Prof Paul De Grauwe

This course is available on the MSc in European and International Politics and Policy, MSc in European and International Politics and Policy (LSE and Bocconi), MSc in European and International Politics and Policy (LSE and Sciences Po), MSc in Human Resources and Organisations (International Employment Relations/CIPD), MSc in Political Economy of Europe in the World, MSc in Political Economy of Europe in the World (LSE and Fudan), MSc in Political Economy of Europe in the World (LSE and Sciences Po) and MSc in Political Science (Political Science and Political Economy). This course is available with permission as an outside option to students on other programmes where regulations permit. This course uses controlled access as part of the course selection process. For information on controlled access courses, including eligibility, application processes, deadlines, and departmental contact details, please refer to the Controlled Access Courses webpage.

To apply for a place, ALL students should submit a statement via LSE for You outlining your specific reasons for applying, how it will benefit your academic/career goals, and how you meet any necessary pre-requisites (maximum 200 words).

The first round of offers will be made from 12-noon on the Friday before Autumn Term week 1. The final deadline for applications is 12-noon on the Friday of Autumn Term week 2.

For queries contact: ei@lse.ac.u

This course has a limited number of places (it is controlled access) and demand is typically very high. Priority is given to students from the European Institute, so students from outside this department may not get a place.

We study the process of European monetary integration. We consider the political and economic rationale for the establishment of a monetary union. This leads us to study the theory of optimal currency areas and its relevance today. This is a theory analysing the costs and benefits for individual nations of joining a monetary union. We introduce the notion of incomplete monetary union and we analyse the implications of the incompleteness of the Eurozone for its stability and sustainability. A central question in this course is how the Eurozone can be completed so as to make it less fragile to the occurrence of crises. We study the role of the European Central Bank as a lender of last resort in the government bond markets. We explore the possibilities of moving into a fiscal union as a way to reduce the Eurozone’s fragility. Additional questions addressed in this course include: How much inter-country risk sharing has there been during crises and through which channels? What is the role of the Eurozone payment system (Target2)  in this process? Has the eruption of the Covid-19 crisis affected the stability and the sustainability of the Eurozone? How successful has the ECB been in fighting inflation during 2022-23? Will the euro take over the dollar as the global currency? Or are we moving towards a multipolar international payments system?

15 hours of seminars and 10 hours of lectures in the Winter Term.
1.5 hours of seminars in the Spring Term.

This course has a reading week in Week 6 of Winter Term.

A review session will be held at the start of the Spring Term to prepare for the e-exam.

Essay (2000 words).

• Paul De Grauwe (2026) The Economics of Monetary Union (Oxford University Press, 15th ed.);
• Kenneth Dyson and Kevin Featherstone (1999) The Road to Maastricht, OUP;
• Waltraud Schelkle (2017) The Political Economy of Monetary Solidarity, Understanding the Euro Experiment, Oxford University Press;
• Ashoka Mody (2018), Euro Tragedy. A Drama in Nine Acts, Oxford University Press
• Adam Tooze, (2018). Crashed: how a decade of financial crises changed the world, New York: Viking.

Exam (100%), duration: 120 Minutes in the Spring exam period.

The summative assessment will take the form of an e-exam in the Spring Term. E-exams are assessments run under invigilated exam conditions on campus. Students will complete the assessment using software downloaded to their personal laptops.