Postgraduate Certificate in Economic Policy (Online)

It is widely recognised by academic economists and policymakers that developed and efficient banking and capital markets are an important prerequisite for economic growth. However, it is also recognised that banking and financial crises can cause abrupt slowdowns or reversals of growth. The drive to understand these phenomena has generated a large body of research, leading to new theories and empirical studies of key features of banking and capital markets. This literature provides the underpinning for the subject material of this module.

Learning outcomes

When you have completed your study of this module, you will be able to:

• explain the functions of financial intermediaries, and evaluate the strengths and weaknesses of bank-oriented and market-oriented financial systems.
• critically evaluate theories of the banking firm which focus on the role of the bank as a provider of liquidity insurance for depositors, and as a delegated monitor of borrowers.
• explain the methods available to a bank to manage credit risk, interest rate risk, market risk and liquidity risk.
• explain why credit markets may fail to clear, and critically evaluate theories of credit rationing and overlending.
• discuss the methods used by shadow banking institutions to raise finance, and the risks to financial stability presented by shadow banking.
• critically evaluate methods for measuring the efficiency of banks, and the intensity of competition in deposits and loans markets.
• explain how a loss of depositor confidence, and asset price bubbles, can trigger banking and financial crises.
• critically evaluate the effectiveness of regulatory arrangements for the banking industry in promoting financial stability.

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Key texts: Matthews K and J Thompson (2014) The Economics of Banking. 3rd Edition. Chichester UK: John Wiley & Sons.
  Freixas X and J-C Rochet (2008) Microeconomics of Banking. 2nd Edition. Cambridge MA: The MIT Press.
• Readings: Throughout the module you will be directed to study a selection of readings, including journal articles, book extracts and case studies that are of particular relevance and interest to the topics covered in the module.
• Virtual learning environment: You will have access to the VLE, a web-accessed study centre. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 Banks and Financial Markets

• 1.1 Introduction
• 1.2 Financial Intermediaries, Financial Markets, and the Flow of Funds
• 1.3 The Financial System and the Flow of Funds
• 1.4 Comparative Financial Systems
• 1.5 Law, Politics and Financial Systems
• 1.6 Bank-oriented versus Market-oriented Financial Systems
• 1.7 Conclusion

Unit 2 Financial Intermediation

• 2.1 Introduction
• 2.2 Principles of Financial Intermediation
• 2.3 Financial Intermediation and Transaction Costs
• 2.4 The Financial Intermediary as a Means of Alleviating Asymmetric Information Problems
• 2.5 The Financial Intermediary as a Liquidity Insurer for Depositors
• 2.6 Conclusion

Unit 3 Risk Management

• 3.1 Introduction
• 3.2 Interest Rate Risk
• 3.3 Market Risk
• 3.4 Credit Risk
• 3.5 Liquidity Risk
• 3.6 Conclusion

Unit 4 Credit Rationing

• 4.1 Introduction
• 4.2 Financial Repression
• 4.3 Credit Rationing due to Adverse Selection: The Stiglitz–Weiss Model
• 4.4 Over-lending
• 4.5 Credit Rationing due to Moral Hazard
• 4.6 Conclusion

Unit 5 Shadow Banking and Securitisation

• 5.1 Introduction
• 5.2 Shadow Banking: Entity-based Classification
• 5.3 Shadow Banking: Activity-based Classification
• 5.4 Traditional Banking and Shadow Banking
• 5.5 The Role of Shadow Banking in the Global Financial Crisis 2007–09
• 5.6 Regulation of Shadow Banking
• 5.7 Conclusion

Unit 6 Competition and Efficiency in Banking Markets

• 6.1 Introduction
• 6.2 The Theory of the Banking Firm
• 6.3 Measures of Competition in Banking
• 6.4 The Structure-Conduct-Performance Paradigm
• 6.5 The New Empirical Industrial Organisation
• 6.6 Measures of Banking Efficiency
• 6.7 Mergers and Acquisitions in Banking
• 6.8 Conclusion

