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2013/2014  KAN-CM_E104  The Recent Financial Crisis and Its Predecessors: Crisis, contagion, political and corporate response

English Title
The Recent Financial Crisis and Its Predecessors: Crisis, contagion, political and corporate response

Course information
Language English
Exam ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Semester
Course period Autumn
Changes in course schedule may occur
Thursday 09.50-11.30, week 36-48
Tuesday 09.50-11.30, week 36, 49
Thursday 09.50-12.25, week 49
Time Table Please see course schedule at e-Campus
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Alfred Reckendrees - MPP
Administrative contact - Karina Ravn Nielsen - electives.lpf@cbs.dk or direct phone: 38153782
Main academic disciplines
  • Globalization, International Business, markets and studies
  • International Political Economy
  • Economics, macro economics and managerial economics
Last updated on 04-04-2013
Learning objectives
In order to achieve the grade 12 (7 point scale)
the student should be able
  • to develop a relevant research question and to identify useful theory, literature, and data that allows for answering the research question.
  • to critically present and discuss the chosen theoretical perspective.
  • to present comprehensive empirical evidence in regard with the chosen issue.
  • to put empirical evidence into theoretical perspective.
  • to identify and discuss competing explanantions.
  • to write an argumentative paper with a clear and useful structure that meets the formal standards of academic writing.
Course prerequisites
The course requires a basic knowledge of macro- and micro-economic theory.
Examination
The Recent Financial Crisis and Its Predecessors: Crisis, contagion, political and corporate response:
Examination form Home assignment - written product
Individual or group exam Group exam, max. 3 students in the group
The project/home assignment must be related to the broad theme of the course (eco-nomic and financial crises, corporate response to crises, policy response to crises, studies on industrial branches or companies, social impacts of crises ...) - the topic has to be approved by the course teacher with the end of the lecture period.
Size of written product Max. 15 pages
max. 15 standard pages for individual papers
max 25 standard pages for group papers.
Assignment type Written assignment
Duration Written product to be submitted on specified date and time.
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period December/January, The topic has to be approved by the course teacher by the end of the teaching period (early December 2013).
Make-up exam/re-exam
Same examination form as the ordinary exam
Course content and structure
The world economic crisis that began in 2007 was the worst economic crisis since the 1930s. It has prompted enormous economic stimulus packages and a new discussion about financial regulation. The aftermath of this crisis restricts the future financial means for most countries resulting in serious economic, social, and political challenges. A group of European states has entered a period of prolonged fiscal and structural problems and for the first time, the Euro-zone faced severe problems. - What were the reasons for this crisis, how might it be explained? How was it possible and why is it so difficult to learn from past experience?
Financial and economic crisis are not singular events. This course compares the recent world economic crisis with the Great Depression (1929-33) and its aftermath, and also with the Asian-crisis (1997) and the so-called dot.com bubble (1999-2000) that did not similarly effect the world economy. These crises offer empirical evidence for a general analysis of financial and economic crises. The course focuses on a comparative analysis of crises and on the analysis of political and corporate responses to crises on the national and international level.
Based on (1) the analysis of the long-term development of the ‘international monetary system’ and the ‘financial globalization’, (2) on the discussion of theoretical explanations of financial crisis, and (3) on a comparative historical analysis of past crises and corporate responses to crises, the students analyze the course and the causes of the recent world economic crisis and strategies of governments, international institutions, and companies to cope with it.
The aims of this course are to:
  • enhance the students’ understanding of economic crises as well as theoretical reflections on crises,
  • expand the students’ knowledge and understanding of international institutions (financial, political, etc.),
  • enhance the students’ ability to analyze complex economic processes,
  • point out the possible gains of historical comparison and warn against (hopefully) wrong historical parallels.
The course will improve the students’ capability to analyze critical industrial and economic development, which is necessary for the design of corporate or political institutions’ strategies towards crises; it will, however, not train technical tools.
Teaching methods
The course will be taught in 15 weeks (2hours each). Due to the overall objective, the course is based on lectures, classroom discussions, and group discussions. Efficient learn-ing is only possible if students are prepared when they come to classes; each lecture re-quires appr. 4h reading. The course is also open for students’ presentations.
Preparatory reading of approx. 700pp. is required.
Student workload
Lectures 15x2h 30 hours
Lecture preparation 15x4h 60 hours
Exam Project 120 hours
databases 10 hours
div. 5 hours
Expected literature

The course requires intensive reading in order to prepare the classes (appr. 40-50 pp. for each class) and perhaps additional reading beyond the syllabus (if the chosen project requires).

A compendium and a compulsory syllabus with up-to-date papers and articles will be constructed until 15 August 2013 (the recent crisis is a field of ongoing research).


The following books should be bought
James, Harold (2009), The Creation and Destruction of Value. The Globalization Cycle, Cambridge, Mass. et. al.: Harvard UP.
Krugmann, Paul (2008), The Return of Depression Economics and the Crisis of 2008, London: Norton & Co.
Rajan, Raghuram G. (2010), Fault Lines. How Hidden Fractures still Threaten the World Economy, Princeton: Princeton UP.

