Addressing the inaugural convocation of Claremont Men's College in 1947, James Blaisdell, president emeritus of the Claremont consortium, framed the new college's future: while it was one thing to develop a curriculum to prepare young men for leadership in business and government through the prism of the liberal arts, he said, the real identity of CMC would be created over time by its faculty and students. Blaisdell's words echo nearly six decades later, through the economics department's bilateral mission to provide students with not only a solid grounding in economic theory, but also real-world skills and practical applications. The launch this fall of the Financial Economics Institute further complements both the College and the department, and encourages the faculty-student interaction that has become a hallmark of the CMC experience.

The new institute, with its unique and rigorous curricular offerings and access to databases including the Wharton Research Data System, vaults student and faculty opportunities to a level virtually unmatched at any other liberal arts college, says Janet Smith, the Von Tobel Professor of Economics, director of FEI and the Robert A. Day 4+1 BA/MBA Program, and former department chair. "The Financial Economics Institute fits squarely within the mission of the College, building on our strengths and making us distinct," she says. "CMC is the only liberal arts college with such a curricular program in financial economics."

A rapidly evolving and highly innovative academic field, financial economics applies economic concepts and methodology to a broad range of finance topics, including capital markets, corporate finance, and the economics of organization. Although grounded in microeconomic theory, the field also draws from law, computer science, psychology, and other disciplines. CMC's sequence in financial economics, consistent with the College's liberal arts orientation, combines core coursework in mathematics, economics, and statistics with a major research project, facilitating students' placement both in key financial-sector posts and in top graduate programs.

The curriculum is enhanced further by partnerships with alumni like Trustee Perry Lerner '65 P'89, a member of the FEI board and partner at Lerner & Squire LLP, who recently visited Janet Smith's Economics of Strategy class, discussing his Internet grocery start-up, FreshDirect. "FEI provides a pull as well as a push," says Lerner, "and will arm students with enough experience and self-confidence to build a career anywhere in the world."

Anchoring this new program is the overriding conviction that quality research and undergraduate teaching are inseparably linked. "Most liberal arts colleges emphasize teaching and some research, and research universities emphasize research and some teaching. CMC's mission and historic emphasis allow us to do both," says Greg Hess, the Russell S. Bock Chair of Public Economics and Taxation. "We take economics very seriously."

That seriousness is rooted deeply at CMC, with a curriculum that emphasizes political economy, economic problems, and public policy, and 40 percent of whose graduates hold a single, double, or dual major in economics or economics-accounting. "Economics always was at the core of the College, and the department always has been phenomenal," says Orley Ashenfelter '64, the Joseph Douglas Green 1895 Professor of Economics at Princeton University.

In Claremont's earliest years, economics faculty members were recognized even when the College itself was a relative unknown. Faculty recruitment was the near-exclusive prerogative of Founding President George C.S. Benson, who engaged many of the new college's faculty from the best graduate schools in the nation, including CMC pioneers Jacob Anton de Haas, professor of international economics, who left a tenured position at the Harvard Graduate School of Business; W. Bayard Taylor, professor of finance and, later, dean of the faculty, from the University of Wisconsin; Walter Buckingham Smith, the James G. Boswell Professor of American Economic Institutions, from Williams College; Arthur Kemp, the Charles M. Stone Professor of Money and Credit, a research consultant to former President Herbert Hoover and the Hoover Institution at Stanford University; and rising star Orme Wheelock Phelps, professor of industrial relations, who was lured from the University of Chicago.

The 2002 approval of the College's Strategic Plan, which called for strengthening of core departments and conversion to tenure track appointments, enabled CMC to continue to attract top economists and industry leaders, their resumes punctuated by the Federal Reserve Board, the President's Council of Economic Advisors, the Securities and Exchange Commission, and the National Bureau of Economic Research.

"The perception by some that, as a liberal arts college, we're not serious about research, still is a challenge in recruitment," says department chair Richard Burdekin, the Jonathan B. Lovelace Professor of Economics, "but our best advertising is our faculty, whose names people recognize and whose research they respect."

CMC's economics faculty members appear prominently on the lists of most-published economics professors at liberal arts colleges. Using The American Economic Review equivalent page methodology of Piette and Laband, an index that ranks economic journals by quality, the College's faculty collectively accounted for the most pages published in those journals between 1991 and 2001—and by a wide margin. CMC's economics faculty published more than 170 pages, while the distant-second Williams College had fewer than 72 published pages.

In the critical area of research output in economics journals, CMC's economics department now rates first or second in the country among liberal arts colleges, and based on size, the core faculty is second among liberal arts colleges only to Williams.

