ASTK15346U COURSE: Credibility and crisis: the politics of macroeconomic governance in hard times

During the crisis, it has been impossible to avoid state actors’ and other commentators’ constant appeals to ‘credible’ policies in the eyes of global markets – diving governments into ‘saints’ and ‘sinners’. But does credibility always arise from a predictable set of policies (such as austerity, countercyclical adjustment, inflation targeting, or quantitative easing), and how has it historically been obtained? What are the material prerequisites, and how much of it is a matter of construction? This module sets out to answer these questions, with reference to a detailed set of case studies (drawn from the Eurozone, US and UK) and broader literature from macroeconomics and political economy on how ‘credible’ policies are made and evaluated. It aims to leave students with the critical tools to judge whether credibility matters in the global economy, and if so, how this relationship is conditioned by state and market power.

The course is taught over seven weeks in the first half of the semester. There will be two classes per week of two hours each, with a different focus in each session but a common theme over the course of each week. All sessions have an expectation of strong class involvement in preparing material on the case studies and will be based on weekly reading, primarily from journal articles and supplemented by contemporary empirical data and media coverage. 

The course is expected to be structured according to the following headings:

1. What is credibility? Who is credible?
2. States versus markets: governing the economy
3. Monetary policy: theoretical principles
4. Monetary policy: independent central banks
5. Fiscal policy: theoretical principles
6. Fiscal policy: government saints and sinners
7. The federal reserve
8. The US government
9. The Bank of England
10.  Austerity in the UK
11. The ECB
12. Regulating the Eurozone

Credibility, democracy 

Competency descriptions

By the end of the course, students will possess knowledge of three key areas. First, the theoretical and practical literature surrounding monetary and fiscal policy making, and how it matters from the perspective of political science. Second, the constitutional and institutional practices surrounding the six case studies and their contemporary political salience. And third, the way that theoretical traditions (in economics and beyond) influence practice, and come to be seen as received wisdom in policy-making. As a result of taking this course, students will be able to better judge the claims made about the intrinsic value of contemporary macroeconomic policies – and who they benefit.  

The module should be particularly interesting for students looking to work in government, or those who want to better analyse what governments do.  It would therefore prove useful to students hoping to go into a range of careers, particularly those involving public or quasi-public institutions.