The main objective is to provide students with insights about the recent macroeconomic and policy developments, as well as tools to formally describe them and independently evaluatethem. Therefore, discussion will be an essential part of the tutorials, and to some extent lectures as well. The research ‐ see e.g. Rose and Goll (1992) ‐ shows that students remember and understand a great deal more if they talk about an issue rather than just hear or read about it. The extent to which you learn and enjoy the class will crucially depend on your participation (you will often work in small groups). No memorizing will be required in this course; the emphasis is on deep understanding of the material, and its effective communication.
Descriptors
Last update: SCHNELLEROVA (25.02.2014)
In this short course, students will get a better understanding of the global financial crisis (GFC) of 2008 and its aftermath. We will discuss the causes of the crisis, its propagation, the macroeconomic and regulatory responses of policymakers, and the observed macroeconomic outcomes. To do so effectively the course will provide a brief refresher of the key macroeconomic relationships using a simple three equation model (of the sort that most central bankers use to think through the intuition of how the macro economy works). Students will practice solving the model and depicting graphically policy responses to various shocks. We will also discuss the main lessons from the crisis, and whether or not they have been learnt.
Literature
Last update: SCHNELLEROVA (25.02.2014)
Some References (the ones with * will be essential, the others optional - many more will be given in the lecture slides): *Bank of England (1999), ‘The Transmission Mechanism of Monetary Policy’, available at www.bankofengland.co.uk/publications/other/monetary/montrans.pdf *Carlin, W and Soskice, D. (2005), ‘The 3‐Equation New Keynesian Model - A Graphical Exposition’, Contributions to Macroeconomics, Volume 5, Issue 1 3 Friedman, M. (1968), ‘The Role of Monetary Policy’, American Economic Review 58 (1): pp1-17 Jarvis (2009), ‘The Crisis of Credit Visualized’, video available at www.crisisofcredit.com. *Kotlikoff, L. (2006), ‘Is the United States Bankrupt?’, Federal Reserve Bank of St. Louis Review, July/August, 88(4), pp 235‐49. *Libich (2012), Video‐interviews with academics and policymakers at www.youtube.com/user/JanLibich1. Most importantly interviews with: ‐ Prof Warwick McKibbin (ex‐Reserve Bank of Australia board member) on the global financial crisis (forthcoming Nov 2012); ‐ Dr Don Brash (ex‐Governor of the Reserve Bank of New Zealand) on the institutional design of monetary and fiscal policy; ‐ Prof Eric Leeper (Indiana University) on monetary‐fiscal interactions; ‐ Prof Adrian Pagan (ex‐Reserve Bank of Australia board member) on real world monetary policy. Libich, J., Stehlík P. and Savage, J. (2010), ‘Fiscal Neglect in a Monetary Union’, Economic Papers, 29(3), pp301‐309 (non‐technical) Libich, J., Nguyen, D., and Stehlík P. (2012), ‘Monetary Exit Strategy and Fiscal Spillovers’, CAMA WP 4/2011, revise/resubmit at the Journal of Money, Credit, and Banking MoPoS (2012), Monetary policy simulation game, various online version are available at www.iconomix.ch/en/resources/m04. Rose, C. and Goll, L. (1992), Accelerate Your Learning: The Action Handbook, Surrey, Unwin Bros Ltd Taylor, J. (2011), ‘An Empirical Analysis of the Revival of Fiscal Activism in the 2000s’, Journal of Economic Literature, 49(3), pp 686‐702: www.stanford.edu/~johntayl/JEL_Taylor_Final%20Pages.pdf. The Bailout Game, available at: www.thebailoutgame. The Federal Reserve of St. Louis (2012), The Financial Crisis: A Timeline of Events and Policy Actions, available at: http://timeline.stlouisfed.org/index.cfm?p=timeline.
