Boston University



Pardee School of Global StudiesIR 759: “Understanding Global Money”Wednesday 2:30-5:15, IRB 102Prof. Perry MehrlingContact Information: 154 Bay State Road, #201B; pmehrlin@bu.edu, 617-353-7324Office Hours: Tuesday 1-3, Wednesday 1:30-2:30.Course description:This course studies financial globalization through the lens of the money market. Since global money is largely private credit money and also largely denominated in US dollars, a central question is how the global money system connects up with the various local public money systems, and how those connections differ between the center and the periphery. Since no individual central bank takes responsibility for global money, a central question is how the system is backstopped and managed, by national authorities such as central banks as well as multilateral institutions. Given that existing such arrangements proved inadequate for reining in inherent instability in 2007-2009, public regulation and also private self-interest have been driving rather far-reaching institutional change. Where are these changes taking us, what are the remaining and emerging new vulnerabilities of the system, and what might be done about them? Students who complete this course will learn how to:1) Read, understand, and evaluate professional discourse about the current operation of global money markets at the level of the Financial Times2) Follow and construct argument/analysis that uses balance sheet reasoning3) Understand the institutional structure of the dollar money markets, their connection to capital markets, and the mechanisms of central bank controlTarget Audience: graduate students in economics, history, anthropology, law, financial engineering, international political economy. A central goal of the course is to develop a common language for talking about global money across disciplines.Prerequisites: IR 571 “Global Money”, or equivalent. A version of IR 571 is available online at Coursera, , and on my own webpage . Grading: Four weekly reaction papers, one from each section of the course,due 24 hrs before class (2-3 pp.)40%Weekly Attendance and Discussion10%Term Paper (20 pages), on agreed topic50%Academic Honesty and Integrity: All?members of the University are expected to maintain the highest standards of?academic honesty and integrity, and the CAS Academic Conduct Code will be?strictly enforced.??The Conduct Code can?be?found at?: Boston University is committed to providing equal access to our coursework and programs to all students, including those with disabilities. In order to be sure that accommodations can be made in time for all exams and assignments,?please plan to turn in your?accommodations letter as soon as possible after the first class to the instructor.?After you turn in your letter, please meet with me to discuss the plan for accommodations so that we can be sure that they are?adequate and you are supported in your learning. If you have further questions or need additional support, please contact the Office of Disability Services (access@bu.edu).Course ScheduleSept 5: OrganizationSection I: OverviewSept 12: The Big PictureMehrling, Perry. 2017. “Financialization and its Discontents.” Finance and Society 3 No. 1: 1-10. Revision of 2016 keynote. Shin, Hyun. 2018. “Redrawing Boundaries in International Finance.” YSI keynote building on his paper, Avdjiev, Stefan, Robert McCauley, and Hyun Song Shin. 2015. “Breaking Free of the Triple Coincidence in International Finance.” Bank for International Settlements, Working Paper #524.Klein, Matthew. 2018. “How the US Saved the World from Financial Ruin.” Podcast interview with Adam Tooze concerning themes from his book Crashed, How A Decade of Financial Crises Changed the World.Sept 19: The “Money View” Hawtrey, Ralph. 1932. The Art of Central Banking. Longmans, Green. Pages 116-302.Copeland, Morris. 1952. A Study of Moneyflows in the United States. National Bureau of Economic Research #54. Chs. 1-3, 10.Hicks, Sir John. 1989. A Market Theory of Money. Clarendon Press. Pages 41-63. Pistor, Katharina. 2013. “A Legal Theory of Finance.” Journal of Comparative Economics 41 No. 2: 315-330.Sept 26: Financial CrisisMinsky, Hyman. 1982. “The Financial Instability Hypothesis: Capitalist Processes and the Behavior of the Economy.” In Kindleberger, Charles P. and Jean-Pierre Laffargue, eds., Financial Crises: Theory, History, and Policy, Cambridge.Mehrling, Perry. 