Tentative articles and book chapters
Acemoglu, Daron (2009): "The crisis of 2008: Lessons for and from economics", in: Critical Review 21, no. 2-3, 185-194.
Acharya, Viral V. / Richardson, Matthew (2009): ”Causes of the Financial Crisis”, in: Critical Review vol. 21, p. 195‐210.
Alogoskoufis, George (2012): "Greece’s Sovereign Debt Crisis: Retrospect and Prospect", GreeSE Paper No.54, Hellenic Observatory Papers on Greece and Southeast Europe, JANUARY 2012
Beck, Thorsten et al. (2010): Bailing out the Banks: Reconciling Stability and Competition. An analysis of state‐supported schemes for financial institutions, Centre for Economic Policy Research (CEPR), London.
Brunnermeier, Markus (2009): “Deciphering the Liquidity and Credit Crunch 2007–2008”, in: Journal of Economic Perspectives, vol. 23, no. 1, pp. 77-100.
Cecchetti, Stephen G. (2009), "Crisis and Response: The Federal Reserve in the Early Stages of the Financial Crisis", in: Journal of Economic Perspectives 23, no. 1, 51‐75.
Coval, Joshua/Jakub, Jurek, et al. (2009), "The Economics of Structured Finance", in: Journal of Economic Perspectives 23, no. 1, 3‐25.
Dore, Ronald (2008): “Financialization of the global economy”, in: Industrial and Corporate Change, vol. 17, no. 6, pp. 1097–1112.
Eichengreen, Barry (2009): “The Crisis and the Euro” International Economy and Trade Working Paper 23/2009 Elcano Royal Institute Madrid – Spain.
Eichengreen, Barry/Temin, Peter (2000): “The Gold Standard and the Great Depression”, in: Contemporary European History vol. 9, no. 2, pp. 183-207.
Hellwig, Martin (2008), "Systemic Risk in the Financial Sector: An Analysis of the Subprime-Mortgage Crisis", Reprints of the Max Planck Institute for Research on Collective Goods, no. 43.
Keynes, John M. (1937): The General Theory of Employment. In: The Quarterly Journal of Economics, Vol. 51, No. 2, pp. 209-223.
Krishnamurthy, Arvind (2010): “How Debt Markets Have Malfunctioned in the Crisis”, in: Journal of Economic Perspectives vol. 24, no. 1, pp. 3‐28
Lane, Philip R. (2012): "The European Sovereign Debt Crisis", in: Journal of Economic Perspectives 26, no. 3, 49-68.
Minsky, Hyman P. (1980): “Money, Financial Markets, and the Coherence of a Market Economy.” In: Journal of Post Keynesian Economics, Vol. 3, No. 1.
Minsky, Hyman P. (1995): “Financial factors in the economics of capitalism.” In: Journal of Financial Services Research, Vol. 9, No. 3-4, 197-208.
Mises, Ludwig von (1931): “The Causes of the Economic Crisis”, printed in: Ludwig von Mises - The causes of the economic crisis and other essays before, Auburn: Ludwig von Mises Institute, 155-181.
Mishkin, Frederic S. (2005), "Is Financial Globalization Beneficial?", in: Journal of Money, Credit and Banking, vol 39, no. 2‐3, 259‐294.
Nielsson, Ulf/Torfason, Bjarni K. (2012): “Iceland's economic eruption and meltdown”, in: Scandinavian Economic History Review 60, no. 1, 3-30
Panetta, Fabio et al. (2009): An assessment of financial sector rescue programmes, (Bank of International Settlements, Monetary and Economic Department), BIS Papers No 48, July 2009.
Reinhart, Carmen M. / Rogoff, Kenneth S. (2009): “The Aftermath of Financial Crises” & “The International Dimension of the Subprime Crisis”. Chapters 14 & 15 of: This Time is Different. Eight Centuries of Financial Folly, Princeton: Princeton University Press, 223-247.
Shadab, Houman B. (2010), “Guilty by Association? Regulating Credit Default Swaps”, in: Entrepreneurial Business Law Journal vol 4, no. 2, 407‐466.
Shin, Hyun Song (2009): “Reflections on Northern Rock The Bank Run that Heralded the Global Financial Crisis”, in: Journal of Economic Perspectives vol. 23, no. 1, 101-119.
Schumpeter, Joseph A. (1942): Capitalism, Socialism and Democracy. Chapter VII: The Process of Creative Destruction, London 1942, pp. 81-86.
Smart, Carolyne / Vertinsky, Ilan (1984), “Strategy and the Environment: A Study of Corporate Responses to Crisis”, in: Strategic Management Journal, vol. 5, 199-213.
Stiglitz, Joseph E. (1999): "Lessons from East Asia", in: Journal of Policy Modeling, vol. 21, no. 3, 311‐330.
Stiglitz, Joseph E. (2009): “The Anatonomy of a Murder: Who killed America’s Economy”, in: Critical Review vol. 21, pp. 329-39.
Straumann, Tobias (2010): “The UBS Crisis in Historical Perspective. Expert Opinion prepared for delivery to UBS AG 28 September 2010”.
Stulz, René M. (2010): “Credit Default Swaps and the Credit Crisis”, in: Journal of Economic Perspectives vol. 24, no. 1, pp. 73‐92.
Temin, Peter (1989): “The spoils of war: The cause of the Great Depression” & “The Midas touch. The spread of the Great Depression”, in: P. Temin: Lessons from the Great Depression, pp. 1-40, 41-87.
White, Lawrence H. (2008): “How Did We Get into This Financial Mess?”, Cato-Institute. Briefing papers no. 110.
 
Last updated on 04-04-2013