The Global Economy Introduction

1. The Global EconomyIntroduction

2. The week ahead • By midnight, Wednesday (2/6) • Captains send group roster to me • If not in a group, send group request to me • In progress • Be working on problem set #0 • This is the only solo problem set

3. Roadmap • Trends • Trade in goods and services • Fluctuations • Inflation and output • Course information

4. Class participation • A part of class • I expect everyone to participate: expect cold calls • Answer a question • Make a comment • Share an experience • Post to discussion board • Broad range of backgrounds • Expert: keep it short • Non-expert: don’t panic

5. Long-Run Performance Production, Saving &Investment, Productivity, Institutions, Capital & Labor Markets, International Trade First half: Short-Run Performance Inflation, Economic Indicators, Aggregate Supply & Demand, Monetary Policy, Taxes & Deficits, Exchange Rates, Capital Flows, Emerging Market Crises Second half: The big picture

6. Long run: GDP per capita, 2011 Source: Penn World Tables 8.0.

7. Short run: US real GDP growth ?

8. Key issue: Trends • U.S. GDP/capita > 70x Burundi GDP/capita • What explains these differences?

9. Long-run economic growthGDP per capita in Year 2000 international dollars Source: Maddison, 2001; 2008 estimate based on Maddison tables.

10. Trends are important Source: Maddison, “Historical Statistics for the World Economy”

11. Do institutions matter? U.S. India Note: Size of circle is proportional to population. Data sources: World Bank and Transparency International.

12. Common culture, different institutions

13. Key issue: Globalization • Who are the U.S.’s largest trade partners? • How are trade patterns changing? • Why are they changing?

14. U.S. imports

15. U.S. exports Canada Mexico Japan China

16. Key issue: Business cycles • What are business cycles? • Are they forecastable? • What can/should governments do ?

17. Business cycles

18. Business cycles

19. Key issue: Inflation and output • Inflation • Growth rate of the price level • What causes inflation? • How are output and inflation related? • Is there a “Philips Curve?” • How do central banks work? • What is money?

20. US inflation (annual)

21. Argentina inflation (annual)

22. Are these related?

23. Inflation and output: evidence 1959-69

24. Inflation and output: evidence 1959-99

25. About the course • One-stop shopping • http://kimjruhl.com/global-economy-2014 • Google group: “the discussion board” • Announcements • Help with problem sets • Blog-ish things • FRED database (more next class)

26. About me • Originally from Madison, WI • PhD in Economics, U. Minnesota • Previous: U. Texas-Austin, Minneapolis FED • Research interests: • International trade policy • Firm level export decisions • Emerging market crises • Other interests: • Computers, robots, beer making/drinking

27. About the teaching assistant • Lioubov “Luba” Pogorelova • lp1140@nyu.edu • Office hours: TBA

28. About class notes • No textbook! • Theoretical background to class discussion • Executive summaries: more concise than a textbook • Custom designed for this course • Read them before class • Entire PDF is available for download from Bb • Perfect for phone, tablet, etc.

29. About slides • Meant to help guide in-class discussion • A complement to assigned reading • Not meant to be stand-alone reading • I will bring printouts to class • Posted online the day before class • Occasionally updated after class • We won’t use every slide • Don’t worry if we skip some!

30. About your grade

31. Group project • Goals • Analyze key obstacles or risks to economic growth in the target country. • Propose a policy change to promote stable long-run growth. • Group • Form on your own, 4-5 students, choose a captain • No cross-class groups • Submit roster by email to me by tomorrow midnight • If you need a group send me an email by tomorrow midnight • Target country randomly assigned on Thursday

32. Group project • Deliverables • A virtual presentation • PowerPoint deck, 10-slide max • Writeup, 5-page max • Presentation should be viewable in 15-minute max • Evaluation criteria • Organization (brevity, clarity, and communication) • Analysis (focus and subject knowledge) • Recommendations and conclusions

33. Group project • Project due April 3 • Peer review • Each student evaluates several other projects • Top group from each section has option to compete in NYU Stern Economic Growth Competition (April 30) • Street economists Lewis Alexander and John Lipsky to judge projects and pose questions! • Winning group awarded the Henry Kaufman Prize for Economic Analysis at Stern (including lunch with Henry!)

34. About assignments 5 problem sets PS #0: individual problem set PS #1-4 group problem sets Same group as for project Due beginning of class Submit printed copy only 1 submission per group No late assignments See “problem set guidelines” online

35. About help! Problem set help Post to discussion board, I will answer there Other help Send me an email Stop by See the teaching assistant

36. About helping me • Course works best if communication goes both ways • If you have ideas, comments, questions, whatever: • Send an email • Speak to the teaching assistant • Post on the discussion board

37. Professional behavior • Cellphones: off • Tablets, laptops: off • Be engaged, sit towards the front of class • If you bring something to eat/drink to class • Make sure it isn’t obnoxious