MIT Department of Economics

Robert M. Townsend
Elizabeth & James Killian Professor of Economics

A theorist, macroeconomist, and development economist, Townsend analyzes the role and impact of economic organization and financial systems through applied general equilibrium models, contract theory, and the use of micro data. 




This website attempts to capture the scope of my work throughout my career, up through and including the present day. It organizes the work formally -- so you can hopefully find what you are looking for or discover something new -- as well as loosely, around a series of themes and ideas that I am currently pursuing.


What’s New?


I am teaching three courses this year: Intermediate Microeconomic Theory, Advanced Macroeconomics, and Development Economics: Macroeconomic Issues.

Intermediate Microeconomic Theory (M14.04) This course provides an introduction to theory and data, consumer choice, and general equilibrium models. It includes the analysis of consumer and producer decisions, partial and general equilibrium analysis, insurance, the welfare theorems and failures of these theorems as with externalities but with resolutions, contract theory and mechanism design, policy analysis, the content of theory for data, and the design of media of exchange as with Bitcoin and markets made possible by distributed ledgers.This is an ambitious course, which trains undergraduates to pursue economics as we economists do professionally, rather than asking students to memorize traditional textbook material.

Advanced Macroeconomics II (M14.462) This course covers the measurement, analysis, and design of financial systems, with a particular emphasis on first principles as a foundation for policy. The course covers several topics related to liquidity and financial intermediation. The focus of the course is on the design of financial contracts and markets and on efficiency and policy interventions in a general equilibrium context. Special topics include innovations made possible by new technology, e-money, and e-platforms.

Development Economics: Macroeconomic Issues (M14.772) Finally, I am also teaching 14.77s, which is about the relationship of randomized controlled trials and quasi-natural experiments to economic theory. Topics covered include scaling up RCTs, choosing models, risk sharing, networks, and obstacles in economy-wide models.

Syllabi and slides for these courses can be found here.

Recent Focus: Forthcoming Book & Lectures

Distributed Ledger Technology (DLT)

One of my current areas of focus is distributed ledger technology. My forthcoming book from MIT Press, Distributed Ledgers: Design and Regulation of Financial Infrastructure and Payment Systems, is an economic analysis of the transformative potential and optimal design of distributed ledger technology (DLT), discussing key components and applications.

DLT (and the related, but not synonymous, innovations of blockchain and Bitcoin) have the potential to transform economic organizations and financial structures. Yet, the subject is embroiled in controversy, hype, and terminological inconsistencies. Rather than get waylaid by alternative possible definitions of distributed ledgers, or decentralized ledgers, the book focuses more broadly on an economic analysis of what DLT can do. It begins by analyzing key individual components, comparing and contrasting the economics framework with the frameworks of computer science and data management disciplines to clarify the technology and initiate steps to combine these disciplines.

The book also covers familiar but key component parts of distributed ledgers: ledgers as financial accounts, e-messages and e-value transfers, cryptography, and contracts including multi-party mechanisms. Each component is discussed, evaluated, and illustrated through the context of historical and contemporary economies, with featured applications in both developed economies and emerging-market countries. These use cases are a hallmark of the monograph. A recurrent focus is the general-equilibrium impact of innovations and welfare gains from innovations featuring key components.

Contract theory is used to derive optimal arrangements, constrained only by obstacles to trade, featuring how the various aspects of ledgers can deepen infrastructure. Mechanism design and monetary theory are used to study public versus partitioned ledgers and improvements in payment systems. Prudential regulation, rather than being a barrier to innovation, can be improved with the use of DLT.

The goal of the book is to provide blueprints for the optimal design and regulation of financial systems given what we know today, including not only choices at the endpoints of the spectrum, of centralized versus decentralized systems, as in the hype, but the choice of hybrid forms in between. Each key component is assessed from both computer science and economic perspectives, and syntheses are offered. Overall, the monograph provides a vision for where we are heading, being clear about obstacles along the way.

Many of these ideas have been outlined in my working paper, "Distributed Ledgers: Innovation and Regulation in Financial Infrastructure and Payment Systems."

In January, I gave the Distinguished AFA Lecture at the 2020 American Finance Association meeting, which focused on this work. A video of the lecture is available here: “Distributed Ledgers: Design and Regulation of Financial Infrastructure and Payment Systems.”

In February, I delivered the keynote at the George State - Review of Financial Studies FinTech Conference.

Recent Focus: Insurance and Propagation in Village Networks

My co-authors and I recently published an article in GlobalDev about our working paper, "Insurance and Propagation in Village Networks." The article explores how a large shock experienced by one specific household spreads to others. Our findings have important implications for responses to the Covid-19 shocks, suggesting that a robust response is particularly important for mitigating economic contagion caused by the pandemic.


I am currently a member of the executive committee and past president of the Society for the Advancement of Economic Theory (SAET). Founded in 1990 and dedicated to advancing knowledge in theoretical economics, SAET publishes the journals Economic Theory and Economic Theory Bulletin, names Economic Theory Fellows, and bestows the Aliprantis Prize for Excellence to a young researcher. SAET also facilitates communication among researchers in economics, mathematics, game theory, and other fields that have the potential to inform and shape economic theory.

Teaching & Students


This page features current and past classes that I have taught at MIT going back to 2011. It also includes syllabi.


