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課程名稱 |
現代央行業務政治選題專題
Seminar on Politics of Modern Central Banking |
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開課學期 |
107-2 |
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授課對象 |
社會科學院 政治學系 |
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授課教師 |
曾煥凱 |
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課號 |
PS5689 |
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課程識別碼 |
322EU2070 |
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班次 |
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學分 |
2.0 |
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全/半年 |
半年 |
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必/選修 |
選修 |
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上課時間 |
星期二8,9(15:30~17:20) |
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上課地點 |
社科研604 |
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備註 |
本課程以英語授課。本課程以英語授課. 國際關係,公共行政,比較政府.
總人數上限：20人
外系人數限制：10人 |
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課程網頁 |
https://www.dropbox.com/sh/5vsy7ux1fbn9on8/AADY-uuRy6Hx08o4M8RjEamea?dl=0 |
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課程簡介影片 |
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核心能力關聯 |
核心能力與課程規劃關聯圖 |
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課程大綱
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為確保您我的權利,請尊重智慧財產權及不得非法影印
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課程概述 |
（英文授課）
Note: All contents are tentative and subject to change. Course schedule was designed on a 18-week semester basis. Class meets once a week, will adjust the proportion of weekly readings for each meeting upon being noti ed of school schedule.
Course Description
This course focuses on the role of central banking in contemporary world politics in the post-World War II period. Emphasis will be placed on understanding the political processes in various aspects of central banking and their consequences. The first part of the course covers topics of more domestic nature – the origin of central banking, roles and objectives, relations with the state and the market. Armed with this domain knowledge, we further explore central banks' relations with the rest of society—including that of foreign countries—in each issue area. The second part of the course considers other dimensions of central banking: trade, international finance, and democracy; in particular, we focus on the interactions between international factors and domestic political processes of central banking. Each class meeting begins with a lecture, followed by a discussion of that week's readings.
Each week's readings consist of assigned book chapter(s) and/or research articles covering related materials of the same topic. Further readings are NOT mandatory, they serve to provide supplemental information or alternative perspectives to give each week's materials. Recent global and country-specific examples are prioritized in the organization of course materials to increase their relevance to current events, with the aim of enhancing student learning.
Prerequisites
Principles for Economics/w Recitation (ECON 1004 and 1005), Intro. to Politics (PS 1005) or equivalent.
Mathematics for Economists (ECON 5100) and Statistics and Econometrics with Recitation (ECON 2014/2015) or equivalent are strongly recommended (but not required). Please consult the instructor prior to registration.
A number of assigned readings involve technical research methods, primarily statistics. It is strongly recommended that students have the ability to comprehend inferential statistics. Simplified version of more sophisticated readings will be presented in class slides; a good grasp of these would suffice to understand the materials well. Students will NOT be tested on technical materials.
Week 1: Introduction
Week 2: The role of money
Week 3: History of Central Banking
Week 4: Monetary theory
Week 5: International monetary system
Week 6: Financial market
Week 7: Monetary decisions and the market
Week 8: State-central bank relations I
Week 9: State-central bank relations II
Week 10: Movie
Week 11: Macroeconomic performance
Week 12: Monetary commitment regimes
Week 13: Central bank independence
Week 14: Cross-border trade and currency swap
Week 15: Shocks, crises, and responses
Week 16: Central banking in the shadow of financial market failure
Week 17: Guest lecture
Week 18: The future of central banking and course wrap-up
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課程目標 |
At the completion of this course, students will be able to:
1. Familiarize with key issues and their respective political processes in central banking.
2. Understand main actors, modes of interaction, and international dimensions in each issue area.
3. Relate and explain observed political and economic phenomena with the theories learned from this course.
4. Design and implement an original research paper.
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課程要求 |
Grading: Assessment and Grading Scale
Assessment methods, de nitions of grades, grading scale and letter grade-to-GP/percentage con-versations are explained at below. Graduate (Undergraduate) students must achieve B+ (C+) or higher in order to pass this course.
