International Macroeconomic Policy:
Theory and Evidence from
Recent Financial Crises
ECON-GB2380.10
Fall 2017
(*) denotes a required reading
I. AN OVERVIEW OF THE WORLD
ECONOMY
I. 1. Global Macroeconomic
Performance After the Global Financial Crisis
Current Economic
Conditions in the Global Economy and Policy Issues:
- Roubini, Handout on Macroeconomic
Issues and Vulnerabilities in the US and Global Economy (*)
- Roubini and Backus, Lectures
in Macroeconomics, Chapter 1. (*)
- Krugman,Obstfeld and Melitz, Chapter 13 (*)
- Global
Outlook:
- IMF
World Economic Outlook Update, July 2017 (*)
- The Economist, Survey of The Global Economy (to be
published in October 2017) (*)
- IMF World Economic Outlook,
September 2017 Chapter 1 (to be published in early October 2017) (*)
- World
Bank, Global Economic Prospects, June 2017 (*)
- BIS Quarterly Review, Sep
2017 (*)
- Davies, The
Global Upswing Could Be More Sustainable This Time, Sep 2017 (*)
- Wolf, Risks Remain
Amid the Global Recovery, Jul 2017 (*)
- Shiller, The Coming Bear Market? Sep 2017 (*)
- Turner, The
Normalization Delusion, Sep 2017 (*)
- Roubini, The
Global Recovery Downside Risks, Jun 2017 (*)
- Davies, What
Is Driving the Global Expansion?, Jul 2017 (*)
- Reinhart and Reinhart, The
Fear Factor in Todays Interest Rates, Sep 2017
(*)
- Roubini, Whistling
Past the Geopolitical Graveyard, May 2017 (*)
- U.S.
Economy:
- Furman, The
Outlook for the US Economy and The Policies of the New President, Jun
2017 (*)
- Roubini, A
Dim Outlook for Trumponomics, Aug 2017 (*)
- Summers, Leading
With Large Tax Cuts is a Dangerous Policy, Sep 2017 (*)
- Feldstein, Tax
Reform and Budget Deficits in America, Aug 2017 (*)
- Roubini, A
Fiscal Reality Test for US Republicans, Apr 2017 (*)
- Furman, Trump
Budget Assumes 3 Percent Annual Growth. Why That Is Extremely Unlikely,
Explained, May 2017 (*)
- Europe
and Eurozone:
- Davies, The
ECB Is Heading Towards a Dovish Exit, Aug 2017 (*)
- Fuest, Germany
Economic Road Ahead, Sep 2017 (*)
- Eichengreen, The
Euro Narrow Path, Sep 2017 (*)
- James, Germany
Weimar Ghosts, Sep 2017 (*)
- Various Authors, Project
Syndicate, German Europe or European Germany? 2016 (*)
- Wolf, Britain
Is Incapable of Managing Brexit and Calamity
Will Follow, Jul 2017 (*)
- Emerging
Markets:
- Wolf, Seven
Charts Showing How the Developed World Is Losing Its Edge, Jul 2017
(*)
- IMF, Can
China Pilot A Soft Landing? Sep 2017 (*)
- Eichengreen, Asia
Unhappy Anniversary, Jul 2017 (*)
- Roach, Deciphering
China Economic Resilience, Jul 2017
(*)
- Various Authors, Project
Syndicate, The Putin Question, 2016 (*)
- Basu, Reviving
India Economy, Sep 2017 (*)
- Posen, Can
We Develop a New Asian Growth Model? Sep 2017 (*)
- De Gregorio, Latin
America Prospects and Policy Space, Oct 2016 (*)
- Monetary
Policy Debates:
- Roubini, The
Mystery of the Missing Inflation, Sep 2017 (*)
- Davies, Central
Bank Disputes: Yellen versus Borio, Sep 2017 (*)
- Summers, Why
the Federal Reserve Job Will Get Harder, Aug 2017 (*)
- Blanchard, Ten
Take Aways from The
Rethinking Macro Policy: Progress or Confusion? May 2015 (*)
- Bernanke, Some
Reflections on Japanese Monetary Policy, May 2017 (*)
- Roubini, The
New Abnormal in Monetary Policy, Jul 2017 (*)
- Frankel, Why
Financial Markets Underestimate Risks, Sep 2017 (*)
- Goldman Sachs, Helicopter
Money, 2016 (*)
