Course Syllabus

Comparative Economics: Global Risks and European Responses

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Semester & Location:

Spring 2020- DIS Stockholm

Type & Credits:

Core Course- 3 credits

Core Course Study Tours:

Visby, Sweden; Athens, Greece

Major Disciplines:

Economics, Finance, and Political Science

Faculty Members:

Jim Breen

Program Director:

Susanne Goul Hovmand- sgh@dis.dk

Time & Place:

Mondays and Thursdays 14.50-16.10, 1D-509

Description of Course

No two economies are run the same way, and the variation of approaches within Europe is arguably as varied as the difference in approaches between the US and Europe.  Much of this has to do with the engagement, or lack thereof of the public sector in the economy. 

Sometimes markets work, sometimes they don't.  What indicators exist that a given market might not function properly, and can we spot those indicators in advance?  Moreover, can intervention provide better economic outcomes? 

What is different between Scandinavia, where we find some of the per capita wealthiest countries in the world, and those places in southern Europe that are struggling with levels of unemployment unseen since the great depression?  Does having one's own currency help or hinder a country like Sweden?  Is membership in the Euro to the advantage of a country like Greece, or a straitjacket?

Economic approaches across Europe are different, but how exactly are these manifest?  In particular we look at how systems across the EU differ in terms of their approach to  the nature and extent of public interventions in the marketplace, privatization, the environment, and central banking systems.  We then consider how the different systems have responded to economic crises in the past, and importantly, their prospects for better and faster recovery in the future. 

 

Learning Objectives

By the end of this course students will have a deeper understanding of...

  1. The theoretical underpinnings for markets: where they work, where they don’t, and if or where economic theory ever indicates a case for government intervention.
  2. Economic theories of positive and negative externalities and the public provision of goods vs. private provision.
  3. Optimal Currency Area theory, the significance of asymmetric shocks to member countries, and the impact of these theories on the Euro zone.
  4. Opposing theories on how to value climate change and environmental damage.
  5. Current theories relating to the sustainability (or lack thereof) of government and private debt.
  6. Economic policy in Europe, in what ways EU central banking and the control of the Euro is unique, and the challenges this presents to the European Union. 
  7. Common themes of economic crises and the various approaches to their remediation.
  8. Different approaches to regional and local economic development in Europe, and in particular how peripheral regions seek to increase their prosperity.

Skills Acquisition

Developing an economic framework for problem solving is a key aspect of this course.  Students leave with an ability to unpick complex problems, understanding how to ask the right questions to get to the core of issues. We also place a strong emphasis on being able to communicate complicated issues to others in a simple fashion.  These are all skills highly valued by employers and useful in later life.

Faculty

Jim Breen has been a professional economist working with the UN, governments, private companies, and social organizations for a number of years across Europe and Africa.  He completed his undergraduate studies at the University of California (Santa Cruz and Berkeley) and his postgraduate work at the London School of Economics.

 

Readings

  • Authers, J. and Smith, A.  (6 August, 2017)  "The Warnings from History That Wall Street Forgot" The Financial Times
  • Blanchard, Olivier. (2019) "Public Debt and Low Interest Rates." American Economic Review, 109 (4): 1197-1229.
  • Dahlgren, G. (2014) Why Public Health Service? International Journal of Health Services, Volume 44, Number 3. pages 507–524
  • Furman, J. and Summers, L.  (27 January, 2019) "Who's Afraid of Budget Deficits?" Foreign Affairs
  • Goodman, J. and Loveman, G.  (Nov – Dec 1991) “Does Privatization Serve the Public Interest?” Harvard Business Review
  • International Monetary Fund (October 2019) "How to Mitigate Climate Change"  IMF Fiscal Monitor
  • Jonung, L. (2009). "The Swedish Model for Resolving the Banking Crisis of 1991-93: Seven reasons why it was successful." European Commission, Directorate General for Economic and Financial Affairs Economic Paper 360
  • Krugman, P. (June 15, 2018) "Tax Cuts and Leprechauns" The New York Times
  • Rosen, H. and Gayer, T.  Public Finance (2014) Public Finance Chapters 3, 4, and 5 pages 34 - 105
  • Rubin, R and Hughes, S. (2017, December 2) Senate Passes Sweeping Revision of U.S. Tax Code.  Wall Street Journal
  • Schumacher, J. and Weder Di Mauro, B. (2015) "Greek Debt Sustainability and Official Crisis Lending" Brookings Papers on Economic Activity
  • Stiglitz, J. Tucker, T. and Zucman, G. (January/February 2020) "The Starving State - Why Capitalism's Salvation Depends on Taxation"  Foreign Affairs Vol 99 Number 1.
  • Tavlas, G. ( 1993)  "The New Theory of Optimum Currency Areas" The World Economy 16, issue 6, pages 663 - 677
  • Taylor, J. (2006) Nordhaus vs. Stern. Cato Institute. Cato at Liberty.

Additional readings TBA

 

Field Studies

On our first trip we will consider the link between public art, and economics taking a look at a cutting edge project being run in Sweden's capital.   Later in the term, we will visit the Chief Economist for the Association of Swedish Engineering Industries, the organisation responsible for the sector's participation in collective bargaining at a national level and for advising manufacturers on how to plan strategically for the future.

