A. Course Goals and Objectives
This course is a theoretical and empirical examination of international macroeconomic issues.
We will first examine national income accounting and the balance of payments. We will then look at exchange rate determination, dynamics, and regimes. In the last part of the course we will study international macroeconomic policy and some current events relevant to the international monetary system.
B. Course Outline
1. Exchange Rates and Open Economy Macroeconomics
1.1 Introduction
1.2 National Income Accounting and the Balance of Payments
1.3 Exchange Rates and the Foreign Exchange Market: An Asset Approach
1.4 Money, Interest Rates, and Exchange Rates
Midterm Exam 1
1.5 Price Levels and the Exchange Rate in the Long Run
1.6 Output and the Exchange Rate in the Short Run
1.7 Fixed Exchange Rates and Foreign Exchange Intervention
Midterm Exam 2
2. International Macroeconomic Policy
2.1 International Monetary Systems: An Historical Overview
2.2 Financial Globalization: Opportunity and Crisis
2.3 Optimum Currency Areas and the Euro
2.4 Developing Countries: Growth, Crisis, and Reform
Final Exam
C. Student Assignments
Problem Sets - Problem solving is essential to successful completion of this course. With this in mind, several problem sets will be assigned throughout the semester and will be graded.
The problem sets are designed to help students prepare for the exams. Students may work in groups, however each student must turn in his/her own assignment to get credit. Failure to turn in a problem set will result in a grade of zero for that assignment. No late problem sets will be accepted.
Exams - There will be three exams, including the final exam, throughout the semester.
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Make-up exams will only be given in very extreme circumstances. The instructor reserves the right to judge what types of excuses are legitimate. The student must secure from the instructor permission to miss an exam before the scheduled exam time. The student will receive a grade of zero for any exam that is missed that is not excused.
D. Method of Evaluation
The student’s grade will be based on two midterm exams, a final exam, and the problem sets. Grading curves for each exam may be implemented at the instructor’s discretion. Class attendance is not mandatory and will not be considered in the final grade.
Academic dishonesty is unacceptable and will not be tolerated. If caught cheating on an exam, the student will receive a grade of zero and the incident will be referred to the Office of Student Conduct and Community Standards for investigation.
E. Grading Scale
The student’s grade will be based on two midterm exams, a final exam, and the problem sets. Grading curves for each exam may be implemented at the instructor’s discretion. Class attendance is not mandatory and will not be considered in the final grade. The percentage weight towards the final grade is as follows:
Midterm Exam 1: 30%
Midterm Exam 2: 30%
Final Exam: 30%
Problem Sets: 10%
The grading scale that will determine the final grade is as follows (standard rounding techniques will apply):
F: 0-69%
A: 93-100%
A-: 90-92%
B+: 86-89%
B: 83-85%
B-: 80-82%
C+: 76-79%
C: 73-75%
C-: 70-72%
F. Special Requirements
None
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G. Bilbliography and Supplemental Reading List
Required Textbook: Krugman, Obstfeld, and Melitz, 2015. International Finance, Theory and Policy, 10th edition. Pearson.
Supplemental Readings:
Blinder, 2013. After the Music Stopped: The Financial Crisis, the Response, and the Work
Ahead. Penguin Press.
Carbaugh, 2014. International Economics, 15th edition. Cengage Learning.
Dornbusch, 1976. Expectations and Exchange Rate Dynamics. Journal of Political Economy
84 (December), 1161-1176.
Dornbusch and Krugman, 1976. Flexible Exchange Rates in the Short Run. Brookings Papers on Economic Activity 3, 537-575.
Eichengreen, 2011. Exorbitant Privilege. Oxford University Press.
Federal Reserve Bank of New York. The Basics of Foreign Trade and Exchange, http://www.ny.frb.org/education/fx/index.htm.
Feenstra and Taylor, 2014. International Macroeconomics, 3rd edition. Worth Macmillan.
Fischer, 1999. On the Need for an International Lender of Last Resort. Journal of Economic
Perspectives 13 (4), 85-104.
Frenkel and Mussa, 1980. The Efficiency of Foreign Exchange Markets and Measures of
Turbulence. American Economic Review 70 (May), 374-381.
Foot and Thaler, 1990. Anomalies: Foreign Exchange. Jornal of Economic Perspectives 4
(3), 179-192.
International Monetary Fund, 2009. Balance of Payments and International Investment Position Manual, 6th edition.
Gerber, 2013. International Economics, 6th Edition. Prentice Hall.
Lane, 2012. The European Sovereign Debt Crisis. Journal of Economic Perspectives 26 (3),
49-68.
Levich, 2001.
International Financial Markets: Prices and Policies, 2nd edition.
Irwin
Mcgraw-Hill/Irwin.
Liaquat, 2009. Lords of Finance: The Bankers Who Broke the World. Penguin Press.
Mann, 2002. Perspectives on the U.S. Current Account Deficit and Sustainability 16 (3),
131-152.
Montiel, 2003. Macroeconomics in Emerging Markets. Cambridge University Press.
Pugel, 2011 International Economics, 15th edition. McGraw-Hill/Irwin.
Rogoff, 1996. The Purchasing Power Parity Puzzle. Journal of Economic Literature 34
(June), 647-668.
Soloman, 1982. The International Monetary System, 1945-1981. Harper and Row.
Taylor and Taylor, 2004. The Purchasing Power Parity Debate. Journal of Economic Perspectives 18, (4), 135-158.
Weithers, 2006. Foreign Exchange: A Practical Guide to the FX Markets. John Wiley and
Sons.
H. Other Pertinent Information
Prerequisite: ECON 201 and ECON 202 or equivalent
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