Assessment Methods
Participation 20%
Quizzes 10%
Oral presentation 30%
Short papers 40%
Course Requirements
Participation
Active participation is essential, and you cannot participate if you have not done the readings; you cannot possibly take part in the discussion unless you attend class. You are therefore expected to have finished all the readings before each week's meeting, and come to class ready to participate in the discussion. While reading the assigned materials, it will be useful to consider the questions listed in each week's course content.
Quizzes
A total of 5 quizzes may be given during classes to keep students in touch with course materials and help the instructor track students' learning. Quizzes will be closed-book/closed-note in format.
Oral Presentations & Feedbacks
Beginning the 4th week of and throughout this semester, students are required to make two oral presentations on reading(s) of their own choosing (articles or book chapters) in weeks
when that speci c readings are assigned; however, you are not allowed to present twice in any given week.
You can (1) pick one or more than one readings from a particular week, (2) summarize one reading and/or compare several of them, and most importantly, (3) articulate your point of view. The entire presentation should last no less than a minute but no longer than 10 minutes. Students will receive 10 points as baseline for each presentation with remaining points determined by how well students organize their talk (3 points/per presentation) and respond to peers' presentations (4 points, 2 in any given week), so that two oral presentations will count toward 30% of total grade: 2 * (10 + 3) + 4 = 30.
While fluency and pronunciation are important facilitators in oral expression, more weight will be given (for the 3 points/per presentation evaluation) to originality of thoughts and the clarity with which students convey these ideas. For each equation a student asked following peers' presentation, that student will receive 1 point (2 points at most in any given week), if a student asked 4 questions for the course of the semester, he/she will earn 4 full points.
Students are allowed to bring note during presentation and coordinate with peers for Q & A, but the key point is to encourage you to get more actively involved in class discussion.
Short Papers
Throughout this semester, students are required to submit TWO original research paper of approximately 5 pages each. There will be no assigned topics; instead, students will use their own discretion in selecting paper topics, so long as they respond to our main topics in some way. Students will need to submit their topics at the seventh class meeting (Oct. 23rd) and are encouraged to schedule an appointment with the instructor to discuss their topics. A good paper should address the followings:
1. It may compare and contrast several of the readings/theories; provide an in-depth cri-tique of just one of the readings/theories. It can also be an application of a theory (or theories) to a historical (preferably post-World War II) or ongoing event.
2. It should not simply summarize the readings; your paper should make an argument and convey a point of view.
3. It should give a good critique of the readings/theories. A critique is not necessarily negative. Whether or not you like an author's argument or a theory, you still must cri-tique it: is the argument clearly stated? Is the evidence o ered relevant to the argument and convincing, or is it biased in some way? Are alternative explanations ignored or addressed? Are the cases selected appropriate for the research question? Any way to strengthen the claim? etc. You may want to incorporate one or several of these points into your writing. Hence, additional outside reading may be expected.
5. Graphical and numerical presentation of information are always welcome. You may want to reference the presentation styles in the assigned readings as your guide or consult the instructor.
6. It should give credit where credit is due: always cite the sources for key information, and always provide page numbers for quotes.
7. It must be double spaced, use 12 point font, and follow the APA citation format.
8. Paper topic and type of paper are due by [], and the paper is due by noon of the last day of class.
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預期每週課後學習時數 |
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Office Hours |
另約時間 備註： hktseng1983@ntu.edu.tw |
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指定閱讀 |
Textbooks
Thammarak Moenjak, Central Banking: Theory and Practice in Sustaining Monetary and Financial Stability (Singapore: Wiley & Sons, 2014).
Carl Walsh, Monetary Theory and Policy 3rd edition (Cambridge, MA: MIT Press, 2010).
Michael W. Klein and Jay C. Shambaugh, Exchange Rate Regimes in the Modern Era (Cam-bridge, MA: MIT Press, 2009).
Walsh's book builds the theoretical foundation for this course. Explanation and outlines for the models covered in each chapter will be provided in class slides for ease of comprehension.
