Among the goals for Lehman College’s Economics Program is that graduates will “demonstrate understanding of national and international economic issues and linkages.”
To facilitate that goal, my course utilizes the International Monetary Fund’s (IMF’s) semi-annual World Economic Outlook reports. Those reports contain a chapter that discusses global economic prospects and policies and another that focuses on country and regional perspectives. Additional chapters are focused on timely themes relevant to the current global macroeconomic context. Those themes have included discussions related to international capital flows, oil scarcity, commodity prices, budget and trade balances, household debt, and most recently, a century of experience in dealing with public debt overhangs.
In one’s economics and other businesses courses (and now in this blog, too), the idea that the global economy is intensely interconnected has been hammered home on repeated occasions. In those courses, students have learned that the real and financial sectors of the economy are closely integrated. Students have also learned that the impact of crises can spill across borders through trade, capital, or information flows. In today’s global economy, what happens in one country—good or bad—has an impact on the U.S. and vice versa. In a recent address at the Swiss National Bank-International Monetary Fund Conference, New York Federal Reserve President William C. Dudley explained that in the present global context “the outcomes for economic activity and capital flows for any individual country depend not only on the public policy and private decisions made within that country, but also on the policies and mix of activities pursued in other countries.” Therefore, as experience will make increasingly clear during graduates’ professional careers—whether in the private sector or in government—one’s focus will need to be sufficiently broad to take into consideration the realities of global interconnectedness and that the outcomes of one’s decisions will increasingly depend on cross-border coordination ranging from supply chain management to public policy.
Before then, classroom use of the IMF’s World Economic Outlook reports can accelerate students’ familiarity with the linkages that tie together the world’s economies. Those reports provide near real-time illustrations of how economic events, risks, and opportunities are playing out through those linkages. Examples in the October 2012 report include:
- Policy tightening in response to capacity constraints and concerns about the potential for deteriorating bank loan portfolios, weaker demand from advanced economies, and country-specific factors slowed GDP growth in emerging market and developing economies…
- Emerging European economies…have now been hit hard by slowing exports to the euro area, with real GDP growth coming close to a halt.
- Increased risk aversion has dampened capital flows to emerging markets.
- Financial conditions are likely to remain very fragile over the near term because implementing a solution to the euro area crisis will take time and the U.S. debt ceiling and fiscal cliff raise concerns about the U.S. recovery.
- The slowdown in global activity and ample slack in many advanced economies have meant that inflation has fallen.
In sum, the IMF’s World Economic Outlook reports can serve as a de facto textbook on the latest national and international economic developments, and at no additional cost to the students. Those reports give students detailed insight into some of the major macroeconomic issues of the day, as well as the linkages through which economic developments in one country impact other countries.