nancy L. Stokey and Robert E. Lucas Jr. Although the book is almost 15 years old, its still quite useful for understanding the methodology behind many macroeconomics articles. Ive also found Numerical Methods in Economics by Kenneth L. Judd to be quite helpful when youre trying to obtain estimates from a model which does not have a closed-form solution. 3. Econometrics Material You Must Know as a Bare Minimum Theres quite a few good undergraduate texts on Econometrics out there. When I taught tutorials in undergraduate Econometrics last year, we used Essentials of Econometrics by Damodar N. Gujarati. Its as useful as any other undergraduate text Ive seen on Econometrics. You can usually pick up a good Econometrics text for very little money at a large second-hand book shop. A lot of undergraduate students cant seem to wait to discard their old econometrics materials. Advanced Econometrics Material that would be Helpful to Know Ive found two books rather useful: Econometrics Analysis by William H. Greene and A Course in Econometrics by Arthur S. Goldberger. As in the Microeconomics section, these books cover a lot of material which is introduced for the first time at the graduate level. The more you know going in, though, the better chance youll have of succeeding. What Econometrics Book Youll Use When You Get There Chances are youll encounter the king of all Econometrics books Estimation and Inference in Econometrics by Russell Davidson and James G. MacKinnon. This is a terrific text, because it explains why things work like they do, and does not treat the matter as a black box like many econometrics books do. The book is quite advanced, though the material can be picked up fairly quickly if you have a basic knowledge of geometry. 4. Mathematics Having a good understanding of mathematics is crucial to success in economics. Most undergraduate students, particularly those coming from North America, are often shocked by how mathematical graduate programs in economics are. The math goes beyond basic algebra and calculus, as it tends to be more proofs, such as Let (x_n) be a Cauchy sequence. Show that if (X_n) has a convergent subsequence then the sequence is itself convergent. Ive found that the most successful students in the first year of a Ph.D. program tend to be ones with mathematics backgrounds, not economics ones. That being said, theres no reason why someone with an economics background can not succeed. Mathematical Economics Material You Must Know as a Bare Minimum Youll certainly want to read a good undergraduate Mathematics for Economists type book. The best one that Ive seen happens to be called Mathematics for Economists written by Carl P. Simon and Lawrence Blume. It has a quite diverse set of topics, all of which are useful tools for economic analysis. If youre rusty on basic calculus, make sure you pick up a 1st year undergraduate calculus book. There are hundreds and hundreds of different ones available, so Id suggest looking for one in a second hand shop. You may also want to review a good higher level calculus book such as Multivariable Calculus by James Stewart. You should have at least a basic knowledge of differential equations, but you do not have to be an expert in them by any means. Reviewing the first few chapters of a book such as Elementary Differential Equations and Boundary Value Problems by William E. Boyce and Richard C. DiPrima would be quite useful. You do not need to have any knowledge of partial differential equations before entering graduate school, as they are generally only used in very specialized models. If youre uncomfortable with proofs, you may want to pick up The Art and Craft of Problem Solving by Paul Zeitz. The material in the book has almost nothing to do with economics, but it will help you greatly when working on proofs. As an added bonus a lot of the problems in the book are surprisingly fun. The more knowledge you have of pure mathematics subjects such as Real Analysis and Topology, the better. I would recommend working on as much of Introduction to Analysis by Maxwell Rosenlicht as you possibly can. The book costs less than $10 US but it is worth its weight in gold. There are other analysis books that are slightly better, but you cannot beat the price. You may also want to look at the Schaums Outlines - Topology and Schaums Outlines - Real Analysis. Theyre also quite inexpensive and have hundreds of useful problems. Complex analysis, while quite an interesting subject, will be of little use to a graduate student in economics, so you need not worry about it. Advanced Mathematical Economics that would be Helpful to Know The more real analysis you know, the better you will do. You may want to see one of the more canonical texts such as The Elements of Real Analysis by Robert G. Bartle. You may also want to look at the book I recommend in the next paragraph. What Advanced Mathematical Economics Book Youll Use When You Get There At the University of Rochester we used a book called A First Course in Optimization Theory by Rangarajan K. Sundaram, though I dont know how widely this is used. If you have a good understanding of real analysis, you will have no trouble with this book, and youll do quite well in the obligatory Mathematical Economics course they have in most Ph.D. programs. You do not need to study up on more esoteric topics such as Game Theory or International Trade before you enter a Ph.D. program, although it never hurts to do so. You are not usually required to have a background in those subject areas when you take a Ph.D. course in them. I will recommend a couple of books I greatly enjoy, as they may convince you to study these subjects. If youre at all interested in Public Choice Theory or Virginia style Political Economy, first you should read my article The Logic of Collective Action. After doing so, you may want to read the book Public Choice II by Dennis C. Mueller. It is very academic in nature, but it is probably the book that has influenced me most as an economist. If the movie A Beautiful Mind didnt make you frightened of the work of John Nash you may be interested in A Course in Game Theory by Martin Osborne and Ariel Rubinstein. It is an absolutely fabulous resource and, unlike most books in economics, its well written. If I havent scared you off completely from studying economics, theres one last thing youll want to look into. Most schools require you to take one or two tests as part of your application requirements. Heres a few resources on those tests: Get familiar with the GRE General and GRE Economics Tests The Graduate Record Examination or GRE General test is one of the application requirements at most North American schools. The GRE General test covers three areas: Verbal, Analytical, and Math. Ive created a page called Test aids for the GRE and GRE Economics that has quite a few useful links on the GRE General Test. The Graduate School Guide also has some useful links on the GRE. I would suggest buying one of the books on taking the GRE. I cant really recommend any one of them as they all seem equally good. It is absolutely vital that you score at least 750 (out of 800) on the math section of the GRE in order to get into a quality Ph.D. program. The analytical section is important as well, but the verbal not as much. A great GRE score will also help you get into schools if you have only a modest academic record. There are a lot fewer online resources for the GRE Economics test. There are a couple of books that have practice questions that you may want to look at. I thought the book The Best Test Preparation for the GRE Economics was quite useful, but its gotten absolutely horrid reviews. You may want to see if you can borrow it before committing to buying it. There is also a book called Practicing to Take the GRE Economics Test but Ive never used it so Im not sure how good it is. It is important to study for the test, as it may cover some material that you did not study as an undergraduate. The test is very heavily Keynesian, so if you did your undergraduate work at a school heavily influenced by the University of Chicago such as the University of Western Ontario, there will be quite a bit of new macroeconomics youll need to learn. Conclusion Economics can be a great field in which to do your Ph.D., but you need to be properly prepared before you enter into a graduate program. I havent even discussed all the great books available in subjects such as Public Finance and Industrial Organization.