The Global Economy

Syllabus

The Global Economy (COR1-GB.2303)

Fall 2024
Gian Luca Clementi
(Preliminary)

Office: KMC 7–71

Email: gclement@stern
Office Hours: By appointment
Class Time: Mon, 6:00–9:00
Location: TBA

Course Description

This class is about Macroeconomics, the sub–field of Economics that studies the
evolution and the determinants of aggregate quantities such as GDP, unemployment,
international trade, government debt, ... and of prices such as exchange rates, interest
rates, ... Among the cool questions that macroeconomists ask are: (i) why are some
countries very rich and others are very poor? (ii) what causes inflation? (iii) is
international trade beneficial to everybody? (iv) does a large federal budget deficit
today imply high interest rates in the future? (v) why sometimes countries plunge in
devastating financial crisis?

Why should MBA students take a full semester of Macroeconomics? There was
never an easier question to answer: No matter what career you chose or you are
contemplating to choose, you will have to take decisions whose success depend on
the future evolution of variables such as exchange rates, inflation rates, interest rates,
GDP, employment, .... I have not used the expression “future evolution” by chance.
In order to take sound decisions, knowing the status quo is not enough. One needs
to forecast how these prices and quantities will evolve in the future. For the sake
of illustration, let’s look at a couple of examples, by considering three among the
most common occupations of Stern graduates: Finance industry, corporate job, and
consulting.
Syllabus 2

Finance. Assume you work for a hedge fund investing in emerging markets. The
risk–return profile of securities traded in such markets depend to a very large extent
on the growth prospect of the respective countries, both in the short– and in the
long–run. As far as the short–run is concerned, you will have to assess the likelihood
that a country will keep its exchange rate pegged to the dollar, or the chance that
it will fall in a financial crisis. With regard to the long run, you will have to gauge
whether the conditions for economic development will persist in the future.

Corporate / Consulting. Assume you work (or consult) for a US–based technology
company that is facing growing demand from Europe. How should the company
respond? Should it build new capacity? If yes, should it locate a new plant in
Europe, or expand capacity in the United States? Conditional on choosing Europe,
which country should it invest in? Among the factors that are likely to influence
your decisions are projections about (i) the evolution of demand for your product
in Europe (how much does it depend on the dynamics of GDP?); (ii) the evolution
of exchange rates (if you locate in the US, most of your expenses are going to be
denominated in US dollars, while your revenues will be in a foreign currency); (iii)
the level of tariffs; (iv) labor market conditions; (v) taxes.

To put it differently, this course is designed in such a way that by the end of the
semester, you will be able to:

(i) Comment intelligently on global economic events and trends.

(ii) Assess and critique the opinions of market analysts and journalists. Is their
analysis based on sound theory? Is it supported by the data?

(iii) Understand the different perspectives brought to economic policy by people

around the world.

The Stern Approach

Macroeconomics is a “strange” field. A body of ideas that were mainstream forty years
ago are now dismissed by the research community either because recent data have
shown them to have counterfactual implications, or because they have been proven to
be internally inconsistent. Unfortunately, these ideas still constitute the framework
upon which most journalists, analysts, and commentators base their conclusions and
recommendations. Academic research in macroeconomics is now advancing at a very
fast pace. At Stern we strive to bring its most recent developments to the classroom,
with the purpose of giving our students a competitive advantage. We can follow this
approach because the faculty itself is engaged on the frontier of research.
Syllabus 3

Prerequisites

The class is going to be challenging and will require a substantial amount of work.
Your proficiency will depend in part on your knowledge of elementary but important
notions of economics, statistics, and mathematics.

Help

There may be times when you will need a little help. If this happens, I strongly
encourage you to come to see me. If you email me, I’ll try my best to get back to you
by the end of the day.

Course Materials

The course materials consist of:

ˆ Book. It is entitled “The Global Economy” and will be provided to you free of
charge the first day of class. It gathers lecture notes written over time by the
Macro Team at NYU Stern. The latest version of the book is available here
under the Creative Commons Attribution-ShareAlike 3.0 Unported License.

ˆ Lecture notes. This is supplementary material that will be handed to you during
the semester.

ˆ Other readings. To maximize your payoff from taking this class, you must
keep abreast of the international macro events as we go along. The Economist,
Financial Times, and the Wall Street Journal are reliable sources, but there is
a lot more interesting stuff to read, watch, listen to.

ˆ Slides. I will post them ahead of class. After that, they will be available
for download from Brightspace. Notice that, by definition, slides are not self–
contained. I provide them for the purpose of reducing the time devoted to
note–taking.

ˆ Deliverables. Quizzes and homework assignments will be posted on Brightspace

well before they are due.

ˆ Recordings. Classes will be recorded for pedagogical purposes. Links to the

streaming videos will be made available promptly on Brightspace.

