Economic Analysis I: Firm Market and the Economy

BMAN24431 Economic Analysis I: Firm Market and the Economy 20 Semester 1 Undergraduate Level 2 Mohammad Salehnejad Unit coordinator Alliance Manchester Business School 1 FHEQ level (Framework for Higher Education Qualifications) ' Middle part of Bachelors ' European Credit Transfer & Accumulation System Rating : 10.0 This course unit provides the essential economic knowledge you need to make informed decisions in today's dynamic business world. It's designed to be both analytically rigorous and highly practical. <o:p></o:p><o:p></o:p>We will begin by studying alternative theories of the firm; demand and supply forecasting using real-time data; models of imperfect competition; non-cooperative game theory; advanced pricing strategies; data-driven pricing; advanced business strategies; the economics of information; risk analysis and decision-making under uncertainty; asymmetric information and signalling; moral hazard and incentives; the principal-agent problem; optimal and empirical incentive systems; introductory auction design; corporate purpose and CSR; and investment analysis.The course subsequently transitions to macroeconomic themes, exploring the monetary system, exchange rate regimes, and currency hedging, alongside inflation and interest rates. It examines short-run economic fluctuations through the lens of the AD–AS and IS–LM models, as well as contemporary theories of business cycles. Furthermore, the syllabus covers models of financial crises and credit cycles, providing students with the analytical tools to leverage macroeconomic data in informing firm-level strategic decisions.Throughout, our focus is on applying these economic tools and data analysis skills to understand real business cases and current events, preparing you for future challenges<o:p></o:p> This course unit provides the essential economic knowledge you need to make informed decisions in today's dynamic business world. It's designed to be both analytically rigorous and highly practical. <o:p></o:p><o:p></o:p>We will begin by studying alternative theories of the firm; demand and supply forecasting using real-time data; models of imperfect competition; non-cooperative game theory; advanced pricing strategies; data-driven pricing; advanced business strategies; the economics of information; risk analysis and decision-making under uncertainty; asymmetric information and signalling; moral hazard and incentives; the principal-agent problem; optimal and empirical incentive systems; introductory auction design; corporate purpose and CSR; and investment analysis.The course subsequently transitions to macroeconomic themes, exploring the monetary system, exchange rate regimes, and currency hedging, alongside inflation and interest rates. It examines short-run economic fluctuations through the lens of the AD–AS and IS–LM models, as well as contemporary theories of business cycles. Furthermore, the syllabus covers models of financial crises and credit cycles, providing students with the analytical tools to leverage macroeconomic data in informing firm-level strategic decisions.Throughout, our focus is on applying these economic tools and data analysis skills to understand real business cases and current events, preparing you for future challenges<o:p></o:p> This course aims to provide a working knowledge of economic techniques relevant for managing a modern firm. The course demonstrates how a solid knowledge of topics such as demand estimation / forecasting, empirical investment analysis, pricing strategies; non-cooperative game theory; strategic behaviour; advance business strategies, oligopoly markets; economics of information, signalling; moral hazard and incentives; inter-temporal decisions under uncertainty;  auctions and market design help improve corporate decisions. Gaining insights from modern macro: This course provides a coherent understanding of macroeconomic factors and their impact on business activities and firm performance. By bridging theory and practice through a rich mix of academic concepts and real case materials, it equips students with the skills to systematically analyze economic news and use it to optimize corporate decision-making.Notably, equip students with an ability to use Excel (or R - optional) to analyse data in business decision making, use economic theories to make sense of economic data and news, and use their understanding to improve on business decisions and master data-driven business decision making. The course uses a rich mix of theory and practice, with a strong emphasis on applying economic theory to real business decisions to help students develop a capability in understanding a wide variety of business situations from economics to finance, which will prepare them for the future job markets. The ability to analyse complex business situations systematically, design relevant business strategies, and make theoretically sound and evidence-based decisions will provide our students with a critical advantage in the job market. In tutorials students will also have the chance to engage in group discussions, build confidence and enhance their presentation skills.    <ul><li style="text-align:justify;">Interpret macroeconomic data and employ the AD-AS, IS-LM, and Mundell-Fleming models to explain the nature and causes of short-run economic fluctuations.</li><li style="text-align:justify;">Explain and apply contemporary business cycle theories to guide strategic corporate decisions.</li><li style="text-align:justify;">Examine the dynamics of credit cycles and financial crises and apply this understanding to assess risks and strategic responses within firms.</li><li style="text-align:justify;">Analyse firm behaviour using economic theory, focusing on market structure, pricing, and strategic decision-making.</li><li style="text-align:justify;">Apply data analysis to inform business decisions, forecast market trends, and evaluate investment projects.</li><li style="text-align:justify;">Explain how uncertainty and imperfect information impact decision-making and analyse associated principal-agent problems and methods for addressing them within a firm context.