Permission of Instructor Required
The course analyzes the history of banking and financial markets in the United States, using the theoretical and empirical tools of modern economics. The recent economic crisis has rekindled interest in financial history, in recognition of the insights it offers for the analysis of modern financial markets and their fluctuations. This course presents an analytical overview of the historical forces responsible for the current structure of American financial markets and financial regulations. The course will proceed chronologically, beginning in the 1780s and ending in 2010. The main topics to be considered include the Constitution and the early institutional foundations of the American financial system; the political economy of early banking regulations; the causes and consequences of financial panics; the Progressive backlash against the power of financiers in the economy; institutional innovations such as the creation of the Federal Reserve System; and New Deal-era financial regulations such as the Glass-Steagall Act. The readings emphasize the work of modern economic historians, as published in economics and economic history journals. However, the course will also include substantial historical content, and work by historians, as well as primary historical sources (such as the writings of Thomas Jefferson on banks) will also be assigned. As no prior knowledge of American financial history is required, the format of the course meetings will be somewhat different than most seminars. Some of the course meetings will be divided into two parts: a seminar-style discussion of the readings, and then a brief lecture, which will present the historical and theoretical background for the following week’s readings.
Prerequisites: Econometrics, and Intermediate Microeconomics.
[Also EP&E 292b]