Applied Macroeconomics

It may be that we are in the midst of a rare “regime change” in global macroeconomics.  The danger is that the confluence of slow real growth, low productivity increases, inflated asset prices (notably bonds, equities, and real estate) and higher public debt in many of the major G20 economies cannot be sustained much longer.  The policy response to the COVID pandemic exacerbates these tendencies. 

In these circumstances, there is a significant probability that the world economy is about to stumble into a period of financial dislocation.  Ironically, Russia is one of the few exceptions.  The Bank for International Settlements, among others, has been expressing its concerns that collectively we have been unable to constrain the build-up of financial imbalances, leading to a progressive narrowing of policy options.

Not only are financial imbalances now much worse than in 2008 but the concentration and power of large banks is more entrenched, shadow banking is more pervasive, and there has been a massive misallocation of capital owing to mispricing, which has exacerbated income inequality via financial repression and productivity-sapping bailouts to crippled firms.  These seem to have the side effect of perpetuating unsustainable asset bubbles. 

Learning Objectives
We will try to determine whether the global economy is experiencing a bubble of historic proportions, an astute exercise in financial repression or something else.  It may come as some relief to know that nobody seems to know the answer to these questions.

Expected Learning Outcomes
The central questions to be addressed are how to explain the fragility of the global economy some 12 years after the beginning of the great recession, whether the policy responses could be compounding the unresolved imbalances, and how all of this could affect you both professionally and personally after HSE.    We will explore theoretical, historical, and empirical aspects of the economic issues underlying the current disequilibrium.

Course Contents

The mini-series of classes will explore these issues over six sessions (2 academic hours each) on proposed dates of the FES macroeconomic seminar from late January to early March 2021, with the exact dates to be decided later.  Presumably we will meet online via Zoom.    Active student participation is expected and attendance will be taken.  The classes and readings are in English.  

Assessment Elements
Since this will be a small group, grading would be based upon participation and an individual oral exam.  In addition, as an option, for some highly-motivated students who may be considering applying to a foreign graduate school, I would be prepared to agree on a topic for a research paper in line with the themes of the course.  

Interim Assessment

(2 module)

0.40 * participation + 0.60 * oral exam