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, we will analyse 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: balance-of-payments, banking sector or public finances?
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 2007 in the American subprime mortgage market has casts a long shadow over the global political economy, whose aftermath has been marked by the management of this crisis. However, understanding the crisis and its consequences is far from straightforward, and requires careful consideration of the workings of finance in modern economies and of competing analytical frameworks. The module will review the role of banks and finance in contemporary capitalism and cover different theories of financial instability, the crisis in the USA, the Euro crisis, and the impact of the crisis on emerging markets. The course places an emphasis on situating those recent crises in broader international economic and financial developments in the last couple of decades. It also highlights theoretical pluralism and controversy by reviewing some key debates on the causes of crises. Finally, the course addresses the mechanisms of transmission of the financial crisis on the real economy, and different economic policy reactions.