This page presents the results of a simulation conducted by students at ESCP Business School. The aim was to uncover the amount of interlinked debt between Portugal, Ireland, Italy, Greece, Spain, Britain, France, and Germany; and then see what would happen if they attempted to cross cancel obligations.

Images by Soapbox

The idea

The idea is very simple – if Portugal owes Ireland €0.34bn of short term debt, and Ireland owes Portugal €0.17bn, we can write off Ireland’s obligations and leave Portugal with a reduced debt of €0.17bn.If you are both a debtor and a creditor you do not need money to settle claims. Rather than require additional funds to deal with choking debt, why not write it off?
The diagrams above show the before and after situation, based on analysis done by students. The simulation itself took place on May 17th 2011 and involved three separate trading rounds.

Students in the Pre-Masters Year of the ESCP Europe Masters in Management program took part in the trial run on March 22, 2011, which involved only the PIIGS countries. The key results were the following:

• Portugal was able to cut its debt in half, primarily because so much of that debt was held by Spain.
• Ireland reduced its debt by 99.74%, mostly through deals with Spain and Portugal. It was able to make use of trading period 3 by moving short- and medium-term debt into long-term debt.
• Italy had a weak bargaining position, as it began with the worst debt position (a high concentration of short-term debt). After reducing debt by 50% in period 1, it was unable to make further gains.
• Greece reduced its debt by 11% but mostly because it had little exposure to the other PIIGS countries. It was unable to make any trades after period 1.
• Spain managed to eliminate all of its debt obligations to the other PIIGS countries, although it owed significant amounts to Britain, France, and Germany. Spain found that it could deal with everyone at the table quite equally.

Main data sources

• IMF World Economic Outlook Database, October 2010
• BIS Locational banking statistics

Resources for instructors

If you would like to replicate this simulation in your classroom, download this zip file. It includes:

• All of our data (including sources and notes)
• The starting positions for each country
• The results table to provide real time information to students
• A summary sheet for students to complete each round

Further reading

Dates and location TBA

In December 1819 Jean-Baptiste Say was one of a group of political economists and businesspeople who founded “Ecole Spéciale de Commerce et d’Industrie”, in Paris. Their practical experience and commitment to liberal ideas established a new type of academic model, pioneering the modern business school. Over the last 200 years the school has undergone a number of innovations, most notably with the merger in 1999 with EAP to form a multi-campus model operating throughout Europe. Combining a European identity with a global perspective, ESCP Europe now stands as a triple accredited and highly ranked establishment. JB Say held the first Chair in Economics, and 200 years later this colloquium uses his intellectual legacy as the host for an appraisal of his ideas and influence. 

Attendance is strictly by invitation only. Suggestions/feedback welcome – please email me.

Main reading: Say, J.B., ([1803] 1855) A Treatise on Political Economy (translation of the 4th Edition) – print copy at Amazon, or see this free pdf, or Library of Economics and Liberty.

• Session I. On theory and practice
• Session II. Origins of entrepreneurship
• Session III. Say’s Law: the origins
• Session IV. Say’s Law: Keynes’ reading
• Session V. Say’s Law: The generally accepted view
• Session VI. Say’s Law: The resurrection

20th-21st November 2009, London

1.    What is Money?

• Menger, Carl, 1976, “The Theory of Money” (Chapter 8, in Principles of Economics, p.257-286)
• Salerno, Joseph T., 1987, “The “True” Money Supply: A Measure of the Supply of the Medium of Exchange in the U.S. economy” Austrian Economics Newsletter, Ludwig von Mises Institute
• Shostak, Frank, 2000, “The Mystery of the Money Supply Definition” The Quarterly Journal of Austrian Economics, Vol. 3, No. 4, pp.69-76

2.    The Interest Rate and Intertemporal Coordination

• Mises, Ludwig von, 1953 [1912], The Theory of Money and Credit Yale University Press (Excerpts: Chapter 19, pp.339-367)
• Hayek, Friedrich A., 2008 [1931], Prices and Production Mises Institute (Excerpts: Lecture 2, pp. 223-252; Lecture 3, pp.253-276)
• Sweeny, Joan and Richard James Sweeny.  1977, Monetary Theory and the Great Capitol Hill Baby Sitting Co-op Crisis: Comment, Journal of Money, Credit and Banking, Volume 9, Feb., pp. 886-89

