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Course 2021-2022 a.y.

20282 - HISTORY, INSTITUTIONS AND CRISES OF THE GLOBAL FINANCIAL SYSTEM

Department of Social and Political Sciences

Course taught in English

Go to class group/s: 31

DSBA (6 credits - II sem. - OP  |  SECS-P/12)
Course Director:
MASSIMO AMATO

Classes: 31 (II sem.)
Instructors:
Class 31: MASSIMO AMATO


Mission & Content Summary
MISSION

The course deals with a central feature of modern economic history: the fact that monetary and financial structures that are increasingly complex are at the same time increasingly exposed to the risk of ever deeper and more devastating crises. This increasing complexity can in no way be interpreted in terms of a Darwinian evolution. Rather, the course offers evidence of the presence, sometimes in competition, sometimes in articulation, sometimes in simple succession, of different organizational principles of monetary and financial systems. The non-evolutionary character of financial history, the presence of organizational principles that cannot be reduced to variants of the same kind, requires that we pay explicit attention to the logical, historical and psychological assumptions of Western monetary and financial architectures, and therefore also to the economic doctrines that mostly implicitly underlie them. The history of monetary and financial architectures, of their performances and of their crises, implies therefore also an attention to the history of economic doctrines in the monetary and financial field, in view of a critical reappraisal.

CONTENT SUMMARY

In line with the structure of the textbook, the course is divided into three sections:

 

The first section focuses on elementary definitions (money, credit, finance) in view of a critical reconsideration of the foundations of the financial logic in its relation to time. The point of departure is Chapter 12 of J. M. Keynes' General Theory, focusing on the main conceptual conventions that govern the calculations and psychology of both financial theorists and practitioners. Particularly important is the Keynesian consideration of the probabilistic logic underlying the investment system and his criticism of the hypothesis of equiprobability of unknown events. A review of the main interpretative strands on the role of expectations in finance follows, from Keynes and Knight's considerations on risk and uncertainty up to recent critiques to the efficient market hypothesis (in particular the work of Robert Shiller, and behavioural finance).

 

The second section has a historical character. Starting from the current pandemic crisis, the course proceeds backwards, with the aim of showing the particular concatenation that governs Western financial history. The goal is to provide evidence about the impossibility of a purely evolutionary representation. In fact, in this historical reconstruction, alternative options to the current structure of financial markets will emerge, sometimes actually operating, sometimes explicitly discarded, but always susceptible to be resumed, starting from new technological supports. The purpose of historical interpretation is to bring out the economic, technical and ideological motives that led to the spread of financial markets based on liquidity and expectations.

 

The third section is meant to give an account of recent interpretative trends and reform proposals in the monetary and financial field, conceived in response to the 2007 crisis and even more recently to the Covid crisis.  We review projects of innovative monetary systems, local and global, the emergence of digital currencies, both public (CBDC) and private, both complementary and alternative, the appearance of new financial structures, also related to new technological potentials (fintech and blockchain). This is done also to further test the theoretical considerations of the first part of the course. Particular emphasis will be given to the stabilizing role of public debt securities as safe assets and to the issue of European public debt, its expansion and how to manage it in the aftermath of the pandemic crisis.


Intended Learning Outcomes (ILO)
KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...

The knowledge that students will have acquired at the end of the course will concern both economic history and the history of economic thought, and therefore indirectly also the assumptions of current monetary and financial theories. In particular, the student will be able to:

  • trace the historical origin of the current institutional framework of monetary and financial systems,
  • assess the strengths and weaknesses, threats and opportunities, of alternative monetary and financial architectures,
  • recognize and express the often unspoken assumptions of current theories,
  • distinguish between different basic orientations,
  • identify their theoretical and ideological significance.

This knowledge will enable the student to describe and define with greater accuracy the current trends in finance in view of estimating their theoretical soundness and practical desirability.

APPLYING KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...

An intelligent use of the knowledge acquired during the course will enable the students to move with more intellectual freedom in their professional field. In particular, the historical knowledge of facts and thoughts will allow them to design new tools with more awareness thanks to the ability to formulate hypotheses with greater accuracy and to interpret the present situation with greater awareness of its logical and historical assumptions. At the end of the course, students will be able to give perspective depth to their technical knowledge, since they will be able to relate them both to their historical origin and to their current trends.

The oral examination (plus an optional written essay for attending students) will also be an opportunity for them to practice in what was once known as the rhetorical art of composing speeches, now better known as communication skills.


Teaching methods
  • Face-to-face lectures
  • Online lectures
  • Guest speaker's talks (in class or in distance)
  • Case studies /Incidents (traditional, online)
  • Individual assignments
  • Group assignments
DETAILS

Assessment methods
  Continuous assessment Partial exams General exam
  • Oral individual exam
  •     x
  • Individual assignment (report, exercise, presentation, project work etc.)
  •     x
    ATTENDING STUDENTS

    The oral exam consists in a talk of around 20 minutes revolving around the topics of the teaching materials and lectures, aimed at assessing the ability of the students to accurately present and critically discuss the main turning points in the history and theory of finance.

    Attending students have the option to write a short essay, either individually or in small groups of 2-3 people, after having defined a research question and a set of initial references with one of the instructors. For students who take this option, the oral exam will revolve only around part II of the textbook (History) and the oral exam and the essay will both weigh 50% in the final grade.

    NOT ATTENDING STUDENTS

    The oral exam consists in a talk of around 20 minutes revolving around the topics of the teaching materials, aimed at assessing the ability of the students to accurately present and critically discuss the main turning points in the history and theory of finance.


    Teaching materials
    ATTENDING STUDENTS
    • M. Amato and L. Fantacci, The End of Finance, Polity, 2012, parts I and II.
    • Lecture notes.
    NOT ATTENDING STUDENTS
    • M. Amato and L. Fantacci, The End of Finance, Polity, 2012, parts I and II.
    • Three papers from a list of readings that will be provided at the beginning of the course
    Last change 09/02/2022 13:01