This course will introduce students to economic policy debates around the Euro, financial crises, debt, deficit, policies of austerity and quantitative easing, trade imbalances, inequality, prosperity and the role of the government in the economy.
Course outline, readings, activities & assignments
Sandbox discussion forum (extra credit):
1). Please write a short paragraph introducing yourself – you can include any information which you would like to share with the others on this course. Have you ever taken an economics course? Have you ever lived in an economy that is undergoing a crisis? Please share your thoughts – what impact did the crisis have on your friends and family?
2). Think of one idea or concept that you have learnt in economics courses that you think might be open to challenge (it does not need to be related to this module’s topic). Is there something that you have learnt as part of economics that you think may not work in the real world?
Module 1. Current Events and Basic Concepts
- Things you need to know about Greek crisis – vox
- The Guardian news -on EU crisis
- Bloomberg – free news channel
• The materials will be introduced by a short video lecture by Tanweer Ali, not more than 10 minutes in length. The video will be accompanied by a transcript or summary, which will be posted on moodle. The video will summarize the ideas introduced, and will tie up the various threads of this module.
Discussion questions (no HW):
- Read about current events in the Eurozone. What has been happening in Greece in the last several months?
- Why is it possible for one EU country to be in crisis and for another country to prosper? Why is this unlikely to happen with different states within the US?
- Assessment criteria: student’s familiarity with the news, detailed and clear news summaries, full answers to questions. Answers do not have to be correct, this module does not test economics knowledge.
Basic concepts of macroeconomics (this module is about knowledge of the definitions, not about policy analysis)
- Understanding debt and budget deficit – Crashcourse definitions
- GDP’s wicked spell – The chronicle of higher education
- Foreign exchange and its impact on trade – Khan Academy
- add a link about balance of payments and trade balance
- add a link with definitions of monetary and fiscal policy
- add a link on exchange rate policies and/or regimes
Discussion questions (answer any 3 questions):
- 1.What is GDP? What is GDP per capita? What is GDP growth? Compare any two countries based on GDP per capita and GDP growth using CIA Factbook.
- 2. Explain why GDP is an imperfect measure of a country’s wellbeing.
- 3. Should infinite growth be a political and economic priority for a country? What might be the negative consequences of growth?
- 4. Why do some governments run deficits and some surpluses?
- 5. If a country has high national debt, does it necessarily create a problem? Explain.
- 6. How do governments conduct fiscal policy? How can it be used to stimulate an economy?
- 7. What do we mean by monetary policy and how do governments implement it in recession?
- 8. How does currency appreciation and depreciation affect exports and imports?
Quiz A, multiple choice on basic macro concepts (some questions above can be covered in this quiz and removed) – to test the students’ knowledge of the definitions of GDP, growth, debt, deficit, fiscal and monetary policy, exchange rates.
Module 2. The Euro crisis
- What is the European debt crises? – bloomberg
- The Greek Debt Crisis Explained in 4 Minutes – Crashcourse
- Punk Economics : The European Debt Crisis animation
- The Three Sides of the Crisis -mruniversity
- The Case for Optimism
- The Case for Pessimism
- European Central Bank
- The Bailout funds
- Why are high bond yields a problem?
- Banking and fiscal union
- The Italian Crisis of 2013
- Remarks on individual countries
- Indicators for Eurozone progress
- Effects on other multilateral agreements
- Optimum currency areas
- Optimum currency areas and the Euro
- Iceland: Causes of the Crisis
- Iceland: Collapse
- The costs of leaving the Eurozone – mruniversity
- Currency union collapse in history -mruniversity
- Greece and the fate of the Euro – project syndicate
Discussion and HW questions:
- 1. How can several countries benefit from adopting a single currency?
- 2. What are the potential costs of adopting a single currency for governments and citizens?
- 3. Research and report what conditions the EU countries had to fulfill in order to qualify to enter a single currency zone.
- 4. Why do some economists think that the single currency was a bad idea?
- 5. Outline several main causes of the Euro crisis.
- 6. What are the potential costs of leaving the Euro for Greece? For other EU countries?
- 7. What might be some of the potential benefits of leaving the Euro for Greece?
Module 3. Austerity
- Life on the precipice-mruniversity
- Will austerity work?
- Recession hurts but austerity kills – the guardian
- The austerity delusion by Mark Blyth – foreign affairs
- Mark Blyth on the dangers of austerity – video
- Steve Keen on why austerity econ is naive – talk
- The body economic talk by author – video
- Ireland’s austerity social consequences – Irishexaminer
- The costs of child poverty – Child Poverty Action Group (UK)
Article by Larry Summers on repressed deficits – how spending cuts may lead to building up commitments for the future.
- 1. How do governments justify the need for austerity in times of crisis? How is this policy implemented in practice?
- 2. Use the example of any one country from “The Body Economic” talk or other readings to describe in more detail the impact of austerity on public health in one of the countries where it was implemented.
- 3. What arguments does Mark Blyth present to support his message that austerity is a dangerous nonsense?
- 4. Why does Steve Keen think that austerity economics is a naive idea? What issues deserve more attention according to prof Keen?
- 5. List ways in which the debt of a government differs from the debt of individuals / households.
- 6. In your opinion, is there an alternative to austerity? What kind of policy might that be?
