In one of the first universities I taught for, I was told not to bother teaching how GDP, unemployment, inequality or inflation were measured. The chapters were easy and students could do it on their own so the professor could focus on more important topics. I didn’t feel confident enough to abandon the chapters completely, so did teach them in an accelerated version. However, I soon realized these were the fundamentals of macroeconomics and economic policy. Understanding how GDP is measured is essential to understanding our values as a society, how we measure what is important, how economic policies are decided. It is through the measure of unemployment and what it means that we can really understand what happens during a recession and why economic policy is so important. These are also the statistics we hear about on a daily basis and that may well affect how we vote in the next elections. They need to be given a central role in the Macro course, not left out as a minor technical chapter.
It is easy to get students interested in these data. I ask each student to chose a country they are particularly interested in and as we learn about each measure, sudents collect the relevant data and write a country report. When many students first chose their own country, I thought it was out of laziness. But I soon learned that it was a great choice, that I now encourage. So often, at the end of the course, I heard students say ‘I learned so much about my country that I didn’t know’. One MBA student said she had long been against the economic policy of her home country in Africa, but now she understood it and could explain it to her family. Choosing their own country has a big advantage: students have an intrinsic interest in the economy, the data is more meaningful, so they remember the values and always have a point of reference: a growth rate for France of 1.7% is quite good, but unemployment is still high at 8%. Students can then use these points to compare the situation of other countries. Following the course, students have a greater understanding of what is happening in their country making it easier for them to keep up with the economic news.
From a practical point of view, the country study is built up over most of the course. Students start collecting data for each of the measures as we learn about them in class: GDP, inflation, unemployment, business cycles, long-run economic growth. Then, as we discuss economic policies, students will look at the country’s central bank, its mission and tools and finally the current monetary policy. They also look at fiscal policy (I will describe our in-class ‘economic policy boards’ in another blog).
All of a sudden, the practical aspects of the macro course become clear and many skills are reinforced: which data should I use (real GDP, nominal GDP, PPP, per capita or growth rate), which sources are best, how to make graphs (historical and comparisons to make it more meaningful), the use of central bank reports on the economic conditions, and of course writing it all out in a structured and rigorous report.
If you would like more information on the Country Study guidelines, don’t hesitate to contact me, I am happy to share them.