2000. “Minsky and Modern Finance, The case of Long Term Capital Management.” Journal of Portfolio Management 26 No. 2: 81-88.Shin, Hyun Song and Kwanho Shin. 2011. “Procyclicality and Monetary Aggregates.” NBER Working Paper No. 16836. Mehrling, Perry et al. 2014. “Bagehot was a Shadow Banker: Shadow Banking, Central Banking, and the Future of Global Finance.”Allen, William A. 2013. International Liquidity and the Financial Crisis. Cambridge. Pages 1-48.Section II: Payments System and the Survival ConstraintOct 3: TARGET 2Willis, Henry Parker. 1920. “The Federal Reserve System.”Cour-Thimann, Philippine. 2013. “TARGET balances and the Crisis in the Euro Area.” CESifo Forum (April)Whelan, Karl. 2017. “Should we be concerned about TARGET balances?” Monetary Dialogue (November)Ceccetti, Steve. 2018. “TARGET2 Balances Mask Reduced Financial Fragmentation.”Oct 10: Emerging Market Economies and Balance of PaymentsMehrling, Perry. 2016. “Beyond Bancor.” Challenge 59 No. 1: 22-34.Kindleberger, Charles P. 1965. “Balance of Payments Deficits and the International Market for Liquidity.” Essays in International Finance No. 46, Princeton.Kindleberger, Charles P. 1978. “The OECD and the Third World.” Pages 105-121 in From Marshall Plan to Global Interdependence. Paris: OECD.Tarashev, Nikola, Stefan Avdjiev, and Ben Cohen. 2016. “International capital flows and financial vulnerabilities in emerging market economies: analysis and data gaps.” Bank for International Settlements.Oct 17: Global MoneyPozsar, Zoltan. 2018. “The Safe Asset Glut.” Credit Suisse Global Money Notes #14 (May)Aldoroso, Ehlers and Eran. 2018. “Business Models and Dollar Funding of Global Banks.” BIS Working Papers No. 708 (March).Duffie, Darrell. 2018. “Over the Counter Market Efficiency.” Nobel Symposium on Money and Banking (May)Section III: Symptoms of DiscontentOct 24: CryptocurrencyNarayanan, Arvind, et al. 2016. Bitcoin and Cryptocurrency Technologies. Princeton.Al-Naji, Nader, Josh Chen, Lawrence Diao. 2018. “Basis: A Price-Stable Cryptocurrencywith an Algorithmic Central Bank.” (April)Cryptocurrency Panel Discussion (Oct 2017)Bank for International Settlements. 2018. Cryptocurrencies: Looking Beyond the HypeOct 31: Sovereign MoneySimons, Henry. 1934. “A Positive Program for Laissez Faire.” In Economic Policy for a Free Society University of Chicago Press, 1948.Positive MoneyVollgeld InitiativeModern Money TheoryNov 7: Rivals to the Dollar--Yen, Euro, RMBGrimes, William. 2008. Currency and Contest in East Asia; the great power politics of financial regionalism. Cornell. Pages 71-117.James, Harold. 2012. Making the European Monetary Union. Harvard. Pages 1-88.Paola Subacchi, Paola. 2016. The People’s Money: How China is Building a Global Currency. Columbia.UNCTAD. 2015. “Making the international financial architecture work for development.” Trade and Development Report.Section IV: EvolutionNov 14: Monetary Walrasianism, Modern Finance, and the Disappearance of MoneyMehrling, Perry. ?2014. ?“MIT and Money.” History of Political Economy 46, Supp., 177-197.Tobin, James. 1969. “A General Equilibrium Approach to Money.” Journal of Money, Credit, and Banking 1 No. 1: 15-29. Mehrling, Perry. 2016. “Financial Economics.” Handbook on the History of Economic Analysis, Elgar Black, Fischer. 1970. “Banking and Interest Rates in a World without Money: The effects of uncontrolled banking.” Journal of Bank Research 1 (Autumn): 8-20.Boughton, James. 2003. “On the Origins of the Fleming-Mundell Model.” IMF Staff Papers 50, No. 1.Nov 21: THANKSGIVING RECESSNov 28: Historical EvolutionDeCecco, Marcello. 1984. The international gold standard: Money and Empire. Pinter. Pages 103-170.League of Nations. 1944. International Currency Experience, Lessons of the Interwar Period. Pages 7-26.Kindleberger, Charles P. 1984. A Financial History of Western Europe. Allen and Unwin. Pages 385-464.Eichengreen, Barry. 2011. Exorbitant Privilege, the rise and fall of the dollar and the future of the International Monetary System. Oxford. Pages 121-177.Dec 5: Multilateral InstitutionsToniolo, Gianni. 2005. Central Bank Cooperation at the Bank for International Settlements, 1930-1973. Cambridge. Pages 24-114.James, Harold. 1996. International Monetary Cooperation Since Bretton Woods. Oxford. Pages 27-57.Boughton, James. 2001. Silent Revolution, The International Monetary Fund, 1979-1989. IMF. Ch. 18.Boughton, James. 2012. Tearing Down Walls, The International Monetary Fund, 1990-1999. IMF. Ch. 15.Mehrling, Perry. 2016. “Discipline and Elasticity in the Global Swap Network.” International Journal of Political Economy 44 No. 4: 311-324.Dec 12: Summing Up ................
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