My Article at The Conversation

Almost 10 years from the Northern Rock near-disaster. Here's a link to my article at The Conversation.

http://theconversation.com/six-charts-that-show-how-much-the-world-has-changed-since-the-2007-08-financial-crisis-83477

Will my lectures go well?

The new semester is about to start at the University of Surrey and elsewhere in the higher education sector. Around this time, most academics begin preparing themselves for the 15 weeks of intense student interaction that follow. That is, preparing mentally, because the actual preparation –in terms of selecting the material, preparing notes, arranging the online content, drafting assessments and generally organising the modules– is normally finished long before the first class takes place.

This mental preparation can be stressful for academics irrespective or rank, but especially for colleagues on their first teaching job. The question at the heart of it all is rather simple: "Will my lectures go well?". The answer, however, depends on many factors and there cannot be absolute certainty that "it will go well". Still, there are many things that conscientious academics can think about and do in order to deliver beneficial and enjoyable learning experiences to their students; and –why not– enjoy them, too.  

With almost 15 years of teaching experience in HE and awards of teaching excellence, I  thought the time was right to reflect on what I have learned, and write it in the form of advice to my PhD students undertaking classes for the first time. I am sharing this, in the hope that it may be useful to others, too.

1. Make the first 5-10 minutes of the lecture matter.  Clearly identify what you will explain during the class and give reasons why your attendees should bother listening to you. It’s all about motivation: as the speaker, you know that the model/equation/experiment you are about to talk about is important in your field. But what can you say that can make your audience actually want to learn about it? (And yes, saying that it will come up in the exam counts as cheating!) As a bonus, if you introduce your lectures well, you will also see a drop in the number of latecomers in subsequent sessions.
2. Tell a story. What I basically mean here is putting your material in context. A simple thing to do is convey a sense of continuity by linking today’s stuff with what was discussed in the previous lecture/teaching session. Or, you can explain how it fits in the bigger picture you are trying to paint. You can then build your ‘story’ by adding more information incrementally and bring your lecture to a close by summarising the main points. Like a story, there is a beginning (that needs to be enticing), a middle part (where the details are panned out) and the end (which should feel rewarding). 
3. Be interested. And, as a result, be interesting. We’ve all been there, the talk where the speaker is clearly doing a chore. It could be because the module is not the lecturer’s favourite, or because she has been teaching it for way too long, or because she is filling up for someone else, or, or, or… There could be many legitimate –or not so legitimate– reasons why the presenter would rather be doing something else. But then, they shouldn’t expect their audience to be appreciative. So, if you teach, and if you are interested in the learning of your students, it is your job to motivate yourself and find these aspects of your material that can capture your and, consequently, your students’ attention.
4. Simplify. Be a bit like Apple. Its webpages are clear, elegant and convey the message without bogging you down in the fine detail. Your slides and other visual aids should follow the same principles. They shouldn’t be cramped with information, which can be provided in a separate handout or an appropriate reference. Instead, they should be streamlined and allow the audience to focus on the person who is doing the explaining: you! 
5. Use technology. It’s actually fun. And I’m not talking about PowerPoints, the data projector and a laser pointer. The modern lecture theatre should be able to accommodate video presentations and electronic voting systems (EVS). Some of these allow students to use their mobile devices to register their vote or other contribution. And most universities these days have dedicated virtual learning environments (VLE) that support discussion forums and generally encourage more effective communication with the class. You may think of these technological provisions as unnecessary but students have come to expect them. 
6. Look after your students. It is not easy being at University. Yes, I am not joking. It can be immense fun, but easy it is not. Just remember the uncertainty. Uncertainty about whether you are able to cope in a totally new and demanding environment. And uncertainty about what follows. “Will I do well at uni?”, “Will I get a good job after graduation?”, “How much debt will I have?” These questions –and many others– are there to sabotage the idea that going to university is a way of having a few years of undisturbed fun. And you, as a higher education professional, can help by being an eager listener, a facilitator and an accommodator.  
7. Be you! You may not like the idea –and most of us do not– but standing in front of an audience means that everyone is looking at you. You are being scrutinised. Your dress sense, your appearance, your mannerisms, your talk, everything is there for all to observe –and, more worryingly, judge. All from the comfort of a warm lecture theatre seat. But accept it! You are doing a challenging job so go out there and be who you are.
8. It’s OK to be nervous. Almost everyone I have known in the profession is dreading that first lecture. And quite a few dread each one after that, too. Preparation can reduce the nerves but, in my experience, it cannot eliminate them. Which probably is a good thing, as any remaining nervousness drives out complacency and ensures that you are ready to perform what truly is a challenging task. If nerves are, however, debilitating then you may want to seek the support of a professional.
9. Don’t stand still. Knowledge is being created all the time, both in terms of teaching effectiveness and in terms of your actual teaching material. You cannot afford to fall behind in any of these things. Most institutions have developmental seminars in support of learning and teaching, so use them. Your student evaluations may be stellar but you can still gain job satisfaction from improving aspects of your delivery. And, of course, new editions of textbooks and new research should be incorporated in your teaching material to keep it up-to-date.
10. Open up. Learn to enjoy the privilege of being surrounded by young, enquiring and aspiring people. This aspect of our job becomes more and more valuable as one grows older in the profession!

Thanks for reading and good luck.

Monetary Sovereignty and Trilemma Stability Data Now Available

Our new paper (with Helen Popper and Graham Bird) entitled "Trilemma Stability and International Macroeconomic Archetypes" is out soon in the European Economic Review.