</li></ul> <ul><li style="text-align:justify;">Critically evaluate and apply key economic models using data to enhance economic and business analysis</li><li style="text-align:justify;">Analyse the working of the economic system, the interconnectedness of major economies, and the effect of macroeconomic trends on corporate performance.</li><li style="text-align:justify;">Analyse the role of the financial sector in the economy and its influence on business performance.  </li></ul> <ul><li>Employ software such as Excel, R, and generative Gen AI tools for data analysis, hypothesis generation, and decision-making.</li><li>Leverage economic and firm data to inform managerial choices and business decisions.</li></ul> <ul><li style="text-align:justify;">Analyse firm data using software such as Excel and R and utilise real-time data for business decisions.</li><li style="text-align:justify;">Integrate background knowledge, theory, and data to enhance decision-making.</li><li style="text-align:justify;">Communicate economic concepts and business strategies effectively, including presenting data-driven insights and making persuasive arguments. Skills to combine background knowledge, theory and data to improve decision making.</li></ul> Part 1: Microeconomic Topics <o:p></o:p><o:p></o:p>1. Complex Markets and advanced business strategies,  <o:p></o:p>2. Risk, uncertainty, imperfect information & firm decisions <o:p></o:p>3. Incentive systems and firm design <o:p></o:p>4. Investment decisions & analysis <o:p></o:p>5. Auctions and market design <o:p></o:p>6. Market Analysis: an empirical approach Part 2: Macroeconomic Topics1. Introduction: Macroeconomic data <o:p></o:p>2.   A Basic model: output, unemployment and inflation at a glance <o:p></o:p>3.   The IS-LM model: the economy in the short-run <o:p></o:p>4.   Exchange rate systems <o:p></o:p>5.   The Monetary system, stabilization policy & expectations <o:p></o:p>6.   Theories of business cycles and recessions <o:p></o:p>7.   Credit cycles, recessions and business cycles <o:p></o:p>8. Financial crises and credit cycles  9. Theories of international trade <o:p></o:p>  Methods of delivery: Lecture/seminars /computer aided learningLecture hours: 30 (3 hours per week over 10 weeks) plus 3 hours overall course revisionsSeminar hours: 8 (1 hour per week)5 hours optional extra revision sessions for students needing help with economics.  0 Other 100% Formative Assessment:<o:p></o:p>12 short weekly mock MCQ tests<o:p></o:p>Summative Assessment:<o:p></o:p>1. Mid-term randomised multiple choice test (20%)<o:p></o:p>2: Randomised multiple choice test (30%)<o:p></o:p>3: Final Economic Analysis Project (50%)   <ul><li>Prior to the exam during weekly seminars and after marks are released.</li><li>General guidance during revision sessions, individual feedback on outlines, and comments / feedback after marks are released.</li></ul> BMAN10001 Economic Principles : Microeconomics Pre-Requisite Compulsory BMAN24431 has pre-requisites of: BMAN10001. Only available to students on: Mgt/Mgt Specialism; IMABS; IM and ITMB.Pre-requisite course units have to be passed by 40% or above at the first attempt unless a higher percentage is indicated within this course outline. N The required online textbooks for the subject are: <o:p></o:p><ul><li class="MsoNormal" style="mso-list:l1 level1 lfo1;tab-stops:list 36.0pt;">Baye, M.R., (2022) Managerial Economics & Business Strategy, 10th Edition, Irwin McGraw-Hill,  <o:p></o:p></li><li class="MsoNormal" style="mso-list:l2 level1 lfo2;tab-stops:list 36.0pt;">Olivier, Blanchard, Amighini, A. and Francesco, G., 2021. Macroeconomics. A European Perspective. <o:p></o:p></li><li class="MsoNormal" style="mso-list:l0 level1 lfo3;tab-stops:list 36.0pt;">Weekly case studies, data sets, and lecture slides (posted on Blackboard - students are asked to read the cases and analyse datasets before the lectures / seminars). Lecture slides mainly draw on recent research and policy papers</li></ul>Weekly chapters from the online textbooks, weekly case studies, prepared for the course, and datasets. Further, the course will draw on relevant research papers including:  <o:p></o:p><ul><li class="MsoNormal" style="mso-list:l0 level1 lfo1;tab-stops:list 36.0pt;">All About the Business Cycle: Where Do Recessions Come From? <a href="https://www.stlouisfed.org/publications/page-one-economics/2023/03/01/all-about-the-business-cycle-where-do-recessions-come-from" target="_blank">link</a>)<o:p></o:p></li><li class="MsoNormal" style="mso-list:l0 level1 lfo1;tab-stops:list 36.0pt;">Inflation in the Aftermath of Pandemics and Wars (<a href="https://cepr.org/voxeu/columns/inflation-aftermath-wars-and-pandemics" target="_blank">link</a>) <o:p></o:p></li><li class="MsoNormal" style="mso-list:l0 level1 lfo1;tab-stops:list 36.0pt;">The Impacts of Higher Interest Rates on UK Firms (<a href="https://cepr.org/voxeu/columns/impact-higher-interest-rates-uk-firms" target="_blank">link</a>)<o:p></o:p></li><li class="MsoNormal" style="mso-list:l0 level1 lfo1;tab-stops:list 36.0pt;">Chaney, T., Sraer, D. and Thesmar, D., 2012. The collateral channel: How real estate shocks affect corporate investment. American Economic Review, 102(6), pp.2381-2409.<o:p></o:p></li><li class="MsoNormal" style="mso-list:l0 level1 lfo1;tab-stops:list 36.0pt;">Finance and Economics: Big MacCurrencies,” The Economist, Apr 27th, 2002 <o:p></o:p></li><li class="MsoNormal" style="mso-list:l0 level1 lfo1;tab-stops:list 36.0pt;">New thinking on executive compensation: Pay CEOs with debt <a href="https://cepr.org/voxeu/columns/new-thinking-executive-compensation-pay-ceos-debt" target="_blank">(link</a>) <o:p></o:p></li></ul> Lectures 33 Seminars 8 0 157 Pre-requisites: BMAN10001 Economics Principles: Microeconomics Dependent course units: BMAN31181Economic Analysis II: Corporate Development, Growth & Strategy Programme Restrictions: BSc Management and Management (Specialisms), BSc International Management, Core: BSc ITMB (Strategy & Economics) BMAN24431 is available to study abroad and exchange students admitted through the University of Manchester’s International Programmes OfficeProgrammes:Core: Mgt (IBE)Option: Mgt, IM, ITMB