Applied Macroeconomics by Roberto Rigobon | My Key Learning & Reflection Nov 2022

My favorite class so far! Learned so much! Laughed so much. I think the class had just macro-inspired-me!

Roberto Rigobon is the Society of Sloan Fellows Professor of Management and a Professor of Applied Economics at the MIT Sloan School of Management.
Read more here :
https://mitsloan.mit.edu/faculty/directory/roberto-rigobon

If I were to sum up the 5-days Macroeconomics with Prof Roberto 🫡 :

It will be with three handwritten draft notes / illustrations :

(1) The Baby-Sitting Cooperatives

The Baby-Sitting Cooperatives — easy to understand analogy how the economy works.

(2) The BBNN Model

How I understand macroeconomics with this BBNN model. It was fascinating to learn and understand what is going on in the U.S. Economy, especially when we looked at the timing of the event took place with the fiscal policy maker (Treasury), the central bank (Fed) and the politicians of course.

(3) The Roberto Rigobon’s Inspiration & Opinion on how countries thrive:

I enjoyed and learned so much while laughing so hard while Roberto was using her wife’s spinning class example (I am not going to tell you what example he used :P) but it was so easy to grasp the understanding of the importance of creating the “Coordinating Device” for a firm, an orgnisation or a country to continue to grow — but with a strong sense of purpose and bision.

I signed up Applied Macroeconomics as one of the elective subjects in my MBA program. No regret despite the fact that it was a none-stop week before while we were traveling to UAE for corporate insight sessions. I had so much fun in this class. I am very inspired that I want to take a moment to write immediately before the momentum fades. and I want to keep a record of my learnings and reflections.

I am not an economist, neither do I am from the banking or financial instituition background. The main point is I think I am like most of the normal working people in the society that trying to understand what happened to the economy and how does that change in the economy would impact me, my life, people around me and my future.
The fact is that, we are participating in the economy. Not just us, but our parents, our great-grandparents and our future generations too. It’s all interconnected, if we were able to learn from the patterns in the history, we can make this “sustainable” to benefit more and bring meaningful economical growth in the nation.

How to diagnose using BBNN model!

I feel like I can understand not only through the graph but I can understand and diagnostic actions taken by central banks and fiscal authorities now, able at least have some clues about which country where they are right now in the economy and what is going on. At least, I can understand what would be the possible implications of the increase of the U.S. interest rate to my country’s economy and others. And I can kind of understand and know how to use the tool to understand did the central bank / policy makers make a right decision for the country. very useful.

I might not be able to digest and process it completely but I think is important for me now to perceive and understand the global economy with the frameworks and tools I learned in this class. The BBNN model is such a powerful tool. Throughout the class, he emphasized on using full and complete sentences to describe the situational changes! Love this so much because this can give us the exact context but not imposing any judgements toward the constantly changing economic shifts.

This is my first time learning economic theory without have to understand the equations and formula first. The way Roberto’s teaching is extremely easy to understand the cause and effect, and what and how the economy works! and if we go with the flow, it will eventually go back to equilibrium, The more I understand the mode, the more I can reduce the chances of getting anxious or pessimistic about the economy.

Because there is a way to measure, diagnose, and there are ways to take necessary actions to correct it back to the equilibrium. And equilibrium is always in disequilibrium! (I think this is a profound finding for me, because it is not necessary to judge which is the bad time or good time in the economy, we just have to do our homework and make wiser decision! )

Key learnings that I would want to keep it documented so I keep myself accountable and I can come back and visit anytime if I were confused about what is going on to the global economy in the near future, at least when I met some random people making non-sense comments about the economy, I have the tools and frameworks to ask deeper questions and get them to think about what they commented :P

What I learned that I can recalled and it is going to be useful:

1. I finally understand inflation, stagflation and deflation, and what make all these happened. It is not good or bad. but we have tools to regulate the situations.
2. All policies are kind of discriminatory. We, have created the political system in every single country.
3. Central Banking function and power :
   Money Supply and Interest Rate
4. Fiscal Policy Authorities / Ministry of Finance / Treasury:
   Taxes and Government Expenditures.

