His work established the importance of doing conventional macroeconomics and microeconomics in underdeveloped countries and set new standards for development economics, said George Akerlof, a former colleague of Hansen's in the UC Berkeley economics department who won the 2001 Nobel Prize in economic science. Models resulting from Hansen's studies were developed for Afghanistan, Bangladesh, India, Thailand and other countries.

Akerlof said Hansen did not avoid careful use of data and hard-to-acquire sources. "He was not the development economist in the airplane, but instead the development economist in the archives," Akerlof said. "He was the greatest development economist of his generation."

In one of his studies, Hansen looked at what Egyptian laborers did with their spare time, in an effort to dispel the surplus labor argument. He dug into old records to compute index numbers, measured the rate of return on the Suez Canal, analyzed Egyptian crop quotas, and co-authored a book about the

Egyptian economy's performance that looked at implications of exchange rate regimes and performance of particular industries.

Hansen's first major publication, in 1951, was "A Study in the Theory of Inflation," in which he showed how there could be a "quasi-equilibrium" in which wages and prices would both be growing at the same steady-state rate and wages and prices would behave in basically the same way.

Hansen was a professor of economics at UC Berkeley from 1966 to 1998 and served as chair of the Economics Department from 1977 to 1985. He also was on the faculty for the campus's Center for Middle Eastern Studies in the Institute for International Studies and served as its director from 1984-85.

A native of Denmark, Hansen was a prolific author who wrote numerous articles and books on the economic theories of interest rates, foreign trade and exchange, and development. He also served as a consultant to international agencies and governments, including Morocco, Turkey, Egypt, Denmark and Syria. Three of his books focused on Egypt, where he lived the last four years of his life.

Laurence Michalak, vice chair of the Center for Middle Eastern Studies, described Hansen as "a profound scholar of the Middle East."

Hansen earned degrees at the University of Copenhagen in Denmark and at Uppsala University in Sweden before becoming an assistant professor at Uppsala in 1947. He also taught at the National Institute of Economic Research in Stockholm and at the University of Stockholm. He served as an advisor to the Institute of Planning in Cairo from 1962-65.

He was named a fellow of the Econometric Society in 1953 and a fellow for the Association for Middle East Studies in North America in 1975.

Hansen broke his hip during a visit to Switzerland in 1999 and, after that, moved to Alexandria, Egypt, with his wife, Soad. He then began to suffer from numerous health problems and died of gastric hemorrhage, according to one of his stepdaughters, Eglal Zaklama.

Zaklama and Hansen's widow are planning a memorial service for Hansen at UC Berkeley in August.