In the second part of the interview with Professor Zaidi, the discussion gradually veers away from his career, and we go into his advice for students, the courses he loves teaching, and what he learned about making plans and still being flexible.
For those who missed the first part of the interview, please read it here.
Manyu Banerjee: So, to summarize, is it safe to say that there were both idealistic (trying to work on important issues of the time) and pragmatic (learning and growing first before trying to work on those issues) impulses that shaped your career? And then there were also personal factors that shaped your career. And eventually, even though not everything went exactly to plan, in the end, you had a very successful career.
Professor Iqbal Zaidi: Yes, though let me just say that it was not my intention to work at the IMF and then parachute into a high-level government job in the State Bank or the Ministry of Finance. I do advise this to my students, but life just doesn’t work that way. Even if you are outstanding, there’s no guarantee you will get into the IMF or the US Federal Reserve – it’s too competitive. It’s like when you’re a high school student there’s no guarantee you’re going to get into Princeton even if that’s your target. Yes, I wanted to work in Pakistan, but it was not that I was micromanaging my future in terms of what job I will get, or even thinking in terms of eventually working for State Bank or the Ministry of Finance. I don’t think the students should think like that. Just like you study hard in high school and then try your best to get into a good school like Princeton. It’s the same with your career in economics and in life. In my case, while I was working in Pakistan, the security situation there prompted us to come back to America. And later, my interests changed, and I wanted to return to academia. The most important decisions in your life are not made the same way that we do in the rational optimization problems in economics. The truth is there somewhere when you look at the whole picture. Very often your decisions are based on what is happening in your life at that moment. I have said in the past that sometimes, the most important decisions in your life are not made with your best interests at heart or even in the best interests of your children, but for the best interests of your grandchildren. It is true at the personal level, and certainly true at the global level. And if that is your outlook, then you would obviously be very concerned about issues like climate change or mass poverty.
I get reminded of the American philosopher John Rawls, who said that to live in a world of peace, to live in a world that is fair, where nature is arbitrary, we as human beings should build institutions that are fair. And that is such a difficult task. In my small ways, both as a professor when I teach my students and in my previous careers, I always keep that in mind.
MB: Of course. I was asking more about what you said of being flexible, to some extent, and having a more holistic understanding as you go through life and try to figure out your career and other choices.
I want to ask one last question about your career before I switch paths. You described by working in the trenches. I guess the impression I get is that it’s perhaps grittier than work that you did at maybe IMF headquarters or something like that, so can you describe what made it different?
IZ: I guess what made it different is that I was working in different countries in Asia and Africa where the experience is very different from working in Washington, D.C. For example, when I first arrived in Accra, Ghana, as an assignment manager, the country had graduated from an IMF-supported adjustment program called ESAF or Enhanced Structural Adjustment Facility and it was the first Sub-Saharan country to do so. And yet, two months later, there was a coup d’état in Ghana after which there was an election that resulted in an 80% wage increase across the board as well as significant increases in other government expenditures. And Ghana was seen in the international community as a success story. But on the ground, the Budget deficit went up by several percentage points. So most of my time in Ghana was spent in bringing the budget deficit under control and controlling the monetary expansion. That kind of work when you are on your own is much more difficult than when you are in Washington and there is a whole team assisting you. It was a similar experience when I worked for the State Bank of Pakistan. At that point in time, I told my family that I have this one chance to work for Pakistan and I did. I worked very hard for the two years I was there.
MB: Shifting directions, I wanted to talk more about like advice that you have for future students, especially, to two categories for students who are looking maybe to do like a Ph.D. and then, especially for students who are looking to go into public policy in a manner like how you did. What is your advice to them? For example, some general career paths skills that you think are useful, at least at the undergraduate level.
IZ: I genuinely feel that the highest form of human activity lies in intellectual pursuit. The satisfaction you get when you do original research is a very rare experience and there are very few things that can give you that kind of happiness. You also get unparalleled control over your own work and your life. You know what you want to achieve, and you are given free reins to achieve those goals. The bulk of my life was spent working in IMF, where you must put in long hours, and you often have no control over that.
I think that professors, with their research, with their teaching, especially teaching in a place like Princeton, get a tremendous amount of satisfaction. And they can impart their skills and their experience to the next generation of students.
Coming to any advice that I may have for students; I developed an interest in mathematics as an undergraduate that has served me very well in my research. I always advise my students who want to do a Ph.D. in economics, not only to take the economics courses, but they should take a lot of mathematics courses so that it becomes sort of a double major in Economics and Mathematics.
Sooner rather than later, you should decide to take important courses in the economics department but also in ORFE. It is important to learn probability theory, stochastic differential equations, and even applied mathematics and machine learning. The discipline itself has a lot of interaction between economics and other fields.
