AR 13/8 2001
OPEN ECONOMY MACROECONOMICS: LECTURE PLAN FALL 2001
Lecturers:
• Asbjørn Rødseth, room 1111 Department of Economics, phone 22 85 51 33,
asbjorn.rodseth@econ.uio.no, internet http://www.uio.no/~asro/, conference hours
Wednesday 15 -16
• Ida Wolden Bache, Norges Bank, phone 22 31 60 95, ida-wolden.bache@norgesbank.no
• Farooq Akram, Norges Bank, phone 22 31 66 92, Qaisar-Farooq.Akram@norgesbank.no
Introduction to the course:
Friday 17 August 11.15-12, room 1247 ES, Asbjørn Rødseth
Ordinary lectures:
Monday 16.15-18, aud. 6 ES.
Thursday 8.15-10, aud. 3 ES.
First lecture: 23 August.
Last lecture: 8 November.
Note: There are no lectures in weeks 40 and 41 (1 October – 14 October).
1. Exchange rates, capital mobility, rational expectations and monetary policy.
Bache 23/8-3/9
1.1. Optimal currency composition of portfolios. Open Economy
Macroeconomics (OEM from now) ch 2.1.
1.2. The foreign exchange market. Capital mobility and risk premia. OEM ch 2.2,
2.3, 2.5.
1.3. The monetary theory of exchange rates. OEM ch 4; Taylor.
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This part of the lectures builds on OEM ch. 1. If the material is not familiar,
this chapter should be read immediately.
Supplementary reading: De Grauwe: “International Money” 1-4, 5.3 and 9.
2. Exchange rates and the current account. Self-correcting mechanisms for the
current account. Rødseth 6/9 – 20/9
2.1. The specie-flow model. OEM Ch. 5.1-5.4.
2.2. The specie-flow model, floating exchange rates. Wage rigidity. OEM ch 5.5,
5.7.
2.3. Wage rigidity. Investment and capital stock dynamics. OEM 5.7, 5.8
2.4. Union wage determination. OEM 5.9
2.5. Government deficits. OEM 5.6, 5.10. De Grauwe: ”Monetary Integration” 9
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Lectures 2.1 and 2.2 build on chapter 3.1 of OEM.
3. Traded and non-traded goods. Rødseth 24/9, 27/9 and 15/10
3.1. The basic two-sector model and extensions. OEM 7.1
3.2. Dynamic and long run effects of aggregate demand. OEM 7.3-7.4
3.3. The Scandinavian model of inflation. OEM 7.5-7.6.
4. Home and foreign goods. Purchasing power parity. Akram 18/10-29/10
4.1. The price-specie-flow mechanism. Short and long run effects of demand
shocks and exchange rate changes when wealth effects are taken account of.
OEM 6.6
4.2. More of the same.
4.3. Exchange rate overshooting. OEM 6.7-6.8
4.4. Purchasing power parity, pricing in international trade. OEM 8.1-8.4. Rogoff.
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These lectures builds on OEM ch 6.1-6.5
Supplementary: de Grauwe “International Money” 5, 6, 7
5. Various issues. Bache 25/10 - 8/11 (4 lectures)
5.1 Monetary union. OEM 9.4, De Grauwe: “Monetary Integration”.
5.2 Speculative attacks, OEM 10.2.
5.3 Fixed exchange rates versus inflation targets., OEM 10.1, 10.3, Svensson.
Supplementary classes are given by Asbjørn Rødseth. These cover OEM chapters 1,
3 and 6.1-6.5 and are meant for students who have not been through this material
before (master students, exchange students etc). They are also recommended to others
as repetition. Schedule:
Wednesday 22 August16.15-18 room 1247 ES
Friday 24 August 8.15-10 room 551 ES
Friday 31 August 8.15-10 room 551 ES
Friday 7 September 8.15-10 room 551 ES
Seminars are given by Asbjørn Rødseth 10.15-12 on the following Mondays: 22
October, 29 October, 5. November and 12 November in room 1247, ES. If enough
students, a parallel seminar in Norwegian will be given on Wednesdays 16.15-18 in
the same weeks.
Term paper: A term paper is due at the end of week 41 (Friday 6 October). The
questions (which are similar to exam questions) are available from week 37.