After an unusual series of global supply chain disruptions caused by a pandemic, the next generation of central bankers take pages from business school playbooks, how markets react to bottlenecks, and how monetary policy Learn how to help.
Understanding how the recent changes in education seen in Malaysia’s master’s program for young policy makers helped the two-year supply chain roar help boost consumer prices the fastest in decades. It emphasizes how the flow of goods was the key to this.
As part of the course, students founded by the Asian Business School with the support of the Massachusetts Institute of Technology will play the “Root Beer Game”, a version of the “Root Beer Game”.
A decades-old classic of the MBA program that helps explain supply and demand signals and dynamics from producer to consumer.
Young officials played with business school students and gave them the opportunity to simulate how product flow affects monetary policy decision-making.
“It corresponds to what is happening in the real world,” says Vipichbolreach Long of the National Bank of Cambodia, who acted as a retailer. “If the signal from the lower course is unclear, we can see the supply chain turmoil that manufacturers and wholesalers are confused about. What does that mean for the transmission of monetary policy,” Long said. increase.
As the global economy freezes, pandemics have forced central banks to unleash trillions of dollars of unprecedented support for governments, households and businesses, so there’s no shortage of moments to teach on the course. was.
How the stimulus that helped boost demand clashed with supply chain problems surprised policy makers around the world, including the Federal Reserve. Initial predictions by policy makers that price pressures caused by supply shortages would prove to be temporary were flat.
Move fast
Chair Jerome Powell testified before Congress and how the bottleneck recently caused by the pandemic clashes with the strong demand that “early action was appropriate” in policy normalization. Was later acknowledged by the Fed if it understood.
This is one of the lessons learned by policy makers in Asia, Saudi Arabia, Sudan and the Maldives in a full-time one-year housing course for a central bank master’s degree, including a six-week program at MIT. .. The price of MYR 365,000 ($ 86,700) includes accommodation in Kuala Lumpur and Washington, New York, and
Cambridge, Massachusetts.
While flooding the economy with money has helped facilitate a rapid recovery, monetary policy binge will leave a legacy that future central bankers will deal with over the years to come. .. House prices and stock markets soared through the pandemic, fueling concerns about growing inequality and leaving authorities with the challenge of raising interest rates without hindering recovery.
This exercise occurs when policy makers around the world are struggling to think about what central banks can do in response to supply-driven inflation. Eli Remolona, who runs the course, states that the “root beer” exercise will provide lessons on how the lag effect works and how difficult it is to predict the impact of policies on the economy. ..
“We are leveraging the pandemic and central bank response,” says Remorona, a former Bank for International Settlements Asia Pacific representative and a long career at the Federal Reserve Bank of New York.
In a separate mission from the textbook, young officials have the opportunity to critique a press conference held by Fed Powell and his European Central Bank counterpart Christine Lagarde to hone their own communication skills. Is given. Arlene Aginardo of the Central Bank of the Philippines said it is especially important to monitor things like the Fed and the ECB, given that the Fed’s and ECB’s policy movements will ultimately spill over into emerging market economies.
“I can understand how difficult it is to communicate well,” she said of monetary policy.
Well equipped
The curriculum covers topics such as crisis prevention, behavioral finance, cybersecurity, digital currencies and ethics. Advisors to this course span the world of central banks, including former President of Central Bank of Malaysia, Zeti Aziz, Robert Merton of the Massachusetts Institute of Technology, and Nobel laureate in economics.
Students interviewed in this article, who speak personally and do not represent the central bank, will hear from world-leading economists and former policy makers through this program, as well as the Emerging Economy Central. He states that he can build a network with his bank associates.
“We cannot guarantee that we will prevent the next crisis,” says Yi Duan Ho of Central Bank of Malaysia. “But we are better prepared to get over it.”
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