- Goldman Sachs, Negative
Interest Rates 101, 2016 (*)
- Bernanke, Modifying
The Feds Policy Framework: Does A Higher Inflation Target Beat Negative
Interest Rates?, Sep 2016 (*)
- Bernanke, Should
the Fed Keep Its Balance Sheet Large?, Sep 2016 (*)
- Blanchard and Zettelmeyer, Will Rising
Interest Rates Lead to Fiscal Crises? Jul 2017 (*)
The Global
Financial Crisis of 2008-09: Causes and Post Mortem; Productivity Slowdown and
the Current Backlash Against Globalization
- Roubini and Mihm, Chapters Introduction, 1, 2, 10, Conclusion and
Outlook (*)
- El-Erian,
The
Lessons of the Financial Crisis, Aug 2017 (*)
- Davies, Have
They Really Fixed Financial Instability? Jul 2017 (*)
- El-Erian,
How
Healthy Is the Global Financial System?, Jul 2017 (*)
- Frydman and Goldberg, Did
Capitalism Fail? Sep 2013 (*)
- Admati, Five
Year of Financial Non-Reform, Sep 2013 (*)
- Ben Bernanke, Ending
Too Big To Fail: Whats The Right Approach?,
May 2016 (*)
- Johnson, Still
Too Big to Fail, Project Syndicate, Jul 2015 (*)
- Various Authors, The
Lehman Legacy, Project Syndicate 2013 (*)
- Wolf, The
Tide of Globalization Is Turning, Sep 2016 (*)
- Goldman Sachs, The
Productivity Paradox, 2016 (*)
- Wolf, The
Economic Origins of the Populist Surge, Jun 2017 (*)
- Bernanke, When
Growth is Not Enough, Jun 2017 (*)
- Bradford DeLong, The
Economic Trend Is Our Friend, Aug 2016 (*)
- Roubini, Populists
and Productivity, Jun 2016 (*)
- Roubini, Globalization
Political Fault Lines, Jul 2016 (*)
- Wolf, Capitalism
and Democracy, The Odd Couple, Sep 2017 (*)
- Various Authors, Inequality:
Piketty Charge, Project Syndicate, Sep 2014
- Various Authors, Project
Syndicate, Globalization RIP? 2016 (*)
- Wolf, Capitalism and
Democracy: The Strain Is Showing, Aug 2016 (*)
- Foroohar, Why
America Tax and Trade Debate is Wrong, Sep 2017 (*)
- Bremmer and Roubini, The
New Abnormal, Institutional Investor, June 2013 (*)
- Blankenburg and Kozul-Wright, The
Rentiers Are Here, Sep 2017 (*)
- Kurz, The
New Monopolists, Sept 2017 (*)
- El-Erian,
The
Risk of a New Economic Non-Order, Sep 2017 (*)
- El-Erian,
An Unstable Economic Order? Jan 2017 (*)
- Wolf, Banking
Is Too Undercapitalized for Comfort, Sep 2017 (*)
Other Background
Readings and Materials (not required readings):
I. 2. Current Account, External Debt and
Financial Crises: Emerging Market Economies and Advanced Economies
- Roubini and Setser
"Bailouts or Bail-ins? Responding to Financial Crises in Emerging
Economies", Chapter 2. (*)
- Roubini and Backus, Lectures
in Macroeconomics, Chapter 1. (*)
- Krugman,Obstfeld and Melitz, Chapter 13 (*)
- Roubini and Mihm, Chapters 3, 4, 5 (*)
- Feldstein, Inconvenient
Truths About The US Trade Deficit, Apr 2017 (*)
- "The
Balance Sheet Approach to Financial Crises", by Mark Allen, Brad Setser, Christian Keller. Nouriel
Roubini and Christoph
Rosenberg, IMF, Dec 2002
- Roubini and Setser
"The U.S. as a Net Debtor: The Sustainability of the US External
Imbalances", Sep 2004. (*)
- Borio, On the Centrality of the
Current Account in International Economics, BIS, Aug 2015 (*)
- Feldstein, Does
Addressing Bilateral Trade Imbalances Work? Jun 2017 (*)
- Various Authors, Emerging
Markets Meltdown, Project Syndicate, Sep 2015 (*)
- Velasco, The
Emerging-Market Currency Rout, Project Syndicate, Aug 2015 (*)
- BIS, Emerging Market
