Teaching international economics and finance during (and beyond) the global financial crisis
This case study uses the development of a timeline of events, announcements and policy responses researched by students and presented in class over the course of first semester 2009, thereby providing a summary of the global financial crisis (GFC) of 2007 to 2009. The conclusions show that this novel approach can extend to the appreciation of other historical perspectives in economics.
2. Creating a timeline
Q: How can the unfolding GFC, about which there was much media discussion but little scholarly consensus, be ‘taught’ in a meaningful way?
A: My solution was to develop an historical perspective on the GFC using a physical timeline to be constructed in the classroom over the first twelve weeks of the thirteen week first semester 2009.
In the first seminar, I brought along a useful tool – butcher’s paper. It was about three metres by one metre and lengthwise down the middle I had drawn a timeline. It had no starting date (as, at that time, the root cause of the GFC was still being argued about) but it did have a finishing date of 20 May 2009, the penultimate seminar in the semester. With a small class, the management of the entries onto the timeline can be reasonably flexible. With a larger class, more time and probably more supervision may be needed.
Each student was given a different coloured marker and each week they could add one or more new entries to the timeline. Duplicate entries were not allowed although extrapolations of existing entries were permitted. In the first few weeks, I invited the students one at a time to write their entries, changing the order of names each week. By week five, the students were managing this process themselves.
Given that this activity carried no assessment weight, I felt that the students should be rewarded for their diligence. The student with the most frequent entries by week 12 would thus receive their choice of movie tickets or phone credit (valued at about A$30).
The timeline became cluttered especially in mid to late 2007 and throughout 2008. Six of my seven students were international students from Europe, Africa and Asia. Some of the entries were peculiar to their country of origin. In addition to marking their entries on the timeline, students were asked to explain to the class the nature of their entries – the date, the event, and the importance of the event in the unfolding of the crisis. They were encouraged to comment on each others’ entries and assess the relative importance of these entries.
For the Week 13 seminar, I typed up the timeline and counted the colours. Entries included events (eg stock market crash on 11 September 2001), announcements (eg Merrill Lynch and Citigroup announce plans to seek additional capital from sovereign wealth funds on 11 January 2008) and publications (eg NBER published data showing US economy in recession, 9 November 2008). The number of entries per student ranged from 14 to 21.
I would trawl the US Federal Reserve and Reserve Bank of Australia sites each week to check what their respective Governors, Bernanke and Stevens, were saying about the crisis, the roles of their banks and the likely turning point to the ‘recession’. I then provided the students with links to various announcements and speeches.
The timeline was one of the classroom activities that I included in each seminar. In the remainder of each three hour seminar, the class covered tutorial questions and solutions, and some lecture material summarised in the form of a mind map and with highlights related to the timeline and some reference to second year macroeconomics. I also alerted students to additional resources and discussed upcoming assessments. One assignment and the final exam included questions on the GFC.
The final seminar in Week 13, reviewed the key points of each set of lecture material, how they could be woven together to provide a perspective on economics and finance in an international context and enabled students to view and interpret the timeline in its entirety (which was easier to do in a Word document).
The timeline and the lecture material encouraged discussion of what governments and central banks would do next. It seemed appropriate then to use the events that were showing up on the timeline as a way of introducing different fiscal policy responses, in terms of order of magnitude and financing, and different monetary policy announcements, in terms of timing and instruments. We covered such issues as the purposes of the microeconomic reforms of the 1970s and 1980s and how they appeared to be winding back as a response to the crisis; whether the era of relatively free trade was at an end as national governments tried to claw back revenue and protect domestic industries; the funding of fiscal deficits; the usefulness of monetary policy and the possibilities of a liquidity trap; and tax reform and UK Prime Minister Gordon Brown’s announcement that tax havens would be wound back.
These are not strictly topics covered by this unit but, without a third year macroeconomics unit in the economics major, a fitting place to put them. Moreover, none of the new desk copies of macroeconomics texts discussed anything that could be used to complement the material I was using in class.
Students lose interest in classes where the teaching is simply a display of the answer, rather than a teaching of understanding. The problem is exacerbated as, once students start to lose interest, it becomes more difficult to get them motivated and interested and so it is harder to encourage understanding. Most staff have, at some time, faced a class of silent students who stare down at their page. If the reaction to this situation is simply to give students the prepared answer, there is little fulfilment for either teacher or students. On the other hand, if students can participate in the classroom, and be encouraged to question and discover answers, then not only can students appreciate their staff and the content of the unit being taught, but staff can looking forward to being part of students’ learning journeys. Developing a timeline of the GFC is one example of such participatory learning but other periods in economic history, such as the Great Depression or the Asian Financial Crisis, could be ‘taught’ in this way.
Margaret is a Faculty Research Scholar and Senior Lecturer in the Faculty of Business and Law at Edith Cowan University in Joondalup, Western Australia. She has been teaching undergraduate and postgraduate economics and finance in on-shore and off-shore programmes for universities in Western Australia for 25 years. In 2009, Margaret won the Inaugural Dean’s Award for Innovation in Teaching and Learning for the implementation of this timeline approach in a third year international economics and finance unit she was teaching for the first time.
- TRUE Project site sharing open educational resources for International Economics