'A crisis situation can land macroeconomists a big break'

A 2017 graduate of Master’s Programme Financial Economics, Nurdaulet Abilov has stepped up to the position of Kazakhstan’s lead quantitative macroeconomic analyst and is in charge of Nazarbayev University’s Economic Modelling Development Center. In this interview, Nurdaulet reveals why Southern Europe makes a perfect place for studying econometrics, how one can develop a passion for economics by lending money to family, and what anti-crisis strategies are being currently developed by Nazarbayev University.

• How did you develop your interest in economics and why did you choose ICEF as your provider of advanced training in mathematics?

I grew up in a family of mathematicians, so I’ve had a great passion for Math. But, after the collapse of the Soviet Union, my parents grew skeptical about mathematics as a career path and they did their best to persuade me to become an economist. When I was a fifth grader mum issued me with a ‘start-up capital’ of several thousands of tenge (Note: Tenge is the national currency of Kazakhstan), which had led me to loan money to my sisters and father at 50% per annum. I wasn’t an ethical bank, as you can imagine. For my parents, who were both teachers, this was a way to nurture in me the understanding of how figures can convert into something tangible. I learned that Economics could be interesting and I made up my mind to take it up. Moreover, math hasn’t disappeared from my life, not in the slightest. While Economics per se constitutes some 20% of my time, the remaining 80% are mathematics.

The bachelor’s programme that I enrolled in at Kazakh-British Technical University was a double degree one, the kind of programme that ICEF delivers jointly with the University of London. This format of education is at a totally different level. It’s international and highly intensive. I knew how it worked and I thought I could do well in ICEF Master’s Programme. The first time I heard about ICEF was at HSE Summer School where I met students Ruslan Yakubov and Vasily Bogdan. They were bright. Me and my fellow students from Kazakhstan could easily tell that. I remember that Ruslan opted for Alternative Investments course and how he sailed effortlessly through whatever task there was in that course.

He impressed me. What solid training he must have received in his first year of master’s studies! What better reason could there be for enrolling in ICEF? Later, as I was reading about the programme, I learned that ICEF had highly qualified and experienced faculty staff as well as many promising students, a perfect environment for making a great leap forward. We had a privilege of being lectured by Alexey Belyanin and Emiliano Catonini. My acquaintance with them had made me absolutely certain that I was on the right track.

• How would you describe the math skills level this master’s programme has equipped you with?

The programme does provide a solid instruction in math. Still, a lot depends on where you see yourself after the programme – trading, business, consulting or PhD studies. Based on that, you are free to choose, in your second year, the amount of math classes you think you would need for your future job. That the programme has an in-depth course in mathematics is, I think, what sets a pace for everyone who takes it. Actually, I don’t think that hands-on training is more beneficial career-wise than academic training as the latter seems to be the product of the former: once you are there doing your job and equipped with high-class tools, you will know for sure how to apply your knowledge in the best way possible.

What I noticed doing both applied and theoretical research is that with practice there’s always the need to have things simplified. This leads to multiple errors and reductions. 

I came to realize that a good master’s programme is the one that delivers courses in a most profound manner, with utmost scrutiny

It’s essential that the bar is set high for students’ development and performance as early as the so-called ‘uploading of standards’ stage.

• What was it like to be an international student and did it have any effect on your learning process?

Frankly, I never felt being regarded as an international student. I’m a fluent speaker of Russian and had been lectured by English-speaking professors before, so I’ve always felt at ease with everything. The way students are being treated by the faculty came as a pleasant surprise. In Kazakhstan you stand every chance of being made to feel miserable by university officials. 

At ICEF the staff are very supportive. They are literally giving you individual guidance. To give one example, I had a very stressful time when I had to leave for Kazakhstan shortly before the diploma award ceremony. I received a great support from Sabina K. Babayeva who stayed in touch with me all that time and helped me out with documents. In all other respects – communication with fellow students and university staff at large – there had never been any difficulties. ICEF offers a very democratic environment, with possibilities to make contacts with global academic community, which is especially useful for those who intend to pursue a PhD degree and in terms of global networking as such. 

• What did you plan to do professionally after graduation?

There was one goal I intended to pursue through ICEF – doctoral studies. I have always been interested in research work and I saw ICEF as a stepping stone to a good PhD programme. The name of ICEF is well known to the global academic community.

When your portfolio reads ‘ICEF’ you feel more secure about your chances of being ranked higher

Besides, the effort-consuming nature of the master’s programme is what helps students prepare for careers in research better than anything else.

