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.
Students will learn the main analytical tools of analysis, being able to catch its dynamics, and its relation with a theretical frame. They will learn institutions dynamics, public actions, in terms of trade-off between politics and markets, understanding the major elements of its stability or instability.
Students will learn major issues related to the economic policy in a intertemporal framework. They will acquire competence of the financial system, financial investments and related risks. Then students will grasp the recent develompments of financial markets, the determination fo interest rates, connection with the real economy and central banks monetary policy.
In the third part, students will enforce their competence in fiscal themes, with a professional approach.
At the end of the course, the student will have acquired:
competence of understanding
• The dynamics of modern democracy, searching for an equilibruim between constitutional principles and the search for the consensus. Specific cases analysis will allow for un understanding of the practical issues in integrating the central state and local authorities.
• Basic tools for evaluating the effects of the monetary policy after the financial crisis, the working of the banking system and the role of the shadow banking
• The actual process of the actors of the tax operations. This part is recommended for students interested in their professional activity
(for the exam, students are reminded that they must choose 2 out of the 3 parts of the course)
Autonomy of evaluation
• Competence in evaluating of the results of the public intervention of the state in the economy, for the social activity, monetary policy, taxation.
• Being able the present and comment in critical terms the results of public actions, monetary issues, taxes. Understanding the related implications and possible scenarios, both to experts and a less qualified audience.
Capability to learn
• Being able to explain complex issues in a coincise manner (but not superficial), using mathematical formulas and graphics.
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. The recent regulation of the european banking 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; the introduction of Libra as Facebook money.
The course is focused on pubblic economics, and it is divided in 3 parts.
1. Public finance. Market failures and collective choices. The crisis of democracy, between populism and inequalities. Examination of specific cases, as those of Comacchio Hospital, and the supply of social services in three different Italian cities.
2. Monetary policy after the 2007-8 crisis. The central role of the banking system in creating money. The role of shadow banking in financial markets. The new financial tools. The quantitative easing, and its evolution.
3. Taxation, a pragmatic-operational approach, for a professional competence.
For the various parts respectively:
1. Roberto Cellini: Politica economica 3/ED, 2019. Part IV – Le politiche macroeconomiche. Capp. Dal n. 16 al n. 27. Lorenzo Forni, “Nessun pasto è gratis.” Il Mulino, 2019. 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.
3. Maura Franchi, Augusto Schianchi: La democrazia del nostro scontento. Carocci editore 2017.
f. Rosen, Gayer: Scienze delle finanze. Parti I, II, III. McGrawHill 2018
g. Franchi, Schianchi: La democrazia del nostro scontento. Dal 1989 al 2016: Il mondo tra attese e delusioni. Carocci editore, 2017.
h. Federico Toth: Il costo del consenso: le decisioni pubbliche tra politica e mercato. Il Mulino 2006.
• A. Andrea Terzi: Economia monetaria, Appunti. EDUCatt 2012
• Andrea Mantovi: Slides. Xero copies available.
• Francesco Saraceno: La scienza inutile. Luiss 2018
• Suggested reading: A. Tooze, Lo schianto, 2008-18. Mondadori 2018
i. Rosen, Gayer (cit.): Scienze delle finanze. Parti IV, V, VI.
j. Gianluca Timpone: Dammi tregua. Imprimatur 2018.
• 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.
• Knowledge and understanding: lectures
• Applying knowledge and understanding: exampes applied to real economic problems
• Making judgements: students will be encouraged to identify strenghts and weaknesses of the main economic theories and their usefulness in real world applications
• Learning the skills: each topic will be addressed first, explaining the problem to be solved, and then critically analyzing the adopted solutions
• Communication skills: the instructor will illustrate the meaning of the most common terms used by the economic community
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.
The exam will be done by 6 questions. 2 for each part of the course.
The student will have to choose by his own decision 3 question out of 2 parts of the program. Each answer deserves a maximum of 9 points. 10 points will be considered for special cases. Each answer must be completed within the limit of 400 words. A slide bullet-format is recommended
Questions may regards both theoretical aspects and actual cases.
Evaluation for the general knowledge and the technical language will refer to the theoretical side of the questions. Evaluation of the application and learning capabilities will be based on explanations and comments of real cases.
For any intermediate exam, students will be informed.