Other readings come from book chapters and articles published in academic journals and websites. Specific readings for each class are identified on this syllabus. Readings marked with a worldwideweb will be available on course website; readings marked with a X means “review” from past weeks. Items marked with m are clickable web-based materials. Items marked with are brief introduction on specific subjects provided by the instructor.
Weekly Topics and Reading Assignments
The weekly coverage might change as it depends on the progress of the class. However, you must keep up with the reading assignments.
Week 1: Introduction
Introduction and overview of the course. (No reading)
Week 2: The Role of Money
Lecture 1: Different Schools of Thought on the Role of Money in the Economy.
Readings:
Keynesianism
Blinder, Alan S. “Keynesian Economics." The Concise Encyclopedia of Economics.
Library of Economics and Liberty.
* Gordon, Robert J. 1990. “What Is New-Keynesian Economics?” Journal of Economic Literature Vol. 28, No. 3, pp. 1115-1171.
Monetarism
* Friedman, Milton. 1968. “The Role of Monetary Policy." American Economic Review Vol. 58, No. 1, pp. 1-17.
McCallum, Bennett T. “Monetarism." The Concise Encyclopedia of Economics. Library of Economics and Liberty.
Further readings:
* Bagehot, Walter. 1873. Lombard Street: A Description of the Money Market, Ch I-II. (Highly recommended, I will brie y discuss it in class)
* Friedman, Milton. 1970. “A Theoretical Framework for Monetary Analysis." Journal of Political Economy Vol. 8, No. 2, pp. 193-238.
* Mankiw, N. Gregory. 1989. “Real Business Cycles: A New Keynesian Perspective." Journal of Economic Perspectives Vol. 3, No. 3, pp. 79-90.
m Roosevelt Institute. 2009. “Saltwater Economics vs. Freshwater Economics."
Questions:
1 In what ways do Monetarism differ from Keynesianism?
2 According to Friedman, what should be the goals of monetary policy? What policy instruments can be used to achieve those goals? (The answer to the second question will be clear to you after you complete the first part of this course)
Week 3: History of Central Banking
Lecture 2: What do central banks do and how did they emerge.
Readings:
History of Central Banking
Moenjak, Ch. 1.
* Broz, J. Lawrence. 1998. “The Origins of Central Banking: Solutions to the Free-Rider Problem." International Organization Vol. 52, No. 2, pp. 231-68.
Roles and Functions
Moenjak, Ch. 3 (pp. 37-74)
* Bank for International Settlements (BIS). 2009. “Roles and Objectives of Modern Cen-tral Banks" in Issues in the Governance of Central Banks (Basel, Switzerland: Bank for International Settlements).
Further readings:
Federal Reserve Bank of San Francisco. 2004. “Why do we need a central bank like the Fed when the laws of supply and demand will keep everything working perfectly?"
Constitution of Chile (read Article 97)
Questions:
1 According to this week's readings, most countries did not have a central bank for the most part of their history, what purposes do central bank serve that make them almost a sine qua non of modern public finance?
2 In what aspects do central banks di er from their commercial counterparts?
Week 4: Monetary Theory
Lecture 3: Theory and practice of modern monetary policy-making.
Readings:
Theory: Supply, Demand, and Welfare
* Carl Walsh, Ch. 2 (skip pp. 44-46 and skim 2.5 and the rest), Ch. 3 (Skim 3.1-3.3). New Keynesian Model: The IS-LM Curve debate
Walsh, Ch. 8.3 (read 8.3.1-8.3.2, skim the rest). Monetary Stability
Moenjak, Ch. 5-9.
Klein and Shambaugh, Ch. 8 & 10.
******QUIZ 1******
Further readings:
Federal Reserve, Conducting Monetary Policy
* Rogo , Kenneth S. 1985. “The Optimal Degree of Commitment to an Intermediate Monetary Target." Quarterly Journal of Economics Vol. 100, No. 4, pp. 1169-89.
Questions:
1 How is money created (by central banks)?
2 What does “hawkish" (“dovish") mean in monetary policy-making?
3 Explain the trade-o along the IS-LM curve. Why does it matter in public policy sense? (We will come to that later in the course)
Week 5: International Monetary System
Lecture 4: International monetary system and the choice of exchange rate regime.
