University of Colorado at Boulder
Department of Economics
Fall 2004
 Economics Program Review by Keith Maskus
 Remembering Lawrence Senesh by Chuck Howe and Larry Singell
 What is Public Economics? by Anna Rubinchik-Pessach
 Another Honorable Year, 2003-2004 by Nicholas Flores
 Faculty Notes
 Alumni Notes
 2003-04 Seminar Series

A Report from the Chair

Dear Alumni and Friends,

Greetings from Boulder, where it is a beautiful and (so far) cloudless summer day. The long-running drought that had turned the state dry and brown seems to have lifted this year. Our gardens are colorful, our lawns are green, and the campus remains a spectacular sight. I hope you will soon find the opportunity to return and visit the university and the economics department.

We live in a time of great change in the global economy and I am excited to contribute my analysis and advice when I can. In recent months I have had a chance to present my views on various aspects of intellectual property rights, international trade and development at such venues as the World Trade Organization in Geneva, the European Commission in Brussels, and Agenda Fundacion in Bogota. I also am finishing a project for the World Bank assessing the reforms Vietnam has made in its business and trade regulation in preparation for that country joining the WTO.

It is good to have this opportunity to fill you in on our progress here. I have just completed my second year as department chair in an environment that can only be described as challenging. The budgetary situation in the state of Colorado remains perilous for public higher education, the university has struggled through a football scandal, and state politics have raised fundamental questions about the academic freedoms of faculty and instructors in the classroom. I will provide some perspective on each of these issues later in this report, but I regret to say that they have been damaging to faculty morale.

There is certainly good news to report as well, however, on both the teaching and research sides of the department. Let me start with some noteworthy accomplishments.

Undergraduate Enrollment
Undergraduate students at the university continue to flock toward economics, in numbers never before seen. We currently have nearly 1,000 declared majors and another 250 minors in economics. Our graduation ceremony in May was the largest yet, with well over 200 graduating seniors and over 1,200 family members and friends in attendance. In academic year 2002-03 the number of undergraduate students in economics courses exceeded 9,200, making our department the largest on campus.

It is a challenge teaching so many students but we strive to ensure quality instruction in the classroom. Despite these large increases in enrollment in recent years, the student evaluations of economics classes have improved. One reason is that we are fortunate to have many outstanding visiting instructors who do a good job in the classroom. Another is that our graduate teaching assistants are committed to the teaching mission of the department. Ultimately, however, it reflects a real dedication on the part of our faculty to provide rigorous and engaging course experiences for undergraduate students. A recent survey of senior economics majors indicated considerable satisfaction overall with their learning experience.

We also maintain an outstanding honors program, which now enrolls over 20 students per year, for students who want to experience economics outside the classroom environment. These students are well-trained, curious and smart. We expect our honors students to undertake a completely new piece of analysis, combining basic economic theory with original data sets and reaching conclusions to interesting questions. The quality of these theses is truly outstanding. Another opportunity for broader study is our large and successful internship program, in which students complete an internship with a local or national enterprise and, under faculty supervision, write a research paper about the experience.

Graduate Training
Interest in our doctoral program has never been higher. The number of outstanding applicants has risen rapidly over the last three years. An interesting comment on the quality of our program is that a far higher percentage of these students than before are choosing to attend CU, despite the high tuition and living expenses here. In the fall semester of 2003 we expected to enroll around 18 new students, but 29 actually entered the PhD program. In the fall semester of 2004 we also expected around 18 new students, but 26 actually enrolled. As you know, our students come from both the United States and countries all over the world.

One reason for this interest is our continued strong record in placing our doctoral students into satisfying careers. The new doctors of philosophy who completed training since the last newsletter have taken jobs at the International Monetary Fund, Georgia Tech University, the Air Force Academy, the University of Beijing, Sam Houston State University, the Indonesian Ministry of Finance, and the International Center for the Study of East Asian Development in Japan. We will have a large group of students entering the professional market this coming year we expect them to be similarly placed.

