Economics 123
International Economics
Spring 2003
T TH 1:15
Tahir Andrabi
Carnegie 205
Office X 72513
Home 621-4948
tandrabi@pomona.edu
Office Hours: T Th 4-4:30, W 10-12
This course introduces students of economics and international relations to the basic
theories and policy problems of international economics. The course is divided into two
parts. In the first, we examine international finance, macroeconomic and stabilization
policy. In the second we consider international trade. In each part, we first develop some
basic economic principles, and then apply these principles to a number of current
problems and policy issues, in the US and various countries around the world. In
between the parts, we will have an interlude for a policy discussion. Details are given
below.
Text: Paul R. Krugman and Maurice Obstfeld (2000), International Economics: Theory
and Policy (henceforth KO).
The course grade will depend equally on an in-class midterm, a final examination and a
take-home paper due on the last day of class.
The policy current affairs discussion will lead to your class projects. We will be focusing
on the following issue: The role of international policy institutions in the the Asian
financial crisis.
I will spend two lectures introducing the topics. You will do the rest.
Many readings for the project are all found on Nouriel Roubini’s website
http://www.stern.nyu.edu/globalmacro/ and on the internet.
We will spend the two lecture days talking about various articles on the site.
Course Outline and Readings
I. Setting the stage:
A. Introduction
KO, Chapter 1
B. Balance of Payments and National Income Accounting
KO, Chapter 15
II. Exchange Rates and Economic Activity
A. Exchange Rates and the Foreign Exchange Market
KO, Chapter 13
1/21, 23
1/28, 30
B. Money and Exchange Rates:
KO, Chapter 14
2/4, 6, 11
C. Price Level and Exchange Rate in the Long Run:
KO, Chapter 15
2/13
D. National Income Determination in the Open Economy:
KO, Chapter 16
2/18, 20
E. Fixed Exchange Rates and Central Bank Intervention
KO, Chapter 17
2/25, 27, 3/4
F. Historical Perspective on Exchange Rate Regimes
KO Chapter 18
3/6
MIDTERM
3/11
III. Policy Discussion
3/13, 25
II. Theories of International Trade: -- March 27—May 6
A. The Ricardian Model
KO, Chapter 2
Number 95-27
3/27, 4/1
B. The Specific Factors Model
KO, Chapter 3,
4/3, 8
C. The Heckscher-Ohlin Model
4/10, 15
KO, Chapter 4
D. The Standard Trade Model
KO, Chapter 5
4/17, 22
E. Scale Economies and Trade
KO, Chapter 6
4/24
F. Regional Economic Issues
KO, Chapter 8
V. Issues in Trade Policy:
A. Economics of Trade intervention
KO, Chapter 8
B. The Political Economy of Trade Policy
KO, Chapter 9 and its appendix
C. Industrial Policy and Strategic Trade Policy
KO, Chapter 11
FINAL EXAMINATION, Tuesday May 13, 2pm
4/29, 5/1, 6