Fall 2009 Course Description

Advanced Topics in Public Policy

Section Title: Global Capital Markets and Public Policy
Instructor(s): Bobby Inman
Paul Rogge
Course: P A 388K - Advanced Topics in Public Policy
(previously Seminar in Topics in Public Policy)
Unique Number: 63080
Day & Time: Wednesdays, 3:00 PM - 6:00 PM
Room: TCC 2.108
Waitlist Information:Dougald MacMillan, 512-232-5187
Notes: This course can be counted as a MGPS topic; Cross List with MAN 385

This course fulfills requirements for the following specialization(s):

Description: This course co-taught with Paul Rogge.

The importance of international capital markets has increased dramatically over the past 35 years since the fall of the Bretton Woods agreement. With the growth of world trade and global investors, international investment capital is increasingly affecting traditional areas of domestic policy. For example, international regulatory arbitrage occurs when capital is raised in the least regulated country, leveraged in another jurisdiction’s banking system, and then deployed on a global basis, sometimes resulting in uneven “booms and busts” that the current system cannot regulate. The course will provide students with an understanding of basic working of the global equity and fixed income markets, a historic understanding of past regulatory innovations such as the Federal Reserve, Securities and Exchange Commission, the role of fixed exchange rates and the Post WWII era, and the eventual growth of modern global markets.

The course is introduced through discussions establishing the basic vocabulary and developing an understanding of current structures in global equity and fixed income markets. By first taking this “snapshot” of where we are, we establish a vocabulary from which to examine the historical origins of various regulatory structures and the policy objectives they were designed to address.

Second, the course examines several historic examples, framed in Dr. Walt Rostow’s classic book, Stages of Economic Growth. The US panic of 1837 presents an elegant example of international linkages between US produced cotton and the English textile industry. This lays the foundation for a national currency, central banking, as well as the importance of international trade and investment flows. Then, the course presents the example of the boom and bust period from 1920 -1940, the birth of a consumer economy, and the subsequent need for security and banking regulation.
Finally, the course examines the Post Bretton Woods era and the growth of the modern system. We will focus on the Greenspan era, strengths and weaknesses of monetary policy and new demands for regulatory controls. This section of the course is informed by the professor’s personal experience in managing capital through the Asian debt crisis of 1998, the technology boom and bust of the 1990’s, and the current difficulties in global debt markets. This experience extends to current global developments and discussions.

The cornerstone of the approach in this course in a global economic understanding and general investment strategy developed from Dr. Walt Rostow’s view of economic growth and development. In this framework, very issue is evaluated from the standpoint of relative raw material and finished good prices, as well as his view of non-equilibrium models of economic growth as found in Stages of Economic Growth.

Goals of this course:


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