Economics teaching has a long history at Birmingham, dating to the establishment of the Faculty of Commerce in 1903 and a separate Honours School of Economics and Social and Political Science in the Faculty of Arts, established almost 30 years later. These were merged into the Faculty of Commerce and Social Science after the Second World War.
Economics became independent of Commerce in the 1950s, though remaining within the larger Faculty of Commerce and Social Science. Gilbert Walker, an industrial economists who was appointed Professor of Economics in 1947. He appointed several young lecturers or assistant lecturers who turned Birmingham into one of the main centres for modern, technical economics in Britain. Frank Hahn (on the staff from 1948 to 1960) undertook pioneering work in general equilibrium theory and the foundations of monetary theory. Terence Gorman (from 1948 to 1961) was another economic theorist, renowned for his work on many subjects, including aggregation, duality, and demand theory. Alan Walters (from 1952 to 1968) was an econometrician who applied new statistical techniques to many problems, one of the most notable being the demand for money.
In 1956, the Faculty of Commerce and Social Science was, for the first time, formally organised into Departments: in addition to Economics there was a separate department of Statistics and Econometrics (renamed, two years later, as Econometrics and Social Statistics, so as to distinguish it from the Department of Statistics in the Faculty of Science). In 1965, with the appointment of Professor Maurice McManus, the Department of Mathematical Economics was created. The three departments were merged in 1976, into a single Department of Economics, reflecting the fact that they shared the teaching of the B.Soc.Sc and M.Soc.Sc. programmes. It was during this period that the number of economists in this area expanded, reflecting a much wider expansion of social science education. In 1962/63 there had been only 7 academic staff, which expanded to 22.5 by 1970/71, the number remaining around 20 till the early 1990s.
Though research continued on other areas, economics in Birmingham retained the commitment to modern technical economics established by Hahn, Gorman, and Walters. James Ramsey (from 1972 to 1974) and Peter Phillips (from 1976 to 1979) were econometric theorists who held the Chair of Econometrics and Social Statistics. Prasanta Pattanaik, a prominent social choice theorist, followed McManus as Professor of Mathematical economics, from 1978 to 1991. Important applied work was undertaken by holders of the Esmee Fairbairn Chair of Investment was held by John H. Wood (from 1962 to 1975), a monetary economist whose work included studies of the term structure of interest rates and econometric models of the banking sector, and Mervyn King (from 1977 to 1984, now Governor of the Bank of England), who focused on taxation and was the author of numerous works on this and other subjects on the British tax system.
In 1988, when Faculties were abolished, Economics moved into the School of Social Sciences. From August 2008 the Department of Economics has become a department in the Birmingham Business School, which, in turn, is part of the newly created College of Social Sciences.