Economies Vulnerabilities Take Center Stage, Sep 2015 (*)
Other Background Readings and Materials
(not required readings):
I. 3. International
Indicators: Exchange Rates and Interest Parity Conditions
II. EXCHANGE RATES AND
FINANCIAL CRISES
II. 1. Exchange Rates in the
Short-Run and Long Run
II. 2. Money, Interest Rates
and Exchange Rates
II. 3. Fixed Exchange Rates,
the Dynamics of Currency Crises and Crisis Contagion
- Roubini and Setser
"Bailouts or Bail-ins? Responding to Financial Crises in Emerging
Economies", Chapter 2. (*)
- Roubini and Backus, Lectures
in Macroeconomics, Chapter 8 (*)
- Krugman, Obstfeld
and Melitz Chapter 18 (*)
- The Mexican Peso
Crisis", IMF, 1995; in case package (*)
- Roubini and Mihm, Chapter 5 (*)
- Frankel, The
Chimera of Currency Manipulation, Project Syndicate, June 1015 (*)
II. 4. Financial crises and their resolution in
EM and DM: The Bail-in vs. Bailout Debate, Unconventional Monetary Policies
(ZIRP, QE, CE, FG), Fiscal Policy and Sovereign Risk
- Roubini and Setser
"Bailouts or Bail-ins? Responding to Financial Crises in Emerging
Economies", Chapters 1, 6, 8. (*)
- Krugman, Obstfeld
and Melitz, Chapters 18, 21 and 22 (*)
- Roubini and Mihm, Chapters 6, 7, 10, Conclusion, Outlook (*)
- Roubini, Handout on Bailouts vs Bail-Ins (to be sent by email)
- Wolf, Argentina
Debt Dispute Must Not Be Repeated, Sep 2016 (*)
- Rogoff, A New Deal for Debt Overhangs? Project Syndicate, Aug
2015 (*)
- Dervis, A
Balance Sheet Approach to Fiscal Policy, Project Syndicate, Aug 2015
(*)
- Blanchard and Zettelmeyer, Will Rising
Interest Rates Lead to Fiscal Crises? Jul 2017 (*)
- Roubini, Ten
QE Questions, Feb 2013 (*)
- Roubini, Unconventional
Monetary Policy on Stilts, Apr 2016 (*)
- Blanchard, Ten
Take Aways from The
Rethinking Macro Policy: Progress or Confusion? May 2015 (*)
- Roubini, The
Mystery of the Missing Inflation, Sep 2017 (*)
- Davies, Central
Bank Disputes: Yellen versus Borio, Sep 2017 (*)
- Goldman Sachs, Negative
Interest Rates 101, 2016 (*)
III. CURENT POLICY ISSUES
III. 1 The Right
Exchange Rate Regime for Emerging Markets and Advanced Economies:
The Inconsistent Trinity Principle
Fixed versus Flexible Exchange Rates: Which is Best?
Currency Boards (Hong Kong, Bulgaria)
Dollarization (Panama, Ecuador, El Salvador)
Monetary Unions (European Monetary Union)
A Global Gurrency? Or a Gold Standard?
- Krugman and Obstfeld,
Chapters 19, 20, 21 (*)
- Roubini, Notes on Currency
Boards and Dollarization (to be distributed via email)
- Wikipedia, Impossible Trinity
(*)
- Olivier Blanchard, Currency
Wars, Coordination, and Capital Controls, Jul 2016 (*)
- Eichengreen, China
Forex Follies, Project Syndicate, Sep 2015
(*)
III. 2. Current Global Macro and Financial
Issues:
Global Economy: Return to Sustained Growth in
Developed Markets or Still an Anemic Recovery Given Deleveraging? Is the
Slowdown of Emerging Markets Cyclical or Structural? Are Some of Them at Risk
of Financial Crises?
US Economy: Return to Potential Growth or Still Anemic Recovery? Is
Potential Growth Lower? The Debate on Secular Stagnation
What Will the Fed do (Exit from Zero Policy Rates) and Implications for the
Bond and Stock Market. Unconventional Monetary Policies in Developed Markets:
Zero Policy Rates, QE, Credit Easing (CE) and Forward Guidance. Should We Worry
About Inflation or Deflation?