Readings:
Exchange Rate Regimes
Moenjak, Ch. 2. (pp. 17-36)
Klein and Shambaugh, Ch. 2-5, 6-7.
Further readings:
* Reinhart, Carmen M. and Kenneth S. Rogo . 2004. “The Modern History of Exchange Rate Arrangements: A Reinterpretation." Quarterly Journal of Economics Vol. 119, No. 1, pp. 1-48.
Questions:
1 What does the end of gold standard portend to the choice of exchange rate regime?
2 What are the pro(s) and con(s) of maintaining a xed/ oating exchange rate regime? Could you illustrate them with some real-world examples?
Week 6: Financial Markets
Lecture 5: Financial markets and monetary decisions.
Readings:
Hierarchy of Money
Mehrling, Perry G. “The Inherent Hierarchy of Money." memo, Barnard College and Columbia University, 2012.
Financial Stability
Moenjak, Ch. 10-12.
Policy Operations
Federal Reserve. Open Market Operations (OMOs)
Further readings:
m International Monetary Fund. 2009. “Balance of Payments and International Investment Position Manual." 6th Edition.
m Rosa, Carlo. 2013. “The Financial Market E ect of FOMC Minutes." Federal Reserve Bank of New York Economic Policy Review Vol. 19, No. 2, pp. 67-81.
Questions:
1 Relate Week 2 and 5's readings to Mehrling's “hierarchy of money.” Why is it important to have a central bank (of some sort)?
2 List the set of policy instruments required for conducting OMOs.
Week 7: Monetary Decisions and the Market
Lecture 6: Monetary policy-making in an open economy.
Readings:
Monetary Policy-Making
Walsh, Ch. 9-11 (Ch. 9: read 9.1-9.4 & 9.6, skim 9.2.1-9.2.3, skim 9.3.1-9.3.3, skim
9.3.1-9.3.3, pay attention to the explanation; Ch. 10: read 10.2-10.4, skim 10.2.2, skim
10.3, Ch. 11: read 11.3, skim 11.5).
Klein and Shambaugh, Ch. 8, 10-11.
Capital Mobility and Policy Implications
* Andrews, David M. 1994. “Capital Mobility and State Autonomy: Toward a Structural Theory of International Monetary Relations." International Studies Quarterly Vol. 38, No. 2, pp. 193-218.
* Obstfeld, Maurice and Jay C. Shambaugh and Alan M. Taylor. 2005. “The Trilemma in History: Tradeo s Among Exchange Rates, Monetary Policies, and Capital Mobility." The Review of Economics and Statistics Vol. 87, No. 3, pp. 423-38.
******QUIZ 2******
Further readings:
* Mundell, Robert A. 1963. “Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates." The Canadian Journal of Economics and Political Science Vol. 29, No. 4, pp. 475-85.
* Garrett, Geo rey. 2000. “Capital Mobility, Exchange Rates and Fiscal Policy in the Global Economy." Review of International Political Economy Vol. 7, No. 1, pp. 153-170.
Questions:
1 Why can't policy autonomy coexist with xed exchange rates in an open economy? In do what ways do such “trilemma" constrain central banks' monetary policy choices?
2 What distinguishes “sterilized" intervention from “unsterilized" intervention?
******PAPER TOPIC DUE******
Week 8: State-Central Bank Relations I
Lecture 7: State-central bank policy interaction.
Readings:
Fiscal and Monetary Policy-Making
Walsh, Ch. 4 (read 4.1-4.4).
* Clark, William Roberts. 2005. Capitalism, Not Globalism: Capital Mobility, Central
Bank Independence, and the Political Control of the Economy (Ann Arbor, MI: Univer-sity of Michigan Press), Ch. 2-4.
Public Financing
* Mishkin, Frederic S. The Economics of Money, Banking, and the Financial Markets 11th Edition (London, UK: Pearson Education, 2016). TBD.