In the second year of studies my focus shifted slightly. In addition to the advanced courses in Macro- and Microeconomics and Econometrics, which interested me the most at that time, there were Derivatives and Applied Finance that I got unexpectedly overwhelmed with. And I started thinking about going into something more applied, about becoming a trade expert or securities analyst. I even applied for these jobs but, alas, I had no previous experience which was a must. Derivative trading is a serious business and involves huge money, responsibility, utmost concentration and meticulous calculations. It didn’t work out for me then. 

When faced with doubt, I returned to Kazakhstan. My return coincided with setting-up by Nazarbayev University of a small task force for macroeconomic research. I was glad to join the work, especially given that macroeconomics was one of my main interests.

• Can you remember when your affinity for macroeconomic had started taking shape? How did the master’s programme help you grope your way in the field of economics?

Among the reasons why I chose to enroll in ICEF master’s programme was its advanced courses in Macroeconomics and Econometrics – the courses that count most when applying for a doctoral programme. I developed a strong interest in that part of Macroeconomics that deals with business cycles. We, students, were introduced to New-Keynesian DSGE models as early as term two and were learning forecasting techniques and econometric analysis tools. Those tools comprised the focus of my further research.

Looking back over my studies, I can say that a special place in my research work belongs to econometrics, which macroeconomists often resort to for data analysis purposes. I learned how to use Eviews software in time series analysis. My Eviews skills played a crucial role in winning the place on Nazarbayev University’s research team, and the first model we have built at our Economic Modelling Development Center was Eviews-based. Interestingly, there are many master’s graduates in Kazakhstan who major in Economic Policy or Economics. Very few, however, have software skills required for data analyst, which came as a big surprise to me, a financial economics graduate. I was so much cooler than the rest. 

• Why do you think macroeconomic topics don’t rank among the most commonly explored research topics in Kazakhstan?

For one thing, macroeconomic research requires superb math skills. Without them one couldn’t be able to build models or conduct proper research. As a rule, many of our bachelor graduates choose to continue their studies abroad, where they spend one year learning things that are more hands-on. One year is too short a time to be physically able to learn much.

In my case, the knowledge I received during my bachelor studies had fit in well with the high standards of ICEF master’s programme, as well as the superb math skills that it offered. I was lucky to be able to outcompete many on Kazakhstan’s research job market. The core reason for the lack of quality macroeconomic research therefore lies in the shortage of qualified experts. As a result, the economy of Kazakhstan remains investigated only poorly. Our Economic Modelling Development Center currently stands as the country’s only lab that explores the national economy by employing, among other things, Eviews- and Matlab-supported macroeconomic models. 

• Can you tell more about the Center? What is its purpose and agenda and how does it stand apart?

The Economic Modelling Development Center was established under Nazarbayev University in 2017. This university is publicly funded and the largest in the country. It is tasked with fostering research by setting up research facilities that are being contributed by most renowned academics from abroad. Originally, the Center was designed to engage in macroeconomics and finance and it started out with two employees only, one being myself. I should say we’ve made a huge progress by cooperating with major research institutes, one being the Institute for Advanced Studies (IHS). The Center currently has a size of 7 employees, of whom two are PhD degree holders. We have come up with quite a number of models and research initiatives in quite a number of sub-fields. 

Our primary focus is on the economy of Kazakhstan, of course. At the same time, a major role in Kazakhstan’s economy belongs to Russia. If we look at KZT-RUB exchange rate, it's easy to notice that these two currencies tend to almost never deviate from 4.5 to 6 range. In establishing this exchange rate, our Central Bank is guided by the dynamics of the rouble. Knowing this, we attempted to approach modelling from a different perspective, shifting the focus of our analysis towards the Russian economy as a way to gain a deeper insight into the economy of Kazakhstan. Our hypothesis proved correct when we built our first model for Kazakhstan: the simulation didn’t look good at all. In the following year, however, we developed and combined two models – one for Kazakhstan and the other for Russia, and that simulation looked a way better than the previous one, which confirms the existence of a close relationship between the economies of our countries – a fact we now take into account when building models for EAEU, among others. 

Over the three years of its existence, the Center has grown to become the only facility in Kazakhstan that furnishes forecasts for Kazakhstan and Russia to Bloomberg.

• How big an impact do you think the current quarantine will have on the economy? What are the forecasts?

The COVID pandemic had given us incredibly large amounts of extra work. Panic seized all layers of society. If it affected general population, imagine the aftermath for businesses.

