Teaching

Financial markets underpin modern economies; financial crises can wreck them. The module focuses on financial systems and the manifestations of financialisation and crises in advanced economies, as well as the Global South. Drawing on research in political economy, it analyses the current state of contemporary finance, as well as the origins and impact of financial crises – particularly the Global Financial Crisis. Combining theoretical and empirical perspectives, the module will explore money and banking in contemporary capitalism; central banking and monetary policy; the functions of contemporary financial markets; domestic and international financialisation; the structure of the international monetary and financial system; and the causes and of the 2007-08 Global Financial Crisis and the 2010-2012 Eurozone crisis. Term one focuses on money, banking, and central banking in contemporary capitalism and the different aspects of financialisation on a domestic and international scale. Term two explores theories of crises and the manifestations of several financial crises in different parts of the world. 

1. Introduction: financial systems, financialisation and financial crisis
2. Money & banking: What do banks do?
3. Central banks and monetary policy
4. Credit and the macroeconomy
5. Theories of money
6. Financial markets
7. Securitisation and the shadow banking system
8. Domestic financialisation: shareholder value orientation and household debt
9. Exchange rate regimes and the international monetary system
10. International financialisation: financial globalisation, capital flows and current account imbalance
11. The US subprime crisis I: build-up, outbreak, contagion
12. The US subprime crisis II: real effects and crisis management
13. Mainstream approaches to financial crises
14. Post-Keynesian approaches to financial crises
15. Marxian approaches to financial crises
16. The Eurozone crisis and its management
17. Sources of the Eurozone crisis: fiscal profligacy, balance-of-payments problems, or flawed EMU design?
18. Capital flows and financial crises in emerging markets
19. Emerging markets during and after the Global Financial Crisis
20. Financial regulation: prudential regulation and capital controls

7AAOM223 Political Economy of the Financial Crises (King’s College London)

The financial crisis that started in 2007 in the American subprime mortgage market has casts a long shadow over the global political economy. The decade after the crisis has been marked by dealing with this crisis and its repercussions. Understanding the crisis and its consequences requires careful consideration of the workings of finance in modern economies, as well as different theoretical frameworks. The module will cover the role of banks and finance in contemporary capitalism; different theories of financial instability; the subprime crisis in the USA, the Euro crisis, and recent financial crises in emerging markets. Emphasis is placed on situating those crises in broader international economic and financial developments over the last four decades. The module also also highlights theoretical pluralism and controversy by reviewing key debates on the causes of financial crises. Finally, mechanisms of transmission of financial crises on the real economy and different economic policy reactions are examined.