Syed Zahid Ali is Professor in the Department of Economics at the MGSHSS. He has an extensive record of high quality research. He has published extensively in internationally recognized journals, including well-regarded journals such as Economics Letters, International Review of Economics & Finance and Economic Modelling, as well as in leading Pakistani journals.
Macroeconomics is a rather broad field; could you explain in which areas of macroeconomics you mostly work?
In the past, my research has touched on a wide range of topics in open economy macroeconomics. I have, for example, done research work that sought to provide explanations of the well-known price puzzle, namely that an increase in policy interest rate could paradoxically raise inflation. In much of my work, I have also looked at the concepts of exchange rate pass-through and cost channel of monetary policy.
Are you interested in theoretical or empirical macroeconomics?
In general, my work is informed by advanced mathematics and shares a macroeconomic policy context. A common theme is the role of interest rates and/or exchange rates to deal with economic distortions. I have also, however, published work related to trade, productivity, intangible capital, and unemployment issues.
Can you briefly tell us about your recent research contribution?
I have recently become increasingly interested in news shock models. My papers, ‘Degree of Openness of the Economy, Habit Persistence, News Shocks and the Price Puzzle’ and ‘Anticipated vs. Unanticipated Currency Depreciation and the J-curve Phenomenon’, for example, would fall under the category of open economy business cycle literature with news shocks. This is still a nascent literature and most contributions have focused on anticipated (news) shocks to total factor productivity. In my own work, I have tried to move beyond this traditional use of anticipation effects and apply them to other sources of exogenous fluctuations like terms of trade shocks and shocks to monetary policy. Beyond novelty, the aim has been to show that these types of anticipated movements can have important implications for explaining outstanding puzzles in the literature. For example, the introduction of anticipated movements in the terms of trade of an economy can help explain why a J-curve exists whereas the same economy without news shocks would be unable to explain this phenomenon. Similarly, the introduction of anticipated changes in monetary policy can help resolve the ‘price-puzzle’, which refers to the empirical finding that prices increase after contractionary monetary policy.
You are passionate about teaching. How do you integrate research with your teaching responsibilities?
Teaching is important to me, and I have taught courses in a number of modules
and streams within the economics major. I think I have taught nearly fifteen
different courses, including those at the very basic level (Principles of Micro and Macro) and advanced Masters level courses. In designing and developing courses, I have tried to include my own research into the course material, and also to reduce the gap between courses at undergraduate and graduate levels. Where I can, I try to keep my approach technology-driven, and employ a blended learning strategy (by using MATLAB and Dynare in Macroeconomics courses) to create a work-integrated learning environment for my students. I have also taught courses in the MBA program and attempted to diversify by teaching focused quantitative courses such as
Econometrics and Financial Econometrics. I also supervise both undergraduate
and post-graduate research projects, which I consider an important responsibility since they are often key contributing factors to my students’ admission prospects for universities.
Kashif Zaheer Malik, Assistant Professor (Economics), conducted this interview.
This article was first published in the MGSHSS newsletter, 'Guftugu'.