Unit 7 Banking and Financial Crises

• 7.1 Introduction
• 7.2 Bank Runs in the Diamond and Dybvig Model
• 7.3 The Asian Financial Crisis 1997–98
• 7.4 Risk-shifting and Asset Price Bubbles
• 7.5 The Global Financial Crisis 2007–09
• 7.6 Deposit Insurance and Moral Hazard
• 7.7 Conclusion

Unit 8 Bank Regulation

• 8.1 Introduction
• 8.2 Systemic Risk
• 8.3 Lender of Last Resort
• 8.4 Deposit Insurance
• 8.5 Risk-adjusted Capital Adequacy Requirements
• 8.6 Stress Testing
• 8.7 Conclusion

Module samples

• M426 Module introduction (PDF)
• M426 Specimen examination (PDF)
• M426 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules

The emergence of an open, liberal international financial order has been one of most notable developments in the global economy in the last 20 years. The growth of a more open international economy since the Second World War produced an international environment in which markets have bypassed national regulations, and financial flows have seriously questioned the Keynesian demand management policies. The study of trade and production cannot, therefore, satisfactorily explain the behaviour of the international economy; finance and the institutions through which it flows should also be examined. In a world where consumption, production and investment are globalised, international finance has become an integral part of any serious academic study of international economics.

The main objective of this module is to study the economists' perspective on international finance, which is a policy-oriented perspective. The examination of the institutions of international finance and the key policy problems that have arisen in recent decades are the main concern of this module. In other words, it is the perspective that an economist would use when advising governments on how to work within the modern international financial system and how to overcome its problems.

Learning outcomes

When you have completed this module, you will be able to do the following:

• outline the decline of Bretton Woods and the rise of the Flexible Exchange Rate Regime, 1973 to the present
• analyse and discuss fixed versus flexible exchange rate regimes
• explain the difference between hedging, arbitrage and speculation and the interaction of hedgers, arbitrageurs and speculators
• discuss the parity relationships between spot and future exchange rates
• demonstrate how a balance of payments is constructed with a series of transactions, and show how transactions are recorded
• explain how the national income framework and elasticities framework can be linked to the absorption framework
• discuss the policy problem the Mundell-Fleming model is designed to address, and the historical circumstances that made it relevant
• differentiate between the assumptions of the Polak model and those of the Mundell-Fleming model
• assess the strengths and weaknesses of the monetary approach
• relate the traditional arguments for and against fixed and floating exchange rates
• explain the rationale behind discretionary intervention in the foreign exchange market
• give an account of the development of the European Monetary System and the European Monetary Union.

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Key texts: Pilbeam, K (2013) International Finance, 4^th Edition, Macmillan.
• Readings: Throughout the module you will be directed to study a selection of readings, including journal articles, book extracts and case studies that are of particular relevance and interest to the topics covered in the module.
• Virtual learning environment: You will have access to the VLE, a web-accessed study centre. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 Evolution of International Financial Systems

• 1.1 Introduction to Unit 1
• 1.2 Bimetallism – before 1879
• 1.3 Classical Gold Standard – 1879–1914
• 1.4 The Interwar Period – 1914–1944
• 1.5 The Bretton Woods System – 1945–1972
• 1.6 The Flexible Exchange Rate Regime – 1973 Onwards
• 1.7 The Rise of the Eurodollar
• 1.8 The International Debt Crisis
• 1.9 Summary

Unit 2 Foreign Exchange Markets

• 2.1 Introduction
• 2.2 Economic Models and Institutions
• 2.3 Market Institutions and Exchange Rates
• 2.4 A Simple Model of the Spot Exchange Rate
• 2.5 A Theory of Spot Exchange Rates: Purchasing Power Parity
• 2.6 Forward and Spot Exchange Rates: Covered Interest Parity
• 2.7 Parity Conditions Linking Spot and Forward Exchange Markets
• 2.8 Foreign Exchange and Other Financial Markets

Unit 3 The Balance of Payments

• 3.1 Introduction
• 3.2 Measures of the Balance of Payments
• 3.3 The Multiplier Approach
• 3.4 The Elasticities Approach
• 3.5 The Absorption Approach
• 3.6 Summary