Sullivan, Kenneth. 2002. “Profits, Dividends and Capital Considerations for Central Banks." LEG Seminar for Central Bank Lawyers, International Monetary Fund.
Further readings:
* Laubach, Thomas. 2009. “New Evidence on the Interest Rate Effects of Budget Deficits and Debt." Journal of the European Economic Association Vol. 4, No. 4, pp. 858-85.
Pessoa, Mario and Michael J. Williams. 2010. “Government Cash Management: Relationship between the Treasury and the Central Bank," IMF Technical Notes and Manuals No. 2012/2.
Questions:
1 What would happen when the government's scal policy is in con ict with the central bank's monetary policy? (We will come to this again in the following weeks)
2 How does central bank “lending" occur? Where does the money come from? (recall Mehrling's “hierarchy of money" from Week 5)
3 Should central banks be allowed to make pro ts?
Week 9: State-Central Bank Relations II
Lecture 8: Government in uence on central banking.
Readings:
Fiscal Dominance
Sargent, Thomas J. and Neil Wallace. 1981. “Some Unpleasant Monetarist Arithmetic." Federal Reserve Bank of Minneapolis Quarterly Review Vol. 5, pp. 1-17. (Skip the technical part, I will explain the model in class slides.)
* Del Negroa, Marco and Christopher A. Sims. 2015. “When Does a Central Bank's Balance Sheet Require Fiscal Support?" Journal of Monetary Economics Vol. 73, pp. 1-19.
Personnel Appointment
* Adolph, Christopher. 2013. Bankers, Bureaucrats, and Central Bank Politics: The Myth
of Neutrality (New York, NY: Cambridge University Press), Ch. 1-2 (skim pp. 1-5, skip pp. 25-6).
* Chang, Kelly H. 2003. Appointing Central Bankers: The Politics of Monetary Policy
in the United States and the European Monetary Union (New York, NY: Cambridge University Press), Ch. 1-2, 5, 6 (skip 1.6; skim 2.2; skim 5.2-5.3)
******QUIZ 3******
Further readings:
* Kumhof, Michael Ricardo C. Nunes, and Irina V. Yakadina. 2010. “Simple Monetary Rules under Fiscal Dominance." Journal of Money, Credit and Banking Vol. 42, No. 1, pp. 63-92.
* Blanchard, Olivier. 2005. “Fiscal Dominance and In ation Targeting: Lessons from Brazil" in Francesco Giavezzi, Ilan Goldfajn and Santiago Herrera co-eds. In ation Targeting, Debt, and the Brazilian Experience, 1999 to 2003 (Cambridge, MA: MIT Press)
The Federal Reserve Board. 1996. ”Remark by Chairman Alan Greenspan: The Challenge
of Central Banking in a Democratic Society." (Note: Search \irrational exuberance")
Questions:
1 What other channels could be used by the governments to influence the central bank's monetary policy?
2 Should monetary decision-making be insulated from the executive branch of government?
Week 10: Movie
The Big Short (2015)
Starring Christian Bale, Steve Carell, Ryan Gosling, directed by Adam McKay Dining options: pizza or lunchbox (we will vote on this)
Week 11: Macroeconomic Performance
Lecture 9: Political distortion of monetary policy and macroeconomic consequences.
Readings:
Income Effect
* Iversen, Torben. 1999. Contested Economic Institutions: The Politics of Macroeco-
nomics and Wage Bargaining in Advanced Democracies (New York, NY: Cambridge University Press), Skim Ch, 2, read Chapter 3.
Political Business Cycle
* Nordhaus, William D. 1975. “The Political Business Cycle." The Review of Economic Studies Vol. 42, No. 2, pp. 169-90.
* Clark, William Roberts and Mark Hallerberg. 2000. “Mobile Capital, Domestic Institutions, and Electorally Induced Monetary and Fiscal Policy." American Political Science Review Vol. 94, No. 2, pp. 323-46. (Note: I will explain their model in class slides)
Further readings:
* Gregory, Mankiw, N. 1988. “Recent Developments in Macroeconomics: A Very Quick Re-fresher Course." Journal of Money, Credit and Banking Vol. 20, No. 2-3, pp. 436-49.
