By Becky Huang and Angela Mao
[Wellesley Women in Business (WWIB) sat down with Professor Cho for a light and fun discussion of his work at Wellesley.]
WWIB: You are teaching ECON 210 Financial Markets and ECON 324 Money and Banking this semester. How do they represent your research and teaching interests?
Professor Cho: These classes represent my teaching interests. The ECON 210 Financial Markets course introduces you to the core economic principles in finance. In addition, the class helps you become aware of the potential investments that are available to you. The class is different from its equivalent at MIT which does more pure theory. My goal is to get across the basic intuition of financial market, e.g. why firms issue bonds and stocks, how banks deleverage, and how this affects the economy. These are simple ideas; but involve a lot of complex terms that often confuse people. For example, the terms fixed income, debt markets, bond markets, and credit markets are all basically referring to markets in which firms can borrow. It becomes accessible once you know the terms and ideas. The class is designed to help students understand this financial world.
The Econ 321 Money and Banking course that I also teach is essentially about monetary policy. It addresses what I think is becoming much more important in the everyday lives of people; but also one of the least understood topics more generally. For example, officials at the Federal Reserve are continuing to deploy policy to address the aftermath of the financial crisis. Current events like the currency wars between countries are becoming important issues.
WWIB: An article in WSJ titled, “Italy Vote Revives Euro-Crisis Worries,” suggests dramatic effects of the Italian political situation on financial markets. Can we get your thoughts on this ongoing crisis?
Professor Cho: There are many factors that are contributing to the overall Euro crisis and a lot of different countries and entities involved. As just one example, bailouts were politically much more difficult to approve in the early part of the Euro crisis as they were financed by bilateral loans. It used to be that Greek officials would say, “Yo Germany, we need a loan!” Then Germany would have to go to their elected officials and say, “Yo, let’s vote on this!” Now there are centralized institutions like the European Stability Mechanism or ESM.
WWIB: What is your view on the current financial market? Any worries?
Professor Cho: Yo, diggity! They are definitely working better than in ‘08 and ‘09. If firms wanna borrow money, they can.
WWIB: Yo diggity.