The turbulent time of the crisis is navigated by academics, not politicians

We forecast a loss of at least 1 percent of the GDP of Russia by the end of 2020. According to the basic scenario, the GDP growth rate was expected to achieve 2.2% earlier this year. The pandemic’s economic aftermath will be colossal. We are being approached by all sorts of customers who would like to receive the possible scenarios from us within the shortest term possible as they sustain losses. They need to have the answers to their questions right now in order to be able to decide upon remedial measures early enough.

There is an obvious reason for our being under time-pressure. Governments normally seek analytics from the Big Four, but the situation we find ourselves in is so untypical that the only tool all forecasting and analyses can rely on is model building, something that consulting is a total stranger to. These days, when I work until midnight, I think of this crisis situation as what can land macroeconomists a big break. 

• Are you planning to do a PhD?

I am about to apply this year. I already did some eighteen months ago, but back then I decided it would better if I did some research first, had more articles published and more practice gained in academic work, so as to increase my chances of getting enrolled in a good programme. I am concurrently doing a degree in mathematics (Note: Graduate diploma in Mathematics) at the University of London and I am busy preparing for the exams. All this is bound to increase by chance of receiving a place on a doctoral programme. Let me explain why I need another degree and why mathematics. 

Key advantages of MSc Programme in Financial Economics:

The London School of Economics (LSE) Certificate and joint degree at LUISS (Italy)

The language of instruction is English. Our board of examiners for the core courses includes independent experts. The certificate, duly signed by LSE director, is an endorsement of internationally-recognized quality and consistency with standards of the UK Quality Assurance Agency for Higher Education. Since 2017, all students are invited to pursue the joint Master’s Degree in Economics and Finance at the Guido Carli Free International University for Social Studies (LUISS).

All teaching staff members are PhD holders

Among our faculty staff are visiting professors from abroad (Stanford, Oxford, LSE) and Russia-based practicing experts (Sberbank, Gazprombank, KPMG, Deloitte, BCS, to name a few). It is a requirement that each lecturer receives positive endorsement from ICEF International Academic Council.

Alumni Club and Career Services

Launched in 2007, the MSc programme has so far been completed by 200+ participants who are now solid professionals providing ICEF Career Services with job vacancies at their employers. Even though this master’s programme may not be a perfect fit for those intending to combine studies with work, it offers ample professional experience opportunities through internships, some of which can be salaried. Also, you are invited to gain contact with the industry via our employer-hosted electives (McKinsey, Deloitte, among others) and regular meet-the-alumni sessions.

One major drawback that is shared by all Economics programmes globally is that some of the areas of mathematics that they cover are listed nowhere on the transcript. ICEF is no exception: it has a very solid course in math that spans mathematical analysis, dynamic optimization, stochastic analysis and statistics, none of which figures on the transcript as a separate item. Instead, they are combined under one name, ‘Mathematics for Economists’, providing no details to doctoral programme administrators. It grieves me that I cannot use my ICEF diploma as a competitive advantage, as was the case when I was seeking job. A bureaucratic flaw, this, however, in no way lessens the superb quality of training.

So I arrived at this idea of earning a transcript that would list these courses and I enrolled in UoL’s programme. Once I have the transcript I will be able to apply PhD programmes with greater confidence.

• How do you choose among suitable universities?

It’s very simple. I look at QS rankings, the top 50 universities. I engage in research and I seek growth opportunities as a researcher that seem to be available only from high ranking universities. Even though research work can be pursued by non-PhD holders, the absence of a PhD degree largely limits a researcher’s influence in the academic circles. 

I visited Barcelona last year – yes, travel was once a reality – namely, Barcelona Graduate School of Economics. This school boasts a solid training in macroeconomics and an impressive scope of opportunities. I can safely say that Southern Europe – Italy and Spain – have the most attractive reputation as providers of training in this field. It is modelling that the local programmes mostly focus on, exactly my research focus. 

It is a common knowledge that all influential macroeconomists are based in the United States. But, this is no longer true as a much stronger influence now exists in Bocconi University, Pompeu Fabra University and other schools in Southern Europe. I will be choosing between Pompeu Fabra and Barcelona Graduate School of Economics. I have met quite many professors there. Moreover, my research interests match perfectly the research endeavours that are being pursued at South European schools. If I should be rejected, I will try the USA. I think I will know by autumn after I have read the details of the programmes. In the meantime, I am waiting impatiently for the borders to open.