Eurozone Crisis and Future the European
Monetary Union: Will It Recover and Survive? The Return of
Sovereign Risk in Advanced Economies. The EU Migration Crisis
Japan's economic prospects: Will Abenomics Work or
Fail?
China: Soft or Hard or Bumpy Landing? Can China Rebalance in Time?
Prospects and Risks for Emerging Market Economies in the Short and Long Run
Geo-Political Risks and Oil Prices; Why Have Markets Ignored Rising
Geo-Political Risks? What are the Prospects for Oil Prices?
Prospects for Major Currencies: Euro, Dollar, Yen, RMB and Other Currencies
- Roubini and Mihm, Chapters 6, 7 (*)
- IMF
World Economic Outlook Update, July 2017 (*)
- The Economist, Survey of The Global Economy (to be
published in October 2017) (*)
- IMF World Economic Outlook,
September 2017 Chapter 1 (to be published in early October 2017) (*)
- Davies, The
Global Upswing Could Be More Sustainable This Time, Sep 2017 (*)
- Wolf, Risks Remain
Amid the Global Recovery, Jul 2017 (*)
- Shiller, The Coming Bear Market? Sep 2017 (*)
- Roubini, The
Global Recovery Downside Risks, Jun 2017 (*)
- Davies, What
Is Driving the Global Expansion?, Jul 2017 (*)
- Reinhart and Reinhart, The
Fear Factor in Todays Interest Rates, Sep 2017
(*)
- Roubini, Whistling
Past the Geopolitical Graveyard, May 2017 (*)
- Various Authors, Emerging
Markets Meltdown, Project Syndicate, Sep 2015 (*)
III.3. Open Issues in the
International Financial System
The 2008-2009 Global Financial Crisis and Its Aftermath: Have We Fixed the System? Will
Crises Occur Again?
Reform of the Regime of Supervision and Regulation of the Financial System in a
World of Financial Globalization
Is there a Risk of a Backlash Against
Globalization? Technology, AI, Inequality and the Future of Work
Are We in a G-20 or a G-0 World? Geo-Political Risks in the Global Economy
Asset Bubbles and Monetary Policy: The Role of Macro-Prudential Supervision
Versus Policy Rates In Addressing Financial Stability
Systemic Risk and Financial Crises: Asset and Credit Booms and Busts.
Housing Bubbles and Busts: Still Ongoing and Where?
Capital Mobility, Hot Money and Capital Controls: Return to Restrictions on
Capital Flows?
The Emergence of the BRICS (Brazil, Russia, India, China, South Africa) in
the Global Economy: Over-Hyped or Not?
- Roubini and Setser
"Bailouts or Bail-ins? Responding to Financial Crises in Emerging
Economies", Chapters 1 and 9 (*)
- Krugman, Obstfeld
and Melitz, Chapters 18, 21-22 (*)
- Roubini and Mihm,
Chapters 8, 9
- El-Erian, The
Lessons of the Financial Crisis, Aug 2017 (*)
- Davies, Have
They Really Fixed Financial Instability? Jul 2017 (*)
- El-Erian, How
Healthy Is the Global Financial System?, Jul 2017 (*)
- Admati, Five
Year of Financial Non-Reform, Sep 2013 (*)
- Eichengreen, The
Promise and Peril of Macroprudential Policy
Project Syndicate, Aug 2015 (*)
- Boskin, The
Bloom is Off the BRICS, Project Syndicate, June 2015 (*)
- Goldman Sachs, Dreaming
With BRICs: The Path to 2050 (Brazil, Russia, India, China), October 2003
- Citigroup Technology
at Work, The Future of Innovation and Work, Feb 2015
- Roubini, Rise
of The Machines: Downfall of the Economy?, Dec 2014 (*)
- Spence, Automation,
Productivity, and Growth, Project Syndicate, Aug 2015 (*)
- Benioff, On
The Cusp Of An AI Revolution, Sep 2016 (*)
- Wolf, The
Economic Origins of the Populist Surge, Jun 2017 (*)
- Roubini, Populists
and Productivity, Jun 2016 (*)
- Roubini, Globalization
Political Fault Lines, Jul 2016 (*)
- Bremmer and Roubini,
A
G-Zero World, Foreign Affairs, 2010