Markets and the Economy

This course focuses on how firms relate to the broader economic environment and is a bridge in the EMBA economics sequence between Managerial Economics and Global Economic Environment (GEE). In Managerial Economics, we analyzed decisions based on information, such as cost and demand, specific to individual firms, and the strategic interaction between a small number of firms that wield market power. In this course, we expand our analysis to the wider landscape in which multiple firms are operating simultaneously, and we focus on how this context affects business decisions. Our discussion completes and builds on our consideration of competitive markets to study how market prices and quantities are determined, how prices evolve, and how changes in various policies, such as minimum wages, rent control, immigration, subsidies, and taxes affect market outcomes. This analysis touches on the different forces that interfere with and complicate the efficient operations of markets, such as externalities, and looks at connections between markets through international trade. Assessing these forces is useful for both understanding how markets operate as well as identifying the social responsibilities of business leaders working within them. We then aggregate further by examining different indicators of economy-wide activity and how they relate to the collective behavior of businesses, households, and governments, which together define larger economic systems. We look at the forces that drive the long-term evolution of national economies and the global economy. The questions we examine include: What is the impact of different macroeconomic trends on the global labor market and income inequality? How can we forecast the growth rate of the global economy? Why do some economies grow much more rapidly than others, and how can we anticipate the next emerging-market miracle? How do government policies such as taxes and regulations affect individual firms and the overall economic system? With the toolkit developed in this course, the stage will be set for GEE, the third course in the EMBA economics sequence. GEE focuses on boom-bust cycles, their impact on businesses, and the roles played by monetary policy, fiscal policy, and financial globalization in determining economic fluctuations.