Unit 4 Balance of Payments: the Mundell-Fleming Approach

• 4.1 Introduction
• 4.2 The Internal-and-External-Equilibrium Approach to Policy
• 4.3 The Mundell-Fleming Approach: the IS-LM-BP Model
• 4.4 Policies and Events: Shifts of the Three Curves
• 4.5 Policies under Fixed and Floating Exchange Rates
• 4.6 Perfect Capital Mobility
• 4.7 Evaluations of the Mundell-Fleming Model
• 4.8 Evaluation of Perfect Capital Mobility

Unit 5 Balance of Payments – the Monetary Approach

• 5.1 Introduction
• 5.2 Background to the Monetary Approach
• 5.3 Three Assumptions of the Monetarist Theory
• 5.4 The Money Supply Identity
• 5.5 Monetarist Analysis of the Balance of Payments
• 5.6 Evaluation of the Monetary Approach
• 5.7 Conclusion

Unit 6 Fixed and Flexible Exchange Rate Systems

• 6.1 Introduction
• 6.2 The Case for Fixed Exchange Rates
• 6.3 The Case for Floating Exchange Rates
• 6.4 The Modern Evaluation of Fixed and Flexible Exchange Rate Regimes
• 6.5 The Case for Managed Exchange Rates
• 6.6 Finance and the Choice of Exchange Rate Systems

Unit 7 Currency Blocs, Financial Integration and International Co-ordination

• 7.1 Introduction
• 7.2 Types of Financial Co-operation
• 7.3 Macroeconomic Policy Co-ordination
• 7.4 European Monetary Union

Unit 8 Currency and Financial Crises and the International Financial System

• 8.1 Introduction
• 8.2 Modelling Currency Crises
• 8.3 The East Asian Financial Crisis
• 8.4 The 2007–08 Financial Crisis
• 8.5 Financial Innovations before the Credit Crunch
• 8.6 Dimensions and Causes of the Credit Crunch
• 8.7 Policy Responses to the 2007–08 Crisis

Module samples

• M429 Module Introduction (PDF)
• M429 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules

This module, Macroeconomic Policy and Financial Markets, is specially constructed for postgraduates studying finance and related subjects. The module is designed to increase the depth of your understanding whether or not you have studied economics or macroeconomics previously. Although it does not require previous study of macroeconomics, if you have studied macroeconomics at undergraduate level, this module adds to your knowledge because, unlike other modules, we focus on the relation financial markets have to macroeconomics.

Our intention is that after successfully completing the module, students from varied backgrounds will understand the key elements of macroeconomics and their connection with financial markets. We place the subject in a real-world context, aiming to show how theoretical and empirical knowledge of macroeconomics and financial markets provides ways to analyse the salient problems faced by modern macroeconomic policy makers.

Learning outcomes

When you have completed your study of this module, you will be able to:

• outline and discuss the connection between financial markets, real saving by households, and real investment by firms
• analyse how monetary policy can affect real macroeconomic activity through its interaction with financial markets
• explain the relation between financial markets and governments' fiscal policies
• discuss the effect that expectations of future inflation and interest rates can have on macroeconomic policy and financial markets
• analyse the connection between foreign exchange markets, imports and exports
• examine the possibility of instability arising from interaction between international capital flows and financial markets
• evaluate theories in the light of empirical evidence
• use theory and evidence to analyse actual problems facing macroeconomic policy makers.

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Key texts: Miles, D, A Scott & F Breedon (2012) Macroeconomics: Understanding the Global Economy, 3^rd Edition, Wiley.
• Readings: Throughout the module you will be directed to study a selection of readings, including journal articles, book extracts and case studies that are of particular relevance and interest to the topics covered in the module.
• Video: You will also have access to video content on the VLE, in which leading policy-makers talk to CeFiMS about their experiences. All the decision makers and advisers in the video have dealt with difficult macroeconomic problems in a range of countries and they explain how they approached the problem and considered alternative policies.
  They include:
  • Paul Volcker, looking back on his experience as Chairman of the Federal Reserve
  • Sir Alan Budd, as Economic Adviser in the British Treasury (Ministry of Finance)
  • Guillermo Ortiz, as the Governor of Mexico's central bank
  • Professor Lord Richard Layard, as advisor to the Russian government
  • Benno Ndulu, of the World Bank
  • Professor Rudiger Dornbusch, on experience of Latin American macroeconomic policy
  • Professor Sakakibura, on Japan's recent policy problems
    The interviews were recorded by CeFiMS for the International Monetary Fund and designed for officials studying macroeconomics with the IMF Institute. They are reproduced here with kind permission of the IMF. They show case studies intended to enable students to link their study of principles to actual macroeconomic policy making in the complex real world.
• Virtual learning environment: You will have access to the VLE, web-accessed study centre. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 Macroeconomics and the World of Finance

