What should a macroeconomic practitioner study?

Posted in economics by jrahman on May 22, 2008

I was talking to a friend about if we could go back in time and structure what we studied, what would our course structure look like.   Here is what I came up with. 

Beginners 1

Microeconomics: partial equilibrium, general equilibrium in perfect competition, externalities – using graphs, no algebra.

Statistics: probability theory, samples, hypothesis testing.

Maths: matrix algebra, calculus.

Echonomic history: global economic history from the 19th century – narrative, not analytical.

Beginners 2

Macroeconomics: macro concepts, difference between short and long run, policy issues.

Econometrics: OLS, its problems, IV estimates.

History of thought: classical, neoclassical, Keynesian, and modern ideas.

Ethics: moral philosophy, applications such as corporate social responsibility, discrimination, affirmative action.

Introductory 1

Microeconomics: producer and consumer problems, partial equilibrium, market structure, general equilibrium, welfare theorems – using algebra.

Maths: differential calculus, set theory etc.

Finance: CAPM, term structure etc – using algebra.

Public policy: public goods, externalities, competion, tax.

Introductory 2

Macroeconomics: Mundell-Fleming model, exchange rate regimes, theories of unemployment, inflation targetting.

Macroeconometrics: time series, lags, ECM, VAR, VECM, S-VARS.

Growth: Solow, Ramsey, Romer, Schumpetarian models – focus on the intuition than algebra. 

Economic history: global history since the beginning of the 20th century – analytical.

Intermediate 1

Industrial organisation: game theory, oligopoly, monopoly, principal-agent problems, auction theory, information economics.

Development: missing markets, institution designs, empirics.

Trade: Ricardian, Heckscher-Ohlin, Krugman-Dixit, policy.

Labour market: unemployment, participation, education, inequality.

Intermediate 2

Business cycle: RBC, New Keynesian models, political business cycle, fiscal policy.

International finance: open economy Solow model, current account, Arrow-Debreu.

Monetary: inflation, exchange rate, monetary policy.

Forecasting: univariate and multivariate forecasting techniques.

Advanced 1

International Finance: complete Obstfeld-Rogoff.

Growth theory: Mankiw-Romer-Veil, Romer, Schumpetarian models.

Economic history: regional economic history since World War II.

Essay: on a major policy issue.

Advanced 2

Macroeconomics: recursive methods.

Growth policy: empirics, policy, institutions, reforms.

Macro modelling: primarily DSGE models.

Econometrics: project.


How long will this take?  At least 4 years if you study nothing else.  And of course you should study other things: liberal humanities – anthropology, sociology, history, politics – would be my pick.  All added up, we’re looking at 6 years or so.  That’s long enough to get a Master degree anywhere in the world. 

What could you do with the above?  You could work as a macroeconomist in central banks, finance ministries, investment banks or multilateral institutions.  If you are lucky, someday you can be a technocratic prime minister. 

Of course you could join the army and train yourself to be a coupmaker someday. 

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  1. […] Prometheus wrote an interesting post today onHere’s a quick excerptI was talking to a friend about if we could go back in time and structure what we studied, what […]

  2. Whoelse said, on May 23, 2008 at 11:02 pm

    don’t you think learning economics is incomplete without Marxian economic theory? Probably you are looking for a job, not trying to learn economics! Yes, you right place is within a government.

  3. jrahman said, on May 24, 2008 at 5:22 am

    Whoelse, I wasn’t writing about the entire subject of economics. I wrote about applied macroeconomics. Modern macroeonomics is a very technical subject, and I was focussing on what you absolutely need to practise. A good grasp of Marx, as well as other alternative theorists (Austrian, post-Keynesian) improves one’s knowledge set, and that is always a good thing. But then, one could argue that a good grasp of the politics and history of the country of your practice is also important. Similarly, perhaps better grasp of microeconomics – industrial organisation, strategic behaviour – or finance are important too. My view is that a macroeconomic practitioner should study any of those things in the 2 additional years. I spent my time doing liberal humanities, but you don’t need it.

    As for whether learning economics as such is incomplete without Marx, no it’s not. Economics can be summed up by a few simple ideas: opportunity cost, marginalism, returns to scale, comparative advantage. If you understand this, all the rest is just details to be filled out.

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  5. fugstar said, on May 28, 2008 at 9:45 pm

    What insane exam questions would you subject your kids to? forgot my favourite imaginary course. Physics Envy 101 – how to stick maths in stuff to make it seem scientific.

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