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

Volume 2015/2016
Education

Bachelorlevel: 10 ECTS
Masterlevel: 7,5 ECTS

Content

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 

Learning Outcome

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.  

This course will be largely based around journal articles and weekly reading. However, some indicative reading that will help students prepare includes:

Farrokh K. Langdana (2009) Macroeconomic Policy: Demystifying Monetary and Fiscal Policy (second edition), Springer

Rodney Bruce Hall (2008) Central Banking as Global Governance: Constructing Financial Credibility (Cambridge Studies in International Relations), Cambridge

T. Persson and G. Tabellini (2011) Macroeconomic Policy, Credibility and Politics, Routledge 

An interest in the international economy and the aftermath of the crisis is a given. A background in a relevant social science, particularly political science or economics, would be useful – although prior experience of economics is by no means necessary if students are willing to commit to some introductory reading such as that listed above. This course would also be ideal preparation for students interested in pursuing the specialisation in international political economy in semester two. Please contact the course leader (hs@ifs.ku.dk) if you have any doubts about the suitability of your background.
The course features two-hour sessions that partly comprise mini-lectures and seminar activities, and are partly student led. To this end, the assessment will encourage students to build on their knowledge and bring this to class. Assessment will take the form of a free assignment.
Credit
7,5 ECTS
Type of assessment
Written assignment
Written assignment
Marking scale
7-point grading scale
Censorship form
External censorship
Criteria for exam assesment
  • Grade 12 is given for an outstanding performance: the student lives up to the course's goal description in an independent and convincing manner with no or few and minor shortcomings
  • Grade 7 is given for a good performance: the student is confidently able to live up to the goal description, albeit with several shortcomings
  • Grade 02 is given for an adequate performance: the minimum acceptable performance in which the student is only able to live up to the goal description in an insecure and incomplete manner
  • Category
  • Hours
  • Class Instruction
  • 28
  • Total
  • 28