Course 2023-2024 a.y.


Department of Economics

Course taught in English

Student consultation hours
Class timetable
Exam timetable
Go to class group/s: 31
CLEAM (6 credits - II sem. - OP  |  SECS-P/01) - CLEF (6 credits - II sem. - OP  |  SECS-P/01) - CLEACC (6 credits - II sem. - OP  |  SECS-P/01) - BESS-CLES (6 credits - II sem. - OP  |  SECS-P/01) - WBB (6 credits - II sem. - OP  |  SECS-P/01) - BIEF (6 credits - II sem. - OP  |  SECS-P/01) - BIEM (6 credits - II sem. - OP  |  SECS-P/01) - BIG (6 credits - II sem. - OP  |  SECS-P/01) - BEMACS (6 credits - II sem. - OP  |  SECS-P/01) - BAI (6 credits - II sem. - OP  |  SECS-P/01)
Course Director:

Classes: 31 (II sem.)

Synchronous Blended: Lessons in synchronous mode in the classroom (for a maximum of one hour per credit in remote mode)

Suggested background knowledge

It is strongly recommended to be familiar with the basic concepts taught in introductory courses of Microeconomics and Macroeconomics.

Mission & Content Summary


The key lesson economists have learnt from the financial crisis is that there is an essential need to integrate macroeconomics and finance. This course emphasizes the importance of credit and financial market imperfections for economic activity and the conduct of monetary and fiscal policy. Particular relevance is given to the causes and the consequences of financial crises and to the conventional and unconvetional tools that policy-makers can use to stabilize the economy.


  • Financial crisis I. Introduction, causes, implications and historical perspective.
  • Financial crisis II. The role of structured finance.
  • Financial crisis III. The bank-run view. The model of Diamond and Dybvig.
  • Leverage, financial intermediaries, and securitization.
  • Asset prices and net worth. The financial accelerator.
  • Credit market imperfections. Household deleverage and the Great Recession.
  • Unconventional monetary policy, theory and evidence.
  • Liquidity traps.  The role of fiscal policy.
  • The European sovereign crisis.*
  • Maroeconomic implications of lockdowns.*

* It time allows it.

Intended Learning Outcomes (ILO)


At the end of the course student will be able to...
  • Define some fundamental concepts in finance, such as leverage and securitization.
  • Understand how financial frictions can impact macroeconomic variables, such as income and employment.
  • Illustrate the causes of financial crises and explain how financial shocks propagate to the whole economy.
  • Explain the effects of monetary and fiscal policies, including the unconventional policy tools, such as forward guidance and quantitative easing.
  • Analyze the key elements of a sovereign crisis, such as the one recently experienced by European countries, and the macroeconomic implications of lockdowns, such as those recently experienced by all major economies.


At the end of the course student will be able to...
  • Use some fundamental concepts in finance, such as leverage and securitization, which are likely to be very useful in their career.
  • Apply the knowledge acquired during the course to evaluate the consequences of a financial crisis for the firm or organization they join after they graduate.
  • Predict and assess the response of the central bank and the government to a major downturn caused by a financial crisis.
  • Evaluate and compare the economic forecasts and views on the state of the economy made available in the internet and other media.
  • Use such analysis in many of the decisions (pricing, portfolio, business investment, hiring, etc.) they are soon called to make throughout their working career.

Teaching methods

  • Face-to-face lectures
  • Guest speaker's talks (in class or in distance)
  • Exercises (exercises, database, software etc.)
  • Individual assignments
  • Group assignments


  • The material is mostly taught through traditional face-to-face lectures. In addition, the instructor teaches several tutorials throughout the course. During each tutorial, the concepts introduced during the lectures are used to answer questions and solve problems that are similar to those on the typical written examination.
  • In addition, the instructor makes available (on the course website on Bboard) a list of links to very recent articles or blog posts on topics that are discussed in class - with comments aimed at clarifying how each of them is related to the models and concepts introduced during lectures. Some of these readings are used by the instructor as the starting point for 'case-study' discussions aimed at showing students how the concepts studied in the course can be used to interpret real-world economic events.
  • Finally, during the semester, the instructor hands out a total of four problem sets, which students are strongly recommended to solve to make sure they are up to speed with the course. In some cases, problem sets include problems which have a similar structure to those on the final examination.

Assessment methods

  Continuous assessment Partial exams General exam
  • Written individual exam (traditional/online)
  • Individual assignment (report, exercise, presentation, project work etc.)


The assessment of whether students have achieved the learning outcomes of the course is carried out through a written final exam. The exam consists of exercises and open questions. The goal of the exam is to verify that:

  1. students can analyze, critically and indepedently, the models presented in class;
  2. students can effectively employ the analytical tools taught in the course;
  3. students can understand the economic forces behind the models and provide intuition for the main results;
  4. students have a solid understanding of the main topics covered in the course.

In addition to the written exam, students are given four problem sets throughout the course. Problem sets are optional, but students are strongly encouraged to take them. Problem sets have the same goal as the written final exam. In addition, they are a very effective tool to ensure that students remain on track with the lectures, without falling behind during the semester. They are also a great way to foster interactions among students (group work is allowed).


Students have the option (only in the first exam sessions) to count the grade obtained on problem sets towards the final grade. More precisely, students can choose that the final grade is computed as the average between the total grade obtained on the best three problem sets (with weight 30%) and the grade on the final exam (with weight 70%). Alternatively, students can choose to disregard problem sets; in that case, the final grade will be given only by the grade on the final exam.

Teaching materials


There is no single textbook for this course. The instructor uses different sources, including lecture notes, slides, and other handouts, which are made available on the course website on Bboard. Students may find it interesting to read the following books (however, note that these books are not required):

  • P. KRUGMAIN, The Return of Depression Economics and the Crisis of 2008, Norton & Company.
  • R.G. RAJAN, Fault Lines: How Hidden Fractures Still Threaten the World Economy, Princeton University Press.
  • G.B. GORTON, Slapped by the Invisible Hand: the Panic of 2007, Oxford University Press.
Last change 09/11/2023 14:37