The Economics of Crises

COURSE OBJECTIVE
The objective of the course is to introduce students to the difference between different types of crises, such as the present one (caused by an exogenous event, a pandemic) and the 2008-2012 (that was caused by a financial bubble). To do so, we review theory and practice of
macroeconomic, fiscal and monetary policy, including regulation of the financial system.
Specific learning outcomes upon completion of this course are:
• Ability to set the present pandemic in a broader contest (damage to health and the economy), evaluating policies to restore public health
and economic activities;
• Ability to apply macroeconomic concepts and theories to analyse problems of employment and inflation and measurement of Business Cycles;
• Capability to analyse the role of macroeconomic policymakers in managing money, banking and the business cycles;
• An understanding of the policy problems facing central banks, with a focus on monetary policy;
• An understanding of the policy problems facing governments, with a focus on fiscal policy;
• Understand the origin economic crises, mostly if exogenous (corona crisis) or debt driven (financial crisis), and the effects of fiscal and
monetary policy.

COURSE CONTENT
The course discusses Macroeconomic policies intended to affect and dampen the business cycles linked to a crisis. We discuss the roles of different authorities in conducting macroeconomic policies aimed at preventing a crisis or at restoring the economic activity after a crisis
hits. Relevant topics are for instance: money creation, control of the interest rates, central banking and the stabilizing role of fiscal
policy with a specific focus on health care expenditures. We investigate the origin and approach to the corona crisis and the previous (financial) crisis looking at these issues from different perspectives. So, for the present crisis, we debate mostly the policy response of national governments, the ECB and the EU. For the previous crisis we discuss the common narrative (the banks were guilty) but also
the micro view on the role of indebtedness (we did it!). Which explanations will convince you the most?

TEACHING METHODS
Lectures and tutorials in small groups

TYPE OF ASSESSMENT
 30% from hand-in assignments, 70% from written exam