74570 - Europe in The Global Economy

Learning outcomes

The course offers an overview of Europe's model of economic integration and explores how this model responds to the challenges of a more competitive global market place. The key question - and the course's overall theme - is whether the euro crisis and the subsequent sluggish economic growth have seriously undermined confidence in the European single market's ability to deliver prosperity for all. In particular, the course assesses how the monetary union, both in terms of institutional design and of macroeconomics dynamics, is critical to the future of the European Union. If “EMU remains a milestone of EU integration (European Commission, EMU@10, 2008), it could also be the cause of its disintegration.

The course will unfold over seven weeks, during which students will acquire notions as well as analytical tools to analyze recent events and to assess the development of the current debate on Europe's economic future.  

Course contents

The course is made of two parts. The first (Prof. Manasse) focuses on the macroeconomis tools required to discuss monetary and fiscal policies within the Euro area. The second (Prof. Subacchi) focuses on the design of European Institutions

Part I (prof Manasse)

Topic  1

1. Review of macroeconomic tools (cont.).
2. Monetary and Fiscal Policies in open economies
3. The issue of coordinating policies
4. Global Fiscal Stimulus

Topic 2

1. Fiscal Policy and Accumulation of Debt
2. The dangers of High Debt and Fiscal Rules and Sovereign Debt Crisis
3. Fiscal Constraints in the EMU
4. Fiscal Constraints in US and UK
5. Europe and the others
   1. the US and transatlantic relations
   2. the rise of China
   3. the other BRICs
   4. Japan’s secular stagnation
   5. emerging markets and developing countries

Topic 3

1. Europe on the brink
   1. the global financial crisis
   2. the impact on Europe
   3. from a banking crisis to a sovereign debt crisis
   4. backstopping the system: the role of the ECB
   5. the issue of coordinating policies
   6. Mario Draghi and “whatever it takes”

Topic 4

1. Europe in the post-crisis years
   1. competitiveness (the real exchange rate) and the intra-EU (and intra-EMU) dynamics
   2. long term GDP growth: secular stagnation or the mediocre normal?
   3. low inflation and deflation: the issue of monetary policy
   4. sluggish domestic demand, high unemployment and the constraints of fiscal policy

Readings/Bibliography

Textbook: O. Blanchard , D.R: Johnson, Macroeconomics, Pearson ed, Chapters  2-7, 19-23.

Suggested readings:
R. Baldwin, Towards an Integrated Europe (London: Centre for European Policy Research, 2004).

Fraser Cameron, The European Union as a Model for Regional Integration, (New York: Council on Foreign Relations Press, 2010).

Ralph Dahrendorf, Why Europe matters. A personal view (London: Centre for European Reform, 1996).

Rudiger Dornbush,Euro fantasies: Common Currency as Panaceaa Foreign Affairs, 75 (5), pp. 110-24.

Mario Draghi, Speech to the Global Investment Conference, London, 26 July 2012.

(The) Economist, Maastricht follies, 9 April 1998.

David Marsh, The euro; the battle for the new global currency (New Haven and London: Yale University Press, 2011, new edition.

Jurgen Stark, german prudence is not to blame for the eurozone,  Financial Times, 12 February 2015.

Global Fiscal Stimulus: IMF article http://www.imf.org/external/pubs/ft/survey /so/2008/INT122908A.htm

Jamil, Anderlini and Lucy Hornby (2014), “China overtakes US as world largest goods trader, in Financial Times, 10 January 2014.

(The) Economist, Europe textile war with China - and itself’, 1 September 2005.

Fredrik, Erixon,  Hosuk Lee-Makiyama, Matthias Bauer and Martina F. Ferracane, Trans-pacific partnership: a challenge to Europe, ECIPE Policy Brief, November 2014.

Paolo Guerrieri and Piero Esposito, 2012, ‘The internationalization of the Italian economy: a lost chance, an opportunity to seize’, Review of economic conditions in Italy, 2012, pp. 55-81.

Daniel S. Hamilton and Joseph P. Quinlan, eds., The Transatlantic Economy 2014. Vol. 1: Headline Trends (Washington DC: Centre for Transatlantic Relations, 2014).

IMF, Competitiveness in the Southern euro area: France, Greece, Italy, Portugal and Spain, Working Paper No.08/112.

Bill Lewis et al., US Productivity Growth, 1995-2000, McKinsey Global Institute, October 2001.

Josh Noble and Gabriel Wildau, Fear of a deflationary spiral, Financial Times, 1 December 2014.

Jim O' Neill, The growth map. Economic opportunity in the BRICs and beyond (London: Portfolio  Penguin, 2011).

Pietra Rivoli, The travels of a T-shirt in the global economy. An economist examines the markets, power and politics of world trade (Hoboken NJ: Wiley, 2005).

Philip, Whyte, Why has the Eurozoneâ₠recovery been weaker than the USà in CER Bulletin, No. 90 (June/ July 2013), pp. 3-4.

Assessment methods

Paolo Manasse: There is a written exam. Students may in addition integrate the exam by writing a short essay on a subject agreed, on a topic relevant for the course 

Paola Subacchi: The exam will be organised in two papers of no more than 1,000 words each, to be prepared and submitted by the end of April and the end of May respectively. The first paper will be on Europe's single market and single currency. The second paper will be on the economic interaction of Europe with the rest of the world - in particular, the US and China. Using material such as newspaper articles and data series - to be circulated together with the questions for the essay - the students need to write an essay on the assigned topic, showing a good understanding of such a topic as well as the ability to discuss it in a critical way. Course attendance and familiarity with the suggested reading list are essential for the preparation of these papers.

Office hours

See the website of Paolo Luciano Adalberto Manasse

See the website of Paola Subacchi