New course structure

Fernando, Jaume and I had a late-night session the other day, and decided that we could do better -- we are revamping the ITFD course structure. Some changes look bigger than they are; others are more substantial. The first big change involve replacing the existing, broad 40 hour classes with smaller, more focused 20 hour modules. Jaume and Fernando are going to teach 20 hours on international finance (Jaume) and on money and exchange rates (Fernando). My own teaching is going to cover an overview of the rise of the global economy in term 1, and a class on financial crises and bubbles in term 2.
We are particularly excited about the advanced elective classes that we will be offering (this replaces the micro and macro classes in term 1 that we had initially put on the program). There will now be additional classes that our students can chose: by Francesc Ortega and Libertad Gonzalez on the economics of immigration, on growth by Gino Gancia and Xavier Sala-i-Martin, by Paula Bustos and Gino Gancia on international trade, and by Alberto Martin and Fernando Broner on international finance.

Solow doctorate

Fernando and I just came back from the Doctor honoris causa ceremony for Bob Solow. Last year, it was Woody Allen (our first doctor h.c.) I am probably not the most sentimental person on earth, but I found it strangely moving. Jaume Ventura, member of our ITFD steering committee and senior researcher at CREI, gave the eulogy. He was on the MIT faculty when Solow retired; Solow's own speech dwelled on the challenges that most advanced economies face as a result of wage stagnation for the less educated part of the population. Solow is 83 now, and doesn't look a day over 60. Amazingly, his ideas have also retained a freshness that most of us can only dream of.
I also learned something new -- Bob Solow spent WW II as an artillery observer in North Africa and Italy. He may even have been in charge of guiding in shellfire on my grandfather's position on the Cap Bon Peninsula in Tunisia in 1942/43 (my paternal granddad served as an interpreter, and was jolly happy about being taken POW by the Americans. He finished the war in a POW camp in Colorado, digging up potatoes).

Hiring Season and Sunscreen Reflections

The hiring season at CREI and UPF is drawing to a close. We had some great junior scholars coming through, and it's always a pleasure to learn what the latest crop of Ph.D.s is working on. Now we have to keep our fingers crossed and hope that our offers are accepted. This year, the weak dollar should make our offers look particularly attractive. You'd think that if anyone is unaffected by the optics of an offer driven by the $/€ rate, it should be economics Ph.D.s, but you never know. UPF is also lucky that recruiting happens in January and February, when our relative "weather advantage" is greatest. All those graduate students emerging from the frozen East and North of the US tend to be charmed by our mild Mediterranean climate. This year, the winter has been ridiculously warm-- yesterday, I decided to get the deckchairs out on my terrace. While reading the latest issue of the Economist (which contains our new ad for the Master's), I even had to get sunscreen...

Merrill Lynch Japan Internship

My former student, Takuji Okubo, is now chief economist at Merrill Lynch Tokyo. We have arranged for one student from the ITFD M.Sc. to complete an internship in his division in the summer of 2009. Tak wrote a thesis on "negative bubbles" -- the idea that big deviations from fundamental asset prices could just as well be negative as positive, and the way to detect these statistically. He applied this methodology to East Asian currencies in the late 1990s. Let's hope the incoming intern doesn't have to do analysis on negative bubbles in world stock and bond markets...

Exchange Rate Specialist to Present in Spring 09

I am happy to report more progress this week. We convinced Eduardo Levy-Yeyati, Head of Latin American Research at Barclays to speak to our students in the spring of 2009. Eduardo is a former professor at Di Tella in Buenos Aires and used to serve as the Financial Sector Advisor for Latin America and the Caribbean at the World Bank. He is widely considered one of the leading experts on the choice of exchange rate regimes, dollarization, and the origins of macroeconomic volatility in emerging markets.

