Understanding Global Macroeconomics: Understand the impact of macroeconomic developments on your business (Corporate Finance)

Managers, especially those working in the finance sector, are bombarded by macroeconomics and financial news from around the world. Since almost all decisions in this increasingly interconnected world depend on both macro and foreign developments, it is important for managers to understand how to integrate this information into a coherent framework. 

In the Understanding Global Macroeconomics program the participants will be introduced to various aspects of macroeconomics and will get acquainted with the main concepts and policy debates: from economic growth to monetary policy and from inequality to debt sustainability; from IS/LM model to exchange rate regimes and from optimal currency areas to Rodrik’s Trilemma. In the two days, we will look into theoretical foundations of the macro economy: aggregate demand, aggregate supply, fiscal policy, as well as monetary policy. We will equally examine the international economy, exchange rates, trade policy and optimal currency areas. After each theoretical introduction we will look into practical applications: the focus will be about 25% on theory and 75% on real-world applications.

How you will benefit

• Be able to interpret high level articles about economics, the main national and international policy discussions
• Construct logical relationships between all major macroeconomic variables and entities: technology, productivity, economic growth, demographics, interest rates, income distribution, exchange rates, domestic politics, international institutions
• Engage in topical policy debates
• Tie business decisions to macroeconomic policy debates
• Apply macroeconomic insights and sources into practical recommendations

Day 1

Economic growth

• The role of technology
• Demography: past, present and importance
• Why nations fail
• Institutions and their effect on growth
• Branko Milanovic’ elephant graph

Equilibrium in the economy

• The goods market
• The financial market
• The demand for money
• The IS/LM model
• The IS/LM model with open economy
• The IS/LM model with open economy and exchange rates
• Exercises, case studies and assignments

Day 2

Fiscal policy

• Fiscal Multipliers – applied to IS/LM (with open economy and exchange rates)
• Debt, deficit, interest rates, risk premia and debt sustainability
• Exercises, case studies and assignments

Monetary policy

• The history of money
• The history of monetary policy
• From money targeting to inflation targeting
• From deflation to inflation to hyperinflation
• From independent central bank to politicized central bank
• Living in a low inflation world
• Unconventional monetary policy
• Exercises, case studies and assignments

Insights on central banking, growth, inflation, interest rates and exchange rates in current policy debates

• Optimal currency areas: is the eurozone an optimal currency area?
  – Application to other regions
  – Policy discussion and case studies
• Does growth come at the expense of climate?
• Is economic growth desirable?
• Secular stagnation and its implications for policy
• Impossible trilemmas – Rodrik’s as well as others’

Day 3

• Assignment in small groups: a current macroeconomic topic, a policy debate or a hot topic in current economic affairs. You will apply the different methodologies used in the previous two days, different macroeconomic sources as well as relevant articles or illustrations to develop your case.
• How to present your findings in a concise and convincing manner. How do you convincingly make your recommendations?
• Examples of assignments:
  – Discuss the pros and cons of a currency union in Latin America
  – Present the ways in which a country could boost its growth potential
  – Come up with a plan to restore competitiveness in a country in the short or medium term
  – Discuss the ways in which a natural disaster affects a country’s public finances and exchange rates
  – Create a policy proposal for addressing a budget deficit and discuss the political and societal implication
  – Discuss policy options for restoring trade imbalances in a certain country, including political and societal implications
  – Compare the economic performance of two countries over the past ten years and highlight the reasons behind the difference
• Group presentations: findings/recommendations to the rest of the class as if it were an official policy briefing to a CEO, a minister or a public official
• Wrap-up session to summarize your take-aways from this program