Several individual faculty members also merit top rankings. Professors Hess and Harold Mulherin, the Don and Lorraine Freeberg Professor of Economics and Finance, placed first and second, respectively, for quality pages published by full professors at liberal arts colleges between 1997 and 2002, and Burdekin earned the seventh position. Lisa Meulbroek, the Fritz B. Burns Associate Professor of Financial Economics, placed first among associate professors, and associate professors Brock Blomberg and William Brown joined her among the top 10 of that category. Marc Weidenmier and Heather Antecol both ranked in the top 10 for assistant professors.

Not confined to the printed page, faculty members also have shared their research as visiting scholars and conference presenters. At the Bank of Japan's Institute for Monetary and Economic Studies, Hess spent seven weeks researching margin rate monetary policy, building on a paper coauthored with Weidenmier, and speaking to audiences at Osaka, Hitotsubashi, and Tokyo Universities. Blomberg presented his research on the economic consequences of terrorism to NATO's Defense College and Regional Economics and Security Affairs Directorate in Rome, and Mulherin will teach a course on mergers and acquisitions this spring at the University of Tuscia in Viterbo, Italy.

This recent international travel follows the tradition of Marc Massoud, the Robert A. Day Distinguished Professor of Accounting, an international accounting expert who has presented to the Egyptian government, in Cairo, and to the Gulf Cooperation Council Accounting Departments' First International Accounting Conference, in Kuwait, and Thomas Willett, the Horton Professor of Economics, a former Deputy Assistant Secretary of the Treasury for International Affairs-Research whose more than 200 publications include placements in many top refereed journals.

"The faculty-student relationship is what makes the College great," says Massoud, a six-time recipient of the Glenn R. Huntoon Award for Superior Teaching and five-time recipient of the G. David Huntoon Senior Teaching Award. "Outreach helps me to advise students better, and to place them for both summer internships and jobs."

FEI: Connecting Students and Alumni

Enabled in part by the hiring of faculty with strong scholarly and applied credentials in corporate finance, the new Financial Economics Institute also draws heavily on the expertise of CMC alumni, not only as members of its board of advisors, but also for direct and frequent interaction with students.

Leaders in sectors including investment management, banking, venture capital, private equity, and public accounting, alumni support and enhance the institute's quantitative faculty and student research with applied lessons and experiences.

"FEI offers increased interaction with employers and an increased focus on the core applied skills that students need to be successful in the job market," says Robert Thomas '99, who, with Garrett Wilson '03, both of Cascade Investments, spoke to Mulherin's Corporate Finance class about Risk & Return, Equity Risk Premium. "I wish the FEI was around while I was at CMC."

In addition to work in the classroom and at the computer, FEI conferences and lecture series bring leaders in business, finance, and academia to campus, providing students and faculty with exposure to issues and topics ranging from risk management in the energy industry to investor behavior and public policy. At the same time, such events—and FEI itself—will enhance the growing reputation of CMC's economics department.

"The national reputation of the economics department is definitely on the rise," says Trustee James McElwee '74, chair of the FEI Board of Advisers and general partner at Weston Presidio, "and FEI is one more contributor to the overall momentum."

Beyond their help with site visits and other job-related activities, including an annual New York City networking trip, Smith says CMC alumni have become increasingly involved with the department and the College in more academic ways. Alumni participate in department-sponsored, student statistics and business plan competitions, including one named for Trustee Henry R. Kravis '67, founding partner of Kohlberg Kravis Roberts & Co.

"A number of illustrious alumni participated in these competitions and as classroom guest lecturers," says Smith, with judges for this fall's Kravis Business Plan Competition including Augie Nieto '80 P'08, president and CEO of Life Fitness, Inc., and Jon Kirchner '89, president and CEO of recently public Digital Theater Systems, Inc. "This direct involvement," says Smith, "is enriching for faculty and students alike."

Building on Tradition

FEI provides just one example of alumni commitments to CMC's institutes. Trustee Robert J. Lowe '62, chairman and CEO of Lowe Enterprises, Inc., has chaired the Lowe Institute of Political Economy since its founding at CMC in 1986. Lowe, says Director Sven Arndt, the Charles M. Stone Professor of Money, Credit and Trade, has both supported the Institute with his time and leadership, and extended job offers to student researchers.

Created to support and publicize faculty and student data collection and applied research in public policy issues, the Lowe Institute has always been identified by three components, says Arndt: enhancing and contributing to student learning, maintaining an intellectual environment, and raising the visibility of the College and the department through its research.

Employing about 15 students, the Institute's research efforts persist tirelessly year-round, says Arndt, with institute-funded grants that enable faculty to hire student research assistants for projects ranging from the impact of NAFTA to the feasibility of monetary integration in the Western Hemisphere. The Institute also co-sponsored recent sessions, workshops, and conferences in Beijing, Claremont, and Frankfurt, as well as the weekly Claremont Economics Seminar series, which brought speakers from myriad universities and institutions to campus, and presented research findings at conferences both in the United States and abroad.

