Course Scope

This course focuses on economic analysis and case studies, by using online sources of economic and financial information (such as Bloomberg), as well as presentations of economic developments over the long-term horizon.

The goal of this course is to cultivate critical thinking and to familiarize students with financial analysis and sources of information. The focus will be on issues such as the risk of the long-term debt cycle and related investment opportunities, the interaction of banks with the real economy, the role of governments and central banks in the economy, and the problem of long-term growth.

Course Outline

Part 1

• The Archetypal Big Debt Cycle
  • Credit and Debt
  • The Template for the Archetypal Long-Term/Big Debt Cycle
  • The Examination of the Cycle
• The Phases of the Classic Deflationary Debt Cycle
  • The Early Part of the Cycle
  • The Bubble
  • The Top
  • The “Depression”
  • The “Beautiful Deleveraging”
  • “Pushing on a String”
  • Normalization
• Inflationary Depressions and Currency Crises
• The Phases of the Classic Inflationary Debt Cycle
  • The Early Part of the Cycle
  • The Bubble
  • The Top and Currency Defense
  • The Depression (Often When the Currency Is Let Go)
  • Normalization
• The Spiral from a More Transitory Inflationary Depression to Hyperinflation

Part 2

• Detailed Case Studies
  • US Debt Crisis and Adjustment (2007–2011)
  • US Debt Crisis and Adjustment (1928–1937)
  • German Debt Crisis and Hyperinflation (1918–1924)

Suggested Reading

• Teacher’s note (eclass.unipi.gr)
• A. Antzoulatos, Governments, Financial Markets and the Macroeconomy, 2^nd edition, 2019
• Allen, F., & Carletti, E. (2008). The role of liquidity in financial crises. Federal Reserve Bank of Kansas City
• Baker, S. R., Bloom, N., & Davis, S. J. (2016). Measuring economic policy uncertainty. The quarterly journal of economics, 131(4), 1593-1636.
• Bansal, R., Kiku, D., Shaliastovich, I., & Yaron, A. (2014). Volatility, the macroeconomy, and asset prices. The Journal of Finance, 69(6), 2471-2511.
• Bloom, N., Floetotto, M., Jaimovich, N., Saporta‐Eksten, I., & Terry, S. J. (2018). Really uncertain business cycles. Econometrica, 86(3), 1031-1065.
• Borio, C. (2014). The financial cycle and macroeconomics: What have we learnt? Journal of Banking & Finance, 45, 182-198.
• Carlin, W., & Soskice, D. W. (2014). Macroeconomics: Institutions, instability, and the financial system. Oxford University Press, USA.
• Claessens, S., & Kose, M. M. A. (2013). Financial crises explanations, types, and implications (No. 13-28). International Monetary Fund.
• Da, Z., Engelberg, J., & Gao, P. (2014). The sum of all FEARS investor sentiment and asset prices. The Review of Financial Studies, 28(1), 1-32.
• Draghi, M. (2008). How to restore financial stability. Bundesbank Lecture Series, 1-14.
• Fernández-Villaverde, J., Guerrón-Quintana, P., Kuester, K., & Rubio-Ramírez, J. (2015). Fiscal volatility shocks and economic activity. American Economic Review, 105(11), 3352-84.
• Fligstein, N., Brundage, J. S., & Schultz, M. (2014). Why the federal reserve failed to see the financial crisis of 2008: The role of “macroeconomics” as a sense making and cultural frame.
• Froyen, R. T., & Perez, S. J. (1990). Macroeconomics: Theories and policies (No. 339 F7 2005.). Macmillan.
• Geanakoplos, J. (2010). The leverage cycle. NBER macroeconomics annual, 24(1), 1-66.
• Giavazzi, F., Amighini, A., & Blanchard, O. J. B. (2010). Macroeconomics: a European perspective. Financial Times Prentice Hall.
• Gilchrist, S., Sim, J. W., & Zakrajšek, E. (2014). Uncertainty, financial frictions, and investment dynamics (No. w20038). National Bureau of Economic Research.
• Guillén, M. F. (2009). The global economic & financial crisis: A timeline. The Lauder Institute, University of Pennsylvania, 1-91.
• Gulen, H., & Ion, M. (2015). Policy uncertainty and corporate investment. The Review of Financial Studies, 29(3), 523-564.
• Handley, K., & Limao, N. (2015). Trade and investment under policy uncertainty: theory and firm evidence. American Economic Journal: Economic Policy, 7(4), 189-222.
• Huang, D., Jiang, F., Tu, J., & Zhou, G. (2015). Investor sentiment aligned: A powerful predictor of stock returns. The Review of Financial Studies, 28(3), 791-837.
• Kahle, K. M., & Stulz, R. M. (2013). Access to capital, investment, and the financial crisis. Journal of Financial Economics, 110(2), 280-299.
• Kumar, M., & Woo, J. (2010). Public debt and growth. IMF working papers, 1-47.
• Lane, P. R. (2008). The macroeconomics of financial integration: a European perspective. The Institute for International Integration Studies Discussion Paper Series iiisdp265, IIIS.
• Mizen, P., & Pentecost, E. (1996). The macroeconomics of international currencies. Edward Elgar Publishing.
• Reinhart, C. M., & Rogoff, K. S. (2009). The aftermath of financial crises. American Economic Review, 99(2), 466-72.
• Reinhart, C. M., & Rogoff, K. S. (2010). Growth in a Time of Debt. American economic review, 100(2), 573-78.
• Jordà, Ò., Schularick, M., & Taylor, A. M. (2013). When credit bites back. Journal of Money, Credit and Banking, 45(s2), 3-28.