* Sargent, Thomas J. and Neil Wallace. 1975. ““Rational" Expectations, the Optimal Monetary Instrument, and the Optimal Money Supply Rule." Journal of Political Economy Vol. 83, No. 2, pp. 241-254.
Questions:
1 According to this week's readings, why do governments' economic stimulus policy often self-defeating? (Recall readings from Week 8 and 9, also, you might find useful hints from this week's Further readings section)
2 Explain Iversen's and Nordhaus's arguments using the IS-LM curve framework you learned in Week 4.
Week 12: Monetary Commitment Regimes
Lecture 10: The political economy of monetary commitments.
Readings:
Political Systems and Monetary Commitment Regimes
* Bernhard, William and David Leblang. 1999. “Democratic Institutions and Exchange-Rate Commitments." International Organization Vol. 53, No. 1, pp. 71-97.
* Lawrence, Broz, J. 2002. “Political System Transparency and Monetary Commitment Regimes." International Organization Vol. 56, No. 4, pp. 861-87.
Exchange Rate Volatility
* Bernhard, William and David Leblang. 2002. “Democratic Processes, Political Risk, and Foreign Exchange Markets." American Journal of Political Science Vol. 46, No. 2, pp. 316-33.
Economic Reform
* Vreeland, James R. 2003. “Why Do Governments and the IMF Enter into Agreements? Statistically Selected Cases." International Political Science Review Vol. 24, No. 3, pp. 321-343.
Further readings:
* Freeman, John R., Jude C. Hays, and Helmut Stix. 2000. “Democracy and Markets: The Case of Exchange Rates." American Journal of Political Science Vol. 44, No. 3, pp. 449-468.
m Finegold-Catalan, Jonathan M. “A Closer Look at China's Currency Manipulation." Mises Daily, April 23 2010.
Questions:
1 What are the risks of anchoring one's currency on other major currencies?
2 What market information can market actors infer from a country's political system?
3 According to Vreeland, why did governments that are least in need of loan participate in IMF programs? What does this imply for monetary policy?
Week 13: Central Bank Independence
Lecture 11: Central Bank Independence (CBI) in perspectives.
Readings:
Theory
* de Haan, Jakob and Helge Berger. 2003. “Chapter 6: How to Tie Your Hands: A Currency Board versus an Independent Central Bank." in Andrew W. Mullineux and Victor Murinde co-eds. Handbook of International Banking (Cheltenham, UK: Edward Elgar Publishing).
Concepts and Measure
* Grilli, Vittorio, Donato Masciandaro, Guido Tabellini, Edmond Malinvaud, and Marco Pagano. 1991. “Political and Monetary Institutions and Public Financial Policies in the Industrial Countries." Economic Policy Vol. 6, No. 13, pp. 341-92. (Read the \measurement" section, skim the rest)
* Cukierman, Alex, Steven Webb, and Bilin Neyapti. 1992. “The Measurement of Central Bank Independence and Its Effect on Policy Outcomes." The World Bank Economic Review Vol. 6, No. 3, pp. 353-98. (Read the “measurement" section, skim the rest)
Political Origins of CBI
* Boylan, Delia M. 2001. “Democratization and Institutional Change in Mexico : The Logic of Partial Insulation." Comparative Political Studies Vol. 34, No. 1, pp. 3-29.
* Keefer, Philip and David Stasavage. 2003. “The Limits of Delegation: Veto Players, Central Bank Independence, and the Credibility of Monetary Policy." American Political Science Review Vol. 97, No. 3, pp. 407-23.
International Liquidity
* Maxfield, Sylvia. 1997. Gatekeepers of Growth: The International Political Economy of Central Banking in Developing Countries (Princeton, NJ: Princeton University Press), Ch. 1.
