01 Policy+ +Business+Dynamics

LAHORE UNIVERSITY OF MANAGEMENT SCIENCES

SULEMAN DAWOOD SCHOOL OF BUSINESS

Economic Policy and Business Dynamics

Dr. Nadeem Javaid

COURSE OUTLINE

MBA III-B (2011)

Instructor: Dr. Nadeem Javaid Email: [email protected] No: 319 Telephone: 042-35608364Office Hours: By Appointment Secretary/ TA Saleem Ahmad Khan

COURSE OVERVIEW

Macroeconomic policies and corporate business are inseparably linked. Now more than ever before, executives and managers need to understand their larger economic context. In business world, efficient decision making calls for profound understanding of the prevailing macroeconomic environment. This course familiarizes its participants with the basic tools and kinds of economic policy and explores the ways governments resolve market failures and try to “fine tune” the economy.

Learning Outcome: After attending this course, participants will be able to understand, analyze and anticipate the implications of these policies within national and international context, including the roles that these policies play in shaping the events in the contemporary business arena.

COURSE REQUIREMENTS

1. Basic understanding of economic concepts and issues.2. Strong analytical capabilities.

RECOMMENDED TEXTBOOKS/SUPPLEMENTARY READINGS ( if Applicable) A course pack consisting of all the reading material will be provided to the participants

COURSE ASSESSMENT/GRADESThe following instruments of evaluation shall be used to assess individual performance.

1) Class Participation 35%2) In Class Exercises / Quizzes 15% 3) WAC 10% 4) Final Exams 40%

CLASS-MANAGEMENT POLICY

1. Use of Cell phones and laptops during the session is strictly prohibited.2. Out of turn speaking in the class will automatically reduce your CP without any warning.3. Absence from class, coming late will also result in negative CP

Economic Policy and Business Dynamics

MBA (III-B)

CASE/LECTURE BOOK

Sessions TITLE OF CASE/LECTURE # READING MATERIAL LEARNING OBJECTIVES

1) Setting the Scene

Session 1 The core concepts of Macroeconomics (Class discussion & Lecture)

1 2

Harvard Business Press Chapters (34 Pages)

National Income Accounting - HBS note ( 7 pages)

To summarize the foundational concepts in macroeconomics i.e. output, money, and expectations--and the key linkages between them.

Session 2 National income accounting and macroeconomic management (Class discussion & Lecture)

1 Insights through Indicators – HBS note (33 pages)

To provide a framework so that participants can identify, organize, and interpret macroeconomic data.

2) Monetary Policy

Session 3 Monetary Policy: Types, objectives and tools (Class discussion & Lecture)

1

2

3

Money and monetary policy - HBS note ( 4 pages) European central bank website

State bank of Pakistan website

To understand the government management of inflation and recession through central bank’s actions.

Session 4 Kinyuseisaku: Monetary Policy in Japan (A) 1 Kinyuseisaku: Monetary Policy in Japan (A) HBS Case (35 pages – 2008)

To analyze the impact of monetary policy on Japan's economic performance over the last few decades, especially as Japan struggled with deflation and a prolonged recession.


Session 5 China: To Float or Not to Float? (A) 1

2

China: To Float or Not to Float? (A) HBS Case ( 30 pages – 2006/2010)

Exchange rate regimes - HBS note (13 pages)

To understand the mechanics of China's exchange rate policy; and to debate what China should do with its exchange rate policy and how this will impact businesses located in China and elsewhere.

3) Fiscal Policy

Session 6 Fiscal Policy: Types, objectives and tools (Lecture)

1 Fiscal policy: managing aggregate demand - HBS note (7pages)

To understand the government management of consumption/Aggregate demand and production/ aggregate supply through certain tools. Also to understand the rational for such management.

Session 7 Barack Obama and the Bush Tax Cuts (A) 1 Barack Obama and the Bush Tax Cuts (A) HBS Case (27 pages – 2009)

To understand the functioning of fiscal policy in the U.S., supply-side and demand-management justifications.

Session 8 Rovna Dan: The Flat Tax in Slovakia 1 Rovna Dan: The Flat Tax in Slovakia - HBS Case (35 pages – 2007/2010)

To gain insight into the significance and implications of a "flat tax" in Slovakia, the problems it solves and creates, and its implications for both fiscal and political policy.

Industrial Policy


Session 9 Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry

1

2

Upgrading the Economy: Industrial Policy & Taiwan's Semiconductor Industry - HBS Case (25 pages – 2009/2010)

Institutions & Policies Shaping Industrial Development: An Introductory Note Research Article (24 pages – 2006)

To understand how industrial policies have the potential to impact the business environment of the country.

Session 10

Singapore Inc. 1 Singapore Inc. HBS Case (27pages – 2003/ 2008)

To understand and examine the key aspects of Singapore's growth, including organizational / cultural arrangements, the savings / investment balance, and total factor productivity growth.

Session 11

Finland and Nokia: Creating the World's Most Competitive Economy

1 Finland and Nokia: Creating the World's Most Competitive Economy - HBS Case (23 pages – 2003/2011)

To understand how policy changes made in the 1990s and how, by 2002, the country had managed to become one of the most competitive economies in the world.

Economic Crisis and Govt. Policy

Session 12

Subprime Meltdown: American Housing and Global Financial Turmoil

1

2

Subprime Meltdown: American Housing and Global Financial Turmoil - HBS Case ( 21 pages – 2008)

Mortgage Guarantee Programs and the Subprime Crisis - HBS note (28 pages)

To understand causes of the crisis, appropriate policy responses and their implications on business


Session 13

Spain: Can the House Resist the Storm? 1

2

Spain: Can the House Resist the Storm? - HBS Case (34 pages – 2009/2011)

The Big Three Performance Variables: Macro-performance of the US and the Eurozone - HBS note (8 pages)

To relate broad economic events--tech bubble, recessions, and the housing bubble around the glob - interpretation of macroeconomic data. Whereas the case explores how shocks are propagated in the economy and cause business cycle fluctuations.

Session 14

The Great Moderation, Dead or Alive? 1

2

The Great Moderation, Dead or Alive? HBS Case (16 pages – 2009)

Investing in the Post-Recession World - HBS note (7 pages)

To understand the evaluation of aggregate volatility and its determinants. The case describes the basic facts, presents contending explanations and explores the consequences of the “Great Moderation” for the likely amplitude of future business cycles.

Documents

01 Policy+ +Business+Dynamics