For every class meeting, you will be assigned a set of readings. It is a requirement of
the course that you complete them before coming to class.
Syllabus 4

Coursework and Evaluation

ˆ Class attendance and participation. Attendance is required. Your participation

enhances both your and your classmates’ learning experience. You can partici-
pate both by asking some questions, and answering others. Your grade will be
based on the quality (not quantity) of your contributions to class discussions.
ˆ Quizzes. These are very short assignments which you’ll be able to complete
on Brightspace and whose main purpose is to give you one more incentive to
complete the readings before class. The due dates are indicated in the calendar.
Given the stated goal of these assignments, (i) you are not allowed to discuss
your answers with your classmates and (ii) late submissions will not be accepted
for any reason.
ˆ Homework. Homework assignments constitute unique opportunities to review
and apply the principles and tools developed in class. I strongly encourage you
to work in team. However, remember that there are good and bad ways to work
with classmates. Tackle all the problems on your own and then discuss them
with your colleagues: good. Split the problems in such a way that you do not
actually see most of them: bad. You are required to hand in your assignments
electronically, through Brightspace. If you work with others, please hand in
only one copy of the solution, noting the names of the authors on the first page.
The due dates are indicated in the calendar.
ˆ Exams. There will be a midterm and a final exam, both closed–book and based
on all the material covered to date. The midterm, 50-minute long, will take
place on November 1st. The final, 80-minute long, will be on December 13th.
ˆ Re–grading. Any request of re–grading must be advanced to me (not to the TA)
no later than one week after the assignment or exam is returned to the class.

Your grade for the course will be based on your performance on all of these deliver-
ables, weighted as follows:

Quizzes (Best 9 of 12) 5%

Class Participation 10%
Homework (Best 3 of 4) 25%
Midterm Exam 25%
Final Exam 35%

Final grades will follow the School’s guideline for core courses: no more than 35% of
the class will receive an A or A–. This guideline was introduced several years ago at
the request of students, who wanted to make sure that different sections of the same
course would be graded to the same standard.
Syllabus 5

Academic Integrity

Integrity is critical to the learning process and to all that we do at NYU Stern. As
members of our community, all students agree to abide by the NYU Stern Student
Code of Conduct, which includes a commitment to:

ˆ Exercise integrity in all aspects of one’s academic work including, but not lim-
ited to, the preparation and completion of exams, papers and all other course
requirements by not engaging in any method or means that provides an unfair
advantage.

ˆ Clearly acknowledge the work and efforts of others when submitting written
work as one’s own. Ideas, data, direct quotations (which should be designated
with quotation marks), paraphrasing, creative expression, or any other incor-
poration of the work of others should be fully referenced.

ˆ Refrain from behaving in ways that knowingly support, assist, or in any way
attempt to enable another person to engage in any violation of the Code of
Conduct. Our support also includes reporting any observed violations of this
Code of Conduct or other School and University policies that are deemed to
adversely affect the NYU Stern community.

The entire Stern Student Code of Conduct applies to all students enrolled in Stern
courses and can be found here. To help ensure the integrity of our learning community,
prose assignments you submit to Brightspace will be submitted to Turnitin. Turnitin
will compare your submission to a database of prior submissions to Turnitin, current
and archived Web pages, periodicals, journals, and publications. Additionally, your
document will become part of the Turnitin database.

General Conduct and Behavior

Students are also expected to maintain and abide by the highest standards of profes-
sional conduct and behavior. Please familiarize yourself with Stern’s Policy in regard
to in-class behavior and the NYU Student Conduct Policy.

In particular: Lateness, using smartphones, holding private conversations, using your

laptop for anything but note–taking, and indeed any behavior that disrupts me or
your colleagues will be considered inappropriate. Repeated violations of this standard
will affect your participation grade.
Syllabus 6

Brightspace

By now you are probably familiar with NYU’s course management software. During
the term, you will be able to use it to view all classes (I will post links to the streaming
videos), download notes, slides, readings, and homework assignments, deliver your
solutions to the problem sets (.pdf, .doc, .xls formats only), send me anonymous
feedback, and check your grades in a confidential manner.

Disability

If you have a qualified disability and will require academic accommodation during
this course, please contact the Moses Center for Students with Disabilities (CSD,
998–4980) and provide me with a letter from them verifying your registration and
outlining the accommodations they recommend. If you will need to take an exam
at the CSD, you must submit a completed Exam Accommodations Form to them at
least one week prior to the scheduled exam time to be guaranteed accommodation.

Feedback

Your feedback is very important to me. Your comments, suggestions, and critiques on
every aspect of the class are welcome at any time during the term. You can address
them to me in the form you prefer: In person, by email, or by snail mail.