No one is immune from the reach of macroeconomics. Things like derivatives, unemployment rates, interest rates, and other financial factors affect anyone who owns a business.
At least, that’s the viewpoint of Marc Tomljanovich, associate professor or economics at Drew University. “We’re looking at how monetary policy affects the economy,” Tomljanovich says. “It’s become really important for business owners to study the current state of things, look at the financial climate, and ask how they can minimize risk.”
To help business owners better understand what they are up against, Tomljanovich has opened a macroeconomics workshop — originally designed exclusively for economic professors — to the rest of us. “People starting or running their own businesses need to know how monetary policy works. They need to get a sense of how policy impacts them,” says Tomljanovich, who has helped organize this workshop each year since 2004.
Tomljanovich and his colleagues from colleges throughout the northeast will present “Macroeconomic Research at Liberal Arts Colleges” on Tuesday, August 5, from 2 p.m. until 5:45 p.m. and Wednesday, August 6, from 8:30 a.m. until 2:30 p.m. at Drew University’s Madison campus. The event is free. Seating for non economics professors or researchers is limited, so business owners interested in attending should contact Tomljanovich at 973-408-3251.
Many professors will be participating in an extensive agenda. Roisin O’Sullivan, economics professor at Smith College, will chair a discussion on monetary economics; Nicole Simpson, economics professor at Colgate University, will chair a discussion on open-economy macroeconomics; Robert Rebelein, professor at Vassar College will chair a discussion on consumption and business cycles; and Mark Hopkins, professor at Gettysburg College, will chair a discussion on macroeconomic theory.
Attendees also will be able to participate in breakout sessions on general macroeconomics, money and banking, international economics, or growth.
“Through these discussions, we hope to get people to agree on the big issues,” says Tomljanovich. “We can talk about what we should focus on in terms of future research and ways to study the economic issues that affect so many people.” For example, economist will be debating whether policy should support improvements in inflation or unemployment.
“We’re going to be looking at macroeconomic research, which is both local and global in scope. A lot of the issues look at monetary policy and how it affects individuals,” says Tomljanovich. “For example, any business that needs to borrow money needs to be aware of interest rates and every business owner needs to understand how financial derivatives work.”
Guess work. Derivatives — financial instruments such as cash, futures or options — often have their values change as a market response to underlying variables such as announcements by the Federal Reserve, political decisions, war, or natural disasters.
“A great example of a derivate affecting real life is the price of heating oil,” says Tomljanovich. “Here it is July, but you can buy oil today to heat your home next winter at a locked in price. The oil company can lock in a price because they stepped into the futures market and it is buying oil today at a future price. The ability to buy oil ahead of time helps insure against future price jumps.
“There are all kinds of derivatives with wheat, corn, oil, whatever. The derivative market is really interesting because it reflects peoples’ best guess of what’s going to happen.”
Policy. “Policy makers have to do something for our economy,” Tomljanovich says. “The hard part is deciding how you decide. We will be looking at major issues, studying data and exploring differing views on what to do.”
But it’s not as easy as it sounds. “The solutions are contradictory. What’s good for inflation will not help unemployment,” Tomljanovich says. “So what should the policy be? These are the issues that affect how a business owner can get more financing or grow his business.”
While this workshop is in its fourth year, Tomljanovich is no newcomer to economics. In fact, he’s been in the field his entire career. Growing up near Boston, he graduated from Northwestern University in 1992. “The job market was really tight so I decided to go back to school for economics. I figured that way I could teach or work in the financial sector,” he says. He earned his Ph.D from Cornell and has been teaching since 1998.