******QUIZ 4******
Further readings:
* Kydland, Finn E. and Edward C. Prescott. 1977. “Rules Rather Than Discretion: The Inconsistency of Optimal Plans." Journal of Political Economy Vol. 85, No. 3, pp. 473-91. (I will explain their model in class slides)
* Debelle, Guy. 1996. “Central Bank Independence: A Free Lunch?" IMF Working Paper
WP/96/1. (Note: I will explain his model in class slides)
* Goodman, John B. “The Politics of Central Bank Independence." Comparative Politics Vol. 23, No. 3 (April 1991), pp. 329-49.
Questions:
1 Recall readings from Week 4, 8, and 9, does CBI o er a better solution to the IS-LM trade-o ?
2 According to this week's readings, what are the favorable conditions for the emergence of CBI?
Week 14: Cross-Border Trade and Currency Swap
Lecture 12: Considerations for cross-country comparative advantage in monetary decisions.
Readings:
Currency Swap
A crash course on risk management. (I will cover this in class slides, introducing concepts such as “hedging," “default swaps," and \tranches.")
Goldberg, Linda S., Craig Kennedy, and Jason Miu. 2011. “Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs." Federal Reserve Bank of New York Economic Policy Review, pp. 1-20.
* McDowell, Daniel and Steven Liao. 2015. “Redback Rising: China's Bilateral Swap Agreements and Renminbi Internationalization." International Studies Quarterly Vol. 59, No. 3, pp. 401-22.
Sectoral In uence on Exchange Rate Policies
* Frieden, Jeffrey A. 2008. “Chapter 18: Globalization and Exchange Rate Policy." in
Ernesto Zedillo ed. The Future of Globalization (New York, NY: Routledge), pp. 344-357.
* Stein, Ernesto H., Jorge M. Streb, and Piero Ghezzi. 2004. “Elections and the Timing of Devaluations." Journal of International Economics Vol. 63, No. 1, pp. 119-45.
Further readings:
Slaughter, Matthew J. “The Myths of China's Currency `Manipulation'." The Wall Street Journal, January 8th, 2016.
McNeil, Alexander J., Rudiger Frey, and Paul Embrechts. Quantitative Risk Management: Concepts, Techniques and Tools 2nd edition (Princeton, NJ: Princeton University Press, 2015). (Note: This is one useful financial management textbook to have, but you are NOT required to purchase or read it at the moment)
Questions:
1 Why do countries swap their currencies?
2 How might exchange rate swap a ect bilateral import and export?
Week 15: Shocks, Crises, and Responses
Lecture 13: Policy responses to unpredictable macroeconomic shocks.
Readings:
Speculative Attacks
A crash course on solving extensive form games, introducing binomial distribution and backward induction. (I will discuss Leblang's model (see below) in class slides)
* Leblang, David. 2003. “To Devalue or to Defend? The Political Economy of Exchange Rate Policy." International Studies Quarterly Vol. 47, No. 4, pp. 533-60.
Asian Financial Crisis
* Walter, Stefanie. 2008. “A New Approach for Determining Exchange-Rate Level Pref-erences." International Organization Vol. 62, No. 3, pp. 405-38.
* Pepinsky, Thomas B. 2008. “Capital Mobility and Coalitional Politics: Authoritarian Regimes and Economic Adjustment in Southeast Asia." World Politics Vol. 60, No. 3, pp. 438-74.
2008 Financial Crisis
* Mitchell, Christopher. 2016. Saving the Market from Itself: The Politics of Financial
Intervention (New York, NY: Cambridge University Press). Chapter 2 & 5.
Further readings:
Berg, Andrew. 1999. “The Asia Crisis: Causes, Policy Responses, and Outcomes," IMF Working Paper WP/99/138. (read Appendix I-II)
* Bodea, Cristina. 2010. “Exchange Rate Regimes and Independent Central Banks: A Corre-lated Choice of Imperfectly Credible Institutions." International Organization Vol. 64, No. 3, pp. 411-42.