From Wealth to Welfare!

1. The instituition is the implementation of the principle.
2. What does it mean by PRODUCTIVITY in the economy or in the country. What does it mean by more productivity? what happened and what do we call when the economy is moving too fast or too slow?
3. We always think we know or we thought we know. or we always think that policy is actually a good idea. what makes me think that I know and I understand.
4. Always have a PLAN A and PLAN B, must learn from mistakes, and correct it faster each time. that’s the way. If the plan doesn’t work, do not repeat, if it works, repeat and when it doesn’t work, stop.
5. I learned that I don’t have to be an economist to understand macroeconomics. the understanding is just profoundly helping me to understand how the world works and how will I react / respond to the information or news that I read from now on.
6. We have so much fears to talk about politics, because we are fearful of offending others. but we shall start talking about politics at home!
7. How I understand Import and Export with the coco-pine analogy.
8. How to look into population of growth of a country, how to pay attention to changes of daily prices, that indicating the real inflation target rate.
9. Human intelligence is irreplaceable. Artificial Intelligence is just going to make our life easier. No data can create hopes, creativity and openness. If what you are doing, it’s contributing to creating hopes, inspiring creativity and fostering the ability to be open — then the future of that job is irreplacable. Only human able to change opinion with just one observation. Only us human able to create something that did not exist (which is without data)

13. Learning about what is Social Peace (SP) line. this help me understand politicians :P The larger the gap from these three points, the more polarised it is.
I like how Roberto put it: Democracy — to sufficient avoid the worst outcome of mankind 👍

Where is our own social peace line? :)

14. How we define Productivity?
New thing I learned : Total Factor Productivity 👍

This concept made me ponder even more in-depth about how to create sustainable and contented workforce in the long run.

15. Golden reflection question while making a strong point : What piece of evidence that I was wrong/incorrect? ⚠️

16. We can’t use the current state to determine why we can’t grow, as a nation. All of the developed countries took 100 years, there is no short cut in this. Most of them have averagely 9 good performing years and 1 bad performing year. It just take one tiny step at a time.

17. Keep experimenting because we don’t know the answer! Give a purpose to what we do! What is the coordinating device? Find a reason why do we want to be better?!

18. The power of academics is to change the narratives.

19. We are not that different from each other. We have a lot of commons that we want to build a country that we are happy to live in.

20. My reflection : Only when I get to know more, I get to expand, with a purpose. Then I will truly understand there is a super big, and super far ambition that I could set myself for.

21. I like how Prof Roberto respond with some questions : “I don’t have an answer.”, the power of “I don’t know” but not the excuse-ish way but more towards, let’s find out together.

22. ‼️ What is that piece of evidence that is wrong ‼️

23. There is no one / single solution to guarantee prosperity of a nation.

24. ‼️‼️‼️ What is that one thing you would be willing to that you know is going to be costly to you but is important to you? ‼️‼️‼️

25. Bonus : Last not least, I am extremely impressed by how Roberto explained blockchain technology and butcoin in the end! super cool, but he is a compassionate genius! I am honored to be able to sit in his class ; bitcoin, is a bit but not coin 🤣 and his definition of bitcoin: deterministic infinitely discontinuity function! ps: first time I learned how to calculate the cost and resources needed to break the blockchain code 🤯

Now, I am definitely in the journey to ask myself lots of significant questions— what role do I play in this system? how can I influence and contribute in that tiny step?

Thank you Professor Roberto Rigobon! One day I will make use of what you have taught me in these five days!

🧡Thank you for humbling the me that I thought I understand how the world works. There are many questions that I would take time to ask myself carefully given that I have learned and know about the world through your lens. Thank you for your inspiration. #teachtoinspire 🧡

— —
ps: I get to ask Prof about what is his next project — he is working on how to measure an ethical firm. 👀🧡

If you are interested : there is this ted talk I would like to share with you :
https://youtu.be/PhhqmEVBR2M