Some of my lectures can be found online: Development Economics, Macroeconomics; Measurement in Economics; An Overview of Micro-Founded Macro Models; Applying an Applied General Equilibrium Approach in Development Economics; and Optimal Risk Sharing Among Households in Developing Countries

Former and Current Students

Finally, the site features a list of current students as well as former students I have worked with in the past.

Working Papers & Publications

My complete archive of working papers and publications are posted with several search feature options. Below I highlight some of my most recent papers.

Recent and Forthcoming Publications

"Curbing Shocks to Corporate Liquidity: The Role of Trade Credit." Niklas Amberg, Tor Jacobson, Erik von Schedvin, and Robert M. Townsend. Forthcoming in the Journal of Political Economy. (Read a Q & A I did about the findings in this paper.)

"Distinguishing Constraints on Financial Inclusion and Their Impact on GDP, TFP,  and the Distribution of Income." Era Dabla-Norris, Yan Ji, Robert M. Townsend, and D. Filiz Unsal, Journal of Monetary Economics, 2020. See also CEPR Discussion Paper No. 11742, 2017; NBER Working Paper No. 20821, 2015. 

“Family Firms, Bank Relationships and Financial Constraints: A Comprehensive Score Card.” Alexander Karaivanov, Jesus Saurina, and Robert M. Townsend, International Economic Review, 2018.

“Integrated Household Surveys: An Assessment of U.S. Methods and an Innovation,” with Krislert Samphantharak and Scott Schuh, Economic Inquiry, 56 (1): 50 -80, 2018.

"Risk and Return in Village Economies," Krislert Samphantharak and Robert M. Townsend, American Economic Journal: Microeconomics 10(1) February 2018 (pp. 1-40): see also NBER Working Paper No. 19738, 2013 (revised 2016).

Recent Working Papers

"A Market Based Solution for Fire Sales and Other Pecuniary Externalities." Weerachart T. Kilenthong and Robert M. Townsend. 2019. Also NBER Working Paper No. 22056, 2016.

"Distributed Ledgers: Innovation and Regulation in Financial Infrastructure and Payment Systems." Townsend, Robert M. Working Paper, 2019. 

"Optimal Contracting and Spatial Competition among Financial Service Providers."  Gustavo Joaquim, Robert M. Townsend and Victor Zhorin. Working Paper, 2019.

"Public Ownership and Anti-Preemption." Juliano Assunção, Sergey Mityakov, and Robert M. Townsend. Working Paper, 2019.

"Rise of Bank Competition: Evidence from Banking Deregulation in China." Haoyu Gao, Hong Ru, Robert M. Townsend, Xiaoguang Yang. NBER Working Paper No. 25795, 2019.

"The Economics of Bank Supervision." Thomas M. Eisenbach, David O. Lucca and Robert M. Townsend, 2019; see also  NBER Working Paper No. 22201, 2016.

"The Impact of Regional Isolationism: Disentangling Real and Financial Factors."  Archawa Paweenawat and Robert M. Townsend. Working Paper, 2019.

"The Village Money Market Revealed: Credit Chains and Shadow Banking." Parit Sripakdeevong and Robert M. Townsend. Working Paper, 2019.

"Who Sees the Trades? The Effect of Information on Liquidity in Inter-dealer Markets."  Rodney J. Garratt, Michael Junho Lee, Antoine Martin, and Robert M. Townsend. Working Paper, 2019.

"Risk-taking over the Life Cycle: Aggregate and Distributive Implications of Entrepreneurial Risk." Dejanir H. Silva and Robert M. Townsend. Working Paper, 2018.

"The Economics of Platforms in a Walrasian Framework." Anil Jain and Robert M. Townsend. Working Paper, 2018.

Working Groups

In addition to the new IO & Finance working group mentioned earlier, I organize and participate in several other active groups: Flow of Funds Accounts and Mapping Financial Systems; Financial Systems, Industrial Organization, and Economic Development; Optimal Design of Payment Systems; Financial Underpinnings of Macro Models.


I have written six books, identified below:

Data & Measurement

In May 2019, I received a seed grant from the Abdul Latif Jameel Water and Food Systems Lab (J-WAFS) at MIT to study the design of weather-contingent crop insurance to improve farmers’ investments in their crops for higher yields. You can read more about the project here.

My  Townsend Thai Project, (link is external) which I began in 1997 with many collaborators, concluded at the end of 2018. It was one of the longest-running panel datasets in the developing world. Many people enjoy watching the video documentary about this project titled, "Emerging Thailand: The Spirit of Small Enterprise." (link is external).

All the data from the Townsend Thai Project can be found by following this link: http://townsend-thai.mit.edu/data/ or by visiting my Dataverse site. 

You can also find an archive for earlier research projects of mine: Consortium of Financial Systems and PovertyImpact of Financial Services in MexicoChicago Neighborhoods ProjectThe Enterprise Initiative; and the Aurepalle Village Project.


Media & News

You can read the announcement about the Abdul Latif Jameel Water and Food Systems Lab grants  in this MIT News story.

I wrote an article for VoxDev exploring how restrictive regional economic policies can lead to lower national productivity and higher inequality. The article,  “The impact of isolationist policies: Insights from regional capital and labour flows in Thailand”, appeared in September 2017.

An archive of media coverage and more public discussion of my work can be found in the News section of the site.


About & Contact Information

My bio statement outlines the path of my career and my work. My most current cv is also available for download via the top of this page or under the About tab. My assistant, Deborah Jamiol, is a good way to go about getting in touch with me. More information about reaching her can be found on my Contact Page.


Air Maxs