pptx - Tony Yates

MSc Open Economy
Overview and intrododuction
Lecture 0 (!) to Birmingham MSc
International Macro
Autumn 2015
Tony Yates
Course admin details
10, 2 hour lectures delivered by me
Assignments for each lecture. [Almost]
Solutions posted after tutorials
Tutorials taken by 3 class assistants.
Office hours: Mon 1-2pm, Tue 10.30-12.30
But watch teaching homepage for alterations.
Material posted on my teaching homepage:
• 80%: 3 hour end of year exam spanning this
course, and the growth/business cycles course
run by Kaushik Mitra.
• 20%: 2 hour multiple choice question test,
spanning the same two courses, held at the
start of next term.
• My course material is new, albeit under the
same course rubric.
• Lecture and assignment material is hard and
• Try to get you to the point where you have
seen ‘under the hood’ how the models work.
• The exam material will almost always not be
as hard as the assignments!
• Motivation and intuition will be covered too.
Hope is this emerges out of the maths, and
you reinforce that yourselves.
• Email: t.yates@bham.ac.uk
• Skype: anthony_yates; facetime
• If an office hour doesn’t happen or you can’t
make it, try these other routes.
• When making contact, remind me that you
are part of this course so I don’t think it is
More on me
• Research and study interests:
– Computation methods for macro
– Applied time series methods; VARs
– Monetary policy rule design
– Diagnosing the sources of business cycle
– The zero lower bound
– Alternatives to rational expectations
– See my publications on my homepage.
• 2 years at Department of Employment. 21
years at Bank of England. 2 years lecturing at
• Blog: www.longandvariable.wordpress.com
• Twitter: @t0nyyates
• Debates on central bank design, fiscal policy,
causes of the crisis, current interest rate
policy, and much more.
International macro
• Study of how economies interact with one
• Determination of exchange rates, relative
price levels, disparities in GDP/head and
growth, patterns of trade and cross border
borrowing and asset positions.
Global financial crisis
Secular stagnation and low world real rates
The Eurozone sovereign debt crisis of 2012.
Greece, now.
All these topical issues are questions of
international macroeconomics, and the debates
hinge on positions people take on the classic
models and philosophies in international macro.
Like: do markets work, or are there significant
• Dornbusch-Mundell-Fleming and exchange
rate overshooting.
• Structural vector autoregressions and tests of
the DMF model.
• Debt-deleveraging and low global real rates
• Small open economy, intertemporal model of
the current account.
• VAR-based tests of the SOE model.
• Uncovered and covered interest parity in a 2
period SOE model of asset pricing.
• Deviations from PPP and LOOP explored and
• [Policy topics, with less formal material, yet to
be prepared, depending on how we go].
• Revision
Along the way
• Preponderance of quantitative formal
modelling, but put in context with topical
• Emphasis on micro-founded models based on
aggregating up whole economy behaviour
from individuals, but with a comparison to
older methods [eg DMF].
• Connections with time series macroeconometrics used to test these models.
• See the reading list on my teaching home
• Obstfeld-Rogoff ‘Foundations of International
• Lecture notes and textbook mimeos by
Schmitt-Grohe, Uribe and Woodford.
• Miscellaneous papers, some on the reading
list, some you have to find yourself.