I think it’s very, very important to take all these courses and quickly start focusing on what you want to do. When you go into research, research requires a very special discipline and you need to, as we try to advise you in your junior paper, narrow down your topic (and not go off in different directions) and then go as deep as you can in your research question and follow it to its logical conclusion.
Sometimes I know that some of my students think that since I’ve been in policy-making all these years, why is it that I spend such a fair amount of time trying to teach the technical underpinnings. And so I always emphasize this point that it’s not that we really believe that those models that I’m presenting to you are literally true, but they are logically consistent and make us comprehend what we’re doing. And then we have a better chance of convincing people of the validity of our arguments than if we are making arguments in very general terms. That’s why economics as a discipline relies so heavily on mathematical modeling, and of course, then you look at the data and then let the data support your policy conclusion. That’s why my work is mostly in applied econometrics. And that is why I enjoy teaching courses like ECO 344 and ECO 322 because I am able to combine my IMF experience with the theory to teach macro econometrics which is used in the central banks (in ECO 322) or to teach about the design of adjustment programs and macroeconomic adjustment from modern monetary economics (in ECO 344).
As far as policymaking is concerned, you have to understand that organizations like the IMF or the World Bank are not looking for generalists but for specialists, and so the new people coming in are mostly PhDs from the top universities. So even if you want to go into economic policymaking, I think that getting a Ph.D. is a very good idea to make you more competitive. Even when you go to a place like the IMF, you do a lot of work in the research department, as I did. You work on the IMF World Economic Outlook, which is the flagship publication of IMF, and the Global Financial Stability Report, and the Fiscal Monitor. These reports and others like these are extremely important contributions to economics.
So my advice would be, first and foremost get a Ph.D. and then go into policymaking.
MB: You said, and I think this is something that really stuck out to me, that if you’re looking to go into policy, it’s very desirable to be a specialist than being a generalist. But at what point should you begin to specialize? At Princeton, you have a tremendous variety of courses that you can take, even within the economics department. I love everything economics, but which part of economics do I want to spend all my life working on? By when should one start to decide, about specializing? Is it something that you should think about as an undergraduate student or is it something that you should leave for grad school?
IZ: I will have to talk from a very narrow perspective here: that is, from the perspective of somebody who wants to be an econ major, then get a Ph.D. and then go into policymaking. There, the answer is yes, as an undergrad, not only when you’re a senior, but by the time you declare your major.
You need not specialize in the sense that you are an undergraduate and you start saying that I’m going to be a macroeconomist or I’m going to be a microeconomist or a health economist or something else.
Just take the core courses, do very well in them, not just core macro, micro, econometrics but other important courses that most economists should be familiar with – certainly as much as you can do in terms of econometrics and all the different methodological courses. Again, coming from my macro perspective, courses in the international monetary finance or trade theory and also public finance or labor economics. The problem is that there are so many courses that you should be taking but you really can’t. There are only 31 courses that you can take even before considering all the distribution requirements.
If you’re applying to graduate school, you must take a course in real analysis, they are going to look at the grade you got in real analysis. You must take some other courses like differential equations, probability theory, and stochastic analysis. They are very, very useful courses when you go to the Ph.D. program. So, students should not even be thinking that they want to be a policymaker. First, you must get into a good Ph.D. program, get a good Ph.D., and then think about the rest.
As an undergraduate, you must start planning – again not micromanaging – but planning and you realize that even when have you made a lot of plans, your goals may change. You might get into the Ph.D. program and your plans can change. As an undergrad, if you decide to go for a Ph.D., then you must focus on that straight away. Now you may realize that you do not want to do a Ph.D. and that’s fine too, and you go into a different sector of the economy.
MB: My last question is about a course that you teach, ECO 322, which is about econometrics for people who are interested in macroeconomic work. I can personally say that I find it extremely valuable given the work that I will probably do, and so it may very well be one of the most valuable courses I take at Princeton. So, I wanted to ask you: why is this course so useful?
IZ: I’m focused on teaching time series analysis in a way that can be used in macroeconomic analysis. It is a very specialized topic, and the course covers a lot of material. I start from the very basics like an introduction to autoregression, unit root tests, and then we move on to structural vector autoregression all the way to what is the workhorse of modern macroeconomics models that central banks and the IMF use, the Bayesian dynamic stochastic general equilibrium model. I tailor-made these courses that are sort of unique to Princeton and it takes a lot more effort on my part to teach and design these two courses, where I can bring in my experiences that can be useful either for the Junior Independent Work or the senior thesis.
I am deeply honored to have had the experience to interview Professor Zaidi. As I mentioned before, I took two of my favorite courses at Princeton with him – ECO 322 and ECO 353. The opportunity to be able to learn from a Professor who is both so experienced and passionate about teaching is truly invaluable and has had a great influence on me, both in terms of the course material and beyond, and is an experience I would recommend to anyone.
– Abhimanyu Banerjee, Social Sciences Correspondent