BUS327 Financial Bubbles, Crashes and Crisis
Showing course contents for the educational year 2019 - 2020 .
Course responsible: Espen Ekberg
ECTS credits: 5
Faculty: School of Economics and Business
Teaching language: EN
Teaching exam periods:
This course starts in Spring parallel 2020. This course has teaching/evaluation in Spring parallel.
Course frequency: Annually
First time: Study year 2019-2020
According to an estimate from the International Monetary Fund (IMF), between 1970 and 2011 alone the world experienced no less 147 systemic banking crises, 218 currency crises and 66 sovereign debt crises. Such financial crises often have devastating effects on the operation of the general economy: they cause decline in investment spending, reductions in business profits, and an increase the number of bankruptcies. They also increase unemployment levels and reduce overall household income. According to figures from The US Bureau of Labor Statistics, unemployment rates in USA more than doubled in the years immediately following the financial crisis of 2008. This crisis - often termed The Great Recession or The Subprime Crisis - spread globally and caused, according to one estimate, an increase in global unemployment of about 50 million and an increase in the number of people living in extreme poverty of about 200 million (Stiglitz, 2010, p. 346).
What are the fundamental characteristics of financial crisis and why do they appear so frequently? How does the macroeconomic climate affect the occurrence of financial crisis? Are financial crises more frequent today than before? How have existing crises been solved historically and what can be done to prevent them in the future? These are some of the questions we ask, discuss, and try to answer in this course. As the students will experience, there exist many different and often competing theories about the causes and effects of financial crisis and how to deal with them. This course provides an overview of these approaches. In addition, it introduces the students to a number of historical case studies of financial bubbles, crashes and crises. The idea is that by investigating past experiences of financial crisis we can recognize patterns in how the crises evolved and also evaluate how they were handled. Such historical knowledge may in turn help shed light on how to deal with and assessing future risks of crisis in the economy and how to deal with such crisis.
The course will thus provide the students both with knowledge about a fundamental part of the market economy (the financial sector) and how and why this sector historically has experienced repeated and severe crises, and improve their skills in writing analytical texts. This skill does not only represent a valuable preparation for writing the bachelor and/or master thesis, but is also fundamental to any job attainable for a graduated business school student.
- Knowledge about fundamental concepts (such as money and debt), about financial institutions (such as banks and regulatory authorities) and about the larger macroeconomic environment in which the financial sector is situated.
- A broad base of theoretical and empirical knowledge about financial stability and financial crises in an international and historical perspective.
- In-debt knowledge about historical cases of financial crisis.
- Basic knowledge about how to plan, structure and write an analytical text.
- Distinguish between different theories on the causes and effects of financial bubbles, crashes and crises, and to present their analysis in writing.
- Critically and systematically present and discuss concepts, institutions and macroeconomic structures central to the understanding of the financial system and to present their analysis in writing.
- Examine historical cases of financial crisis by applying relevant theories and concepts and to present their analysis in writing.
- Reflect on how theories of social phenomena - such as financial crises - are constructed, contested and developed, including how differences in methodological approach may affect our understanding of social processes.
- Reflect on the various ethical dilemmas connected to the development of financial crises and the different ways of solving them.
- Reflect on the value of historical knowledge for the understanding of present day problems.
The course consists of lectures, discussion groups, class discussions, writing exercises, written assignments and student peer review. The students should bring their laptops (or other writing instrument) to every lecture
Besides regular lectures and group work, the teaching of this class will be conducted through the systematic use of writing exercises.
Individual feed-back from lecturer on written assignments. Peer-review of written assignments
Mishkin, F (2016), The Economics of Money, Banking and Financial Markets, Edinburgh: Pearson, ch 1-3, 7, and 9-16. In addition, a list of articles and book chapters will be provided at the start of the semester.
Two written assignments (the third- and ninth-week-of-class assignments). The assignments must be solved individually. The assignments are mandatory, but will not be graded. The two mandatory assignments during the semester make up a substantial part of the final exam, which will consist of an academic essay presenting and discussing major concepts, theories and historical cases of financial crises.
Term paper/essay (70 %) grade A - F and written exam with short questions, 90 minutes (30 %) grade A-F.
Both assessment components need to be passed in order to pass the course. There will not be any retake exam in the course. Those that wish to take the course again must do so next time the course is arranged, including all the elements in the assessment.
The course is open to all master programmes at NMBU and 3rd year bachelor students enrolled in the bachelor program in Business Administration and bachelor program in Economics.
The course is in English. Incoming students can contact student advisors at the School of Economics and Business (email@example.com) for admission to the course.
External examiner will control the quality of syllabus, questions for the final examination, and principles for the assessment of the examination answers.
Examination details: Langsgående vurdering: A - E / F