• Cocktail and Dinner Party Economics
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  • Dinner Party Economics

Mission-ary Zeal

We work to preserve the value of money by keeping inflation low and stableThe Bank of Canada As I begin a new semester of Introductory Macroeconomics, I am again struck by how little students know about ‘the real world’ of economics and politics.  Only a graduate student auditing the course knew who Mark Carney or Ben Bernanke were when I asked approximately 600 students the question.  That is unfortunate because these are very powerful men who will shape a student’s ‘real world’ more profoundly than most of the profs they learn under. (But come to think of it, sometimes students don’t know the name of their prof either!)  My main goal this semester is impart macroeconomic ideas but it is also to acquaint them with the current players in the political-macroeconomic game. To make them aware of a very real world. At some point in the term I will give my sage advice  which is “Do not graduate in a recession if you can help it.”  Why you ask? Because of hysteresis. When in a business cycle  a student graduates will change their career path–along with the more obvious factors of the major they take,  the skills they acquire and the contacts they have. The timing of graduation is not a trivial matter.  Hysteresis can be very unlucky if you are an outsider and young graduates are usually outsiders to the labour market.  Furthermore, recessions can arise through the actions of the central bankers of the world (Carney or Benanke included) as they implement Monetary Policy.  Students should know who the key central bankers are, their MOs and plan accordingly.

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