- 7. Explain how reducing spending on poverty alleviation today actually increases future spending commitments.
Written assignment 500 words: Write a summary of the social costs of austerity.
Module 4. Money
- What is money? – positive money
- Misconceptions around banking – watch parts 1-6
- Where does money come from – read the book summary
- Where money really come from – business insider brief
- Why Economists Don’t Understand Money – Victoria Chick
- Economic growth and money supply – interview with Werner
- (optional)The modern money network – readings by R.Wray and others
- (optional)Traditional money and banking course – Khan academy
- (optional)Positive Money: more advanced videos – use accounting
- Passage on Gringott’s bank taken from The Philosopher’s Stone (Harry Potter series)
- articles by Martin Wolf and Ann Pettifor. The Chicago Plan.
- 25min film on money in defense of gold standard – topdocum
- Against the gold standard – St Louis fed
- 30min film on how the economy works– the role of credit
- Keen v. Krugman blog debate (2012)
- What is quantitative Easing? – video or article
- http://keynesforkids.com -Intro to Keynesian economics
- Creating Our Own Money: Introduction and examples -technology helps
- Bitcoin Has Spawned 100+ Cryptocurrencies – readwrite
- Bitcoin Is Flawed, But It Will Still Take Over the World – wired
Bitcoin problems – the atlantic
- 1. What is money? Where does it come from?
- 2. How can we best protect its value? How can we ensure there is enough to go around?
- 3. What are some of the controversial issues surrounding money creation?
- 4. Is it fair that private banks have a monopoly over the creation and supply of money? If not then who in your view should control the supply of money?
- 5. Read the passage on Gringott’s bank. How does this contrast with the workings of the real-life banking system?
- 6. Talk to two people amongst your circle of acquaintances about money. These can be friends, family or colleagues. How do they describe what money is and where it comes from? How do they react to your explanation?
- 1. Outline the role of credit in an economy.
- 2. Explain the term ‘Quantitative Easing’.
- 3. Paul Krugman and Steve Keen have expressed very different views as to whether credit is at the root of financial crises. What is the reason why they have different answers to the same question?
- 4. What do economists mean by ‘Keynesian economics’?
- 5. Explain the pros of returning to the gold standard.
- 6. Explain the pros of returning to the gold standard.
- 7. What is a bitcoin? How is this form of money created?
- 8. Explain why in your view bitcoin will (or will not) one day replace mainstream currencies.
- 9. In the years since the outbreak of the global financial crisis in 2008 central banks around the world have embarked on a series of policies aimed at increasing the monetary base, i.e. quantitative easing. Despite the dire predictions of hyperinflation, why has quantitative easing not led to high inflation in developed countries? Write a paper of approximately 500 words, fully cited.
Module 5. Financial Crises
- The animated history of the Financial crisis, five years on
- Chapter on Crises in Money an Banking book – ch 13
- The role of credit in fueling crises
- Historical material on the crash of 1929
- the Latin American crisis.
- the Asian crisis.
Discussion and HW questions:
- 1. In what ways does the crisis of 2008 resemble the crash of 1929? In what ways are these two crises different?
- 2. What is the cause of stagnating growth across the developed world?
- 3. What caused the Latin American debt crisis of the 1980s?
- 5. Written assignment, 200 words: Why do crises happen?
Module 6. Inequality
- Income inequality debate – council on foreign relations
Inclusive capitalism – economic policies in the US, NYT
Talk by Stiglitz on the price of inequality: http://www.youtube.com/watch?v=gKOJqnAET9A
Wilkinson: How economic inequality harms societies -TED, real effects on health, lifespan,etc
Inequality: the choices we made – some laws made it worse
Inequality and poverty in US – numbers
Inequality article – NYT 2015
- Branko Milanovich, Global Inequality: From Class to Location, from Proletarians to Migrants – world bank paper
Youtube with Tim Jackson (on growth)
- Blog piece on debate on marginal productivity? Or shorter articles
Discussion and HW questions:
- 1. Is it more important for countries to aim to be richer or more equal? What should be the primary aim for your country?
- 2. Is it possible to achieve prosperity for everyone without material growth?
- 3. How might inequality have contributed to the financial crisis?
- 4. Is inequality the result of lower productivity or of differences in power?
- make up more questions based on each of the resources above
Module 7. Labour market
- Touchstone blogs (from the Trades Union Congress)
- Low wages cost economy money – Berkeley
Discussion and HW questions:
- 1. Is full employment a better goal than growth?
- 2. “Look after unemployment and the budget will take care of itself”
- 3. What impact does trade union power have on employment?
- 4. How would you implement a job guarantee in your home country/state?
- 5. How do low wages cost economy money?
- 6. Can we afford prosperity? Why not full employment? Why not living wages? Why not shorter hours?
- 7. Describe several ways in which the government regulates the labor market in your country. Do you consider the level of government involvement appropriate, less or more than desirable? Explain.
- 8. What should be the role of the government in the economy? What kind of government policies can ensure prosperity?
- 9. Give an example of a policy undertaken by a government anywhere in the world, aimed at improving well-being of its citizens.
- 10. Give an example of a policy intended to improve well-being of citizens, but that did not work well.
- 11. Can you imagine a time when the economy might be driven by other factors besides material gain? What might the other factor(s) be, and what would such an economy look like?
Lectures by Steven Keen on political economy