3.    The Gold Standard and the Great Depression

• Rothbard, Murray, 2005 [1963], What has government done to our money? Mises Institute (Excerpts: pp.159-170)
• Reed, Lawrence, 2005, “Great Myths of the Great Depression” Mackinac Center for Public Policy
• White, Lawrence H.  2008, “Is the Gold Standard Still the Gold Standard among Monetary Systems?” Cato Institute Briefing Papers, No. 100

4.    Deflation and Prosperity

• Rothbard, Murray, 2005 [1962], The Case for a 100% Reserve Dollar Mises Institute (Excerpts: Chapter 10, pp.180-186)
• Selgin, George, 1997, Less than Zero: The Case for a Falling Price Level in a Growing Economy Institute of Economic Affairs, Hobart Paper No. 132 (Excerpts: pp.9-41; 70-72)

5.    Free Banking vs 100% reserves

• Mises, Ludwig von, 1953 [1912], “Peel’s Act” in The Theory of Money and Credit Yale University Press (Excerpts: Chapter 20, pp. 368-373)
• White, Lawrence H. 2009 [1984], Free Banking in Britain: Theory, Experience, and Debate, 1800-1845, Institute of Economic Affairs (Excerpts: Chapter 5, pp.89-135)
• Selgin, George, 1997, Less than Zero: The Case for a Falling Price Level in a Growing Economy” Institute of Economic Affairs, Hobart Paper No. 132 (Excerpts: pp. 67-69)
• De Soto, Jesus Heurta, 2006, Money, Bank Credit and Economic Cycles Mises Institute (Excerpts: Chapter 8, pp.675-714)

6. Central banking

• Smith, Vera, 1990 [1936], The Rationale of Central Banking, Liberty Fund (Excerpts Chapter XII, pp.167-196)
• Hayek, Friedrich A., 1990, Denationalisation of Money – The Argument Refined, Institute of Economic Affairs, Hobart Paper Special, No. 70 (Excerpts: pp.23-28, 46-55, 130-131)
• Congdon, Tim, 2009, Central Banking in a Free Society, Institute of Economic Affairs, Hobart Paper No. 166 (Excerpts Chapter 1, pp.34-43; Chapter 8, pp.178-189)

7.    Proposals for Reform

• Salsman, Richard, 1990, Breaking the Banks, American Institute for Economic Research (Excerpts: Chapter IX, pp. 125-141)
• De Soto, Jesus Heurta, 2006, Money, Bank Credit and Economic Cycles Mises Institute (Excerpts: Chapter 9, pp.736-787)
• De Soto, Jesus Heurta, 2006, Money, Bank Credit and Economic Cycles Mises Institute (Excerpts: Chapter 9, pp.788-805)

Updated: March 2018

The Macro Bootcamp is a short and intensive reading group that serves as a refresher for a graduate level class in contemporary macroeconomics. It aims to cover the seminal texts of the most prominent schools of thought, and act as a foundation for applications to current policy debates.

1. Advanced reading

Participants are advised to read the following book, which provides an excellent introduction to modern macroeconomics from a school-of-thought approach. The interviews at the end of the book in particular are worth attention:

• Snowden, Vane & Wynarczyk (1994) A Modern Guide to Macroeconomics, Edward Elgar

2. Reading list: key articles

Note: this reading list is heavily influenced by Tyler Cowen’s Macro I Reading List, Fall 2006 (.pdf). For a previous version of that, see here.

History of thought/background

• Woodford, Michael (1999) “Revolution and Evolution in Twentieth-Century Macroeconomics”, Working Paper
• Krugman, Paul (2000) “How Complicated Does the Model Have to Be?” Oxford Review of Economic Policy Vol. 16 No.4
• Mankiw, N. Gregory (2006) “The Macroeconomist as Scientist and Engineer,” Journal of Economic Perspectives, vol. 20(4), pages 29-46, Fall.

