Letter From the Chair
Welcome to the Economics Division of Columbia Business School!
Economic theory provides entrepreneurs, managers, business leaders, and policy makers with the framework and tools to make and evaluate various business decisions and policies.
Our faculty teaches students how to think about economic decisions in a structured and critical way, giving them the tools to make and evaluate business decisions. In addition to a micro-economic perspective, we also give students the tools to understand the global macro-economy in which their business operates; how it is today and how it is likely to evolve in the future.
The Economics Division faculty leads research in various fields, such as macro-and microeconomic theory, labor economics, international economics, development, public-economics, organizational and industrial economics, and political economics. Members of the division include a Nobel Prize winner, a former member of the Federal Reserve Board, a former Chair of the President's Council of Economic Advisors, former Chief Economists of the World Bank and Asian Development Bank, two Fellows of the Econometrics Society, and several editors of leading economics journalists.
Our faculty have received numerous teaching awards in recent years for both the core course on Managerial Economics and the core course on Global Economic Environment. For an overview of the electives offered by the Economics division, please click here.
Nachum Sicherman
Carson Family Professor of Business
Chair of the Economics Division
In the Media
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OPEC+ Members Say They’ll Cut Oil Production. Global Markets Don’t Seem to Believe Them.
Research
The Macroeconomics of Stakeholder Equilibria*
We propose one route to a more inclusive society. Our context is the prevailing one of high wealth inequality where stockholders alone supply the stochastic discount factor governing the allocation of capital. A large and pervasive pecuniary externality is thus imposed on non-stockholder workers, something we view as antithetical to the notion of an inclusive society.
Presenting balanced geoengineering information has little effect on mitigation engagement
‘Moral hazard’ links geoengineering to mitigation via the fear that either solar geoengineering (solar radiation management, SRM) or carbon dioxide removal (CDR) might crowd out the desire to cut emissions. Fear of this crowding-out effect ranks among the most frequently cited risks of (solar) geoengineering. We here test moral hazard versus its inverse in a large-scale, revealed-preference experiment (n~340,000) on Facebook and find little to no support for either outcome. For the most part, talking about SRM or CDR does not motivate our study population to support a large U.S.
A Q Theory of Internal Capital Markets
We propose a tractable model of dynamic investment, spinoffs, financing, and risk management for a multi-division firm facing costly external finance. Our analysis formalizes
Dynamic Trading with Realization Utility
An investor receives utility bursts from realizing gains and losses at the individual-stock level (Barberis and Xiong, 2009, 2012; Ingersoll and Jin, 2013) and dynamically allocates his mental budget between risky and risk-free assets at the trading-account level. Using savings, he reduces his stockholdings and is more willing to realize losses. Using leverage, he increases his stockholdings beyond his mental budget and is more reluctant to realize losses. While leverage strengthens the disposition effect, introducing leverage constraints mitigates it.
Dynamic Banking and the Value of Deposits
We propose a theory of banking in which banks cannot perfectly control deposit flows. Facing uninsurable loan and deposit shocks, banks dynamically manage lending, wholesale funding, deposits, and equity. Deposits create value by lowering funding costs. However, when the bank is undercapitalized and at risk of breaching leverage requirements, the marginal value of deposits can turn negative as deposit inflows, by raising leverage, increase the likelihood of costly equity issuance. Banks’ inability to fully control leverage distinguishes them from non-depository intermediaries.