Tapping Resources

At the core of these institutes' strength is unparalleled access by students to real-world tools and innovations. CMC is the nation's only liberal arts college with access to the Wharton Research Data System, a Web-based data management system that allows faculty and students to easily retrieve information from a wide variety of financial, economic, and marketing data sources.

"FEI's databases will expose CMC students to the type of research they can expect to face in the future, allowing them to be much more competitive in the job market and within the top graduate schools," says Brian Dennis '97, assistant director of FEI and the Robert A. Day 4+1 BA/MBA Program.

Like FEI, the Lowe Institute provides access to databases containing empirical and statistical data, both domestic and international, from resources including the International Monetary Fund. "Within the majority of fields students study," Arndt says, "they're learning textbook information and theories. But with access to these datasets, they're putting to practice what they've learned in real-world situations, to see if the data support the evidence, and picking up a lot of useful statistical techniques."

CMC's ability to offer FEI and an ever-expanding range of courses, including classes tying the department to emerging and timely issues in business, finance, and economics like Economics of Strategy and Sports Economics, is the direct payoff of the depth of academic talent and disciplines now housed in its economics department. "We recruit not only the highest quality faculty, but also faculty with an applied policy focus and interests matching our students' interests," says Burdekin, citing as one example how Assistant Professor Jennifer Ward-Batts' Economics of Population course reflects her personal research interests and the College's attention to globalization.

"The example of how the Federal Reserve Board and the Tokyo Stock Exchange ended their active management of margin rates can teach students about monetary policy," says Hess, applying his visiting scholarship at the Bank of Japan to his Intermediate Macroeconomics class. "Policies that don't work need to be abandoned."

Hess' work complements a Freeman Foundation grant to develop a program in Asian political economy that has funded enhanced Asian offerings, including three distinguished visiting scholars: former U.S. Ambassador to Japan Michael Armacost, former U.S. Ambassador to Thailand David Lambertson, and Chong-Wook Chung, former senior secretary for foreign policy and national security in the office of the president of the Republic of Korea, and his nation's first ambassador to the People's Republic of China.

Freeman funds also have supported adding Asian modules to existing coursework, says Burdekin, such as coverage of Chinese and Japanese banks in his Money and Banking class, and a trip to Hong Kong, where students and faculty will attend the Western Economic Association's Pacific Rim Conference. "The international dimension is important," says Burdekin, "as exchange rates, trade movements, and foreign assets increasingly influence investment and portfolio decisions."

The relevance of a curriculum that addresses international economics, Burdekin continues, does not necessarily require graduates taking jobs abroad, although a number of students do aim to do just that. "Our curriculum focuses on courses and related research that students easily see as relevant, from basic theory and quantitative methods to varied electives," says Smith. "Research keeps us current, thinking about the frontiers of knowledge and unanswered questions as well as about the limitations of our models and methods."

Students appreciate the value of being taught by economists who are not only excellent teachers, but also experts in a range of applied policy areas, and benefit from their professors' professional experiences and connections. "Our professors' public and private sector experience allows them to offer non-academic insight into professions and real-world applications in the classroom," says Justin Hance '06, an economics-legal studies dual major, FEI research analyst, and BGI/Michael Larson Asset Management Fellow who also will be one of the first to complete the Financial Economics Sequence. "While their research clearly is important, their ability to teach and connect with students is what, in my mind, creates the value of the department."

It also helps the department's graduates secure summer placements and even permanent jobs, often with prestigious institutions such as the Council of Economic Advisers. "We have had continuing success at the Federal Reserve Board in Washington," notes Hess. "One of their recruiters called and said he wanted to see more CMC students. I think this will grow."

He cites not only CMC students' well-grounded education in economics and accounting, but also in research methodology. As students complete their senior theses, they develop knowledge of the fundamentals and importance of solid research in addition to their particular subject area. "A lot of employers," says Hess, "are looking for that combination."

Students also have sharpened their presentation and research skills through the Lowe Institute's Baker-Lowe Scholars Program. Two to three CMC seniors are selected, annually, to conduct independent research on a topic of their choice, then craft a 30 minute presentation for the Board of Governor's Institute meeting in spring. "It really does give our seniors a chance to have a capstone experience," says Arndt.

Progressing Toward Premier

Despite a new institute and advancements in national reputation, today's economics department continues proceeding with the same purpose prophesized by Blaisdell some 50 years ago. Exacting standards in employing the College's core economics department, plus careful consideration of policy and programs—knitted with the underlying fabric of faculty-student research—make it pre-eminent among peer institutions. And still, the plans to propel and promote the department beyond its present position prove indefatigable.

"Our long-term goal is to have a national reputation as the premier economics department among liberal arts colleges. By many objective standards, we are there already," says Janet Smith, but, like deHaas and Phelps decades before, adds, "We need to make a concerted effort to raise our national profile even higher."

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