Real Business Cycles

• Long, John B. and Plosser, Charles. (1983) “Real Business Cycles,” Journal of Political Economy, 39-69.
• “The Prescott-Summers debate” (1986) Federal Reserve Bank of Minneapolis Quarterly Review Vol. 10, No. 4
• Stadler, George. (1994) “Real Business Cycles,” Journal of Economic Literature, XXXII, 1750-1783.

New Keynesian economics

• Clower, R., and Leijonhufvud, A., (1975) “The Coordination of Economic Activities: A Keynesian Perspective,” American Economic Review 65(2):182-188
• “Symposium: Keynesian Economics Today,” (1993) Journal of Economic Perspectives, 7(1):3-82*
• Mortensen, Dale and Pissarides, Christopher. (1994) “Job Creation and Job Destruction in the Theory of Unemployment,” Review of Economics Studies
• Taylor, John. (2000) “Reassessing Discretionary Fiscal Policy,” Journal of Economic Perspectives, 21-36.

Monetary policy

• Caplin, Andrew and Spulber, Daniel. (1987) “Menu Costs and the Neutrality of Money,” Quarterly Journal of Economics, 703-725
• Taylor, John B. (1993) “Discretion Versus Policy Rules in Practice,” Carnegie-Rochester Conference Series on Public Policy, 39, pp. 195-214
• “Symposium on the Monetary Transmission Mechanism,” (1995) Journal of Economic Perspectives, 9(4): 3-96*
• Shafir, Eldar, Diamond, Peter, and Tversky, Amos. (1997) “Money Illusion,” Quarterly Journal of Economics, 341-374

3. The podcast

Here is an audio version of my own lecture notes:

4. Further reading

The classic graduate text for macro is David Romer. It is the best treatment of the alternative growth models, and then has a chapter on each variable of national income accounting. Participants are advised to grapple with it after the bootcamp has taken place.

• David Romer (2011) Advanced Macroeconomics, McGraw Hill, 4th edition

It is also a good idea to see how various Austrian, Keynesian and Monetarist ideas can be integrated into a heterodox narrative. See Arnold Kling’s “Lectures on Macroeconomics“.

Note: the lectures above feed into the Monetary Theory and Policy Workshop

This article intends to walk through a process for collecting and presenting data. It will include some basic commands in Excel and Powerpoint. The slide deck below provides a step-by-step guide. You should follow it in order to complete the set tasks.

You will need the following to get started:

• Download “aje_template.potx“
• You can download handouts for these slides here: “aje_data.pdf“

Tasks

1. Replicate the following PDF file (but without the patterned fill): “aje_data_chart.pdf”

• Kaleidic Guide to Using the UK National Accounts
• Find the NGDP figures from the ONS website (here’s a stable link for our data)
• Email me for the solution: “aje_data_1.xlsx”

2. Replicate the following PNG image (but without the patterned fill):

• Download “aje_data_2.xlsx“
• Email me for the solution: “aje_data_3.xlsx”

Resources on data visualisation:

• Not all graphs are straight lines by me
• Schwabish, J., 2014, “An Economist’s Guide to Visualizing Data” Journal of Economic Perspectives 28(1):209-234
• Why you sometimes need to break the rules in data viz by Rosamund Pearce
• Fundamentals of Data Visualization by Claus Wilke
• BBC Visual and Data Journalism cookbook for R graphics
• Data visualisation white paper by SAS – this is very thorough
• Graphics Principles Cheat Sheet
• ChartPorn.org
• Modern approaches to data visualisation
• Chart format guide (by Paul Bolton), House of Commons Library Standard Note, October 15th 2014
• How to improve your tables – less is more
• Mistakes, we’ve made a few

Some examples of good data visualisation:

• The fallen of WW2
• Think before you use a donut chart 
• 2016 Internet Trends, by Mary Meeker, KPCB
• This tweet by Brian Reyes

The Economist is renowned for good data visualisations. Here is their advert for data journalists, demonstrating their expertise.

This is part of my online course on Analytics.