• develop a relevant research question and to identify useful theory, literature, and data that allows for answering the research question,
• critically present and discuss the chosen theoretical perspective,
• present comprehensive empirical evidence in regard with the chosen issue,
• put empirical evidence into theoretical perspective,
• identify and discuss competing explanations, and
• write an argumentative paper with a clear and useful structure that meets the formal standards of academic writing.

The financial crisis starting in 2007 turned out to be the worst economic crisis since the 1930s. It prompted enormous economic stimulus packages and a new discussion about financial regulation that seem to have quickly disappeared. The aftermath of this crisis still poses serious economic, social, and political challenges. Many European states are facing prolonged fiscal and structural problems and, for the first time, the EURO-zone is dramatically challenged. It is argued that the financial crisis transformed into a crisis of the EURO and of the European Union. But: What were the reasons for the financial crisis, how can it be explained? How could “it” happen again and why is it so difficult to learn from past experience? What are the challenges for the political economy of Europe today?

The course will focus on two themes and how they impact on companies, politics, and society: (1.) financial crises and (2.) the political economy of Europe today. The students will analyse the course and the causes of the latest financial crisis and discuss possible prospects of the European Union and the EURO-zone. The focus is on strategies of governments and international institutions, and on how companies might cope with these problems. The discussion will be based on theoretical explanations of financial crises, on comparative historical analyses of past crises and the long-term development of the international monetary system and financial globalization.

(1.) Financial and economic crisis are not singular events. The recent financial crisis will be compared with the Great Depression (1929-33) and its aftermath, and with other crisis events, because policy makers claim to have learned from the Great Depression and because interpretations of the Great Depression have been used to design anti-crisis policies. A comparative analysis of crises and of political and corporate responses to crises on the national and international level allows for generalizations and provides a background for the discussion and evaluation of theoretical explanations of crises.

(2.) Many argue that the economic problems of Europe today have their origins in the financial crisis of 2007. There are good reasons for this view, but it might be an incomplete interpretation. Independent from the financial crisis, the political economy of Europe might have created problems that multiplied with the financial system collapsing. Therefore, changes in the world economy and in dominant ideologies since the 1970s (liberalization, financialization, and globalization) are briefly discussed, and the present structure of the European Union. Concepts from economics and from political economy help understanding the present situation.

The course will improve the students’ capability to critically analyse economic development, which is necessary for designing corporate or political institutions’ strategies towards crises; it will, however, not train econometric techniques. The aims of the course are:

• to help the students understand financial crises and theoretical explanations of crises,
• to reflect the rationales of political and corporate response to crises,
• to expand the students’ knowledge and understanding of international financial and political institutions,
• to enhance the students’ ability to analyse complex economic processes, and
• to “use” history to better understand the present and to warn against wrong historical parallels.

Tentative literature. Some texts may be exchanged for more recent publications

Books (select chapters accessible in a reader)

Amati, Anat / Hellwig, Martin (2014), The Bankers’s New Clothes: What’s Wrong with Banking and What to Do about It, Princeton: Princeton UP ISBN 978-0691162386

Eichengreen, Barry (2015), The Hall of Mirrors. The Great Depression, the Great Recession, and the Uses – and Misuses – of History, Oxford: Oxford University Press ISBN 978-0199392001 (hardback)

Eichengreen, Barry (2008), Globalizing Capital: A History of the International Monetary System, 2nd edition, Princeton: Princeton UP ISBN 978-0691139371

Gorton, Gary B. (2012): Misunderstanding Financial Crises: Why Don’t We See Them Coming, Oxford: Oxford University Press ISBN 978-0199922901

Rajan, Raghuram G. (2011), Fault Lines. How Hidden Fractures still Threaten the World Economy, Princeton: Princeton UP ISBN 978-0691152639

Reinhart, Carmen M. / Rogoff, Kenneth S. (2011), This Time is Different. Eight Centuries of Financial Folly, Princeton: Princeton UP ISBN 978-0691152646

Screpanti, Ernesto (2014), Global Imperialism and the Great Crisis. The Uncertain Future of Capitalism, New York: Monthly Review Press ISBN 978-1583674475

Streeck, Wolfgang (2014), Buying Time: The Delayed Crisis of Democratic Capitalism, London: Verso, ISBN 978-1781685488

Wolf, Martin (2015), The Shifts and the Shocks: What We've Learned—and Have Still to Learn—from the Financial Crisis, New York: Penguin ISBN 978-0143127635.