• 1.1 Introduction
• 1.2 Getting Macroeconomics in Perspective
• 1.3 Long-Run and Short-Run Macroeconomics
• 1.4 Aggregate Demand and National Income Accounts
• 1.5 Alternative Windows on Macroeconomics
• 1.6 Macroeconomics and Financial Markets
• 1.7 Macroeconomics and Finance in Subsequent Units

Unit 2 Saving and Finance

• 2.1 Introduction: Real and Financial Saving
• 2.2 Life Cycle Theory of Saving
• 2.3 Flow of Savings to Financial Markets – Demographic Fundamentals
• 2.4 Impact of Financial Markets on Saving – Interest Rate Effect
• 2.5 Impact of Financial Markets on Saving – Wealth Effect

Unit 3 Investment and Financial Markets

• 3.1 Capital Accumulation
• 3.2 Interest Rates and Investment – the Basic Model
• 3.3 Beyond the Basic Model
• 3.4 Investment and the Stock Market
• 3.5 Financing Hierarchy and the Role of Internal Funds
• 3.6 Conclusion – Investment and Monetary Policy

Unit 4 Monetary Policy and the Central Bank

• 4.1 Central Banks and Macroeconomic Policy – Inflation Targeting
• 4.2 Policy's Intermediate Targets – Money Supply and Interest Rate
• 4.3 Taylor Rules
• 4.4 Transmission Mechanisms of Monetary Policy
• 4.5 Monetary Policy in Context

Unit 5 Fiscal Policy and Government Finances

• 5.1 Effects of Fiscal Policy – Aggregate Demand and Financial Markets
• 5.2 Fiscal Policy and Monetary Policy
• 5.3 Fiscal Policy and the Sustainability of Debt Financing
• 5.4 Fiscal Policy in Perspective

Unit 6 Expectations, Inflation, and Interest Rates

• 6.1 Markets Reflect the Expected Future Today
• 6.2 Macroeconomic Expectations and Financial Markets
• 6.3 Inflation Expectations and the Inflation Output Trade Off

Unit 7 Foreign Exchange Markets and Foreign Trade

• 7.1 Foreign Exchange Markets and the Economy
• 7.2 Case Study – China's Macroeconomic Policy Choices
• 7.3 Exchange Rates, Inflation and Aggregate Demand
• 7.4 Exchange Rates and Monetary Policy

Unit 8 International Capital Flows and Financial Markets

• 8.1 International Capital Flows – Balance and Shocks
• 8.2 Interest Rates, Expectations and Currency Crises
• 8.3 Currency Crises and Exchange Rate Systems
• 8.4 Is There a Case for Controls on International Capital Flows?

Module samples

• M425 Module Introduction (PDF)
• M425 Specimen Examination (PDF)
• M425 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules

Welcome to the module Microeconomic Principles and Policy. We hope that you will find the module stimulating and useful.
The module introduces a wider range of microeconomic theories and applications than only those reflecting traditional or ‘neoclassical’ views. Some of these are more contentious than others as they have implications for public policy.

There are two narratives, or theoretical approaches, running through this module. The first is the traditional neoclassical approach, which is based on the assumption that all economic actors behave rationally to improve their own self-interest in markets that are competitive. The second narrative covers alternative approaches that have been developed to analyse economic behaviours.

Learning outcomes

By the end of this module you will be able to:

• explain the principles underlying consumer demand from different perspectives
• discuss what economists mean by the 'theory of the firm'
• spell out the implications of competitive and noncompetitive market structures on the firm's pricing and output decisions
• evaluate how firms respond to the pricing and output decisions of other firms in the market
• debate the importance of the markets for inputs or factors of production, such as labour, capital and natural resources
• analyse how firms expand and the implications for market structure
• discuss how globalisation has influenced the firm's behaviour and the implications for pricing and output decisions.

