Economists study financial market trends so they can predict future economic circumstances. Economists are hired by governments, businesses, and journalistic organizations to track markets and make predictions based on the financial and socioeconomic data.
The analysis of this data allows them to make short- and long-term models and forecasts to help mitigate financial risk to businesses and governments. In turn, this allows these organizations to make better economic decisions.
An economist’s responsibilities include:
- Setting up methods to collect and analyze financial and socioeconomic data.
- Building predictive models based on past data collected.
- Analyzing historical economic data.
- Advising businesses and governments on economic forecasts.
- Delivering predictions in written form to journalistic publications.
- Researching the different fields of study affected by the broader scope of economics.
Economists should have skills in:
- Mathematics and statistics.
- Organization and analysis.
- Quantifying data and presenting it in easy-to-understand terms.
- Collaborating with other economists and statisticians.
- Interdisciplinary thinking.
To qualify for a position as an economist, candidates must possess at least a master’s degree in Economics or Statistics. A doctorate in these fields will serve to make an applicant more competitive in the market.
A bachelor’s degree is sufficient for entry-level roles( particularly in government) but only in assistive roles to more skilled and experienced economists. This gives candidates vital experience that will make them more competitive for both master’s and doctorate programs in addition to higher-level positions.
Salaries for Economists range between $94K to $186K, with the median being $135K.
Factors impacting the salary you receive as an Economist include:
- Degrees ( Bachelors, Masters, Ph.D.)
- Years of experience
- Reporting Structure (Seniority of the manager you report to and number of direct reports)
- Level of performance - exceeding expectations
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Economist Interview Questions
Question: Which global trends are you following that you believe will shape the world economy in the next five years?
Explanation: This is a general or opening question the interviewer will use to start the conversation, find out a little bit more about your background, and collect information they can use later in the interview.
Example: “Without a doubt, the most dominant global trend impacting the world’s economy is the COVID-19 pandemic. As we work through this, the structures of businesses and the way they conduct their operations are changing dramatically. The outcome of this is difficult to forecast, but some overall impacts will include higher unemployment, lower GDP, and tighter credit.”
Question: What economic indicators does the Federal Reserve consider when making decisions about interest rates?
Explanation: This is a technical question. While interviewing for a position as an economist, you can anticipate that the majority of questions will be technical. You need to be able to define and discuss major economic concepts, principals, and terms. The best way to prepare is to review your economic knowledge and practice answering questions similar to these.
Example: “When making decisions about interest rates, the Fed considers factors include inflation, the money supply, GDP, and other significant economic trends which impact the availability and cost of credit.”
Question: Can you explain the difference between causation and correlation?
Explanation: This technical question asks you to compare two similar terms used by economists that impact the work they do. This is the typical structure of a question you can anticipate.
Example: “Causation refers to the impact an issue has on an event or movements in the economy. Correlation, on the other hand, describes how separate but related economic events move relative to each other. An example of causation is the impact that inflation has on interest rates. An example of correlation is how interest rates and home buying activity move opposite of each other.”
Question: Can you describe the characteristics of a perfectly inelastic good?
Explanation: When a question asks you to describe something, you can identify it as a technical question. Your answer should consist of a definition of the term and an example of how it is used.
Example: “A perfectly inelastic good as an item whose demand does not change regardless of the price or availability of the item. An example of this would be water. Since everyone needs a relatively static amount of water each day for personal use, the amount you use would not vary significantly regardless of the price the water district charges.”
Question: How would you go about determining the value of a currency?
Explanation: This is an operational question. Operational questions ask you to define or describe a process you use to do your job. Operational questions are best answered directly and briefly. The interviewer will ask a follow-up question if they need additional information about this topic.
Example: “Valuing a currency is dependent on many different factors. These include the strengths of the country’s economy, inflation, the impact of foreign exchange, and the demand for the currency. When valuing a country’s currency, I would take all of these into consideration and come up with a value that reflects these criteria and will allow individuals and organizations using that currency to transact business in a relatively normal manner.”
Question: Can you explain what quantitative easing is?
Explanation: Yet another technical question. When answering technical questions, you can anticipate a follow-up from the interviewer to explore the topic further. Keeping your answers brief and to the point will provide the interviewer the opportunity to ask their follow-up question.
Example: “Quantitative easing is introducing new money into the money supply of a county, usually by the country’s central bank. The purpose of quantitative easing is to keep interest rates stable while providing the funds organizations need to conduct business.”
Question: If the U.S. were to default on its debt, what will happen in the major financial markets (stocks, bonds, commodities, etc.?)
Explanation: This technical question asks you to project what would happen if the situation described were to occur. As an economist, this is a basic principle you should be familiar with and be able to discuss.
Example: “if the U.S. were to default on its debt, the major stock markets would likely fall dramatically. The exception to this would be commodities. People would shift their money into more stable investments, including gold and silver, as well as oil and other commodities whose demand would either be stable or would increase.”
Question: What is the significance of the Yield Curve?
Explanation: This technical question asks you to discuss a particular concept and talk about how it affects the economy. As a reminder, make sure you first define the term and then discuss the impact it may have. If it helps, you can provide an example.
Example: “The yield curve is a line that shows the interest rates of bonds having equal ratings but differing maturity dates. The slope of the yield curve gives a forecast of future interest rate changes and economic activity. Typically, short term rates are higher than long-term rates for bonds. When this reverses, it is known as an inverted yield curve and points to a slowdown in economic activity.”
Question: Can you describe the current macroeconomic situation between China and the USA?
Explanation: By asking this question, the interviewer is requesting you to perform an analysis and provide an opinion on a particular topic. The purpose of this is to make sure that you have knowledge of current economic conditions and can use this knowledge to form policy or provide advice to the organization.
Example: “The current state of the macroeconomic situation between China and the USA can best be described as ‘coopetition.” Both nations depend on each other to sell their products, goods, and services. However, they also compete in the international marketplace, both domestically and in third party countries. The leaders of the U.S. and China have been engaging in a trade war using tariffs to make each other’s goods more expensive. History has taught us that tariffs are typically ineffective and disrupt normal economic functionality between entities.”
Question: How Is Value at Risk (VaR) calculated?
Explanation: While this appears to be a technical question, it is operational. The interviewer is asking you to describe the process you use to calculate this indicator. When answering operational questions, you can methodically walk the interviewer through the process using short but clear steps.
Example: “To calculate the value at risk for an investment or portfolio, you first calculate the periodic returns of the equities. You then create a covariance matrix based on these returns. The next step is to calculate the mean and standard deviation for the investments. The final step is to introduce a confidence level to the equation. You can then estimate the value at risk by subtracting the initial investment from the result you obtained in the last step.”
Additional Economist Interview Questions
Do you have experience using computer models to interpret statistical data?
Are you able to reinterpret data when forecasts are proven incorrect?
What economic trends have you noticed that could be considered red flags?
How closely do you follow politics as it pertains to economic events?
What methods do you use to track specific economic trends?
Have you been published in any economic journals? If so, what was the nature of the publication and the content you provided?
Have you ever led a team of colleagues with a specific forecasting goal in mind? Describe the experience.
Describe the last economic forecast you attempted and the statistical model you created for it. Were your predictions correct?
How adept are you at public speaking and presenting your analysis?
What fields of study outside of economics do you have experience in? How have they helped your work in economics?
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