Study Tours

The Short Study Tour takes us to the island of Gotland, which lies in the middle of the Baltic Sea, halfway between Sweden and Lithuania.  We will stay in Visby, the island's capital, one of the most well-preserved Medieval cities in Europe and a UNESCO World Heritage site.  If Sweden is an economy on the physical periphery of Europe, Visby is one on the periphery of Sweden.  How does it survive and thrive?  Importantly, how does it differ from our Long Study Tour destination?

During the Long Study Tour, we travel to Athens to learn first hand about the different causes and implications of the Greek financial crisis.  We see what happens when a country loses 30% of its GDP in the space of a few years and hear from local and European Union experts about different ways to help the country recover, considering in particular its location on the periphery of Europe.

 

Approach to Teaching

The teaching approach is to use established economic thinking and analysis to examine day to day issues that affect and will continue to affect you.  A significant aim of this course is to leave you with a template for problem solving, applicable to many aspects of modern day living.

 

Expectations of the Students

Students will be expected to actively participate in ‘telling stories’ of how the theoretical models are expected to play out in real life.  Each will support and enhance the learning of their fellows in class. Students shall come prepared with their own views and opinions to each session, and at times will be required to work in groups.  Each student will be responsible for two presentations to the class. 

Active engagement in classroom discussion is a key prerequisite to a good grade in this course. 

Note on Attendance:

Class participation is a key aspect of our learning process.  As such, any (and each) absence will result in a reduction of your class participation grade by 7.5%.  If you have an ongoing medical issue resulting in more than one absence, please speak with your instructor.

 

Evaluation

In this class you will be evaluated on how well you can assimilate the tools and ideas presented and then use them to interpret the world around us.  To that end it will be essential for you to learn material prior to class.  This will enable us to use as much classroom time as possible, not for the acquisition of theory, but rather for using ideas and concepts to analyse and understand contemporary issues.

As part of that process, there will generally be quizzes set prior to class. 

Grading

Assignment

Percent

Class Participation

20%

 

Pre-Class Quizzes

20%

 

Pre-Core Course Week and/or Study Tour Presentations

10%

Midterm Examination

15%

Policy Presentation

15%

Final Examination

20%

Class Participation:

This component covers active participation in class, performance in small assignments, feedback and questions on fellow students’ presentations (see #3 and #5 below). Participation is not to be confused with mere attendance during the semester.

Pre-Class Quizzes:

Most classes will be preceded by a quiz covering the assigned reading/viewing/listening.  The quizzes are published on Canvas with their due dates and times.

Pre-Core Course Week and/or Study Tour Presentations:

Students will make presentations on organizations and or places we will visit. The purpose of the presentation is to prepare your colleagues for the visit as well as to provide some insight into the types of things we should consider or ask about while there.

Mid-Term Examination:

There will be a midterm exam with questions on the lectures, student presentations, videos, and readings from the first half of the term. Any material covered prior to the test is fair game for the exam. It is a closed-book exam that will last 1 hour.

Policy Presentation: 

Students will make an individual, 15 minute presentation on a project or policy they would like to implement in either Sweden or the US.  The presentation will be followed by a 5 minute Q&A session. The presentation will outline the objectives of the policy, its underlying assumptions, and its theoretical underpinning as it relates to course material.

Final Examination: 

This exam is similar to the mid-term exam, but covers all material from the entire course. Any material covered in any lecture is fair game for the exam. It is a closed-book exam that will last 1.5 hours.

Note on Use of Electronic Devices in the Classroom:

Aside from exams, which are in Canvas and must be completed on laptops, computers will only occasionally be used. The use of other electronic devices such as mobile phones is prohibited. Students found using electronic devices for purposes other than intended for the class will receive an “F” for their participation grade.  There are 168 hours in any given week: this course will take up only 2.5 of them in class time.

Class Sessions:  

Class Sessions 1 - 5

Economics vs. Politics

Class 1 - Expectations for the course.  An intro to Economic analysis in the real world. 

Class 2 - Pareto Optimality and the case for markets.  The 1st and 2nd Fundamental Theorems of Welfare Economics.

Class 3  - Public Goods.  Market failures.

Class 4 - Externalities

Class 5 - Short Study Tour Presentations

Core Course Week (Short Study Tour to Gotland)

Class Sessions 6 - 9

Case Study on Greece 

Class 6 - Optimal Currency Area Theories

Class 7 - Causes and Implications of the Greek Financial Crisis

Class 8 - Central Banking,  Class Group Presentations on the European Central Bank, The Swedish Central Bank, The Greek Central Bank

Class 9 - Long Study Tour Presentations

Long Study Tour to Athens

Class 10 - Midterm

Class Sessions 11 - 13

Privatisation, the Environment

Class 11 - Privatisation

Class 12 - Class Group Presentations on privatisation in practice

Class 13 - Discount Rates and valuing long-term costs

Class Sessions 14 - 18

Financial Crises and Other Future Challenges

Class 14 - Sweden and Financial Crises 1991-93, 2008-09

Class 15  - Financial Crises, Jack-in-the-Box or Clockwork? 

Class 16 - Debt, Deficits, and Prospects for the Future

Class 17 - Corporation Taxes and Other Current Issues

Class 18 - Final Exam

Class 19 - Student Policy Presentations and Other Current Issues

 Class 20 - Student Policy Presentations and Other Current Issues

 Class 21 - Student Policy Presentations and Other Current Issues

 

Academic Regulations  

Please make sure to read the Academic RegulationsLinks to an external site. on the DIS website. There you will find regulations on:

DIS - Study Abroad in Scandinavia - www.DISabroad.orgLinks to an external site.

 

Course Summary:

Date Details