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Key texts: Pindyck, R & D Rubinfeld (2018) Microeconomics, 9th Edition. Pearson.
  Goodwin N, J Harris, JA Nelson, B Roach & M Torras (2019) Microeconomics in Context. 4th Edition, Routledge.
• Readings: Throughout the module you will be directed to study a selection of readings, including journal articles, book extracts and case studies that are of particular relevance and interest to the topics covered in the module.
• Virtual learning environment: You will have access to the VLE, which is a web-accessed study centre. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 Introduction to Microeconomics

• 1.1 Introduction
• 1.2 Markets
• 1.3 Supply and Demand
• 1.4 Elasticity
• 1.5 Conclusion

Unit 2 Theories of Consumer Behaviour

• 2.1 Introduction
• 2.2 Traditional Approach of Utility Theory
• 2.3 Limitations of the Consumer Theory
• 2.4 Behavioural Approach
• 2.5 Policy Issues
• 2.6 Conclusion

Unit 3 Theory of Production and Costs

• 3.1 Introduction
• 3.2 Types of Resources Used in Production
• 3.3 Production and Costs
• 3.4 Production Decisions
• 3.5 Analysing Costs and Production
• 3.6 Conclusion

Unit 4 Markets and Competition

• 4.1 Introduction
• 4.2 Perfect Competition
• 4.3 Non-Competitive Market Structures – Monopoly
• 4.4 Monopsony
• 4.5 Non-Competitive Market Structures – Monopolistic Competition
• 4.6 Conclusion

Unit 5 Oligopoly and Other Noncompetitive Markets

• 5.1 Introduction
• 5.2 Oligopoly models of output decision-making
• 5.3 Oligopoly models of price competition
• 5.4 Game theory
• 5.5 Collusion by firms
• 5.6 Prohibiting collusion
• 5.7 Case study – China's airline markets
• 5.8 Conclusion

Unit 6 Markets for Resources – Labour, Capital and Other Inputs

• 6.1 Introduction
• 6.2 Labour Markets
• 6.3 Manufacture, Natural and Social Capital Markets
• 6.4 Finance Capital
• 6.5 Conclusion

Unit 7 Industry Structures, Pricing Behaviour and Globalisation

• 7.1 Introduction
• 7.2 Alternative Theories of Firms' Behaviour
• 7.3 Big Business
• 7.4 Pricing Behaviour
• 7.5 Globalisation
• 7.6 Conclusion

Unit 8 Microeconomics Applied to Externalities, Public Goods and Environmental Economics

• 8.1 Introduction
• 8.2 Externalities and Public Goods
• 8.3 Direct Public Provision: the changing role of State Owned Enterprises
• 8.4 Environmental Economics
• 8.5 Conclusion

Module samples

• M457 Module Introduction (PDF)
• M457 Specimen Examination (PDF)
• M457 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules

This module aims to introduce you to the theory and practice of public finance, with special reference to how governments raise and use revenues. It is concerned with taxation, borrowing and aid. There are economic principles that bear on the issues of financing public expenditure and these are covered in the module. At the same time, however, we recognise that decisions on taxation, borrowing and aid are not taken solely with reference to economics but also to politics, and the module raises relevant political and social issues too. While the module has some emphasis on taxation in poorer countries, they are not its exclusive concern.

Learning outcomes

When you have completed your study of this course you will be able to:

• outline and discuss the main sources of government revenue
• explain the main criteria for assessing types of taxation
• analyse the main trends in taxation especially as between advanced and developing countries
• evaluate the main recommendations and analytical methods of the theory of optimal taxation that underpins modern tax reform
• gauge the degree of inequality and evaluate policies to reduce inequality
• outline the economic arguments for and against environmental taxes
• assess the impact of taxes on people’s consumption behaviours
• evaluate the causes of weak tax administration in developing countries and recommended appropriate policies to improve tax administration
• judge the use of Value Added Taxes in the context of developing countries
• discuss the causes and effects of tax competition between countries
• evaluate the effects of natural resource abundance on countries
• explain the economic case for fiscal decentralisation
• explain the characteristics of local taxes and some of the problems of tax collection at local level
• define the issues in how fiscal policy can be used to stabilise economies
• outline the different effects and policy implications of internal and external debt
• explain how governments can create the illusion of fiscal adjustment by financial engineering
• assess the success of aid giving as a method of supplementing government revenues in poorer countries and analyse its effects on government spending, tax raising and borrowing.

