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Professor Janice Eberly, Distinguished Fellow at the Golub Centre for Finance and Policy, visiting the Sloan School at MIT. She has also held the position of James R. and Helen D. Russell Professor of Finance at Northwestern University and was the former Chief Economist of the U.S. Department of the Treasury, visited the National University of Singapore's (NUS) Risk Management Institute (RMI) and was invited to participate in the Seventeenth Annual Risk Management Conference on 15 August 2024. The day after the conference, Professor Eberly had a cordial dialogue session over lunch with six students from the Master of Science in Financial Engineering (MFE) program. Professor Eberly is one of the world's leading economists whose research focuses on the interplay between the financial sector and macroeconomics. Her recent research has focused on the role of intangible assets in capital accumulation and innovation. Therefore, this visit provided a unique opportunity for students to discuss current hot topics in the field of economics in a relaxed and enjoyable environment.
In the interactive session, the students first introduced their interests and backgrounds. Professor Eberly also discussed the course work in the MFE program with the students in an effort to learn more about the program and the students present at the session. She mentioned that the collaboration between the university program and the industry is very helpful because it helps students to cross the barriers of the financial field and have the opportunity to showcase their abilities. In addition to having good skills and an interest in the subjects, she stressed the importance of practical experience and encouraged students to be open-minded when diving into the workforce. She added that theoretical knowledge often has to be tried and tested in an actual work environment in order to know whether a preferred career path is suitable for you. She also advised us students that the process is non-linear as “you will learn and grows on the job and then 20 years later you will look back and say to yourself, wow, I learned a lot!” Professor Eberly also shared with the students her experience working in the U.S. Treasury Department during the financial crisis, which she quipped was a "thrilling" process. The economic data was terrible, and economists were distressed that policy-making in crises was often not as good as it should have been for complex reasons. Sometimes academics worry about not having complete data and perfect models for how to deal with the situation, but she says, "If economists don't speak up, others will speak up even if they know less, right?" and opined that this is why it's important to keep communicating. Speaking about the impact of the pandemic, Professor Eberly said that countries have had a large number of interventions in terms of fiscal and monetary policies. One of the problems now is that the government is gradually withdrawing these measures in order to deal with the problem of inflation. The situation is different in each country, and the demand in the post-Covid housing market in the United States is high, and home prices remain high even in a high interest rate environment. For the global economy, it is important to recognize that there is a loss of connectivity in addition to the loss of paper economy when there is a lack of communication and trade between countries because of policy estrangements and losses. Only when we maintain this connection can we promote more economic growth.
The focus of the exchange then shifted to Professor Eberly's academic research. The students had an in-depth discussion on the theme she shared at the annual risk management conference, "Intangible Assets as Financial Assets, Valuation, and Growth." In the wake of the financial crisis, despite the recovery of credit markets and the recovery of the job market, she was baffled by the unusually weak level of investment in the data. Professor Eberly remarked that after leaving the Ministry of Finance, she had more time to devote to academic research, and finally realized that the real reason was a fundamental change in the way companies produce and create value, and intangible assets have gradually replaced the production methods that relied only on equipment and labor in the past. She said that the most valuable companies in the world have very little capital and more intellectual property. This has led to a new way of thinking about jobs and investment, and there are still many unanswered questions about policy. For example, securing property rights used to be a core development principle, but now property rights protection is too strong so that spillovers do not occur, others do not benefit from them, and economic growth does not occur. She also used the concept to encourage people to think about the trade-offs and challenges in the recent case of Google's antitrust defeat. The students also mentioned the ownership of data by technology companies, and she said that the question of how to manage data in terms of policy is indeed a challenge. "In the early days of Facebook, my students were excited about the product and invited me to participate with them, but I was surprised at how much personal information people were willing to post on social media, even though it might seem old-fashioned," says Professor Eberly with a laugh.
When asked what macroeconomic policies at the national level could drive innovation, Professor Eberly said that it is difficult to predict future trends, so it is generally difficult to develop policies around specific technologies. The role of private equity and venture capital institutions ensures that there is sufficient capital to be left to market mechanisms in terms of capital allocation. However, corporate capital itself does not have enough motivation to cultivate young people, so she believes that the most important area of public policy is the development of human capital, and that it should be a long-term goal to make sure that people have enough knowledge. Some students expressed their interest and confusion about virtual currencies and blockchain technology, and Professor Eberly shared a paper demonstrating the similarity between virtual currency mechanisms and existing national financial systems. For example, the banking system faces the biggest problem of information asymmetry and still cannot be solved, because the virtual currency system does not create additional information, but uses different terminology from the traditional system. Still, she is optimistic about the innovation of technology in solving problems, and she believes that blockchain technology itself has practical application value in scenarios such as cross-border payments and decentralized transaction systems similar to the housing market.
The lunch exchange came to an end with laughter. The students expressed their heartfelt gratitude to Professor Eberly and took a group photo with the professor to commemorate the event. This exchange not only benefited the students of the MFE program, but also provided valuable guidance and inspiration for their future career development. As shown by such exchange events, the MFE programme at the National University of Singapore has a good platform for students to meet and network with renowned scholars. NUS MFE hosts a variety of events to help students expand their industry horizons, combine theory and practice, and shape them into well-rounded financial professionals. If you are interested in the NUS MFE program, you are welcome to apply! Applications will be open from May 13, 2024 to February 15, 2025! Admission is sent on a rolling basis, with only one admission per year, in August. Don't miss this opportunity, we look forward to meeting you!
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