Booms, Recessions and Bubbles

This two day course starts with a review of the main economic explanations for cyclical deviations from long term growth trajectories and equilibrium adjustments before considering large and protracted investment bubbles and their effect on the economy in day two. The assessment of disequilibria from a number of theoretical perspectives will be covered in this context.

Day 1, Morning
A review of the circular flow, of balance of payments constraints arising from the injections withdrawals equilibrium and of the quantity theory of money. This review of basic macroeconomic concepts will enable reflection on international linkages in aggregate demand and of the money neutrality assumption underlying mainstream monetary policy in the recent past.

Day 1, Afternoon
The afternoon session will review the benchmark (Solow) model for economic growth in long run equilibrium and short term cyclical deviations from it. The discussion will cover structural realignments as a core reason for cyclical deviations from the long term growth path while the trajectory of business cycles over the short term is analysed in fundamentally different ways from e.g. monetarist and Keynesian perspectives.

Day 2, Morning
The morning session will commence with a historic overview of past bubbles and trace some common aspects. This will be followed by a discussion of how bubbles can be defined and identified with reference to basic long term valuation concepts for assets and indicators for overvaluation. A central question to be discussed is how and when a bubble in one sector becomes a problem for the economy at large.

Day 2, Afternoon
Having identified and characterised bubbles in the morning session, the afternoon session will look at attempts to pinpoint the root causes of booms escalating into bubbles. In this context, explanations advanced in the Austrian school of economics as well as mainstream microeconomic approaches to incentive compatibility in designing bonus payments will be covered.
For further information, or to register your interest for future dates, please contact us.

Course Summary: 

  • Duration: 2 Days
  • Price: £540 + VAT
  • Dates: Please contact us
  • Code: BRECB

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