* Ali Bas, Muhammet, Curtis S. Signorino, and Robert W. Walker. 2008. “Statistical Backward Induction: A Simple Method for Estimating Recursive Strategic Models." Political Analysis. Vol. 16, No. 1, pp. 21-40. (I will cover this in class slides as a supplement to Leblang's model)
Questions:
1 How do speculators evaluate the \defense capability" of a given currency? How does the monetary authority of that country assess the \o ensive intentions" of speculators?
2 Why do countries with xed exchange rate regimes tend to implement some sort of capital control during crisis? (Recall readings from Week 5-7, you may also nd helpful hint from Bodea's piece in this week's Further readings section)
Week 16: Central Banking in the Shadow of Financial Market Failure
Lecture 14: Complex Crisis (or Crisis-Complex) and Regulatory Issues Readings:
The Unpredictable
* Katzenstein, Peter J. and Stephen C. Nelson. 2014. “Uncertainty, Risk, and the Crisis of 2008." International Organization Vol. 48, No. 2, pp. 361-92.
* Katzenstein, Peter J. and Stephen C. Nelson. 2013. “Reading the Right Signals and Reading the Signals Right: IPE and the Financial Crisis of 2008." Review of Interna-tional Political Economy Vol. 20, No. 5, pp. 1101-31.
* Helleiner, Eric. 2011. “Understanding the 2007-2008 Global Financial Crisis: Lessons for Scholars of International Political Economy." Annual Review of Political Science Vol. 14, pp. 67-87.
Responses from the Fed
* Golub, Stephen, Ayse Kaya, and Michael Reay. 2015. “What Were They Thinking? The Federal Reserve in the Run-Up to the 2008 Financial Crisis." Review of International Political Economy Vol. 22, No. 4, pp. 657-92.
******QUIZ 5******
Further readings:
Stiglitz, Joseph E. 2010. “Lessons from the Global Financial Crisis of 2008." Seoul Journal of Economics Vol. 23, No. 3, pp. 321-40.
* McCarty, Nolan, Keith T. Poole, and Howard Rosenthal. 2015. Political Bubbles: Financial
Crises and the Failure of American Democracy (Princeton, NJ: Princeton University Press).
Ch. 7. (Note: The Troubled Asset Relief Program (TARP) legislation.)
Questions:
The Federal Reserve acquired a great deal of collateralized debt obligations (CDO) from banks through the TARP program, how would these assets appear on the Fed's balance sheet? (recall readings from Week 6) From the perspectives of central banks' roles and objectives (recall readings from Week 3 and 4), what are the risks of doing so?
According to Katzenstein and Nelson (2014), how can “norms" improve our understanding of the rather rational, individualistic, and technical fields of financial market? What does this imply for monetary authorities (aka., central banks)?
Week 17: Guest Lecture
I plan to invite a guest speaker from the financial industry (whose professional works touch on bitcoin and high frequency trading) to share his/her view on the technological frontier of new monetary instruments as a way to wrap up this course.
Week 18: The Future of Central Banking and Course Wrap-Up
Lecture 14: Managing central banks in a new regulatory environment
Readings:
CB management in transition
* Tucker, Paul. 2018. Unelected Power: The Quest for Legitimacy in Central Banking
and the Regulatory State (Princeton, NJ: Princeton University Press), TBD.
* Johnson, Juliet. 2016. Priests of Prosperity: How Central Bankers Transformed the
Postcommunist World (Ithaca, NY: Cornell University Press), TBD.
The rise of digital currency
* Mundell, Robert A. 1961. “A Theory of Optimum Currency Areas." American Eco-nomic Review Vol. 51, No. 4, pp. 657-665.
Nakamoto, Satoshi. “Bitcoin: A Peer-to-Peer Electronic Cash System." bitcoin.org
Committee on Payments and Market Infrastructures. 2018. “Central Bank Digital Currencies" Bank for International Settlements Markets Committee Report.
Further readings:
Lee, Vivien and David Wessel. 2018. “Digital Currencies: Five big implications for central banks." Brookings May 21st 2018.
Questions:
1 According to Johnson, why are the conflicting allegiances facing central bankers in Postcommunist countries?
2 Is bitcoin an ideal substitute for Mundell's vision of a new global currency union?
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