The paper uses the simple geometry of the classic, open-economy trilemma to introduce a new gauge of the stability of international macroeconomic arrangements.  The new stability gauge reflects the simultaneity of a country's choices of exchange rate fixity, financial openness, and monetary sovereignty.  So, the new gauge is bounded and correspondingly non-Gaussian. We use the new stability gauge in nonlinear panel estimates to examine the post-Bretton Woods period, and we find that trilemma policy stability is linked to official holdings of foreign exchange reserves in low income countries. We also find that the combination of fixed exchange rates and financial market openness is the most stable arrangement within the trilemma; and middle-income countries have less stable trilemma arrangements than either low or high-income countries. The paper also characterizes international macroeconomic arrangements in terms of their semblance to definitive policy archetypes; and, it uses the trilemma constraint to provide a new gauge of monetary sovereignty.

Link to full text (on ResearchGate)

Data on monetary sovereignty and trilemma stability for 180 countries are available. A file with both variables in stacked form (for panel analyses) can be found here. 

A Scottish Currency

The Scottish Government is keen to form a "Sterling Area" with the UK post-independence. Ironically, under this arrangement, an independent Scotland would not have an independent monetary policy: the Bank of England would still be responsible for setting the Area's policy interest rate. In contrast, a Scottish Government would have the ability to affect the country's output and employment through its own independent taxing and spending decisions.

However, that very same fiscal policy independence would present a potential risk for the Area as a whole. For example, a substantial increase in Scottish debt could lead to significantly higher borrowing costs. In turn, these could derail the country's budget. Solutions at that stage would be economically and politically painful. The options would entail either an unpopular bailout by the UK (which, no doubt, would come with austere conditions) or a potentially messy exodus from the stirling area in order to boost competitiveness. 

Such dilemmas have been recently faced by countries in the eurozone and Scotland should heed the lessons. Entering a currency union with the UK will require a credible and strict fiscal framework to prevent a future exchange rate crisis. Westminster is unlikely to agree to a currency union without appropriate fiscal brakes, otherwise it will be exposing the UK to risks emanating from Scottish fiscal policies. If Scotland is unwilling to sign up to that, it should bite the bullet and create its own freely-floating currency. That will also be more commensurate with the aim of political independence.  

Some Lessons for Investors by Aesop, the Ancient Storyteller

I sometimes read Aesop's fables so that I can provide lessons to my children without appearing to preach too much. But as I read, I realise that Aesop's stories have more valuable lessons for us, the adults.

So, here are two of them:

On greed...

"A man and his wife had the good fortune to possess a goose which laid a golden egg every day. Lucky though they were, they soon began to think they were not getting rich fast enough, and, imagining the bird must be made of gold inside, they decided to kill it in order to secure the whole store of precious metal at once. But when they cut it open they found it was just like any other goose. Thus, they neither got rich all at once, as they had hoped, nor enjoyed any longer the daily addition to their wealth."

(The Goose that Laid the Golden Egg, translated by V. S. Vernon Jones for Wordsworth Classics)

I guess that in terms of the theory of finance this couple would have a utility function with a convex shape. In other words, their utility would increase at an increasing rate as their level of wealth increases... It would look something like this:

They would be risk-loving. Of course the risk of killing the bird did not pay off! Luckily, modern financial theory assumes investors whose utility increases at a decreasing rate as wealth increases. Investors are risk-averse or 'moderately greedy'...

On Investment Styles...

"A hare was one day making fun of a tortoise for being so slow upon his feet. 'Wait a bit,' said the tortoise; 'I'll run a race with you, and I'll wager that I win.' 'Oh, well' replied the hare, who was much amused at the idea, 'let's try and see'; and it was soon agreed that the fox should set a course for them, and be the judge. When the time came both started off together, but the hare was soon so far ahead that he thought he might as well have a rest: so down he lay and fell fast asleep. Meanwhile the tortoise kept plodding on, and in time reached the goal. At last the hare woke up with a start, and dashed on at his fastest, but only to find that the tortoise had already won the race."

(The Hare & the Tortoise, translated by V. S. Vernon Jones for Wordsworth Classics)

Choosing good companies (tortoises) and holding on to them may be a better strategy than jumping on bandwagons (hares) for long-run races (investment returns). There was a story recently at the Wall Street Journal discussing the case of an old fund (structured in 1935) invested in 'boring' companies which has outperformed recent and more 'dynamic' allocations. Have a look here.

EuroDigest

EuroDigest is my data-based report summarising EURUSD performance for the first six months of 2012.

Document available here

If you read one thing today... (and you are interested in the EZ)

The President of the Council of Europe has published his proposals ahead of the European summit this Thursday and Friday.

The document does present a roadmap to further integration that should underline the strength of the union in the long run.

It mentions explicitly integrated financial, budgetary and economic policy frameworks.

There is no time frame but it is suggested that this could be agreed in December.

I suspect that the markets are getting impatient for something concrete and will not react with enthusiasm.

But the EZ leaders have shown that they do not want to be (seen to be) swayed by the financial markets' short term reactions.

Democratic accountability and legitimacy also mean that the proposals will have to be sufficiently discussed and approved at the national level.

I think that these proposals are in the right direction.

Of course a lot (all) depends on what Germany thinks it can do.

And further integration presents a challenge not only for those who want to be part of it but also for those who are sceptical or hostile (e.g. the UK).

Does the EZ have time to contemplate these proposals?

I think it does, as long as Italy can borrow at reasonable rates.


Just in case you missed it the document is here.