15.218: Global Economic Challenges and Opportunities
Offered Spring Semester
This course provides in-depth analyses of the major risks and opportunities in the global economy. It discusses the key economic forces and policy responses that will shape the business environment in the next decade and for which every organization should prepare. The course not only analyzes global economic issues currently in the headlines, but also develops the tools to understand and interpret these events. The objective is to provide students with the context and frameworks to be able to perform their own critical analyses, so that they can plan for and respond to the inevitable surprises in the global economy that will affect them in their future careers.
The course focuses on economic forces and events that affect and link multiple countries around the world. The first section begins by developing the basic models, tools and frameworks in the context of recent financial crises. This initial material also focuses on giving students the background to interpret and understand key macroeconomic and international financial statistics. These frameworks and models will then provide the core for analyzing the impact of various global economic events and policy responses. The second section of the course shifts to the policy options employed by different countries to address these challenges and risks, including more nuanced discussions of how governments, central banks, and other international institutions make decisions. These discussions will draw on Professor Forbes’ experiences working in the White House, US Treasury and Bank of England. The final section of the course shifts to long-term global economic challenges and opportunities facing countries around the world today, tying together the frameworks for analyzing countries’ strengths, vulnerabilities, and policy options. These discussions provide insights on how macroeconomic policy decisions are made, and the role of various economic, political, historic and social forces. The course ends by discussing what comes next in the global economy, including what companies should be monitoring and doing to prepare.
E2.728: Can the World Withstand a More “Normal” US Monetary Policy?
Offered Fall, SIP
After years of very low interest rates and “unconventional” monetary policy, the US is leading the world in raising interest rates and returning to a more “normal” monetary policy. This is increasing risks for emerging markets and companies around the world—especially when combined with increased tariffs and concerns about trade wars, as well as higher oil prices. Is this just the beginning of more widespread stress in markets around the world? Should we expect more widespread financial contagion? More specifically, the class will cover five topics: (1) a quick review of how central banks conduct monetary policy (including how it has changed since the crisis); (2) how higher interest rates in the US will affect countries around the world, including how to evaluate which emerging markets are most vulnerable; (3) how to predict how different emerging markets will respond—with implications for companies and investing around the world; (4) the risks of financial contagion from different countries and country responses; (5) how these risks interact with other recent events in the global economy (such as protectionism and oil prices).