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. (download from CBS Library)

Acharya, Viral V. / Richardson, Matthew (2009): ”Causes of the Financial Crisis”, in: Critical Review 21, 195‐210. (download from CBS Library)

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. http://eprints.lse.ac.uk/42848/1/GreeSE%20No54.pdf

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. http://dev3.cepr.org/pubs/other/Bailing_out_the_banks.pdf

Brunnermeier, Markus (2009): “Deciphering the Liquidity and Credit Crunch 2007–2008”, in: Journal of Economic Perspectives 23, no. 1, 77-100. (download from CBS Library)

Dore, Ronald (2008): “Financialization of the global economy”, in: Industrial and Corporate Change 17, no. 6, 1097-1112. (download from CBS Library)

Eichengreen, Barry & Peter Temin (2010): “Fetters of Gold and Paper”, in: Oxford Review of Economic Policy 26, no. 3, 370-384. (download from CBS Library)

Fisher, Irving (1933), “The Debt-Deflation Theory of Great Depressions”, Econometrica I, pp. 337-57. (download from CBS Library)

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. http://www.coll.mpg.de/pdf_dat/2008_43online.pdf

Keynes, John M. (1937): “The General Theory of Employment”, in: The Quarterly Journal of Economics 51, no. 2, 209-223. (download from CBS Library)

Kindleberger, Charles / Robert Z. Aliber (2011), “The Anatomy of a Typical Crisis”, in Manias, Panics and Crashes. A History of Financial Crises, New York: Palgrave MacMillan 2011, pp. 26-38.

Krishnamurthy, Arvind (2010): “How Debt Markets Have Malfunctioned in the Crisis”, in: Journal of Economic Perspectives 24, no. 1, 3‐28 (download from CBS Library)

Lane, Philip R. (2012): “The European Sovereign Debt Crisis”, in: Journal of Economic Perspectives 26, no. 3, 49-68. (download from CBS Library)

Minsky, Hyman (1977), “A Theory of Systemic Fragility”, in Bordo, Michael, Financial Crises. Volume 1, Cambridge, Edward Elgar 1992, pp. 45-59. (included in the course reader)

Minsky, Hyman P. (1995): “Financial factors in the economics of capitalism.” In: Journal of Financial Services Research 9, no. 3-4, 197-208. (download from CBS Library)

Mises, Ludwig von (1931): “The Causes of the Economic Crisis”, printed in: Percy L. Greaves, Jr. (ed.) (2006): Ludwig von Mises - The causes of the economic crisis and other essays before, Auburn: Ludwig von Mises Institute, 155-181. (-> download from CBS learn)

Mishkin, Frederic S. (2005), "Is Financial Globalization Beneficial?", in: Journal of Money, Credit and Banking 39, no. 2‐3, 259‐294. (download from CBS Library)

Mishkin, Frederic S./Herbertsson, Tryggvit (2006): Financial Stability in Iceland, ed. by Iceland Chamber of Commerce, May 2006. http://www.vi.is/files/555877819Financial%20Stability%20in%20Iceland%20Screen%20Version.pdf

Nielsson, Ulf/Torfason, Bjarni K. (2012): “Iceland's economic eruption and meltdown”, in: Scandinavian Economic History Review 60, no. 1, 3-30. (download from CBS Library)

Smart, Carolyne / Vertinsky, Ilan (1984), “Strategy and the Environment: A Study of Corporate Responses to Crisis”, in: Strategic Management Journal 5, 199-213. (download from CBS Library)

Stiglitz, Joseph E. (2009): “The Anatomy of a Murder: Who killed America’s Economy”, in: Critical Review 21, 329-39. (download from CBS Library)

Straumann, Tobias (2010): “The UBS Crisis in Historical Perspective. Expert Opinion prepared for delivery to UBS AG 28 September 2010“ (included in the course reader))

White, Lawrence H. (2008): “How Did We Get into This Financial Mess?”, Cato-Institute. Briefing papers no. 110. http://www.cato.org/pubs/bp/bp110.pdf