A new feature of our graduate training is that we now provide free training in English, accent reduction, and classroom pragmatics for our foreign graduate students who wish to be supported as teaching assistants and graduate instructors. Despite their commitment to solid teaching, occasionally there is a difficulty in communication arising from differences in language, accents, and culture, especially when both the TAs and freshmen students are in a classroom together for the first time. The new program should do much to alleviate the concerns of undergraduate students on this score and help train our doctoral students for academic careers.

Research Accomplishments
Despite its budgetary difficulties, CU-Boulder remains a top public university. This was reaffirmed recently by a two-year study performed by Shanghai Jiao Tong University in China. Accounting for Nobel laureates, highly cited researchers, articles published in top journals, citations of faculty publications, and academic performance per faculty member, this study ranked CU-Boulder the 11th best public university in the world (and 31st in the world among all universities). One of our faculty members, Jim Markusen, is among the world's top-cited economists and his presence on the faculty contributed materially to this overall ranking. Indeed, Jim was the only member of all the social science faculties at CU to be included on this list. For more information on the study, visit

Recent rankings of economics departments in the world have been posted by a web site providing information to prospective graduate students. These rankings break down departmental research performance by academic discipline on the basis of publications in top journals over the period 1990-2000. In the broad area called "trade and development" CU ranked 21st in the world. In the more narrowly defined field of "trade and factor movements" our department was ranked third in the world, just behind Columbia and Harvard. Without a doubt the department has built a global reputation for excellence in international trade, which is reflected in the high numbers of graduate students wishing to study here. Additional rankings may be found at the website

Department members also continue to attract grants to support their research. Various faculty members currently are working on grant-supported research programs, with support coming from such agencies as the National Science Foundation, the Social Science and Humanities Research Council, the Environmental Protection Agency, the Social Security Administration, and the Colorado Department of Transportation.

Personnel Decisions
I am pleased to report that Assistant Professor Terra McKinnish successfully completed her mid-term comprehensive review and has been appointed to a term that will culminate in a tenure decision some years hence. Terra is a labor economist who has been doing fascinating work on the workplace-based determinants of marriage and divorce, among other things.

We saw two retirements in May of this year. After long and successful careers, Professors Fred Glahe and Don Roper retired from teaching. Both are macroeconomists, leaving of a hole in our teaching program that we will endeavor to fill quickly. We certainly wish them the best in their retirements.

Unfortunately, the rest of the news in the personnel area is discouraging. Professor Ruqu Wang, a microeconomic theorist whom we hired a year ago, decided to return to his prior employment at Queen's University in Canada. Professor Eckhard Janeba, who has made great contributions to our research and teaching programs, chose to accept an extremely prestigious appointment as Professor at Mannheim University in Germany. Finally, the department was unsuccessful in its efforts to attract a new member last year. We made offers to three excellent candidates, all of whom took competing jobs at other universities. A central problem is that other universities now offer candidates in economics generous start-up packages, which CU cannot match. It is likely the department will need to use its gift monies to begin paying for such packages.

A Tough Year
I don't wish to dwell on problems facing the university but you may be interested in an update. The first, and by far most significant, difficulty is the continuing decline in fiscal support for public higher education in the state, a trend also happening across the country. In last summer's newsletter I explained the sources of CU-Boulder's declining revenues, which now result largely from the constraints imposed on the legislative budget process by the state constitution. Specifically, the TABOR amendment to the constitution requires the state to limit sharply its revenue and expenditure growth, starting from the much-lower base established in the recent recession, and to rebate any revenue surpluses to taxpayers. Amendment 23 mandates the state to increase spending on K-12 education, a preference driven by tight restrictions on personal property taxes in yet another amendment. Together these factors mean that less than 15 percent of the budget lies within the legislature's discretion and this portion must be used to balance the state's budget. Unfortunately, public higher education is one of the few items in this discretionary component and universities have suffered vastly disproportionate budget cuts.

