Central banks and monetary policy at the Executive MBA

The Executive MBA class of 2018 met for another residency session with an international focus at MiLgårdarna in Klippan. EFL’s international expert Fredrik N. G. Andersson focused on central banks and monetary policy, and participants learned plenty of new things and engaged in interesting discussions. We got in touch with Fredrik to find out little bit more.

EFL international expert Fredrik N.G. Andersson

Hello, Fredrik. You put the Executive MBA spotlight on central banks and monetary policy. Can you tell us more?

Central banks around the world have substantial influence on the economy. Interest rates for mortgages, savings accounts and corporate loans are all affected by central bank decisions. This in turn affects growth, unemployment, inflation and debt in the economy. In recent years, we’ve seen more and more central banks pursue “unconventional” monetary policies, which gives them an even greater influence on the economy. Understanding how central banks act and what they base their decisions on is therefore very important.

What was the plan for the session?

The day was based on workshops and the participants were assigned to pretend to be central bank directors tasked with setting the interest rate for 2017 to 2020. Participants were given access to data similar to the type of data available at a real central bank, and a simple model of the economy that they could use to see how different interest rates affect it. We had a total of four central banks representing the banks in Sweden, the US, Brazil and Tanzania. As in real life, finding a suitable interest rate level did not prove to be easy. The group responsible for Sweden in particular had difficulties propping up growth in the economy while attempting to limit the dangerous accumulation of debt in the economy.

What do you hope the participants learned?

I hope they have a better understanding of how central banks act and, especially, an understanding of how difficult it is to be a central bank. They frequently run into conflicts of objectives that are not easy to reconcile.



Three quick questions

What do you have in the pipeline now?
Right now I’m working on a project about shaping the monetary policies of tomorrow. Our current system was designed in the 1990s and major deficiencies have come to light. The question is: what would a better system look like?

What is the best thing about your job?
The freedom to do research on topics I’m passionate about.

Best book you would recommend as a Christmas present?
The Great Degeneration: How Institutions Decay and Economies Die by Niall Ferguson. I have a strong interest in history and I think it can teach us a lot. This book has a very important message. The world is constantly changing and we need to keep up, not just as individuals and companies, but also in politics. Unfortunately, we’re failing in far too many areas, as this book clearly demonstrates.