INTERNATIONAL POLITICAL ECONOMY
Learning outcomes of the course unit
Students will improve their abilities in macroeconomic analysis and forecasting, by deepening their understanding of macroeconomic dynamics, in connection with the current theoretical debate on the elements of global stability and instability. As concerning monetary policy, students will deepen their knowledge of modern financial systems and their recent evolution, in particular concerning the problem of the euro. The fundamental relevance of “too big to fail” and of “whatever it takes” shall be addressed, and the consequences in terms of non-conventional monetary policies (in first instance, Quantitative Easing). Students will be thereby in a position to appreciate the conceptual reach of articles published in authoritative newspapers, and then to translate them in plain common language, so as to be able to setup and improve professional debates (perhaps with explanatory goals) with non-experts of the monetary-financial sector.
The student will learn in which sense the financial crisis has not been an “accident” of History, and rather a passage of the economic development of the last three decades, after the fall of the Soviet Union, the rise of China in global markets, the technological revolution associated with internet, the mass diffusion of smartphones and the potentialities of the cloud. This new phase of world development has profoundly influenced politics, in particular in the western advanced democracies. The student will grasp the meaning of the current so-called “crisis of democracy” and its far reaching implications, from the election of Trump to the Brexit, the spreading of populisms and the critical perspectives for the European Union.
By the end of the Course the student will develop a critical attitude towards:
• The new monetary policy after the crisis of 2008, the evolution of financial markets, the working of the banking system and the relevance of shadow banking. Among other things, the student will grasp the connection between economic growth and interest rates, between public deficits and growth.
• The foundations of the european monetary system, the euro; concerns about the future of the European Union and the potential for improving the political union.
• The tight connection between the evolution of the economic system and of the political system. The crisis of democracies after the economic crisis, the decline of the middle income class, the rise of inequalities within states, errors made by policymakers (like Greece), the conditions for a resourgence of the economic system in liberal-democratic terms.
• The student will develop abilities to express autonomous judgement on facts and interpretations.
• The student will acquire communication skills, i.e. the ability to present and explain, in a simple but not superficial way, the potential macroeconomic scenarios facing us, set forth original and critical interpretations, reasonably documented and motivated (“connecting the points”), to both qualified professional and non-experts in charge of decisionmaking.
• The student will develop the ability of learning to learn.
Course contents summary
The focus of the Course is international macroeconomics, with particular emphasis on the recent phase that follows the great financial crisis of 2008 and the subsequent Great Recession. Topics are developed in the three parts of the Course.
1. Macroeconomic policies in response to the financial crisis and the subsequent Great Recession. Monetary policy and the role of the banking system in the creation of money. Quantitative Easing and its evolution. Problems with sovereign debts.
2. “Whatever it takes”. The problems of the euro, its history and evolution. Private debt. The role of “shadow banking” in the global financial system.
3. Globalization. The political consequences of the crisis of 2008. The crisis of democracy. The period 1989-2016, Trump and Brexit, the spreading of populisms. Politics, economics and social networks.
For the various parts respectively:
Dominick Salvatore: International monetary economics. John Wiley & Sons. Economic and financial news from Il Sole24ore, Financial Times, Wall Street Journal, etc. (available online) for the period february-may 2020.
2. Andrea Mantovi: materials available at Copy Service. Paul De Grauwe: The Future of Eurozone. Slides available at Copy Service. Lipschitz-Schadler: Macroeconomics for Professionals. Cambridge University Press
3. Maura Franchi, Augusto Schianchi: La democrazia del nostro scontento. Carocci editore 2017.
• Acquiring notions: front lessons with slides and/or specific recommended references.
• Acquiring the ability to apply notions: presentation and discussion of case studies currently under inquiry.
• Acquiring autonomy of judgment: by means of active participation to the discussion of the cases presented.
• Refining the ability to learn: for each issue, starting with the problem at hand, possible solutions will be analyzed, listing and discussing the factors contributing both positively and negatively to the solution.
• Acquiring technical language: contents will be presented in economic professional language, so as to foster a proper sedimentation of the required competences.
Assessment methods and criteria
As concerning the evaluation procedure, candidates will be given a pair of opportunities.
a. The first (recommended for frequenting students) is represented by the presentation of a specific refinement of an issue (pertaining to the program) with previous agreement of the Teacher. Reference to international authoritative standards and literature will be particularly appreciated. The presentation takes 30 minutes, with a maximum of 12 slides of synthesis (slides must not contain too much text or concepts). Exposition is meant to be simple and clear but not superficial, with due account of the complexity dimensions of the problem, and the related sources of uncertainty. Laude will be assigned to those students that, beyond the requirements for maximum score, will demonstrate a proper and systematic knowledge of the issue, a relevant autonomy of judgment, and very good communication ability.
b. The second (recommended for non-frequenting students) is a written exam consisting of 3 questions, one for each part of the program. Candidates are required to answer 2 questions with equal weight for the final score. The first question must pertain to the first two parts of the program (Questions A1 and A2). The second question refers to the third part of the program (Question B). The exam takes 1 hour. Questions will be general, with either theoretical or empirical focus (the “cases” discussed in the references). Laude will be assigned to those particularly brilliant students that, beyond the requirements for maximum score, will demonstrate a thorough and systematic knowledge of the issue, the ability to apply the notions learned to the problem at hand, a significant autonomy of judgment, and a particular sophistication in the elaboration of answers.
Evaluation will be based on the quality of the exposition, of the technical language employed and of the theoretical apparatus supporting the presentation. The ability to learn shall be connected with the representation of the problem; the critical attitude shall be connected with the analysis of the cases and examples under scrutiny.
Outcomes will be notified via ESSETRE.