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Readings: Throughout the module you will be directed to study a selection of readings, including journal articles, book extracts and case studies that are of particular relevance and interest to the topics covered in the module.
  • "classics" in the study of public finance
  • operational and policy documents that illustrate how the public finance practitioner uses the tools of public finance in real world policy contexts
  • case studies and research papers that examine the impact of various public finance policies and initiatives in a variety of country and policy contexts.
• Virtual learning environment: You will have access to the VLE, a web-accessed study centre. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 Introduction to Taxation

• 1.1 Introduction
• 1.2 Criteria for Assessing Types of Taxes
• 1.3 Types of Tax
• 1.4 Trends in Taxation
• 1.5 Tax Policy and Tax Administration
• 1.6 Conclusion

Unit 2 The Economic Theory of Taxation

• 2.1 Introduction
• 2.2 Economic Efficiency
• 2.3 Income Tax versus Sales Tax
• 2.4 Taxes on the Supply of Labour
• 2.5 Equity and Efficiency
• 2.6 Optimal Taxation
• 2.7 Implications for Tax Policy
• 2.8 Summary and Conclusions

Unit 3 Public Policy and Taxation

• 3.1 Introduction
• 3.2 Inequality
• 3.3 Environmental Taxes
• 3.4 Behaviour and Taxes: Tobacco and Alcohol (Sin) Taxes
• 3.5 Summary and Conclusions

Unit 4 Tax Policy Issues in Developing Countries

• 4.1 Introduction
• 4.2 Tax Policies in Developing Countries
• 4.3 Tax Administration in Developing Countries
• 4.4 Value Added Tax (VAT)
• 4.5 Summary and Conclusions

Unit 5 Tax Policy Issues

• 5.1 Introduction
• 5.2 Tax Competition
• 5.3 The Internationalisation of Tax Policy – Base Erosion and Profit Shifting (BEPS)
• 5.4 Natural Resources ‘Curse’?
• 5.5 Flat Taxes
• 5.6 Summary and Conclusions

Unit 6 Sub National government Revenues

• 6.1 Introduction
• 6.2 The Economic Case for Fiscal Decentralisation
• 6.3 SNG Tax Revenues
• 6.4 Intergovernmental Grants and Transfers
• 6.5 Sub-National Government Borrowing
• 6.6 The Impact of Fiscal Decentralisation
• 6.7 Summary and Conclusions

Unit 7 Budget Deficits and National Debts

• 7.1 Introduction
• 7.2 Deficit Definitions
• 7.3 Why do Governments Run Deficits?
• 7.4 Why Do Deficits Matter?
• 7.5 Does Government Debt Matter?
• 7.6 Austerity Policies
• 7.7 Fiscal Policy in Developing Countries
• 7.8 Fiscal Adjustment and Fiscal Illusions
• 7.9 Summary and Review

Unit 8 Foreign Aid and Debt Relief

• 8.1 Introduction
• 8.2 What is Foreign Aid? (ODA)
• 8.3 Donors of Foreign Aid
• 8.4 Allocation of Foreign Aid
• 8.5 Budget Support
• 8.6 Aid and Tax Effort in Recipient Countries
• 8.7 Aid Volatility
• 8.8 Debt Relief
• 8.9 Summary and Conclusions

Module samples

• M405 Module Introduction (PDF)
• M405 Specimen Examination (PDF)
• M405 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules

Welcome to this module looking at The International Monetary Fund and Economic Policy. The module covers an extensive range of issues and, in the next eight weeks, you will study a wide spectrum of topics associated with the relationship between the IMF and macroeconomic stabilisation. Because the subject matter is vast, I have tried to focus on some of the key themes and provide some indications as to where this subject matter can be studied in greater detail if or when you have time to do so.

