| Module Title |
Debt, Default and Democracy |
| Module Code |
LG519 |
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School |
School of Law & Government |
Online Module Resources
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| Module Teacher | Gary Murphy | |
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NFQ level |
8 |
Credit Rating |
10 |
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Pre-requisite |
None |
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Co-requisite |
None |
| Compatibles |
None |
| Incompatibles |
None |
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Description
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Sovereign debt threatens to paralyze the world economy, undermine democracy, and fundamentally reorder international power relationships. Sovereign debt is a political choice. Much of the commentary on Europe’s debt crisis castigates politicians instead of systematically analyzing their dilemmas. This course introduces students to cutting edge research in this rapidly growing field. It is organized in three sections. The first part discusses the political nature of sovereign debt from its origins in medieval Europe to its key role in contemporary political economy. Sovereigns can and do refuse to repay their debts. Therefore, in contrast to other types of debt, markets need to assess willingness to pay as well as ability to pay. Students will play the roles of ratings agencies attempting to measure the political risk of different countries, and how it varies between democracies and autocracies. The second section concentrates on democratic constitutions and party systems and how they impact on sovereign debt. It shows how the relationship between democracy, welfare, and economic theory brought about a steady growth in sovereign debt; how the markets charge higher interest to some political systems than others, regardless of debt dynamics; and how countries react differently to the challenge of controlling public finances. The second section ends by analyzing the potential of instruments such as debt brakes to alleviate the crisis currently facing many countries. Simulations will place students in the role of governments balancing economic and political pressure in formulating a budget and constitution-writers designing rules to ensure manageable public finances. The third section applies many of the tools of the first two parts of the course to the European debt crisis. It begins by outlining institutional foundations of the Euro currency and how they have been destabilised by the financial crisis that began in America. The last two lectures look at two very different countries that have been overwhelmed by sovereign debt (Ireland and Greece) and two very different institutions under pressure to resolve the crisis (the German government and the European Central Bank).
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Learning Outcomes |
1. Understand academic approaches to sovereign debt.
2. Critically analyze contemporary developments in the politics of sovereign debt.
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| Workload |
Full-time hours per semester |
| Type |
Hours |
Description |
| Lecture | 12 | No Description | | Seminars | 12 | No Description | | Independent learning | 226 | No Description | | Total Workload: 250 |
All module information is indicative and subject to change. For further information,students are advised to refer to the University's Marks and Standards and Programme Specific Regulations at: http://www.dcu.ie/registry/examinations/index.shtml
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Indicative Content and Learning Activities
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Probable course structure.
Part 1: Historical and Global Perspectives1. The Nature of Sovereign Debt2. The Birth of Sovereign Debt3. Assessing Risk[Simulations of sovereign bond rating.]4. Regime Type and Sovereign DebtPart 2: Political Competition and Contemporary Democracies4. Sovereign Debt, the Welfare State, and Keynesianism5. Political Institutions and Credibility6. Political Institutions and Retrenchment[Simulations of budgeting in crisis situations.]7. Fiscal Institutions and Debt Control[Simulations of institutional reform.]Part 3: The Euro Crisis8. European Integration and the Euro9. The Subprime Crisis, European Economies, and the Bond Market10. Bailouts in Ireland and Greece11. All loads lead to Frankfurt? Germany and the Euro crisisIndicative Reading ListBiglaiser, Glen, Brian Hicks, and Caitlin Huggins. 2008. Sovereign Bond Ratings and the Democratic Advantage: Portfolio Investment in the Developing World. Comparative Political Studies 41(8): 1092-116.Mosley, Layna. 2003. Global Capital and National Governments, Cambridge Studies in Comparative Politics. Cambridge, U.K.; New York: Cambridge University Press.North, Douglass C., and Barry R. Weingast. 1989. Constitutions and Commitment: The Evolution of Institutional Governing Public Choice in Seventeenth-Century England. The Journal of Economic History 49(4): 803-32.Reinhart, Carmen M., and Kenneth S. Rogoff. 2009. This Time Is Different: Eight Centuries of Financial Folly. Princeton: Princeton University Press.Strauch, Rolf and von Hagen, Jürgen. 2000. Institutions, Politics, and Fiscal Policy. Dordrecht: Kluwer.Tomz, Michael. 2007. Reputation and International Cooperation: Sovereign Debt across Three Centuries. Princeton: Princeton University Press.http://www.voxeu.org/.
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| Assessment Breakdown | | Continuous Assessment | 100% | Examination Weight | 0% |
| Course Work Breakdown |
| Type | Description | % of total | Assessment Date |
| Group project | Simulations of sovereign bond ratings, budgeting in crisis situations, and institutional reform | 25% | n/a | | Essay | n/a | 75% | n/a |
| Reassessment Requirement |
Resit arrangements are explained by the following categories;
1 = A resit is available for all components of the module
2 = No resit is available for 100% continuous assessment module
3 = No resit is available for the continuous assessment component |
| This module is category 1 |
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Indicative Reading List
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- Mosley, Layna: 2003, Global Capital and National Governments, Cambridge Studies in Comparative Politics., Cambridge University Press, Cambridge,
- Reinhart, Carmen M., and Kenneth S. Rogoff: 2009, This Time Is Different: Eight Centuries of Financial Folly., Princeton University Press, Princeton, NJ,
- Tomz, Michael: 2007, Reputation and International Cooperation: Sovereign Debt across Three Centuries, Princeton University Press, Princeton, NJ.,
- Ferguson, Niall: 2008, The Ascent of Money: a financial history of the world, Allen Lane, London,
- Strauch, Rolf and von Hagen, Jürgen: 2000, Institutions, Politics, and Fiscal Policy, Kluwer, Dordrecht,
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Other Resources
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3603, Website, 0, Vox website, http://www.voxeu.org/, |
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Array |
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Programme or List of Programmes
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| HMSA | Study Abroad (Humanities & Soc Science) |
| MDEV | MA in Development |
| MIR | MA in International Relations |
| MISC | MA in International Security & Conflict |
| Timetable this semester: Timetable for LG519 |
| Date of Last Revision | 15-FEB-05 |
| Archives: | |
