The National Budget 2021 simulation was an object lesson in the complexities of balancing competing budgetary priorities. This year’s Bachelor in Economics students were set that task for an imaginary country in a practical and innovative learning experience.
Designed and run by Professor Jose Manuel Puente, the exercise is a perfect case of learning by doing. As part of IE University’s Liquid Learning experience, students got a taste of the impact fiscal decisions can have on an entire country’s economy. Professor Puente is an economics expert and a consultant to the World Bank. He has lectured at world-leading educational institutions including both Oxford and Cambridge Universities, Harvard, MIT and Princeton.
The professor set a complex problem before the teams: draw up a budget that balances the fictional country’s books and satisfies all the ministries’ competing needs.
Consolidating the year’s learnings
The idea of the simulation was to put into practice everything the students had learned throughout the year. Working in teams of nine, they had to bring together the policies, theories, and variables they had studied to produce a viable strategy for economic policy.
Each team member was given a briefing from a specific department of the imagined nation’s government. Using internal memoranda from different ministries and institutions, each presents their budgetary needs at a simulated cabinet meeting. All the ministries desire greater financial resources. And each of them makes their case as to why their department is too important to suffer budget cuts.
At the cabinet meeting, the nine teammates had to work together to compile a budget that satisfied a “Ministerial Council.”
Key economic emphases
The simulation centered on some of the most critical economic drivers that real economists must wrestle with. They include:
- The sheer scale of a governmental budget—its revenue and expenses.
- The impact of taxation, and expenditure on public infrastructure, environmental measures, sustainability etc.
- The wider economic impact of a budget deficit.
- The processes and negotiations which affect such decisions.
After presenting their cases and going through some tough negotiating, the teams each had to come up with a final set of decisions. They then had 10 minutes to present their budget strategy and their reasoning.
Learning by doing
Professor Puente explained why the simulation is such a valuable exercise for Bachelor in Economics students. “I think they enjoyed the simulation, and they learned a lot about economic policy,” he confirmed. “The process is learning by doing, and the center of the simulation is the student, not the professor. We’ve passed from the traditional way of strategic learning to a more innovative, participant-centered learning.”
The participants agreed that the simulation had been a valuable insight into the issues facing real-world economists. “The experience has been great,” said Adam Chahine. “It really shows the fringe cultures; how there’s a clash between different ideas, and how we can work with that instead of against it. We’re seeing cooperation between ideas. It’s honestly really helpful because it gives us a different perspective on how we think of economics.”
“We would see the effect that our decisions had on the country, on their GDP and their inflation,” said Denise Rubenstien. Her colleague Alan Calderón added that “We’re learning by doing. We’re putting everything we’ve learned in class into a physical simulation and seeing the outcomes in real-world problems.”
The National Budget 2021 simulation is part of the truly global approach to the study of the field in the Bachelor in Economics. Typical of the innovative teaching methodologies adopted by our faculty, its practical nature gives students a real feel for the depth, breadth, and impact of the decisions they may face in their later careers.
Professor Puente said the teams performed well and learned a lot from the exercise. Congratulations to them. We’re certainly looking forward to seeing how another group of economists of the future fare at the next National Budget simulation.