Learning outcomes

When you have completed this module, you will be able to do the following:

• identify who pursues stabilisation policies, and why
• distinguish between countries that seek to stabilise on their own, and those that seek help in doing so
• outline and discuss the role, function and operations of the IMF and its approach to stabilisation
• discuss the influence of the financial sector in precipitating instability
• explain the prevalent stabilisation theories and assess their appropriateness in differing circumstances
• identify and discuss the major criticisms and controversies that the IMF's approach has elicited
• explain the particular problems and prescribed remedies for low-income countries seeking to stabilise their economies.

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Readings: Throughout the module you will be directed to study a selection of readings, including journal articles, book extracts and case studies that are of particular relevance and interest to the topics covered in the module.
• Virtual learning environment: You will have access to the VLE, which is a web-accessed study centre. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 Macroeconomic Stabilisation and the Role of the IMF

• 1.1 Introduction
• 1.2 The Character of the International Monetary Fund
• 1.3 The Articles of Agreement
• 1.4 Three Key Functions Performed by the IMF
• 1.5 Organisational Structure of the IMF
• 1.6 The Executive Board, Constituency System and Advisory Organs
• 1.7 The Departmental Structure of the IMF
• 1.8 The Process Followed in Negotiating a Financing Arrangement with the IMF
• 1.9 Types of IMF Lending
• 1.10 Types of IMF Conditionality
• 1.11 Conclusion

Unit 2 The IMF's Approach to Stabilisation

• 2.1 Introduction
• 2.2 Trends in the Use of IMF-Supported Stabilisation Programmes
• 2.3 Special Drawing Rights (SDRs)
• 2.4 A Model to the Rescue? Mundell-Fleming
• 2.5 Scenarios Using the IS-LM-BP Schedules
• 2.6 The Theoretical Framework For IMF Stabilisation Policies
• 2.7 The Financial Programming Approach – Four Key Identities
• 2.8 Moving from Identities to Behavioural Assumptions
• 2.9 Key Questions and Issues – Jamaica 2010
• 2.10 Conclusion

Unit 3 Alternative Approaches to Stabilisation

• 3.1 Introduction
• 3.2 Key Shortcomings and Criticisms of the IMF Financial Programming Approach
• 3.3 Further Issues in Evaluating the Financial Programming Approach
• 3.4 How Can the IMF Programming Approach Be Improved?

Unit 4 Stabilisation and the Financial Sector

• 4.1 Introduction
• 4.2 Capital Flows and Stabilisation Policy
• 4.3 The Emerging Market Crisis
• 4.4 The Global Financial and Economic Crisis
• 4.5 Conclusion

Unit 5 Stabilisation Policy and Financial Sector – Institutional Responses to Recent Crises

• 5.1 Introduction
• 5.2 Financial Sector Crises – the Role and Responses of the IMF
• 5.3 Developing International Standards and Codes
• 5.4 The IMF's Role in Crisis Prevention and Resolution
• 5.5 Financial Crises – Other International Responses
• 5.6 Conclusion

Unit 6 Stabilisation and the Financial Sector – Some Challenges and Controversies

• 6.1 Introduction
• 6.2 Capital Account Liberalisation
• 6.3 Capital Controls
• 6.4 Criticisms of IMF Stabilisation Policies
• 6.5 Criticisms of the IMF's Response During the EME Crisis
• 6.6 Criticisms of IMF Policy During the Global Financial Crisis
• 6.7 Conclusion

Unit 7 Stabilisation and Low-Income Countries

• 7.1 Introduction
• 7.2 IMF Concessional Lending to Low-Income Countries
• 7.3 The Economic Development Document
• 7.4 Debt Relief
• 7.5 Emergency Lending
• 7.6 IMF Technical Assistance (TA)

Unit 8 Challenges for Low-Income Countries

• 8.1 Introduction
• 8.2 Quotas and Voting Shares of Low-Income Countries
• 8.3 Access Limits
• 8.4 Additional Challenges for Developing Countries
• 8.5 Social Safety Nets
• 8.6 Conclusion

Module samples

• M413 Module Introduction (PDF)
• M413 Specimen Examination (PDF)
• M413 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules