1HistoryofFinancialTurbulenceandCrisesProf.MichalisM.PsalidopoulosSpringterm2011Coursedescription:The outbreakofthe2008financialcrisishasrekindled academic interestin the history of fi‐nancial turbulence and crises – their causes and consequences, their interpretations by eco‐nomicactorsandtheorists,andthepolicyresponsestheystimulated.Inthiscourse,weusetheanalyticaltoolsofeconomichistory,thehistoryofeconomicpolicy‐making and the history of economic thought, to study episodes of financial turbulence andcrisis spanning the last three centuries. This broad historical canvas offers such diverse his‐toricalexamplesastheDutchtulipmaniaofthelate17thcentury,theGermanhyperinflationof 1923, the Great Crash of 1929, the Mexican Peso crisis of 1994/5and the mostrecent sub‐primemortgagecrisisintheUS.Thepurposeofthishistoricaljourneyis twofold:Ontheonehand,wewillexploretheprin‐cipalcausesofavarietyofdifferentmanias,panicsandcrises,aswellastheirconsequences–bothnationaland international.On the other hand,we shall focus on the wayeconomic ac‐tors, economic theorists and policy‐makers responded to these phenomena. Thus, we willalso discuss bailouts, sovereign debt crises and bankruptcies, hyperinflations and global re‐cessions, including the most recent financial crisis of 2008 and the policy measures used toaddressit.Whatismore,emphasis shallbeplacedonthe theoretical frameworkwithwhichcontemporary economists sought to conceptualize each crisis, its interplay with policy‐making,aswellasthepossiblechangesintheoreticalperspectivethatmayhavebeenprecipi‐tatedbytheexperienceofthecrisesthemselves.Last but not least, the course seeks to provide an introduction to important themes in eco‐nomicandsocialhistory,andhighlighttheusefulnessandsignificanceofbotheconomichis‐toryandthehistoryofeconomicstomoderneconomists.Courseobjectives:Bytheendofthecourse,studentswillbefamiliarwith:• Thetypology, terminologyandbasicetiology of differentfinancial crises,as wellastheprincipalhistoricalfactssurroundingmajorcrises.Thisincludesdistinguishingbetweendifferenttypesofcrises(currency,debt,financial,liquidity,etc.),beingabletohighlightkeydifferences and similarities, as well as discussing and evaluating their causes andconsequences.• Themethodsappliedbyeconomichistorianstotopicsinfinancialhistory,andtheirsig‐nificance to modern day economists. Historical scholarship in economics finds itself inan ongoing discussion aboutwhat eventsor processes are significant,how one can de‐fineandassessthemand,especially,whyitisimportantforpresentdaysocialscientiststobeliterateineconomichistory.• Ways to synthesize knowledge of economic history, thehistoryofeconomic policyandthehistoryofeconomicthoughttoforgeone’sownoriginalwayoflookingatcontempo‐raryepisodesofeconomicturbulence–andthewaytheyareinterpretedandtackledbypolicy‐makers.2Courseprerequisites:Apartfromaworkingknowledgeofintermediatemacroeconomics,thecourseassumeslittleprior knowledge of financial history or the history of economic thought, although a back‐groundinthesefieldswillbeanadvantage.Throughoutthecourse,emphasisshallbeplacedonhistoricalratherthanfinancial/mathematicaltoolsforstudyingcrises.Courseoutline:Themainoutlineofthecourseisgivenbelow,alongwithsomesupplementaryreadingallot‐tedtoeachweekofcoursework;themainbooktobestudiedthroughoutthecourseis:Charles P. Kindleberger, 2000. Manias, panics, and crashes :a history of financial crises. NewYork:WileyThisisthe fourth editionof the classic bookbyCharlesKindleberger, and the lastone to besigned by him alone. The book is now in its fifth edition with Robert Aliber as co‐author;whilst this will also serve the purposes of the course, students are encouraged to make anefforttoobtaina(used)copyofanypreviousedition.Becauseofthestructureofthebook,individualchapterscannotbematchedtospecificweeksofstudy,butstudentswillbeexpectedtohavecoveredmostofthematerialincludedbythemiddleofthecourse.For a goodintroductionintovarious issues relating to the history of economic thought,
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