In some of his latest work, he is asking if emerging markets are really decoupling from the rich world, and if so, why. He argues that the "financial channel" (transmitting rich world shocks to poor countries) is still alive and well, but smaller than it used to be. At the same time, there is real decoupling, with growth rates in Latin American developing countries largely impervious to a slowdown in the North. He also calculates that basically all of the improvement in the current account and the trade balance in Latin America is due to the boom in commodity prices (see chart on the left).

What policies work in Iraq?

I thought it would be interesting for prospective students to learn a bit about the kind of seminars that take place at UPF -- we don't just run undergrad and grad programs, there is a plethora of seminar series as well. One paper in particular caught my eye last week. Eric Chaney (Berkeley) came here on Friday, and talked about his work on Iraqi bonds. Iraq issued new debt after the fall of Baghdad. These are traded worldwide. He argues that you can learn a lot about the stability of the Iraqi government from looking at these bond prices. In particular, he asks if the major "turning points" in the fight against the insurgency show up in bond prices. The punchline - "hard power" doesn't work. Catching, for example, the head of El Qaeda in Iraq, Abu Musab al-Zarqawi (trumpeted as a major success at the time), hardly shows up in the bond prices at all. The market also wasn't much impressed by the formation of the al-Maliki government. What does matter is "soft power" - evidence of Sunni-Shiite reconciliation, of negotiations with tribal groups, etc. As Chaney notes, the bond price responses offer policy-makers real-time feedback on the type of initiative that works. I think this is really exciting work. Michael Greenstone (MIT) also has a paper using the same data to assess the success of the "surge". Potentially, these methods could improve the quality of decision-making.

Sala-i-Martin signs up

Xavier Sala-i-Martin, Catalan economist at Columbia and founder of the NGO Umbele has agreed to give one of our policy topics classes in the spring of 09. I cannot tell you how thrilled I am -- in addition to being a leading expert on the economics of growth, Sala is a political economist in the best tradition, and one of the most popular lecturers at Pompeu (where he teaches in the graduate program every year). A frequent commentator on Spanish politics, economics and society, his foundation attempts to change the rules of the game in terms of development aid in Africa. Umbele is Kishwahili for "future", and you should go and check out the initiatives they support over at www.umbele.org.

Policy expert on board

We are now in the process of signing up senior policy experts for the courses in the third term. Antoni Estevadeordal from the InterAmerican Development Bank has agreed to teach for us. This is great news! He heads the trade and integration section at the Bank, and has been involved in developing new programs that facilitate trade development. Antoni holds a PhD from Harvard and has published in the leading economics journals, including the Quarterly Journal of Economics and the American Economic Review.

Silly item of the day

The delights of academic life... while you hopefully think that we slave day and night to get the new M.Sc. off the ground (not far off the mark), a friend of mine at the LSE apparently devoted his precious hours to energetic googling, and dug up all the dirt on my background:

"Voth - Memory Alpha, the Star Trek Wiki
The Voth are a saurian species, presumably native to the planet Earth, but residing in the Delta Quadrant. A significantly advanced species, the Voth are cold-blooded creatures, have a superior sense of smell, and skin pigmentation which alters according to moods... Adult Voth are slightly taller than adult Humans..."

This is apparently from the Star Trek wiki, and comes with full-color pictures of the species. I am sure my colleagues now find my eccentricities easier to understand. Last time anyone thought they could read my reaction to a paper in my face... they were just decoding subtle changes in skin pigmentation. Me? I am personally disappointed; all that cosmetic surgery to appear human for nothing...

Blogging the new M.Sc. in International Trade, Finance and Development

I thought it would be a nice idea to have a blog where I can tell people about the progress we are making as we move towards the launch of the new Master's at UPF in International Trade, Finance and Development. It's February now, almost a year after Jaume, Fernando, Antonio and I started to toy with the idea of launching this. Another six months, and we'll be "going live"! The process from idea to approval and launch of the program was short but pretty intense. Two weeks ago, we presented the new program the BGSE open day in Barcelona. Fernando's presentation seems to have generated quite a bit of interest.