Thus, in the present environment nearly all of the ongoing cuts must come from higher education. A combination of small resident tuition increases and some relief in the budget mean that the higher education budgets for the coming academic year will be marginally higher than last year's, though not enough to pay for increases in energy and health costs. The reality is that if there are no reforms in the state's constitutional crisis in the near future, the legislature will be forced to slash higher education budgets even more dramatically over the coming years. Indeed, we face the remarkable prospect that the state will be rebating hundreds of millions of dollars to taxpayers at the same time that it cuts public contributions to university budgets close to zero. It is not a sustainable situation.

In fact, CU-Boulder has moved toward becoming a private institution. Under legislation passed earlier this year, this campus was awarded "enterprise status" because the state's contribution to its budget had reached well below 10 percent. Enterprise status means that the campus is now able to sell construction bonds in order to erect new buildings and maintain existing facilities. In principle, it also means that the university should achieve greater autonomy in setting tuition rates over the next few years, though the legislature and governor continue to control those rates tightly.

Earlier this year the university community witnessed an episode that must be described as bizarre in the context of public policy related to the budget crisis. The state of Colorado simply does not have any money to construct new buildings and all agencies operate under a capital-construction freeze unless they can raise the funds themselves. On our campus the law school building is old and far behind standards for competing law schools in terms of space, library facilities, and internet access. The need for a new building led university officials to wage a campaign convincing student leaders to vote to tax themselves to pay for it. After months of intensive lobbying, the student group agreed that future students would pay stiff extra fees in order to fund the construction of a new law school and additional buildings. This decision showed that the students are dedicated to the university and willing to face up to these extraordinary costs over several decades, despite the fact that most students will not benefit directly from the law building. In itself this action is remarkable. The bizarre thing, however, is that the state, which will contribute not a single penny to construction costs, will own the buildings.

The budget crisis is dispiriting for the faculty but other states face fiscal problems as well. Here however, an equally damaging event was the attempt by conservative legislators last year to restrict the freedom of professors to address their classes. Relying on highly dubious statistics and anecdotal innuendos, these legislators nearly passed a bill that would have established an "Academic Bill of Rights." Under this law, professors making comments in their classes not directly related to their subject matter (and by inference that were liberal in tone) could have been subject to civil and criminal penalties. Fortunately, the bill did not make it out of committee, in part because a compromise was struck under which departments need to monitor the political tenor of their professors' lectures in the future. Still, damage was done to the morale of the faculty here and it was a factor in the departures of faculty from economics.

A third problem was the controversy surrounding the football team. The recruiting practices alleged to have taken place have no place on a college campus and the whole episode was extremely unfortunate. While not directly affecting the economics department, it has been another reason to wonder about the direction in which the university is headed.

Some Positive Notes
Far better, I think, to end on some positive notes. First, I continue to be delighted by hearing from recent graduates and learning of their interesting activities. Here are three examples. Jon Hokama, who received an MA in 1996, is now the senior competitive marketing manager for a server division of Hewlett Packard, with extensive responsibility for sales in the western hemisphere. William Weathers, a BA graduate in 2002, has served two years in the Peace Corps in Haiti. His assignment was to teach business skills to Haitian villagers, where he taught them basic life lessons from economics, such as "Buy (peanuts) when the prices are low and store them until the off season, when prices are doubled." And Shombi Sharp, who received an MA in 2002, was a major author of the United Nations Development Program's report on AIDS in Eastern Europe, released earlier this year in Moscow. The media coverage of the report's launch was extensive and Shombi was quoted in some of the world's top journalistic outlets.

Finally, I would like to express my gratitude again to all the alumni and friends who offer their support and encouragement to the department. We are clearly entering an era where public support for higher education will decline even further and it will become increasingly important for universities and academic departments to turn to private sources for assistance. I hope you will consider us as we work to continue the strong traditions of teaching and research in economics.

Thank you, Keith Maskus

Economics Program Review  |  Remembering Lawrence Senesh 
 What is Public Economics? |  Another Honorable Year, 2003-2004
Faculty Notes  |  Alumni Notes  |  2003-04 Seminar Series |  Graduates  |  Awards
Department of Economics 2004-05 Annual Fund  | Let Us Hear From You! 
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