CCGL9030 Global Issues
[This course is under the thematic cluster of ‘Sustaining Cities, Cultures, and the Earth’.]
Financial crises are common and occurred quite frequently in market economies. What is a financial crisis and what are its possible causes? Can it be anticipated and hence prevented? What government polices can be implemented to alleviate its impact?
A financial crisis can occur in the form of a currency crisis, a banking crisis or both. For example, the financial crisis in Asia in 1997-1998 was a currency crisis whereas the global crisis in 2008 was a banking crisis. Consider the one in 2008. As a subprime mortgage crisis that started in America in 2008, the crisis speedily mutated into a “systemic risk” threatening the financial system of every advanced and emerging economy. The financial contagion quickly exacerbated the impact of the crisis by transmitting the financial shocks through the interlinked financial markets to the whole global economy.
Sooner than expected, millions of people in different countries lost their jobs and fell into poverty. Almost overnight the entire investment banking industry worldwide was wiped out. The crisis that started out in America has turned into the worst global economic crisis since the Great Depression.
This course aims to bring to students an exploratory account of a financial crisis and an understanding of the conceptual underpinnings of the issues that lie at the heart of it. The course will focus on how the financial crisis in 2008 began, how it developed, how the different countries dealt with it with their own politico-economic means and measures, what are the effects on people, and what is its implication for the global economy, and its broader ramifications for our society.
Course Learning Outcomes
On completing the course, students will be able to:
- Describe the socio-economic background and the possible causes for financial crisis and explain how the crisis through the different financial and economic channels can reinforce itself and affect other economies in the world.
- Formulate critical questions and reflections regarding issues of economic development against an understanding that very often our efforts to respond to one problem might lay the foundations for the next.
- Critically evaluate the effectiveness of the various government policies for the rescue of the faltering economy and assess how these policies in one country can impact others in the global economy.
- Demonstrate understanding that the elimination of crises, if possible at all, is very costly and hence why crises will almost certainly recur.
- Assess how the crisis in 2008 will form and shape the future path of growth and development for the global economy.
Offer Semester and Day of Teaching
First semester (Wed)
|Activities||Number of hours|
|Reading / Self-study||50|
|Assessment: Individual report on group project||10|
|Assessment: Group presentation of group project||20|
|Assessment: Case summaries and homework||20|
|Assessment: Take-home test||4|
Assessment: 100% coursework
|Class participation and tutorial discussions||10|
|Homework and case summaries||30|
|Group project and presentation||20|
|Group project report||10|
The following cases and reading materials will be assigned. The list will be updated as deemed appropriate.
- Alfaro, L., & White, H. (2013). Currency wars. Harvard Business School.
- Coval, J., Jurek, J., & Stafford, E. (2009). The economics of structured finance. Journal of Economic Perspectives, 23(Winter), 3-25.
- Greenspan, A. (2010, Spring). The crisis. Brookings Papers on Economic Activity.
- Mathis, J., Tuzzolino, F., & Ramaswamy, V. (2011). Global financial crises and the future of securitization. Harvard Business School Case.
- Mishkin, F. S. (2009). Is monetary policy effective during financial crises?. American Economic Review Papers and Proceedings, 99(2), 573-577.
- Moss, D., & Bolton, C. (2011). Fighting a dangerous financial fire: The federal response to the crisis of 2007-2009. Harvard Business School Case.
- Pill, H., Tella, R. D., & Schlefer, J. (2008). Financial crisis in Asia: 1997-1998. Harvard Business School Case.
- Roscini, D., Schlefer, J., & Dimitriou, K. (2011). The Greek crisis: Tragedy or opportunity. Harvard Business School Case.
- Rotembery, J. J. (2008). Subprime meltdown: American housing and global financial turmoil. Harvard Business School Case.
- Segel, A. I., & Creo, B. (2010). Understanding the credit crisis of 2007-2008. Harvard Business School Background Note.
- Bardhan, A. (2008). Of subprimes and subsidies: The political economy of the financial crisis. Social Science Research Network. From http://ssrn.com/abstract=1270196
- Blinder, A. S., Lo, A. W., & Solow, R. M. (2012). Rethinking the financial crisis. Russell Sage Foundation.
- International Monetary Fund, Washington, DC. (2011, September). Global financial stability report: Grappling with crisis legacies.